An applicant has been unsuccessful before the Federal Court in a matter concerning his claimed entitlement to unpaid superannuation contributions (some $4,850) from his then employer. In earlier legal proceedings before the Federal Court (Besanko J in Kronen v FCT [2012] FCA 1463), the applicant had attempted to have the Commissioner (through the Tax Office) enforce that claim on his behalf. However, Besanko J held there was no enforceable legal duty on the part of the ATO to recover on the applicant’s behalf from his former employer the alleged unpaid superannuation contributions. In doing so, Besanko J refused the applicant leave to amend his originating application, and dismissed the application itself.

The applicant then sought leave to appeal from the orders made by Besanko J in the current proceedings. However, the Federal Court concluded that there was no prospect of the applicant succeeding in any appeal from the judgment, for much the same reasons as those given by Besanko J. Therefore, the Federal Court refused the applicant’s application for leave to appeal. However, it noted that that was not an adjudication that the applicant had no entitlement to the claimed unpaid superannuation contributions. Rather, it said it simply confirmed that he had not right to secure their recovery by the proceedings against the Commissioner and the ATO.

(Kronen v Comr of Taxation [2013] FCA 416, Federal Court, Mansfield J, 10 May 2013.)

[LTN 89, 13/5/13]

2012 case before Besanko J

Kronen had been selling cars and received both a retainer and commissions in 1998 – 2000, which were each about 50% of his remuneration. His employer paid superannuation contributions on the retainer, but not on the Commissoners, notwithstanding there being an award, which required the employer to pay superannuation contributions. The award had a definition of ‘ordinary time earnings’ (and though the case doesn’t say, this was this was probably the relevant salary base under the award – and under Superannuation Guarantee (Administration) Act 1992 – ‘SGC Act’). Kronen had taken 5 separate actions of various types before this trying to get super on his commissions, and this 6th action was based on trying to get his superannuation through the tax system, based on the SGC system of returning SG shortfall amounts to the fund nominated by the employee who was the subject of the superannuation shortfall. Kronen wrote to the Commissioner about this various times, but after giving the matter consideration on two occasions, the Commissioner advised Kronen in writing that he was not of the opinion ‘commissions’ were part of ‘ordinary time earnings’ and therefore he didn’t have a basis for issuing a shortfall assessment under s36 of the SGC Act or amending such assessments under s37 of that Act.

This case was brought on the basis of the Prerogative Writs persisting under s39B of the Judiciary Act, saying that the Commissioner had failed in his public duty to properly determine what the level of superannuation shortfall there was (if any) and then to collect it, and make the relevant portion available to Kronen’s fund.

The Commissioner sought to have the case dismissed summarily (irrespective of whether ‘commissions’ were part of ‘ordinary time earnings or not’) and he succeeded, broadly for this reason (quoting from para 50 of the judgement).

50.     The insuperable difficulty for the applicant in this case is that I do not think the SGAA contains a scheme, which gives him a right or imposes a duty on the respondent. The words in s 36 (and s 37 if that be relevant) are wholly permissive and it is the employer who is given the right to object. Furthermore, there is no section which provides a trigger to an obligation on the respondent to hear and decide a claim by an employee that his or her employer was not making superannuation contributions according to law. The fact that there might be an administrative structure (that is, employee notification) does not confer a right on the applicant to require the respondent to take action or impose a duty on the respondent to do so. Section 45A (if it be relevant) did not create a duty to hear and determine.

The 2013 case before Mansfield J

In the later case, Kronen sought leave to appeal the summary dismissal, which can be done if the decision is attended by sufficient doubt. Mansfield J concluded it was not, saying at para 41 as follows.

41.     The respondent, who has general administrative responsibility by reason of s 43, may take enforcement action under ss 36 and 37. I respectfully agree with Besanko J that it is a decision for the respondent about whether, when and how to take such action. There is no provision (other than the general administrative responsibility given by s 43) which appears to permit an employee such as the applicant to be entitled to require the respondent to take steps which the respondent does not consider appropriate as part of the enforcement powers under ss 36 and 37. If the contrary were the case, it is difficult to see what “quality control” could be imposed on that obligation. That is, it is difficult to see how a line could be drawn which would prevent the respondent from being obliged to pursue pointless or hopeless claims by an employee. That is not to suggest that the applicant’s claim falls into that category. I have assumed his claim that contributions based on his commission payments should have been made is an arguable one. But, obviously, there are those who would persist in unarguable cases. There are degrees of “arguableness”. The submission of the applicant is presented as one involving an absolute obligation on the respondent at the request of an employee. It does not address how “arguableness” is to be assessed, or whether that is to be assessed by the respondent or by a Court or whether the obligation arises from the subjective assessment of an employee (which would equate to an absolute obligation).