FEDERAL COURT OF AUSTRALIA

Ascic v Secretary, Department of Social Services [2016] FCA 1122

ORDERS

THE COURT ORDERS THAT:

1.    The appeal of each of the first applicant and the second applicant is dismissed.

2.    The applicants are to pay the costs of the respondent.

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

REASONS FOR JUDGMENT

SIOPIS J:

1    The second applicant, Mr Marko Ascic, is a former police officer of the Australian Federal Police. The first applicant, Mrs Ana Ascic, is the wife of the second applicant. Mr Marko Ascic was injured at work on 11 December 1987.

2    At that time, the Compensation (Commonwealth Employees) Act 1971 (Cth) (the 1971 Act) was in force and applied in relation to work place injuries.

3    On 26 April 1988, Mr Ascic completed a Compensation Claim (Injury or Disease) Form in respect of his work related injury.

4    On 25 August 1988, a delegate of the Commissioner for Employees’ Compensation wrote to Mr Ascic and the Australian Federal Police advising that Mr Ascic’s compensation claim was approved on the basis of depression and acute paranoid reaction to perceived stress in his employment. The delegate served a copy of the determination to that effect on the Regional Executive Officer of the Australian Federal Police, and advised that officer of Mr Ascic’s weekly compensation rate. As a consequence of that claim and determination, Mr Ascic has been in receipt of payments since that date. Mr Ascic retired from the Australian Federal Police in 1988 on the grounds of mental incapacity, but remains in receipt of weekly payments under the 1971 Act. I refer to these payments as the Comcare payments.

5    The 1971 Act was replaced by the Safety, Rehabilitation and Compensation Act 1988 (Cth) (formerly named the Commonwealth Employees’ Compensation and Rehabilitation Act 1988 (Cth)) (the SRC Act) from 1 December 1988.

6    On 20 August 2013, Mr Ascic completed a claim under the Social Security Act 1991 (Cth) for a carer payment for the care he provides to Mrs Ascic. Also on that date, Mrs Ascic herself completed a claim under the Social Security Act for a disability support pension.

7    On 23 August 2013, Mr Ascic completed an income and assets form for himself and his wife which, inter alia, disclosed the receipt of the Comcare payments.

8    On 1 May 2014, Centrelink advised Mrs Ascic that her disability support pension claim was rejected because the combined annual income of herself and Mr Ascic was above “the allowable limit”. Centrelink advised that the information used to assess Mrs Ascic’s claim revealed combined assets of $288,424.00 and a combined annual income of $73,419.72.

9    On 5 May 2014, Centrelink advised Mr Ascic that his claim for a carer payment was rejected because the combined annual income of himself and Mrs Ascic was above “the allowable limit”.

10    On 4 August 2014, an authorised review officer of Centrelink affirmed the decision in relation to Mr Ascic’s claim for a carer payment and, on 8 August 2014, an authorised review officer of Centrelink affirmed the decision in relation to Mrs Ascic’s claim for a disability support pension.

11    On 14 August 2014, Mr and Mrs Ascic lodged an application for review by the Social Security Appeals Tribunal (the SSAT) of the authorised review officer’s decision in relation to each of the two decisions referred to in [10] above. On 21 November 2014, the SSAT affirmed the two decisions under review.

12    On 19 December 2014, Mr and Mrs Ascic each lodged an application for review of the relevant SSAT decision at the Administrative Appeals Tribunal (the Tribunal).

statutory provisions

13    The relevant statutory provisions in the Social Security Act are as follows:

Section 17 – Compensation recovery definitions

(1)    In this Act, unless the contrary intention appears:

“compensation” has the meaning given by subsection (2).

“compensation affected payment” means:

…

(a)    a disability support pension; or

…

(f)    a carer payment;…

…

Compensation

(2)    Subject to subsection (2B), for the purposes of this Act, compensation means:

(a)    a payment of damages; or

(b)    a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

(c)    a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

(d)    any other compensation or damages payment;

(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

(2A)    Paragraph (2)(d) does not apply to a compensation payment if:

(a)    the recipient has made contributions (for example, by way of insurance premiums) towards the payment; and

(b)    either:

(i)    the agreement under which the contributions are made does not provide for the amounts that would otherwise be payable under the agreement being reduced or not payable because the recipient is eligible for or receives payments under this Act that are compensation affected payments; or

(ii)    the agreement does so provide but the compensation payment has been calculated without reference to the provision.

…

Receives compensation

(5)    A person receives compensation whether he or she receives it directly or whether another person receives it, on behalf of, or at the direction of the first person.

Section 1064 – Rate of age, disability support, wife pensions and carer payments (people who are not blind)

…

Module E -- Ordinary income test

Effect of income on maximum payment rate

…

1064-E2 - Ordinary incomes of members of couples

If a person is a member of a couple, add the couple’s ordinary incomes (on a yearly basis) and divide by 2 to work out the amount of the person's ordinary income for the purposes of this Module.

Section 1173 – Effect of periodic compensation payments on rate of person’s compensation affected payment

(1)    If:

(a)    a person receives periodic compensation payments; and

(b)    the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and

(c)    the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;

the rate of the person’s compensation affected payment in relation to that day or those days is reduced in accordance with subsection (2).

(2)    The person’s daily rate of compensation affected payment is reduced by the amount of the person’s daily rate of periodic compensation.

(3)    The reference in subsection (2) to a daily rate of periodic compensation is a reference to the amount worked out by dividing the total amount of the periodic compensation payments referred to in paragraph (1)(a) by the number of days in the periodic payments period.

…

Section 1174 – Effect of periodic compensation payments on rate of partner’s compensation affected payment

(1)    If:

(a)    a person receives periodic compensation payments; and

(b)    the person is a member of a couple; and

(c)    the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and

(d)    the person is qualified for a compensation affected payment in relation to a day or days in the periodic payments period but, solely because of the operation of this Part, does not, or would not, receive the payment; and

(e)    the person’s partner receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;

the amount (if any) by which the daily rate of periodic compensation payable to the person exceeds the daily rate of the compensation affected payment for which the person is qualified in relation to a day or days in the periodic payments period (the excess amount) is to be treated as ordinary income of the person’s partner for the purpose of the calculation of the amount of the compensation affected payment referred to in paragraph (e).

(2)    The reference in subsection (1) to a daily rate of periodic compensation is a reference to the amount worked out by dividing the total amount of the periodic compensation payments referred to in paragraph (1)(a) by the number of days in the periodic payments period.

…

Section 1184K - Secretary may disregard some payments

(1)    For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

(a)    not having been made; or

(b)    not liable to be made;

if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

the tribunal’s decision

14    On 27 August 2015, the Tribunal dismissed each of the applications for review, and affirmed the decision of the SSAT.

15    The Tribunal held that, pursuant to s 17 of the Social Security Act, a carer payment and a disability support pension were each compensation affected payments. The Tribunal also held, pursuant to s 17(2) and s 17(2A), that the Comcare payment Mr Ascic receives in relation to an injury he suffered in 1987 is compensation as defined in that Act. This circumstance, therefore, affected Mr and Mrs Ascics’ entitlement to a carer payment and a disability support pension.

16    The Tribunal then considered Mr and Mrs Ascics’ personal circumstances, and the impact of Mr Ascic’s Comcare payments falling within the definition of “compensation”, and examined whether the Comcare payments should be disregarded pursuant to s 1184K(1) of the Social Security Act on the grounds that their situation was a special circumstance warranting the use of that discretionary power. The Tribunal concluded that, while the characterisation of the Comcare payments as compensation would negatively impact Mr and Mrs Ascics’ application for support, this did not give rise to special circumstances which warranted disregarding the Comcare payments under s 1184K(1), as this was a situation not uncommon to many who seek support.

17    The consequence, said the Tribunal, was that, as a result of s 1173(1) and s 1173(2) of the Social Security Act, Mr Ascic’s entitlement to a carer payment was reduced by the amount of his existing Comcare compensation payments, with the effect being that he was not entitled to a carer payment because he was receiving compensation which was more than the maximum allowable carer payment.

18    Further, in respect of Mrs Ascic’s claim for a disability support pension, s 1174(1) of the Social Security Act had the effect of attributing a part of Mr Ascic’s Comcare payments to Mrs Ascic’s annual income. The consequence was that Mrs Ascic’s annual income exceeded the maximum payment rate for a disability support pension, and she was, therefore, ineligible for a disability support pension.

appeal on question of law in this court

19    On 29 September 2015, Mr and Mrs Ascic commenced an appeal on a question of law under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) from the orders of the Tribunal. Mr and Mrs Ascic identified eight questions of law in their originating application.

20    The respondent objected that none of the eight purported questions of law, which were contained in the applicants’ notice of appeal, disclosed any identifiable question of law. The respondent’s submissions should be accepted.

21    However, the Court has a power to formulate questions of law in the interests of justice if the underlying complaints made by an applicant, particularly where the applicant is self-represented, could be formulated as questions of law (Haritos v Commissioner of Taxation (2015) 233 FCR 315 at [103]-[104]).

22    In this case, a perusal of the decision of the Tribunal and the parties’ submissions disclosed the gravamen of Mr and Mrs Ascics’ complaints.

23    In brief, I understood the applicants’ main contention to be that the Tribunal had erred in characterising the Comcare payments which Mr Ascic was receiving pursuant to his 1988 claim, as compensation within the meaning of s 17(2) of the Social Security Act.

24    The applicants’ argument was that the Comcare payments which Mr Ascic has received since 1988 were properly to be characterised as benefits payable under a determination made under s 103 of the 1971 Act, and not as compensation as defined in s 17(2) of the Social Security Act; and that characterisation of those Comcare payments had been preserved by the transitional provisions in Pt X of the SRC Act. Therefore, said Mr Ascic, the Comcare payments did not fall to be deducted from, or otherwise affect, the “compensation affected” carer payment or the disability support pension pursuant to s 1173 and s 1174 of the Social Security Act.

25    Mr Ascic went on to contend, alternatively, that the proper characterisation of the Comcare payments he has received since 1988 was not compensation, but as ordinary income under s 1064-F5 of the Social Security Act.

26    At the commencement of the hearing, I advised Mr Ascic, who appeared on his own behalf and on behalf of his wife, that the contentions that he had raised in his notice of appeal, purportedly as questions of law, did not disclose identifiable questions of law. However, I said, that on the basis of the matters which were in contention, the following three questions of law or mixed questions of fact and law, could be formulated; and that the Court would proceed on the basis that the applicants’ appeal was on these questions of law.

1.    Whether the payments made to Mr Ascic, pursuant to the 1988 claim were properly to be characterised on the evidence as benefits under a determination made pursuant to one of the statutory sources referred to in s 103(1) of the 1971 Act, or, instead, as compensation under the 1971 Act.

2.    Whether the transitional provisions in Pt X of the SRC Act, had the effect of preserving the characterisation of the Comcare payments made to Mr Ascic pursuant to his 1988 claim.

3.    Whether, alternatively, the proper characterisation of Mr Ascic’s Comcare payments, at the time of the consideration of Mr Ascic’s claim for a carer payment and Mrs Ascic’s claim for a disability support pension, was as ordinary income referred to in s 1064-F5 of the Social Security Act, rather than compensation under s 17(2) of the Social Security Act.

THE FIRST QUESTION OF LAW

27    I deal, first, with the question as to the characterisation of the claim made by Mr Ascic in 1988 and the determination made in respect of that claim.

28    Before this Court, Mr Ascic referred to, and relied on, evidence that was before the Tribunal, in particular, the claim form, which he submitted when he made his 1988 claim. However, Mr Ascic also applied to adduce further evidence which was not before the Tribunal, namely, the letters sent to each of Mr Ascic and the Australian Federal Police from a delegate of the Commissioner for Employees’ Compensation (the Commissioner), dated 25 August 1988, attaching the determination made on 25 July 1988 by that delegate (the delegate’s determination) in respect of Mr Ascic’s 1988 claim. Mr Ascic said, from the Bar table, that, notwithstanding his attempts to obtain those documents from Comcare and the Australian Federal Police, he had been unsuccessful in his attempts to do so by the time of the Tribunal hearing. Mr Ascic has since obtained the documents.

29    The documents are, in my view, relevant to the determination of this issue, and the respondent did not object to them being received into evidence. Accordingly, I permitted the documents to be adduced into evidence.

30    The relevant section is s 103 of the 1971 Act:

(1)    In this section, “determination” means a determination, award or order by which provision is made for or in relation to the grant of any benefits to or in relation to employees or their dependants in respect of injury or disease causing death or incapacity, or in respect of the loss of, or damage to, property, in circumstances connected with the employment of those employees, being –

a)    a determination made under the Public Service Arbitration Act 1920-1969;

b)    an award or order made under the Conciliation and Arbitration Act 1904-1970; or

c)    a determination, award or order made by a prescribed person, tribunal or body under a law of the Commonwealth or of a Territory.

(2)    A person who would, but for this section, be entitled to compensation under this Act and to benefits under a determination in respect of the same injury, or in respect of the same loss of, or damage to, property, is not entitled to receive both compensation under this Act and benefits under the determination but shall elect whether to receive the compensation or the benefits.

31    An important element of Mr Ascic’s argument that he applied for and was awarded benefits under s 103(1) of the 1971 Act, and not compensation, is the fact that at para 14 of the claim form that he completed on 28 April 1988, the following words appear:

I certify that

•    I am fully aware of my rights and obligations (as outlined at the front of this form) in this matter and elect to claim benefits under the Compensation (Commonwealth Government Employees) Act 1971.

32    Mr Ascic contended that the Tribunal did not have regard to that part of his claim form. Mr Ascic contended that the use of the word “benefits” in para 14 of the claim form meant that his claim was to be construed as having been made by reference to s 103(1) of the 1971 Act. Accordingly, said Mr Ascic, the subsequent determination was for the payment of benefits pursuant to that section, and not for the payment of compensation under the 1971 Act.

33    The Tribunal found that there was no evidence to support Mr Ascic’s contention that the determination of his 1988 claim was a determination of “benefits” of the nature referred to in s 103(1) of the 1971 Act. However, said Mr Ascic, the Tribunal did not have the benefit of the delegate’s determination.

34    In my view, it is apparent that s 103 of the 1971 Act contemplates that an applicant may potentially receive “benefits” for a work related injury under a determination made by reference to one or more of the statutory sources referred to in s 103(1)(a), (b) or (c); or an employee may receive compensation for such an injury under the other provisions of the 1971 Act pursuant to a determination made by the Commissioner. Section 103(2) of the 1971 Act provides that an employee cannot, in respect of the same injury, receive compensation under that Act as well as under a statutory determination from a source referred to in s 103(1).

35    I have had regard to para 14 of Mr Ascic’s claim form and the delegate’s determination. In my view, contrary to Mr Ascic’s contention, the delegate’s determination shows that the payments awarded to Mr Ascic in 1988 were compensation payments made under s 45(2) of the 1971 Act; and so was not a payment of benefits made pursuant to a determination by one of the statutory bodies or persons referred to in s 103(1) of that Act.

36    First, the delegate’s determination expressly states that the payment to Mr Ascic is made under s 45(2) of the 1971 Act. That section provides for the payment of compensation under the 1971 Act where an employee is totally incapacitated for work.

37    Secondly, the determination is signed by a delegate of the Commissioner and not a statutory body or a person referred to in s 103(1) of the 1971 Act.

38    Thirdly, the letter of 25 August 1988, serving the determination on the Australian Federal Police refers to the service of the determination under s 61(1)(a) of the 1971 Act. That section only applies where a determination has been made by the Commissioner for compensation under the 1971 Act.

39    Accordingly, in my view, on the proper construction of s 103 of the 1971 Act, and on the application of that section to the evidence, I am of the view that the determination for compensation by the delegate in respect of Mr Ascic’s 1988 claim, was made under the 1971 Act and is, therefore, to be characterised as compensation under that Act.

the second question of law

40    The relevant provisions for this question are the transitional provisions to be found in Pt X of the SRC Act. The question is whether those provisions preserved the characterisation of the Comcare payments which Mr Ascic was receiving as a consequence of his 1988 claim.

41    As mentioned, Mr Ascic’s contention was that he had never applied for or received compensation but that he had been awarded “benefits” under s 103(1) of the 1971 Act, and the relevant transitional provisions in the SRC Act did not effect a transformation of the characterisation of the payments from “benefits” to “compensation” for the purposes of s 17(2) of the Social Security Act. Therefore, said Mr Ascic, the Tribunal had erred in the characterisation of his payments as compensation, rather than benefits.

42    Mr Ascic relied particularly on s 126(4) of Pt X of the SRC Act. This provides as follows:

An election made by an employee under section 103 of the 1971 Act shall:

(a)    in the case of an election to receive benefits under a determination referred to in that section-be taken to be an election under section 52 of this Act to receive benefits under that determination; or

(b)    in the case of an election to receive compensation under that Act-be taken to be an election made under section 52 of this Act to receive compensation under this Act.

43    In my view, Mr Ascic is correct in his argument in respect of the construction of the relevant transitional provisions in the SRC Act. The sections do not contemplate a recharacterisation of the nature of the Comcare payments of which he was in receipt under the 1971 Act. To the contrary, they provide for the continuation of the entitlement to, and liability on the part of the Commonwealth in respect of the compensatory payments in existence at the commencement of the SRC Act. (See s 125(1), s 126(2) and s 128 of the SRC Act.)

44    However, the Tribunal did not find that the characterisation of the payments had changed in the manner contended for by Mr Ascic. Rather, as I have said, the Tribunal was of the view that the payments which were initially received by Mr Ascic pursuant to the 1971 Act were properly to be characterised as compensation under that Act, and not as the payment of benefits pursuant to a determination by reference to s 103(1) of that Act.

45    Therefore, even though Mr Ascic’s argument is correct in relation to the construction of the relevant transitional provisions of the SRC Act, this does not assist his case.

the third questioN of law

46    The third question of law is whether the Comcare payments received by Mr Ascic under the 1971 Act were properly characterised as “ordinary income” under s 1064-F5 of the Social Security Act.

47    Section 1064-F5 provides as follows:

If:

(a)    a person’s employment has been terminated; and

(b)    the person receives a termination payment (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise);

the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.

48    Section 1064-F14 of the Social Security Act relevantly provides:

termination payment includes:

(a)    a redundancy payment; and

(b)    a leave payment relating to a person’s employment that has been terminated; and

(c)    any other payment that is connected with the termination of a person’s employment.

49    As I understand it, this is an alternative argument by Mr Ascic, namely, that if the Comcare payments are not “benefits”, then they are not to be classified as compensation, but are to be classified as ordinary income under s 1064-F5 of the Social Security Act.

50    Section 1064-F5 deals with the characterisation of payments made on the termination of employment. The Comcare payments made to Mr Ascic under the 1971 Act were made by reason of his injury, and not by reason of the termination of his employment. Accordingly, the Comcare payments are not properly to be characterised as termination payments. Section 1064-F5, therefore, has no relevance to each of the applicant’s claim for a carer payment and disability support pension respectively.

51    The consequence is that the appeal of each of the first applicant and the second applicant is dismissed.

Associate:

Dated:    14 September 2016