FEDERAL COURT OF AUSTRALIA

Comcare v Dunstan [2014] FCAFC 21

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The applicant pay the respondent’s costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

Introduction

1    This appeal, on a question of law, is from a decision of the Administrative Appeals Tribunal (the Tribunal) given on 17 June 2013. The appeal concerns the meaning of the expression “the employee receives a pension and a lump sum benefit under a superannuation scheme as a result of the employee’s retirement” in s 21A of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the SRC Act).

2    Section 21A provides rules for the calculation of weekly compensation benefits to an employee who has retired following a work-related injury and who receives a pension and a lump sum benefit under a superannuation scheme. It is relevantly in the following terms:

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.

…

3    On 21 January 2013 the present applicant, Comcare, determined that from 28 February 2013 the respondent, Mr Dunstan, was entitled to weekly compensation calculated under s 21A of the SRC Act on the following bases:

(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;

(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.

Comcare affirmed that decision upon reconsideration on 27 March 2013.

4    The Tribunal set aside the decision under review. The Tribunal decided that the respondent’s weekly compensation from 28 February 2013, and presently, was not to be calculated under s 21A but was to be calculated under the terms of s 19 of the SRC Act.

The facts

5    The Tribunal said that the following facts were not controversial.

6    The respondent was born on 27 September 1955.

7    He commenced employment with the Department of Defence on 25 October 1975. As a result, he became a member of the superannuation scheme established by the Superannuation Act 1922 (Cth).

8    On 1 July 1976 the Superannuation Act 1976 (Cth) replaced the Superannuation Act 1922 and all members of the earlier scheme were transferred to the superannuation scheme established by the Superannuation Act 1976. That scheme is the Commonwealth Superannuation Scheme and the respondent remained a contributing member until his employment with the Australian Taxation Office ceased on 20 May 2001.

9    The respondent’s employment with the Australian Taxation Office was terminated pursuant to s 29 of the Public Service Act 1999 (Cth).

10    Following the termination of his employment, the respondent made an election pursuant to s 137 of the Superannuation Act 1976 to defer his superannuation entitlements.

11    The respondent remained a “deferred benefit member” of the Commonwealth Superannuation Scheme.

12    The respondent received annual “Deferred Benefit Member Statements” from the Commonwealth Superannuation Scheme setting out details of his superannuation account for each financial year.

13    The respondent had not requested the release or payment of his Commonwealth Superannuation Scheme deferred benefit.

14    On 5 November 2012 the respondent signed an “Authority and release of superannuation information” notice for Comcare to provide to ComSuper.

15    ComSuper provided a “Section 114B(2) Notice Request For Superannuation Information” (s 114B Notice) on 6 December 2012. In that notice under s 114B (of the SRC Act) ComSuper 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. The date on which he reached his compulsory minimum preservation age was 27 September 2010, when he turned 55 years of age. That notice indicated that the EFC component of the respondent’s superannuation entitlements at age 55 was $42,597.41 lump sum and $2,128.24 gross pension per fortnight.

16    On 7 January 2013 Comcare notified the respondent of its intention to apply s 21A to the calculation of his incapacity entitlements.

17    As we have said, on 21 January 2013 Comcare made a determination under s 21A that the respondent’s entitlement to weekly incapacity payments was $456.18 per week. Comcare affirmed that decision upon reconsideration on 27 March 2013.

18    The Tribunal said that the respondent, Mr Dunstan, was a “defined benefits member” of the Commonwealth Superannuation Scheme, which is an “unfunded defined benefits superannuation scheme” declared under reg 2A of the Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 (Cth).

The reasons of the Tribunal

19    The Tribunal said that once he turned 55, it was open for Mr Dunstan to request payment of his superannuation entitlements in the Commonwealth Superannuation Scheme. Evidence was adduced confirming that Mr Dunstan was eligible for a pension and a lump sum benefit on reaching the applicable preservation age of 55.

20    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.

21    The Tribunal said the word “receives” was not given a special statutory meaning. In Archer v Comcare (2000) 101 FCR 30; [2000] FCA 1296 the Full Court of 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.

22    The Tribunal considered the legislative framework and said Div 3 of Pt II of the SRC Act set out provisions governing the payment of weekly compensation to an employee who suffers an incapacity for work as a 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, it said, one of the purposes of the SRC Act was to provide weekly income support to an incapacitated employee whose ability to earn income in employment has been reduced by injury.

23    The Tribunal referred to the definition of “superannuation amount” in s 4(1) of the SRC Act and to the terms of the s 21A(3) calculation. Plainly enough, the Tribunal said, these provisions were 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.

24    The Tribunal referred to s 114B of the SRC Act enabling 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 did not apply if all of the retired employee’s benefits in the superannuation scheme have been deferred, as in the present case.

25    The Tribunal said 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) was germane for three reasons. Firstly, the delineation meant 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 avoided the difficulty that otherwise would arise in 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 was difficult to see how an overpayment could arise, and how s 21A could apply, in circumstances where a superannuation benefit was not payable to and had not been received by a retired employee who receives weekly compensation for incapacity. Thirdly, ComSuper’s s 114B Notice referred to preserved benefits, but it did not refer to deferred benefits.

26    Comcare said that Mr Dunstan was entitled to payment of his superannuation benefits on reaching his preservation age. But, the Tribunal said, this was not correct. Mr Dunstan elected to defer his superannuation entitlements under s 137 of the Superannuation Act 1976 on cessation of his previous Commonwealth employment. Consequently, payment of Mr Dunstan’s deferred superannuation benefits was governed by s 138 of the Superannuation Act 1976:

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.

CSC is short for Commonwealth Superannuation Corporation.

27    The Tribunal said that on 27 September 2010 and presently, Mr Dunstan was not within the terms of s 138(2)(a), (b) or (d), and he had not given notice of a date for the start of payments under s 138(2)(c). It was 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.

28    The Tribunal then referred to s 31(2)(g) of the Superannuation Industry (Supervision) Act 1993 (Cth) under which 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 the SIS 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 was required to trigger the release. In this case, the requisite action was a written notice under s 138(2)(c) or a written application under s 138(4)(a) of the Superannuation Act 1976 providing sufficient information to enable the trustee to determine whether benefits are payable. But no such action had been taken.

29    Thus, the Tribunal said, merely attaining preservation age did not render any preserved benefits payable to Mr Dunstan on 27 September 2010.

30    The Tribunal considered Comcare’s submission that Mr Dunstan should be taken to have received his superannuation benefits on attaining his preservation age. At this age, so the argument went, 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 said 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. The Tribunal said that Comcare’s formulation was, effectively, one of constructive receipt.

31    The Tribunal said that constructive receipt arose, 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 was not a novel conception. Constructive receipt was well understood, in tax law for example. Part 3-30 of the Income Tax Assessment Act 1997 (Cth) dealt 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 was set out in s 307.15 which applied for the purposes of determining whether a payment is a superannuation benefit; and determining whether a superannuation benefit was made to or received by the relevant person. The provision stated that a payment is treated as being made to you, or received by you, if it is made “for your benefit; or to another person or to an entity at your direction or request.” The Tribunal said that even though the purposes of the Income Tax Assessment Act 1997 were different to those of the SRC Act, it saw no good reason to apply a different and broader conception of constructive receipt for the purposes of s 21A of the SRC Act.

32    In the present case, the Tribunal said, 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 Commonwealth Superannuation Scheme to pay him a pension or a lump sum. In these circumstances, the tests of constructive receipt were not satisfied.

33    The Tribunal then applied what the Full Court had said in Archer v Comcare at [11]:

… 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 lump sum benefit. How much more may be a matter of controversy.

34    Even if Mr Dunstan’s inaction was sufficient to establish his tacit consent to continue the deferral (and the Tribunal said it made no such finding), the continuing effect of the deferral precluded a present obligation on the Commonwealth Superannuation Scheme trustee to crystalize and pay out his superannuation benefits. Without a present obligation to pay, there could be no constructive receipt.

35    The Tribunal rejected 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 was a step too far when control had not been exercised and there was no present obligation on the scheme trustee to pay the benefit.

36    The Tribunal then turned to the submission by Comcare that taking no action to request or direct payment of a superannuation benefit on reaching preservation age was sufficient to establish tacit consent to continuation of the status quo, requiring or directing the Commonwealth Superannuation Scheme trustee to make no change to an earlier election. In Comcare’s submission, the “tacit acceptance” referred to in Archer v Comcare was analogous to Mr Dunstan taking no action on reaching preservation age and, thereby, tacitly consenting to his superannuation benefits remaining, undisturbed, in the Commonwealth Superannuation Scheme. 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 asserted that this satisfied the test set out by the Full Court in Archer v Comcare. The Tribunal said this was not correct.

37    Archer v Comcare was 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, 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.

38    While the factual basis of Mr Archer’s apparent tacit acceptance, whether agreed or found, was not entirely clear, the relevant communications between Mr Archer and the scheme trustee were clearly identified in the Statement of Agreed Facts that was accepted into evidence in the anterior Tribunal proceedings. In the present case, there were no such communications or comparable circumstances.

39    The Tribunal said that if Comcare was suggesting that inaction or omission on the part of an employee was consistent with the provision of “tacit consent”, sufficient to form a direction or request under the terms of the superannuation legislation it would reject the suggestion. For consent to be given tacitly, at the minimum, it must be established that the person had knowingly, voluntarily and deliberately chosen to remain silent, or to take no action, in the knowledge that a choice was being made, with real alternatives available. While intention may be inferred by conduct, ALH Group Property Holdings Pty Limited v Chief Commissioner of State Revenue (2012) 245 CLR 338; [2012] HCA 6 at [31]–[32], the evidence must be sufficient to support the drawing of the inference. The Tribunal said 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. The Tribunal found that the evidence was not sufficient to establish that Mr Dunstan provided tacit consent to action of any kind by the trustee of the Commonwealth Superannuation Scheme 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.

40    As to the submission by Comcare that the purposes of ss 20, 21 and 21A of the SRC Act included preventing “double dipping”, the Tribunal said that 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 was 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 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 did not follow, however, that the same result was obtained in the circumstances of an incapacitated employee with a deferred superannuation benefit that was not presently payable and that had not been received by the employee.

41    The Tribunal said that in Mr Dunstan’s case, subject to the superannuation legislation, the Commonwealth was liable to fund growth in the productivity component of his deferred superannuation benefit at some point in the future, when payment of the benefit was triggered and due to Mr Dunstan – when he turned 65, or he died, or he suffered permanent invalidity, or he requested payment of benefits, whichever occurred first. And, subject to calculations under s 19, the Commonwealth was liable to pay him compensation for incapacity as a result of an injury in Commonwealth employment until he turned 65. If his deferred superannuation benefits became due and payable to him before he turned 65, his weekly compensation would be reduced.

42    As to the submission by Comcare that, ultimately, Mr Dunstan would be better off to some degree than an equivalent employee to whom superannuation benefits were due and payable under the terms of a superannuation scheme on reaching the applicable preservation age, the Tribunal said that even if Comcare was 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 others 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. The Tribunal said it did not think that the SRC Act could properly be construed to require the exercise of rights conferred on an employee by other legislation without express provision. It said it had found no such express provision in the SRC Act. The Tribunal noted that issues concerning the interoperability of the SRC Act and the Superannuation Act 1976 were squarely addressed by the legislature in s 114B, where s 114B(14) expressly disapplied the bar on the assignment and attachment of benefits under ss 118 and 119 of the Superannuation Act 1976.

43    The Tribunal said that if it was the intention of the drafters to require an incapacitated employee to draw down his or her superannuation benefits on reaching the minimum compulsory preservation age, as Comcare contended, 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 stretched meaning too far.

44    Comcare submitted 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 was a desirable object. But, the Tribunal said, consistency could not be obtained by a construction that strained the limits of meaning to an untenable degree – there was 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.

45    The Tribunal said that the language and purposes of s 21A were quite clear and there was no need to depart from a natural and grammatical reading.

46    The Tribunal said that the meaning of “receives” for which Comcare contended was very broad indeed. Comcare said that it was 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. The Tribunal said it did not accept the construction Comcare contended for. The Tribunal did not think that the meaning of the word “receives” in s 21A of the SRC Act could stretch so far as to include something that was not payable at the relevant time and that had 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.

47    The Tribunal said that in the context of s 21A, the word “receives” was cast in the present tense – it referred to a pension and a lump sum the employee receives from a superannuation scheme. It did 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.

48    The construction applied by the Full Court in Archer v Comcare was 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.

49    The Tribunal referred to Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees v Neil (1993) 41 FCR 517.

50    The Tribunal referred to Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 where 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. The Tribunal said it was 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 might have been 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 did not arise on the mere passing of that anniversary. The Tribunal said that more was required under s 138 of the Superannuation Act 1976. On this point, Agalianos’ case was distinguished.

51    The Tribunal held that Mr Dunstan did not receive superannuation benefits on reaching his preservation age. The deferral election he made meant that superannuation benefits were not payable to him on 27 September 2010 and they would not become payable to him unless and until the terms of s 138(2) of the Superannuation Act 1976 were satisfied.

52    The absence of any action on his part on reaching preservation age could not be construed to satisfy the requirements of s 138(2)(c) and (4) of the Superannuation Act 1976. On the present evidence, the Tribunal said, when Mr Dunstan reached his preservation age, nothing happened in respect of his deferred superannuation benefits. It appeared 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 would remain until he turned 65, or he died, or he became totally and permanently incapacitated, or he gave notice of a date selected for the start of payment of the deferred benefits, having ceased to be an eligible employee.

53    In these circumstances, the Tribunal said, it could not properly be said that Mr Dunstan received his superannuation benefits as a pension and a lump sum, when in fact he did not.

54    The Tribunal said that in the present circumstances of Mr Dunstan’s case, there was no reason to depart from or to extend what the Full Court said in Archer v Comcare at [13]. Wherever the outer limits of the meaning of the word “receives” may lie, the Tribunal was satisfied that the term “the employee receives” in s 21A of the SRC Act did 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, the Tribunal said, it could not accept.

The notice of appeal

55    The question of law identified in the notice of appeal is whether on a proper construction of s 21A of the SRC Act and the meaning of the word ‘receives’, “the Tribunal was precluded from making a finding that the respondent did not receive a pension and a lump sum benefit under a superannuation scheme upon turning 55 years of age and reaching his ‘preservation age’”.

56    The grounds relied on were as follows:

1.    The Tribunal misdirected itself in interpreting the meaning of ‘receives’ by applying a definition contained in section 307.15(2) of [the] Income Tax Assessment Act 1997 rather than interpreting the meaning of the word in accordance with the SRC Act.

2.    The Tribunal misdirected itself in interpreting the meaning of ‘receives’ in s 21A of the SRC Act as it applied to the Respondent by concluding that section 138 of the Superannuation Act 1976 was a substantive rather than procedural provision with respect to the release of superannuation benefits under that Act.

The submissions of the parties

57    The applicant referred to the definition of “superannuation amount” in s 4 of the SRC Act. It referred to s 137 of the Superannuation Act 1976, pursuant to which a person may make an election that Division 3 of Part IX apply. Section 136 sets out how “deferred benefits” are calculated. Section 138 provides that deferred benefits are payable after the earliest of, relevantly, the date selected by the person (at any time after his or her minimum retiring age) for the start of the payment of the deferred benefits. Section 138(4) provides, relevantly, that deferred benefits are not payable unless a written application has been made by the employee requesting payment.

58    The applicant then traced the course of reasoning of the Tribunal.

59    It submitted that the leading authority was the decision in Archer v Comcare which established that “receives” encompasses any dealing with the pension or lump sum benefit at the direction or request, or with the consent, of the employee. The wider meaning accepted in Archer v Comcare had the elements that there must be something more than the benefit being payable to the employee, that is, something more than the existence of an obligation at law or in equity to pay the benefit to the employee; and an employee receives a benefit under a superannuation scheme when either:

(a)    a benefit that is payable to the employee has been paid to the employee;

(b)    a benefit that is payable to the employee has been paid at the employee’s direction; or

(c)    the trustee has dealt with a benefit that is payable to the employee in some other way at the request or with the consent of the employee;

with the result that the obligation to pay the benefit to the incapacitated employee will have been discharged or deferred.

60    The applicant, Comcare, submitted that the Tribunal erred in law, first, in not being satisfied that the benefit was even payable to the respondent by virtue of s 138 of the Superannuation Act 1976 and, secondly, not being satisfied that even if the benefit was payable, that it had been dealt with at the request or the consent of the employee.

61    In respect of the first element, the applicant submitted that the Tribunal’s interpretation of s 138 and the release requirements of the Superannuation Industry (Supervision) Act 1993 was incorrect. This was because s 138 was a procedural mechanism by which superannuation benefits which become payable because of the operation of the Superannuation Industry (Supervision) Act 1993 were able to be processed or released by the trustee. The Superannuation Industry (Supervision) Act 1993 provides that preserved benefits are payable once a person reaches preservation age and has stopped working. All that s 138(2)(c) did, the applicant submitted, was trigger the processing of the payable benefit rather than making the benefit “payable”. Interpreting s 138(2)(c) in this manner meant that the Tribunal also incorrectly distinguished Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390. The applicant submitted that: “Assuming that s.138 is only a procedural step is analogous to a compensation claim being payable at the moment of injury, but is not able to be paid or processed until the procedural requirements of making a claim are completed.”

62    In respect of the second element, the applicant submitted that the Tribunal misdirected itself in interpreting the meaning of “receives” by interpreting the ordinary meaning of that word by applying a statutory test contained in a different piece of legislation, that is, s 307.15 of the Income Tax Assessment Act 1997. The applicant submitted that the respondent’s decision to preserve his benefit upon cessation of employment was sufficient to amount to tacit consent to retain the benefit in the scheme even after it became payable upon reaching preservation age. That is, it was submitted, in electing to preserve, the respondent had provided tacit consent to action of the trustee to retain his benefit even after it became payable until he elected otherwise. Applying Archer, the trustee in some way by continuing to keep the payable benefit preserved had dealt with the benefit at the request (because of the initial preservation election) and with the consent (by not making a further request after age 55) of the employee so that the obligation to pay the benefit to the respondent will have been deferred.

63    The respondent submitted that the appeal must fail for several reasons. First, the Tribunal interpreted the meaning of the word “receives” in accordance with the SRC Act and ground one was therefore not made out. Secondly, the Tribunal properly interpreted the provisions of s 138 of the SRC Act and it therefore followed that the second ground was not made out. Thirdly, the respondent submitted, the Tribunal applied the correct interpretation of the word “receives” for the purposes of the SRC Act.

64    As to the first ground, the respondent submitted that the Tribunal was right to conclude that no broader conception of constructive receipt could apply for the purposes of the SRC Act than for s 307.15 of the Income Tax Assessment Act 1997. The decision in Archer v Comcare was entirely consistent with such reasoning, the respondent submitted, and indeed precluded the contrary.

65    As to the second ground, having set out the terms of s 138(2)(c) of the Superannuation Act 1976, the respondent submitted that the terms of the section were unambiguous and explicitly provided that deferred benefits became payable on the day after one of the preconditions contained in the subsection had been met. The respondent submitted that the applicant was inviting the Court to rule that the word “payable” did not mean “payable”. Moreover, the respondent submitted, there was nothing in the terms of the section to suggest that it was merely procedural. Section 138 was drafted to effect substantive rights of a person entitled to a benefit and substantive obligations on the CSC. The respondent submitted that the applicant was inviting the Court to assume the provision bore a purpose not apparent from the legislation. He referred to Certain Lloyd’s Underwriters v Cross (2012) 248 CLR 378; [2012] HCA 56.

66    As to the meaning of “receives” the respondent referred to Archer v Comcare at [11] and [13] and referred to decisions which had cited or applied Archer, being Boothe v Commonwealth of Australia [2002] FCA 1101 and a number of Tribunal decisions including Re D'Angelo and Secretary, Department of Family and Community Services (2003) 76 ALD 726; [2003] AATA 712. The respondent submitted that the meaning of the word “receives” in Archer v Comcare was the correct approach. It had been applied consistently by the Federal Court and by the Tribunal. The word was not a term of craft or jargon. The limits of the concept were well understood and conformed to the plain English meaning of the word. The respondent also submitted that the meaning the applicant sought to impose was entirely unnatural and extraordinarily vague. If a person could be found to have received a benefit in circumstances where they would be required to take positive steps in order to access it, there was no natural point at which to draw the line. For example, it could not be the case that a tradesman “receives” payment for a task by reason only that it was open to him or her to undertake the task and issue an invoice. An interpretation that allowed for such an outcome would be perverse.

Consideration

67    We have set out the reasons of the Tribunal at greater length than usual so that the submissions of the parties may be better understood.

68    It is to be noted that the applicant Comcare accepted the correctness of Archer v Comcare. This must include what the Full Court said at [11], as follows:

The meaning to be given to the word “receives” must take account of the context in which it is used. That context is a group of statutory provisions which distinguishes between, on the one hand, a benefit under a superannuation scheme that is “payable” to an incapacitated employee and, on the other, a benefit that an incapacitated employee “receives”. This context, as well as the meaning of the words themselves, indicates that 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 lump sum benefit. How much more may be a matter of controversy.

69    As to the first ground of appeal, that the Tribunal misdirected itself in interpreting the meaning of “receives” by applying a definition contained in s 307.15(2) of the Income Tax Assessment Act 1997 rather than interpreting the meaning of the word in accordance with the SRC Act, we see no substance in it.

70    The Tribunal did no more than consider s 307.15(2) of the Income Tax Assessment Act 1997 as an analogy in the context of Comcare’s submission that constructive receipt was sufficient. The Tribunal was well aware, and said, that the purposes of the Income Tax Assessment Act 1997 were different to those of the SRC Act. The Tribunal then went on to apply what the Full Court had said in Archer v Comcare at [11]. The Tribunal’s reasoning was that without a present obligation to pay there could be no constructive receipt.

71    It follows that, contrary to the applicant’s contention, the Tribunal did not “apply” the definition contained in s 307.15(2) of the Income Tax Assessment Act 1997 in contradistinction to interpreting the meaning of the word “receives” in accordance with the SRC Act.

72    We reject ground 1.

73    Ground 2 is that the Tribunal misdirected itself in interpreting the meaning of “receives” in s 21A of the SRC Act by concluding that s 138 of the Superannuation Act 1976 was a substantive rather than a procedural provision with respect to the release of superannuation benefits under that Act.

74    Since the Tribunal did not say in its reasons that s 138 was a substantive provision, this ground is obscure.

75    In other contexts it has been said that the distinction between substance and procedure is elusive and we do not think the distinction assists in the present context. Contrary to the submission made by Comcare, the distinction does not make it an error on the part of the Tribunal to have distinguished Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 which, in our opinion, concerned a very different statutory context and is of no present assistance.

76    It is to be recalled that not only does s 138(4) of the Superannuation Act 1976 provide that 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 but this subsection has to be read, relevantly, with s 138(2)(c) which provides that deferred benefits that are applicable in respect of a person become payable on the day immediately after the earliest of, relevantly, the date the person selects for the start of the payment of the deferred benefits. Taken together, the provisions of s 138 are not appropriately described as procedural.

77    Comcare does not identify any provision in the Superannuation Industry (Supervision) Act 1993 which qualifies s 138(4) of the Superannuation Act 1976 and operates to make ‘payable’ to Mr Dunstan the deferred benefits which that provision states to be ‘not payable’ to him unless, relevantly, he makes a written application and provides any information necessary to determine whether the benefits of which he seeks early release are payable consequent upon a s 138(2)(c) selection. For that reason there was not a benefit payable to Mr Dunstan unless and until he reached the age of 65, died, became permanently incapacitated or made a s 138(2)(c) selection and made a written application for early release of his deferred benefits. It was not necessary for the Tribunal to go beyond that point.

78    That the deferred benefits were not payable under the Superannuation Act 1976 was one of the considerations taken into account by the Tribunal in deciding whether or not, for the purposes of s 21A of the SRC Act, the respondent was a person who “receives a pension and a lump sum benefit under a superannuation scheme”.

79    Unlike Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397 per Dixon CJ, the word “receives” is not to be taken on the footing that the adult worker is to be the recipient of compensation and the draftsman finds it convenient so to describe him when it becomes necessary to speak of him in order to make the point that the injury must be before and the compensation after the amending Act. See also per Kitto J at 404.

80    The submission put to the Tribunal on behalf of Comcare was that the trustee had dealt with the benefit at the request or with the consent of the employee. The submission was that upon turning 55, the respondent was able to notify CSC pursuant to s 138(4) that he wished to access his deferred benefit and that no impediment to the release of the respondent’s deferred benefit existed other than the absence of that notice. Accordingly, so the submission went, at any time after age 55, by not notifying the CSC of an application for the payment of his deferred benefits, the respondent was taken to have received a lump sum benefit. At the time of reaching preservation age and the deferred benefit becoming payable, by not notifying CSC that the benefit was to be released, Comcare submitted that the respondent had continued to consent to CSC deferring the obligation to release the superannuation benefits.

81    On analysis, in our opinion these submissions by Comcare amount to a legal construct whereby the respondent “was taken to” have received a lump sum benefit and are concerned more with the respondent’s right to do a certain thing rather than with the actual doing of it. Section 21A of the SRC Act is concerned with what the person receives rather than with rights to take steps in order to receive.

82    In our opinion there was no error in the conclusion of the Tribunal that, on the facts, the trustee had not dealt with the benefit at the request and with the consent of the respondent.

83    We reject ground 2. We do not find it necessary to rely on s 114B of the SRC Act for this purpose – see [25] above and the reasons of the Tribunal at [35]–[38].

Conclusion

84    For these reasons the appeal should be dismissed with costs.

Associate:

Dated:    13 March 2014