Re Commissioner of Superannuation v Fay Olive Scott [1987] FCA 79 (11 March 1987)

FEDERAL COURT OF AUSTRALIA

Re: COMMISSIONER FOR SUPERANNUATION
And: FAY OLIVE SCOTT
No. G62 of 1986
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Fisher J.
Spender J.
Pincus J.

CATCHWORDS

Administrative Law - administrative Appeals Tribunal - Appeal from - Superannuation Act - spouse of eligible employee - wholly or substantially dependent - meaning of substantially - consideration of question of dependency - question of fact.

Superannuation Act 1976 ss.3,81

HEARING

BRISBANE
11:3:1987

COUNSEL for the applicant Mr. Needham instructed by the Australian Government Solicitor

COUNSEL for the respondent Mr. Westbrook instructed by Trilby Misso & Co.

ORDER

The appeal be allowed and the decision appealed from be set aside.

The matter be remitted to the Administrative Appeals Tribunal for reconsideration with a direction that the word "substantially" in the definition of "spouse" in s.3 of the Superannuation Act 1976 means "in the main" or "essentially".

There be no order as to the costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is an appeal from a decision of the Administrative Appeals Tribunal ("the Tribunal") pursuant to sub.s.44(1) of the Administrative Appeals Tribunal Act 1975 ("the A.A.T. Act"). On 15 May 1986 the Tribunal set aside a decision of the applicant, the Commissioner for Superannuation ("the Commissioner") rejecting the claim of the respondent Fay Olive Scott ("Mrs. Scott") that a spouse's benefit be paid to her in accordance with s.81 of the Superannuation Act 1976 ("the Act"). The Tribunal remitted the matter to the Commissioner for reconsideration in accordance with a direction that Mrs Scott was entitled to a spouse's pension under that section of the Act. The essential matter of law before us was the proper construction of the phrase "wholly or substantially dependent" in the definition of "spouse" in s.3 of the Act. The Commissioner by Notice dated 12 June 1986 appealed against the decision of the Tribunal on the ground that it had misdirected itself in holding that to show substantial dependence it was sufficient to show only that the dependency was more than trivial, minimal or nominal. On 10 July 1986 an amended notice of appeal was filed wherein the ground thereof was stated as being a misdirection as to the proper meaning of the phrase "wholly or substantially dependent" in paragraph (b) of the definition of "spouse" in sub.s.3(1) of the Act. On the hearing of the appeal counsel for the Commissioner limited his submission to the contention that the Tribunal misdirected itself in the manner alleged in the original notice of appeal, namely as to the meaning of the word "substantially".

2. The circumstances in which the dispute arose were very adequately set out in the reasons of the Tribunal and it is sufficient if we state them briefly. Mrs. Scott was a widow, her husband having died on or about 11 October 1982. He was an eligible employee for the purposes of the Act, having contributed to the fund established by s.40 of that Act. He married Mrs. Scott in 1964 and there were two children of the marriage. However in April 1982 Mrs. Scott and her husband separated and thereafter lived apart. On 28 October 1982 Mrs. Scott made an application for a spouse's benefit to be paid to her in accordance with s.81 of the Act. This application was rejected on the ground that she was not a spouse as defined in sub.s.3(1) of the Act. It was common ground that in the circumstances the relevant portions of the definition were as follows:

"spouse; in relation to a person who has died and was,
at the time of his death, an eligible employee or a
retirement pensioner, means -

(a) ...

(b) a person who was legally married to the deceased
person at the time of the person's death but who was
not living with the person on a permanent and bona
fide domestic basis at that time, and who, in the
opinion of the Commissioner, was wholly or
substantially dependent upon the deceased person at
that time."

3. The crucial issue at all times has been whether Mrs. Scott was wholly or substantially dependent upon her husband at the time of his death. If she was, she was entitled to a spouse's benefit in accordance with s.81 of the Act, her husband being an eligible employee who died before attaining his maximum retiring age.

4. On 28 February 1983 a delegate of the Commissioner rejected Mrs. Scott's claim on the ground that she was not a spouse in accordance with the definition. Her solicitors sought reconsideration of the delegate's decision and on 4 June 1985 the Commissioner advised that he affirmed the decision. Mrs. Scott applied to the Tribunal under sub.s.154(6) for a review of the decision which had been confirmed by the Commissioner. The Commissioner had in the meantime granted an orphan pension to the two children under s.97 of the Act, on the assumption that Mrs. Scott was not a spouse for the purposes of the Act.

5. Mr. Scott was a Postal Officer Grade 3 in the Australian Postal Commission at the time of his death. On 12 May 1982, at a time when Mrs. Scott and her husband were living separately but in the matrimonial home, they entered into a maintenance agreement which was subsequently registered under s.86 of the Family Law Act 1975. The agreement provided that Mr. Scott move out of the matrimonial home transferring his interest therein to Mrs. Scott upon her paying him $23,000. It contained the following provision:

"The husband and the wife shall cease to have any
obligation if any so existed to pay maintenance to each
other."

It was not disputed that from that date and until his death Mr. Scott paid no maintenance to his wife or for his children.

6. There was much evidence before the Tribunal of the circumstances which prompted the execution of this agreement and in particular that Mrs. Scott and the children wished Mr. Scott to leave the matrimonial home as soon as possible because of his threats of violence. Mrs. Scott had apparently accepted her solicitor's advice that notwithstanding the agreement she could upon an application for dissolution of marriage seek a property settlement and lump sum maintenance. It is not necessary for us to relate these circumstances in greater detail, at least at this stage.

7. Mrs. Scott was granted a supporting parent's benefit under the Social Security Act 1947 at the rate of $200 per fortnight. After her husband's death she received a widow's pension under that Act. She had not engaged in any employment since Mr. Scott left the home but was in receipt of monies varying between $20 and $50 per week from her parents. The latter persons provided her with a motor vehicle and a television set and additional sums of money when they visited her. Her expenditure on herself and her children exceeded her pensions but Mrs. Scott said that her parents made up the balance. The question before the Tribunal was whether at the time of her husband's death she was wholly or substantially dependent upon him.

8. The Tribunal noted that that phrase had been examined earlier in great detail by a differently constituted Tribunal in Re Schlatter v. Defence Force Retirement and Death Benefits Authority (1985) 8 ALD 133. It decided that it would be "extremely unhelpful" for it to decide the matter in a manner inconsistent with that earlier decision, particularly when the arguments advanced were substantially the same in both matters. In Re Schlatter the Tribunal came to the conclusion in relation to the phrase "wholly or substantially dependent" that "rather than attempt to define what 'substantially' is, it is probably easier to say what it does not mean. The dependency shown should not be trivial, minimal or nominal (and to that extent should be greater than 'partly' as previously used) and should not be total but something in between."

9. The Tribunal in Re Schlatter later said:

"It is important to note, however, that merely because
the payment or support cannot be aptly described as
trivial, minimal or nominal, nor is it total, it does
not ipso facto follow that the payment or support is
thereby 'substantial'. Each case must still be looked
at in context and on its facts."

10. The Tribunal in this matter considered that the meaning given to the phrase in the Re Schlatter proceedings was "reasonably tenable" and that it would be unhelpful for it to decide that the phrase bore a different meaning from that which the earlier Tribunal had accorded to it.

11. The Tribunal then reviewed the facts and in particular considered the Commissioner's contention that Mrs. Scott was not dependent upon her husband because she had abandoned her right to be supported, but, in the alternative, if she was dependent she was not wholly or substantially dependent because she was receiving a supporting parent's benefit and financial support from her parents. It found that, notwithstanding the agreement, she was still dependent upon her husband at the time of his death and that such dependence was, having regard to the meaning it attached to the word, "substantial". From this decision the Commissioner appealed to this Court, alleging that the acceptance of this meaning was a misdirection. He contended that the correct meaning of "substantially" in the context was "in the main" or "essentially".

12. In our opinion the Commissioner was right in the interpretation which he placed on the word in its context. It cannot be right to consider the word in isolation and then to determine that which it does not mean. In Palser v. Grinling (1948) AC 291 Viscount Simon made reference to such an approach in reference to the phrase "substantial portion of the whole rent". He said at page 316:

"It is plain that the phrase requires a comparison with
the whole rent, and the whole rent means the entire
contractual rent payable by the tenant in return for
the occupation of the premises together with all the
other covenants of the landlord. 'Substantial' in this
connexion is not the same as 'not unsubstantial', i.e.,
just enough to avoid the 'de minimis' principle. One
of the primary meanings of the word is equivalent to
considerable, solid, or big. It is in this sense that
we speak of a substantial fortune, a substantial meal,
a substantial man, a substantial argument or ground of
defence. Applying the word in this sense, it must be
left to the discretion of the judge of fact to decide
as best he can according to the circumstances in each
case, the onus being on the landlord. If the judgment
of the Court of Appeal in Palser's case were to be
understood as fixing percentages as a legal measure,
that would be going beyond the powers of the judiciary.
To say that everything over 20 per cent. of the whole
rent should be regarded as a substantial portion of
that rent would be to play the part of a legislator:
if Parliament thinks fit to amend the statute by fixing
percentages, Parliament will do so. Aristotle long ago
pointed out that the degree of precision that is
attainable depends on the subject matter. There is no
reason for the House to differ from the conclusion
reached in these two cases that the portion was not
substantial, but this conclusion is justified by the
view taken on the facts, not by laying down percentages
of general application."

The reference to the use of percentages has some relevance to the present matter.

13. The crucial factor is that the word "substantially" finds its place in the phrase "wholly or substantially dependent" and must be construed alongside the adverb "wholly" and thus as meaning something less than total dependence. We prefer the line of authority appearing in the decisions of the Tribunal which have adopted this meaning, namely Re Grech (1981) 3 ALN. 94, Re Mrs. B. (1984) 6 ALD 609 and Re Janice Mary McGrath a decision delivered on 30 June 1986. This preference accords with the approach of Ambrose J. of the Supreme Court of Queensland in Re Bonny (1986) 2 Qd R 80:-

"In my view the connotation of this term ('substantially
dependent on') in the definition section must be
considered having regard to the whole phrase 'wholly or
substantially dependent on' rather than by attempting
merely to construe the term 'substantially' as if it
stood alone having regard to the meaning attributed to
that term in other legislation...

In my view... that approach is not of assistance when
one is construing the phrase 'wholly or substantially
dependent on' because the connotation of the term
'substantially' within that phrase is governed by the
conjugational position of the word 'wholly' immediately
before it.

In my view when considered in the context of a
definition that talks of a person who is 'wholly or
substantially dependent on' another, the term
'substantially' connotes 'in the main', or
'essentially'."

This Court has on a number of occasions considered the adjective 'substantial" and, even where it stands alone uninfluenced by proximity to the word "wholly", has adopted a meaning which accords with the submission of the Commissioner. I refer in particular to Tillmanns Butcheries Pty. Ltd. v. Australasian Meat Industry Employees' Union and Others (1980) 27 ALR 367. At page 382 Deane J. said:

"The word 'substantial' is not only susceptible of
ambiguity: it is a word calculated to conceal a lack of
precision. In the phrase 'substantial loss or
damage', it can, in an appropriate context, mean real
or of substance as distinct from ephemeral or nominal.
It can also mean large, weighty or big. It can be used
in a relative sense or can indicate an absolute
significance, quantity or size. The difficulties and
uncertainties which the use of the word is liable to
cause are well illustrated by the guidance given by
Viscount Simon in Palser v. Grinling ((1948) AC 291 at
317) where, after holding that, in the context there
under consideration, the meaning of the word was
equivalent to 'considerable, solid or big', he said:
'Applying the word in this sense, it must be left to
the discretion of the judge of fact to decide as best
he can according to the circumstances of each case'....
In the context of s.45D(1) of the (Trade Practices) Act
1974 (Cth.), the word 'substantial' is used in a
relative sense in that, regardless of whether it means
large or weighty on the one hand or real or of
substance as distinct from ephemeral or nominal on the
other, it would be necessary to know something of the
nature and scope of the relevant business before one
could say that particular actual or potential loss or
damage was substantial. As at present advised, I
incline to the view that the phrase, substantial loss
or damage, in s.45D(1) includes loss or damage that is,
in the circumstances, real or of substance and not
insubstantial or nominal."

14. In our opinion the Tribunal erred in law in directing itself that the word "substantially" meant something more than trivial, minimal or nominal. It is necessary to construe it alongside the word "wholly" and not by reference to what it does not mean. It has in our opinion the meaning, in relation to a person in the expression "wholly or substantially dependent", that that person is primarily, essentially or in the main dependent upon another person.

15. It follows that we must allow the appeal.

16. Notwithstanding the fact that we agree with the Commissioner's argument on the meaning that we should attach to the word "substantially" it is proper that we remit the matter to the Tribunal for reconsideration in the light of these reasons. For our part however we would not like to think that to attach our meaning to that word necessarily has the consequence that Mrs. Scott must be unsuccessful in her claim. We appreciate that the parties intentionally limited their submissions to this Court to the question of the proper meaning of that word notwithstanding invitations from the Bench to present wider submissions in relation to the whole phrase. Anything which we now add must be considered as tentative and subject to reconsideration if and when the matter is argued in depth and detail. The particular problem arises as stated by various Tribunals when an applicant is not at the relevant time in receipt of maintenance or support or entitled thereto under an existing maintenance order. In these circumstances the question of dependence has been held to depend upon whether or not there was a legal obligation in another to support the applicant. Such an approach causes difficulties when the question of dependence has been stated by Courts on a number of occasions to be a question of fact.

17. The comments of Barwick C.J. in Aafjes v. Kearney infra at page 457 prompt us to make these comments. He said on that page in support of the view of Viscount Haldane L.C. in Potts v. Niddrie and Benhar Coal Co. Ltd. (1913) AC 531 at 536-8:

"With due respect, I commend this view, one which I hold
strongly myself, to those who are asked such a question
as the question asked in the present case stated. If
that view is followed, certainty and early finality in
these matters will be advanced, whereas if it is not,
unnecessary and avoidable subtlety and complexity will
be further introduced into this area of the
administration of the law to the great disadvantage of
those for whose benefit this legislation was designed.

In my opinion, the Commission was clearly entitled to
hold on the material before it that the respondent was
wholly dependent for support upon her father. That
material afforded evidence of that fact and no
principle of law precluded the conclusion. In that
connection, I would express my dissent from the view
that because 'the facts are clearly stated' that 'the
question as to whether on facts found which legal
category is the appropriate one is... a question of
law'. On the contrary, the conclusion of dependence is
one of fact and not the assignment of a situation to a
legal category. The view from which I express my
dissent would turn every conclusion of dependence into
a question of law. But that would clearly be erroneous
and contrary to every decision of high authority,
including Potts v. Niddrie and Benhar Coal Co. Ltd,
supra."

18. We are concerned that the Tribunal in this and some other matters has approached the problem in at least substantial reliance upon the provisions of the Family Law Act. This has produced the necessary consequence of a long detailed and careful consideration of the rights of husband and wife under that Act. In consequence there is inevitably speculation as to how the Family Court would view their relationship and their entitlement to an order for maintenance of one by the other. Such an approach necessitates not only a prognostication of the likely decision of that Court but also a resolution of conflicting decisions and value judgments in selecting the preferred decision. In the present matter the question of Mrs. Scott's dependence and whether such was substantial was determined by reference to her entitlement to maintenance from her husband at the time of his death in accordance with the provisions of s.72 of the Family Law Act. This is in itself surely a question of law and appears to run counter to the accepted view that dependency is a question of fact. In particular the likely attitude of the Family Court to Mrs. Scott's maintenance agreement was extensively canvassed. In making comments hereafter we appreciate we are not fully informed nor have we been referred to authorities which might resolve our concern. Therefore our tentative view is in no way critical of the careful and detailed manner in which the Tribunal has approached the resolution of a complex problem. Likewise we are concerned lest the Commissioner and his officers think that he or they are required in many instances to approach the question in reliance substantially on the attitude of the Family Court and its decisions which understandably frequently diverge.

19. In Kauri Timber Co (Tas.) Pty. Limited v. Reeman [1973] HCA 8; (1973) 128 CLR 177 the High Court considered a somewhat different expression, namely "dependent wholly or in part, upon the earnings of that worker". The Chief Justice at page 179 noted that "dependency on the earnings of the worker is a question of fact" and, later, that "underlying the concept of dependency in connexion with these Acts (Workers Compensation Acts) there is, in my opinion, the notion of maintenance and support". On page 180 he said "Maintenance and support for this purpose will not be the same concept as is relevant in legislation as to testator's family maintenance or in matrimonial causes".

20. At page 188 Gibbs J. (as he then was) said:

"However, in its relevant sense, the adjective 'dependent', as
defined in the Oxford English Dictionary, means that the
person to whom it is applied 'depends or has to rely on
something else for support, supply, or what is needed'. The
word, as this definition shows, is capable of different
shades of meaning. It may mean 'relying for support', so
that it connotes actual reliance, or 'having to rely for
support', so that it connotes not only reliance in fact but a
need to rely for support."

See also per Gibbs J. in Aafjes v. Kearney (1976) 8 ALR 455 at page 461 where he repeated his view stated in the earlier case.

21. In the present case it is not necessary to establish dependence "upon earnings" and therefore it is open to the decision maker to look beyond the question whether the earnings were in fact applied in maintaining the dependants.

22. Gibbs J. emphasized in the above two cases that a person may be dependent even though not in receipt of support in fact, so long as there is a need to rely upon another for support. In this sense a person may be dependent on another so long as he or she has a need for support, notwithstanding the fact that the need is for one reason or another not being satisfied by that other. It may be conceded that a person without wages or private income needs to rely for support upon some person. To the extent that such a need is not satisfied, he or she is reliant upon social security or like pensions and private charity. In our opinion this concept of dependence based upon a need for support could have relevance in a matter such as this. In the absence of an irrevocable abandonment by Mrs. Scott of the entitlement to support from her husband, itself a question of fact, it is very much a question of fact for the Tribunal whether Mrs. Scott was dependent upon her husband in the sense to which we have referred: See the observations of Viscount Haldane L.C. in Potts v. Niddrie and Benhar Coal Co Ltd. supra at pp.536-8 and as to abandonment, cf New Monckton Collieries Ltd v. Keeling (1911) AC 648, a case the facts of which illustrate irrevocable abandonment and complete independence.

23. We would also attach significance to Barwick C.J.'s opinion that testator's family maintenance and matrimonial causes were not relevant to the determination of the question whether the widow in the case before him was wholly dependent upon the earnings of the deceased. It is our opinion that concepts relevant to the Family Law Act together with the practices and decisions of that Court also do not necessarily determine conclusively the question of dependency under the Superannuation Act. The latter Act provides benefits for employees on their retirement and after their death for spouses and children which to some extent the particular employee has purchased by his contributions. In this way it differs greatly from the concept of Social Security legislation and the rights of spouses and children under the Family Law Act when there is a breakdown of the marriage relationship.

24. In these circumstances it seems to us somewhat incongruous for an investigation of dependency to be confined to consideration, if not speculation, as to the impact of the Family Law Act upon the matter. The same comment may be applied to an enquiry into the attitude of the Court to the consequences of the maintenance agreement between the parties and whether it ousted the jurisdiction of the Family Court. The investigation into what quantum of maintenance Mrs. Scott might reasonably expect to negotiate or would be likely to receive under a Court Order was inevitably extremely onerous. More significant might be the fact that in the words of Gibbs J. she would have had an overwhelming need to rely upon her husband for support but for the pension and charity of relatives. It is pertinent to note that in two particular decisions of the Tribunal, the reasoning in which we would endorse, Johnson v. Commissioner for Superannuation (1979) 40 FLR 392 and Re McGrath, a decision delivered 30 June 1986, the matter of dependence was determined with little if any reference to rights and likely entitlements under the Family Law Act.

25. It is our opinion that the matter could be determined as a matter of fact without being virtually confined to the Family Law Act and decisions of the Family Court. In that determination, the need for support is at least a relevant matter as is whether on the facts there has been an irrevocable abandonment of an entitlement to such support. Furthermore in assessing need we would have thought that it would be proper to disregard charity and pension payments which have been made because the need was not otherwise satisfied. (See per Mason J. in Aafjes v. Kearney supra at page 464 line 40).

26. The appeal should be allowed, the decision appealed from set aside, and the matter remitted to the Tribunal for reconsideration with a direction that the word 'substantially' in the definition of 'spouse' in s.3 of the Superannuation Act 1976 means 'in the main or essentially'.

27. Since the only question sought to be argued on the appeal was the difficult question of the meaning of 'substantially' in that definition, which question was an important one and one requiring clarification, the appropriate order to make as to costs is that there be no order as to costs of the appeal.

I have had the advantage of reading the reasons prepared by Fisher and Spender JJ. and agree with them so far as they relate to the meaning of the word "substantially" in the relevant phrase, that being the question argued before us.

2. A more difficult point, to my mind, arises from the use of the word "dependent". Here, the respondent, Mrs. Scott, had made an agreement purporting to abrogate her husband's obligation to pay maintenance, but the Family Court might well, in its discretion, have ordered the payment of maintenance despite that. I prefer not to deal with the problem, which appears to me a difficult one, of the proper application of the notion of dependency to facts of that kind, since the matter is not in issue in this appeal.

3. I agree that the orders proposed by Fisher and Spender JJ. should be made.