FEDERAL COURT OF AUSTRALIA

Archer v Comcare [2000] FCA 1296

WORKERS’ COMPENSATION – entitlement to compensation under Safety, Rehabilitation and Compensation Act 1988 (Cth) – entitlement reduced where employee ‘receives a lump sum benefit under a superannuation scheme’ – in what circumstances does employee ‘receive a benefit’

WORDS AND PHRASES – “receives”

Safety, Rehabilitation and Compensation Act 1988 (Cth)  ss 19, 20, 21

Re Mirkovic v Telstra Corporation Ltd (1993) 18 AAR 492  not followed

Page v Meek (1862) 32 LJQB(NS) 4  applied

LAWRENCE ARCHER v COMCARE

V 770 of 1999

JUDGES:       BURCHETT, GOLDBERG & FINKELSTEIN JJ

DATE:            14 SEPTEMBER 2000

PLACE:          MELBOURNE

On Appeal from the Administrative Appeals Tribunal

THE COURT ORDERS THAT:

1.      The appeal be dismissed.

2.      The applicant pay the respondent’s costs of the appeal.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

On Appeal from the Administrative Appeals Tribunal

REASONS FOR JUDGMENT

THE COURT:

1                     Mr Archer was employed by Qantas Airways Limited.  In 1995 he suffered an injury in the course of his employment as a result of which he became incapacitated for work.  This entitled Mr Archer to receive weekly compensation under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (the Compensation Act).

2                     In July 1997 Qantas terminated the services of Mr Archer because of his medical condition.  At the time Mr Archer was a member of the Qantas Airways Limited Staff Superannuation Plan, a superannuation scheme established for the benefit of employees of Qantas.  Members of the scheme are entitled to receive benefits in a variety of circumstances, one being on the termination of the member’s employment. 

3                     Having regard to the reason for his termination, Mr Archer became entitled to a “withdrawal benefit” under the scheme.  The amount of the benefit was $42,440.27.  The benefit included a component of $16,681.64 which was not payable to Mr Archer but was required to be preserved by roll-over until the attainment of a particular age or the occurrence of a specified event:  see s 31(2)(g) of the Superannuation Industry (Supervision) Act 1993 (Cth), subdiv 6.1.2 of the Superannuation Industry (Supervision) Regulations 1994 (Cth).  This component is referred to as the “preservable amount”.

4                     The manner in which the trustee of the superannuation scheme is obliged to deal with a withdrawal benefit to which a member is entitled is as follows.  Save for three circumstances, the trustee must pay the benefit to the member “as soon as practical after all necessary procedures and documentation have been completed”.  The first circumstance in which the benefit is not to be paid to the member is when the member requests the trustee to hold the benefit in the scheme for up to 90 days.  Unless the second or third circumstance arises, the trustee must pay the benefit to the member at the expiration of 90 days.  The second circumstance is if the member instructs the trustee to pay all or part of the benefit to a nominated approved deposit fund or towards the purchase of an eligible annuity or to another superannuation fund that complies with certain statutory requirements.  The third circumstance is if a preservable amount forms part of the benefit.  In that event if the trustee is instructed to do so, the preservable amount must be either transferred to another superannuation fund or approved deposit fund, which is required to preserve such amount, or the amount can be applied toward the purchase of a deferred annuity which cannot be surrendered or assigned except in limited circumstances.  If no such instruction is given the preservable amount may be retained by the trustee or it may be transferred to another roll-over fund. 

5                     The entitlement to a benefit under the superannuation scheme had the potential to affect Mr Archer’s entitlement to weekly compensation under the Compensation Act.  In an attempt to avoid this result, Mr Archer requested the trustee to preserve all his benefits in the scheme.  In particular, he instructed the trustee not to make any payment to him of the withdrawal benefit. 

6                     The trustee was content not to pay the withdrawal benefit directly to Mr Archer.  However, it advised Mr Archer that unless he gave instructions how the benefit was to be dealt with, the trustee would transfer it to the superannuation plan’s approved eligible roll-over fund, of which AMP Limited was the trustee.  In fact, in the absence of instructions from Mr Archer, the trustee was only entitled to pay the preservable amount to the trustee of a roll-over fund and the balance to Mr Archer.  This notwithstanding, because Mr Archer did not provide instructions as to the disposition of his withdrawal benefit, the trustee paid the whole of the benefit to AMP, to be held on behalf of Mr Archer. 

7                     Ordinarily, the payment, without instructions, of the non-preserved portion of the withdrawal benefit to AMP would not discharge the trustee’s obligation to pay that amount to Mr Archer and the amount would still be payable to him.  However, 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.  It follows, and the contrary was not argued, that the trustee’s liability to pay that  portion to Mr Archer has been fully discharged. 

8                     Division 3 of Part II of the Compensation Act prescribes the rate of compensation that is payable to an incapacitated employee.  The principal sections in that Division are ss 19, 20, 21 and 21A.  In each section there is a formula by reference to which the amount of compensation is to be calculated.  An incapacitated employee who continues in his employment is entitled to weekly compensation under s 19.  The amount of compensation payable is a percentage of the employee’s normal weekly earnings.  If a pension under a superannuation scheme is “payable” to the incapacitated employee, the amount of compensation must be reduced:  see s 19(3A).  The word “payable” means due and immediately payable and is not a reference to a debt which may be debitum in praesenti solvendum in futuro.  The words of s 19 show that “payable” means “presently payable”.  Section 20 applies to an incapacitated employee who is no longer in employment and “receives a pension under a superannuation scheme”.  The amount of compensation to which this employee is entitled is reduced by reference to the pension received by the employee.  Section 21 applies to an incapacitated employee who is no longer in employment and “receives a lump sum benefit under a superannuation scheme”.  The compensation that is payable to this employee is reduced by reference to the lump sum benefit. Finally, s 21A is concerned with an incapacitated employee who is no longer in employment and who receives both a pension, and a lump sum benefit, under a superannuation scheme.  Both benefits must be brought to account for the purpose of calculating the weekly compensation that is payable to the employee. 

9                     Comcare, the statutory corporation charged with the responsibility of administering the Compensation Act, decided that upon the termination of his employment Mr Archer had “receive[d] a lump sum benefit under a superannuation scheme” within the meaning of s 21 and reduced his weekly compensation accordingly.  The Administrative Appeals Tribunal affirmed that decision.  Its reasons for doing so are not altogether clear.  The Tribunal said:

“23.     I accept that the language of s 21 ‘receives a lump sum benefit under a superannuation scheme’ is to be given its ordinary and natural meaning, although the phrase must be interpreted as used in its context assisted but not necessarily bound by one of a variety of dictionary definitions…

…

27.       That the Withdrawal Benefit is a lump sum benefit is, I think, without any doubt.  It was a single, once only benefit, in contrast to a pension, by nature of periodical payment as referred to in s 20 of the Act.

…

29.       [I]t seems to me that following the termination of his employment, a component of the lump sum was ‘received’ by the applicant as that word is ordinarily understood.  The non preserved component of the lump sum falls into a different category to the preserved amount component.  It was open to the applicant to take the non preserved component in hand if he had so instructed, or to have it rolled over for the income tax advantages, that were available if he adopted the latter course.  In context I do not think ‘receives’ should be limited to something taken in hand.  Further, the fact that the trustee of the Plan declined to allow the Withdrawal Benefit to remain in the Plan after the applicant’s employment was terminated, does not in my view detract from the notion of receiving a lump sum benefit.  The lump sum was not and could not be retained (in the Plan) but the non preserved component was available to the applicant.  He had access to it to use for his own purposes including rollover.  It was I think received by the applicant within the terms of s 21.”

10                  Mr Archer brings this appeal from the decision of the Tribunal on a question of law:  see s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth).  The question of law that arises is the meaning of the word “receives” in the phrase “receives a lump sum benefit under a superannuation scheme” in s 21.  The interpretation of s 21 involves a question of law. 

11                  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.

12                  In some cases, the Tribunal has given a very wide meaning to the phrase “receives a lump sum benefit”.  For example, in Re Mirkovic v Telstra Corporation Ltd (1993) 18 AAR 492 the Tribunal held that an incapacitated employee received a lump sum benefit when the employee “had an unequivocal power of disposition over it”.  To a large extent, there is a bar on the assignment of superannuation benefits.  The trustee of a regulated superannuation fund must not recognise an assignment of a beneficial interest in a fund, except in very limited circumstances (for example to permit the member to charge his interest as security for the advance of money to purchase a home or for an advance to meet financial hardship):  see ss 31(1) and 32(1) of the Superannuation Industry (Supervision) Act 1993 (Cth), regs 13.12 and 13.13 of the Superannuation Industry (Supervision) Regulations 1994 (Cth) and rule 2.5 of the superannuation plan’s rules.  In these circumstances, it is difficult to understand what is meant by an “unequivocal power of disposition” over a benefit that is payable to a member.  The word “unequivocal” means “clear” or “not ambiguous”.  It is unlikely that the Tribunal had these meanings in mind.  It is possible that the Tribunal was intending to refer to a member who had an “absolute power of disposition” over a benefit payable from a fund.  But as has just been pointed out, a member of a superannuation fund will never possess an absolute ability to part with his interest.  If the Tribunal had in mind the situation where a benefit was merely payable to a member, then for the reasons that we have already given, it could not be said that the benefit has been received.  If the expression “an unequivocal power of disposition” was intended to have some other meaning, the meaning is not apparent.

13                  To summarise, 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. 

14                  It is not necessary in this case to determine further the outer limits of the meaning of the word “receives”.  Whatever be its meaning, there can be no doubt that Mr Archer did receive a lump sum benefit under his superannuation scheme.  Mr Archer received a benefit when the trustee paid the withdrawal benefit into the hands of AMP because by his conduct Mr Archer accepted that the payment was to his account.  At that point the trustee was no longer obliged to pay the non-preservable part of the benefit to Mr Archer, and it had discharged its obligations as regards the preservable amount.  The trustee’s obligations were replaced by obligations undertaken by AMP.  At law the payment by the trustee to AMP of the non-preservable amount of the withdrawal benefit, being an amount that was payable to or at the direction of Mr Archer either express or implied, was a payment to Mr Archer:  Page v Meek (1862) 32 LJQB(NS) 4 at 6. As we have said, it is not necessary for the purposes of this appeal to decide whether, and in what other circumstances it can be said that, a pension or lump sum benefit under a superannuation scheme is received by an employee after the benefit has become payable but before it has been paid to, or for the benefit of, an employee.  The resolution of that question can await a case where it directly arises.

15                  This appeal must be dismissed with costs.

Associate:

Dated:              14 September 2000