Re Commissioner of Superannuation v Roy James Hastings [1986] FCA 439 (15 December 1986)

FEDERAL COURT OF AUSTRALIA

Re: COMMISSIONER FOR SUPERANNUATION
And: ROY JAMES HASTINGS
No VG140 of 1986
Commonwealth Superannuation

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY
GENERAL DIVISION
Woodward J.
Keely J.
Wilcox J.

CATCHWORDS

Commonwealth Superannuation - Deemed invalidity - Eligible employee terminated for reasons other than physical or mental incapacity - Employee unfit for duties actually assigned but allegedly fit for available alternative duties - Whether employee may be deemed to have retired on the ground of physical or mental incapacity - Meaning of "his duties" - Whether Commissioner for Superannuation has a discretion as to directing that employee deemed to have retired on the ground of incapacity.

Superannuation Act 1976 ss.3, 7, 75, 76, 79

Administrative Appeals Tribunal Act 1975 s.44

Public Service Act (NT) ss.31, 49

Ward v. Williams [1955] HCA 4; (1955) 92 CLR 496, Finance Facilities Pty Limited v. Commissioner of Taxation of the Commonwealth of Australia [1971] HCA 12; (1971) 127 CLR 106, Re Gleeson (1907) VLR 368, Julius v. Bishop of Oxford (1880) LR 5 AC 214, Water Conservation Commission v. Browning [1947] HCA 21; (1947) 74 CLR 492, The Queen v. Australian Broadcasting Tribunal; ex parte 2HD Pty Limited [1979] HCA 62; (1979) 144 CLR 45, Defence Force Retirement and Death Benefit Authority v. Britt (1984) 4 FCR 306 referred to.

HEARING

MELBOURNE
15:12:1986

Counsel for the Applicant: Mr J Karkar

Solicitors for the Applicant: Australian Government Solicitor

Counsel for the Respondent: Mr W J N Wells

Solicitors for the Respondent: Gibson and Gibson

ORDER

The appeal be allowed.

The decision of the Administrative Appeals Tribunal be set aside and the matter be remitted to the Tribunal, to be heard and decided again, in accordance with the reasons for judgment herein, with such further evidence as the Tribunal may admit.

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

DECISION

The Commissioner for Superannuation appeals to this Court from a decision of the Administrative Appeals Tribunal, constituted by a Deputy President and two other members, setting aside a decision of the Commissioner and, in lieu thereof, directing that the Commissioner deem the respondent to have been retired on 15 August 1980 on the ground of physical incapacity to perform his duties. The appeal -- which is confined to matters of law, see s.44 of the Administrative Appeals Tribunal Act 1975 -- raises two questions as to the proper construction of s.7(2) of the Superannuation Act 1976.

2. The respondent, Roy James Hastings, was born on 30 August 1925. He served for 12 years with the then Commonwealth Department of Excise and Customs. On 23 April 1971 he was retired from his position as a clerk with that Department on the ground of invalidity; he was then suffering from ischaemic heart disease. He was granted a pension pursuant to s.67 of the Superannuation Act 1922.

3. On 8 April 1980 Mr Hastings was appointed a senior health inspector in the Northern Territory Department of Health. As such he became an "eligible employee" within the definition of that term contained in s.3 of the Superannuation Act 1976, the legislation which had by then superseded the 1922 Act. However, Mr Hastings' service in that Department was thought to be unsatisfactory and, on 15 August 1980, his appointment was terminated, pursuant to s.31(9) of the Public Service Act (NT). The ground ascribed for the decision to terminate was stated as "conduct, diligence and efficiency" which, it is common ground, was intended as a reference to the situation referred to in s.49 of that Act, which reads as follows:

"49. If an employee appears to the Commissioner to

be inefficient or incompetent, or unable to discharge or
incapable of discharging his duties as such an employee,
the Commissioner, as he thinks appropriate, may do one
or more of the following:

(a) change the duties of the employee;

(b) transfer him to another part of the
Public Service;

(c) reduce his salary,

or may retire him from the Public Service."

4. It was not until 1 October 1981 that the Commissioner became aware of Mr Hastings' appointment in the Northern Territory, and of the termination of that appointment. The effect of that appointment had been automatically to terminate Mr Hastings' entitlement to receive a pension -- see s.76 of the Superannuation Act 1976 -- but, the facts not being known to the Commissioner, payments had continued to be made. The Commissioner told Mr Hastings that he would be required to refund those payments. Mr Hastings responded by claiming that his appointment was terminated by the Northern Territory Government because of his medical condition and by requesting that the Commissioner apply to his case the provisions of s.7(2) of the Superannuation Act 1976.

5. Section 7 of that Act reads:

"7. (1) A reference in this Act to the retirement
of an eligible employee on the ground of invalidity
shall be read as a reference to his having been retired,
or his services having been otherwise terminated, on the
ground of physical or mental incapacity to perform his
duties.

(2) Where a person has, before attaining his
maximum retiring age, ceased to be an eligible employee
otherwise than by reason of death or by reason of his
having been retired, or his services having been
otherwise terminated, on the ground of physical or
mental incapacity to perform his duties, but the
Commissioner is satisfied that, at the time he ceased to
be an eligible employee, he was, by reason of physical
or mental incapacity, unfit to perform his duties, the
Commissioner may direct that the person shall, for the
purposes of this Act, be deemed to have been retired on
the ground of that physical or mental incapacity."

6. The Commissioner made certain inquiries but he was not satisfied that Mr Hastings' appointment had been terminated by reason of his medical condition. He declined to apply s.7(2), with the result that he rejected Mr Hastings' application for a restoration of his pension entitlement as from the date of that termination, 15 August 1980.

7. Mr Hastings appealed to the Administrative Appeals Tribunal against the decision of the Commissioner. When the matter came on for hearing the Tribunal was informed that it was common ground between the parties that, on 15 August 1980, Mr Hastings was not physically able to perform the duties of a senior health inspector. However, it was the case of the Commissioner that he was fit to perform duties in an alternative classification within the Department and that his medical condition was not the reason for his dismissal. The Tribunal was also told that there was a major issue between the parties as to Mr Hastings' capacity for work. On behalf of Mr Hastings it was submitted that it was unnecessary for the Tribunal to resolve that issue, that -- once it be conceded or established that Mr Hastings was not fit for work as a senior health inspector -- the Commissioner was obliged by s.7(2) to deem him to have been retired on the ground of physical incapacity. Counsel for the Commissioner disputed the construction of s.7(2) necessary to yield this result and the Tribunal decided first to resolve the issues of construction, deferring in the meantime the receipt of evidence upon the disputed questions of fact. As already indicated, the Tribunal eventually accepted the submissions upon construction put on behalf of Mr Hastings, so that it became unnecessary for it to receive the evidence.

"his duties"

8. The first matter which arises under s.7(2) is the meaning to be ascribed to the words "his duties". The question is whether these words refer only to the duties of the respondent in his employment as a senior health inspector as at the time he ceased to be an eligible employee -- that is, at the time his services were terminated -- or whether they encompass the whole range of duties which the respondent could reasonably have been required by his employer to perform, through redeployment or transfer.

9. The submission of the applicant Commissioner is that "his duties" includes the full range of available duties, so that an employee can be said to be incapacitated only in a case in which no suitable work can be found by the employer. In support of that submission counsel for the applicant draws attention to the well-known practice of Commonwealth instrumentalities -- which practice finds expression in various legislative provisions similar in terms to s.49 of the Northern Territory Act already quoted -- to attempt in the first instance to find for incapacitated employees suitable alternative work, terminating the services of the employee only when no such work is available. Counsel contends that an interpretation of "his duties" which limited the application of those words to the duties of the position occupied by the employee at the relevant time would confer an advantage upon an opportunistic employee who, being unable to cope with those duties, resigned his or her employment before new duties could be substituted. We agree that this is a possibility but, as we consider that the Commissioner has a discretion under s.7(2), it is a matter of little moment; the Commissioner would be entitled to take into account those circumstances when considering the proper exercise of that discretion.

10. The strongest argument in favour of construing "his duties" in the manner suggested by counsel for the applicant is the contrast between the use of those words in s.7(2) and the use in s.75 of the Act of the phrase "the duties performed by him immediately before his retirement on the ground of invalidity"; the latter being a clear reference to the employee's actual duties. To put that argument in perspective we set out the whole of s.75, which deals with cancellation of pensions:

"75. (1) Where the Commissioner is satisfied,
after receiving the report or reports of a medical
practitioner or medical practitioners with respect to
the health of a person to whom invalidity pension is
payable, that the health of the person has become so
restored as to enable him to perform duties of a kind
that are, in the opinion of the Commissioner, suitable
to be performed by him (having regard to the duties
performed by him immediately before his retirement on
the ground of invalidity and to such other matters as
the Commissioner considers relevant), the Commissioner
shall so inform such person or authority as the
Commissioner considers appropriate with a view to that
person or authority finding suitable employment for the
pensioner.

(2) If--

(a) the pensioner is offered by the
Commonwealth or by an approved authority
employment (not being employment on a
part-time basis) that involves the
performance of duties that, in the
opinion of the Commissioner, are suitable
to be performed by him (having regard to
the duties performed by him immediately
before his retirement on the ground of
invalidity and to such other matters as
the Commissioner considers relevant);
and

(b) the person unreasonably refuses or fails
to accept the offer within 14 days after
the receipt by him of the offer, or
within such further period as the
Commissioner allows,

the Commissioner may cancel the person's entitlement to
invalidity pension."

11. Section 75 relates to an event which occurs after the termination of the employment of a person: the restoration, in whole or in part, of the former employee's health. At that time the person has no current duties. It would not, therefore, have been appropriate to use in s.75 the term "his duties". It was necessary to use a phrase which referred back to the duties previously performed by the person. It is understandable that the legislature should have selected as significant the duties performed immediately before retirement. A phrase such as that actually used was necessary for that purpose. By contrast, the need in s.7(2) was to refer to a situation ascertainable at the date of the actual cessation of employment: retirement or termination on a ground other than incapacity "to perform his duties". As the relevant date was one at which the employee still had duties, it was natural in this context to speak of "his duties". The difference in terminology between s.7(2) and s.75 being explained by the differing contexts, no inference of an intended different meaning should be drawn. Upon analysis, s.75 furnishes no support for the construction of s.7(2) urged on behalf of the applicant. Indeed, inasmuch as s.75 requires a consideration of the duties performed by the employee immediately before his or her retirement - and does not require any consideration of the duties of other positions to which the employee might have been transferred immediately before retirement - it is consistent with the interpretation of s.7(2) argued on behalf of the respondent.

12. Counsel for the respondent argues that the term "his duties" ought to be construed literally, to refer to the duties of the position held by the person at the relevant date i.e. retirement. There is no warrant, he says, for any extended meaning and, particularly, for one which would require the Commissioner to investigate the duties of some alternative position which might have been, but was not, allocated to the employee by the employer. We agree. Had it been the intention of Parliament to have the Commissioner embark upon such an inquiry, this intention could easily have been stated. Normally the words "his duties", used in reference to an employee, would be understood as referring to the duties of the position which that employee held at the relevant time. We see no warrant for interpreting them in s.7 in any other way. In relation to the first point we agree with the view of the Administrative Appeals Tribunal that "his duties" refers to the respondent's duties as senior health inspector.

"may direct"

13. As indicated, the Administrative Appeals Tribunal held that, notwithstanding the use in s.7(2) of the word "may", once the pre-conditions specified in s.7(2) were satisfied the Commissioner had no discretion in the matter but was bound to direct that the former employee be deemed to have been retired upon the ground of incapacity. The primary reason for this conclusion was that s.7(2) was seen as being a provision designed to confer a benefit upon those who fell within its terms.

14. The leading Australian authorities dealing with the circumstances under which the word "may", when used in a statute, should be interpreted as imposing an obligation are Ward v. Williams [1955] HCA 4; (1955) 92 CLR 496 and Finance Facilities Pty Limited v. Commissioner of Taxation of the Commonwealth of Australia [1971] HCA 12; (1971) 127 CLR 106. In the former case Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ said at p.505 that

"it is necessary to bear steadily in mind that
it is the real intention of the legislature
that must be ascertained and that in
ascertaining it you begin with the prima facie
presumption that permissive or facultative
expressions operate according to their
ordinary natural meaning".

Their Honours adopted a statement by Cussen J, in Re Gleeson (1907) VLR 368 at p 373, that the burden is on

"those who assert that the word 'may' has a
compulsory meaning to show, as a matter of
construction of the Act, taken as a whole,
that the word was intended to have such a
meaning".

In Finance Facilities Windeyer J, with whom Barwick CJ agreed, spoke to like effect, pointing out at p.134 that it was not a case of "may" meaning "shall":

"While Parliament uses the English language the
word 'may' in a statute means may. Used of a
person having an official position, it is a
word of permission, an authority to do
something which otherwise he could not
lawfully do. If the scope of the permission
be not circumscribed by context or
circumstances it enables the doing, or
abstaining from doing, at discretion, of the
thing so authorized."

The question, Windeyer J went on to say, was

"whether the particular context of words and
circumstance make it not only an empowering
word but indicate circumstances in which the
power is to be exercised -- so that in those
events the 'may' becomes a 'must'."

15. In support of the Tribunal's decision on this aspect of the case, counsel for the respondent refers to the situation mentioned by Lord Cairns in Julius v. Bishop of Oxford (1880) LR 5 AC 214 at p.225: "where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the Legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the Court will require it to be exercised". This passage was quoted in Ward v. Williams and the principle to which it refers was applied in Finance Facilities. Counsel argues, as the Tribunal held, that the purpose of s.7(2) is to provide a mechanism for extending to each member of an additional class of persons the benefit of being treated under the Act as a person who has retired on the ground of physical or mental incapacity.

16. The matter is one of impression, not admitting of much elaboration, but we are not persuaded that it was the intention of Parliament that the Commissioner should be bound to make a direction, where the preconditions are met, that an employee be deemed to have retired on the ground of incapacity. There are two reasons for our view.

17. First, s.7(2) may operate under a wide variety of circumstances. On the one hand there may be a case in which an employee has suffered a long-term incapacity and could readily have retired on that ground but where, through pride, embarrassment, ignorance or confusion -- possibly the product of the incapacity itself -- the employee chose simply to resign. Without the sub-section that choice might result in irrevocable prejudice to the employee. It is readily understandable that Parliament should have wished to avoid such a situation. At the other extreme there may be a case in which the employee has committed an act which would, in the usual course, have led to dismissal but, before dismissal, has become incapacitated - perhaps even as a result of the wrongful act. An example, mentioned during the argument, is the case of an employee who steals his employer's car and crashes it, suffering an incapacitating injury. It would be surprising if it were intended that, notwithstanding the conduct of the employee and its result, the Commissioner was bound to admit him or her to the benefits of an employee retired on the ground of incapacity. Similarly, it would be surprising if Parliament intended that an employee who resigned during a temporary incapacity for work, for example because of illness, must be treated in the same way as one who retired because of an incapacitating permanent injury.

18. In our opinion, it is too simplistic to describe s.7(2) as creating a power intended to be used for the benefit of persons who comply with its pre-conditions. Rather, we see it as a provision designed to avoid injustice in cases where an employee might be thought to be morally entitled to a pension, because effectively forced out of his or her employment for health reasons, but is not within sub-s.(1). Because the circumstances of individual cases must differ widely it is impossible to cast such a provision in a rigid form; a discretion must be vested in a suitable person, to be exercised upon the merits of the individual case. The industrial and medical history of the applicant for a pension is undoubtedly material to the decision to be made. Otherwise, as the relevant matters are unspecified in the legislation, it is for the Commissioner to determine what matters are to be taken into account and the weight to be given to them "unconfined except in so far as the subject matter and the scope and purpose" of s.7(2) enables a court to say that "given reasons are definitely extraneous to any objects the legislature could have had in view": see the words of Dixon J in Water Conservation Commission v. Browning [1947] HCA 21; (1947) 74 CLR 492 at p.505 adopted in The Queen v. Australian Broadcasting Tribunal; ex parte 2HD Pty Limited [1979] HCA 62; (1979) 144 CLR 45 at p.49. The ultimate question for the Commissioner is whether it would be reasonable, having regard to the interests not only of the applicant for a pension but of other contributors to the superannuation fund, to treat the applicant as being entitled to the same benefits as if he or she had retired on the ground of invalidity. The Commissioner's decision is, of course, itself subject to review by the Administrative Appeals Tribunal.

19. The second matter which influences us to reject the argument that s.7(2) imposes an obligation upon the Commissioner is the language used in other sections of the Act. Elsewhere, where an obligation is intended to be imposed upon the Commissioner, the word "shall" is used: see, for example, s.16(4) and compare the use of the word "may" in respect of matters clearly intended to be discretionary, for example ss.11, 12, 13, 14, 15, 16(2). In some cases -- for example ss.9, 10, 58 -- the word "shall" has been used in connection with a deeming provision. Whilst it is important to the operation of s.7(2) that there be an overt act of the Commissioner establishing his satisfaction that the employee was incapacitated at the time of retirement, it would have been consistent with the careful use of terminology in the Act to then provide that the Commissioner "shall direct" -- not "may direct" -- if it had been intended to impose upon him an obligation.

20. Counsel for the respondent submits that ss.75 and 79 of the Superannuation Act provide the answers to some of the anomalies suggested on behalf of the applicant. We do not think that they do. Section 75 applies only to a case in which the health of the former employee has been restored after his retirement. It has no relevance to a case in which the former employee remains incapacitated but is a person whose employment would have been terminated in any event and regardless of incapacity. Section 79 deals only with a limited situation where incapacity flows from a wilful act of the employee done for the purpose of obtaining invalidity benefit.

21. Both parties sought to support their argument upon the second question in the case by reference to the decision of the Full Court of this Court in Defence Force Retirement and Death Benefit Authority v. Britt (1984) 4 FCR 306. That decision related to s.37 of the Defence Force Retirement and Death Benefits Act 1973 which provides that where a contributing member has been retired otherwise than on the ground of invalidity or of physical or mental incapacity to perform his duty but, after his retirement, the relevant Chief of Staff informs the Authority that, at the time of retirement, grounds existed on which he could have been retired on the ground of invalidity or incapacity "he may, for the purpose of this Act, be treated as if he had been retired on that ground". In a judgment which set out the relevant principles and referred to both Ward v. Williams and Finance Facilities the Full Court held that the section conferred a discretion upon the Authority. Although the wording of the Defence Force Retirement and Death Benefits Act differs from that of s.7(2) of the Superannuation Act, the scheme of the two provisions is similar. The submissions put on behalf of the respondent in the present case are very close to those put, and rejected, in Britt. In our view the conclusion at which we have arrived is supported by that decision.

22. In the result the applicant succeeds on one of the two matters of law argued before us. The decision of the Administrative Appeals Tribunal must, therefore, be set aside. The matter should be remitted to the Tribunal, to be heard and decided again, in accordance with these reasons for judgment, with such further evidence as the Tribunal may admit. As counsel for the applicant has informed the Court that his client does not seek an order for costs, in the event of the appeal succeeding, there will be no order for costs.