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High Court of Australia |
AMELIA IRENE HARRIS v. DIRECTOR-GENERAL OF SOCIAL SECURITY
High Court of Australia
Gibbs C.J.(1), Wilson(2), Brennan(1), Deane(1) and Dawson(1) JJ.
CATCHWORDS
HEARING
CanberraDECISION
GIBBS C.J., BRENNAN, DEANE and DAWSON JJ. Mrs Harris, the appellant, was paid an age pension under the Social Services Act 1947 (Cth) ("the Act") on and from 29 April 1976. On 9 September 1977 she obtained casual employment as a nursing aide. In most fortnights between that date and 2 September 1979 she received some pay, the amounts of which varied from fortnight to fortnight. Her lowest pay was $35.65, her highest $231.16. She also received some amounts of income by way of interest on bank deposits and other investments. She did not notify a Director of Social Services of her earnings. An entitlement review form containing questions about her income was sent to her on 19 July 1979. She answered those questions candidly. Thus it was discovered that she had been paid her pension at a rate higher than the rate that was appropriate having regard to the income-test provisions of s.28(2) of the Act to which reference will presently be made. In purported exercise of the power conferred by s.140(2), it was decided to deduct $10 each fortnight from Mrs Harris' pension until $1,177.90 should be recouped. That was the amount assessed as overpaid age pension during the period from pension payday 13 October 1977 to pension payday 30 August 1979.
Mrs Harris invoked the jurisdiction of the Administrative Appeals Tribunal
to review that decision. Two issues arose: the calculation
of the overpayment
and the method by which it should be recouped. The second issue has not been
argued here. The Tribunal declined
to vary the decision to deduct $10 each
fortnight from Mrs Harris' pension but, by majority, it set aside the decision
and remitted
the matter for reconsideration, directing that the amount to be
deducted be calculated in accordance with the principles expressed
in the
reasons for decision of the majority. The dissenting member, Mr W.B. Tickle,
held that $1,177.90 did not exceed the correct
assessment and he would have
affirmed the decision. The Director-General of Social Security appealed to
the Federal Court of Australia.
The Full Court of that Court set aside the
decision of the Administrative Appeals Tribunal and ordered that the matter be
remitted
to the Director-General to enable him to calculate, in accordance
with the reasons for judgment of the majority of that Court (Fox
and Northrop
JJ.) the amounts paid by way of age pension to Mrs Harris "which should not
have been paid to her by reason of her failing
to give appropriate
notifications under s.45(1)" of the Act. This appeal is brought by special
leave from that judgment.
The only question that has been raised on each appeal relates to the
calculation of the overpayment. That question has evoked
divergent views
between the majority and minority in both the Federal Court and the
Administrative Appeals Tribunal and between the
majority of the Court and the
majority of the Tribunal. To answer the question, it is necessary to refer to
a mosaic of provisions
which do not easily interlock. The provisions will be
referred to in the form in which they stood at the material time, though some
of them have been amended subsequently and others have been repealed and new
provisions inserted in their place.
An age pension is paid from a date determined by the Director-General
(s.39). It is paid either "in fortnightly instalments"
(s.41(1)) or, if the
pension is paid to an account maintained with a bank, credit union or building
society, "at such intervals as
the Director-General determines" (s.135W(2)).
Division 4 of Part III of the Act governs the rate of pensions. Section 28(1)
provides:
" Subject to this Part, the rate of an age or invalid pension
shall in each case be a rate determined by the Director-General
as being
reasonable and sufficient, having regard to all the circumstances of the
case, but shall not exceed the maximum
rate fixed by or in accordance
with the next 8 succeeding sub-sections."
The eight succeeding subsections fix different maximum rates for different
classes of age pensioners, the rates specified in those
subsections being
subject to adjustment from time to time by a factor derived from variations in
the Consumer Price Index (s.28A).
Although the Director-General is required
by s.28(1) to make a discretionary determination of the rate of a pension, his
practice
is to determine the rate of each pension at the relevant maximum
rate. The rate of Mrs Harris' pension was determined at the maximum
rate fixed
by s.28(1A) as adjusted. To distinguish between the rates involved in the
calculation of pension payments, it will be
convenient to call the rate
determined under s.28(1) as adjusted by s.28A "the s.28(1) rate". The s.28(1)
rate is a component in
the calculation required by sub-s.(2) which is not one
of "the next 8 succeeding subsections". Subsection (2) provides:
" The annual rate at which an age or invalid pension is
determined shall, subject to sub-section (2AA), be reduced
by one-half
of the amount (if any) per annum by which the annual rate of the income
of the claimant or pensioner exceeds
-
(a) in the case of an unmarried person - $1,040 per
annum; or
(b) in the case of a married person - $897 per annum."
Sub-section (2AA) is irrelevant to this case. Section 28(2) confers no
discretion. The deduction from the s.28(1) rate that
occurs when "the annual
rate of ... income" exceeds the specified amounts per annum does not depend on
any decision by the Director-General.
The calculation required by sub-s.(2)
has two variables: the s.28(1) rate and the annual rate of income of the
pensioner. The result
of the calculation may be called "the s.28(2) rate".
The s.28(2) rate determines "the annual rate of the pension" for the purposes
of s.41(2) and therefore determines the amount payable to a pensioner each
fortnight. Section 41(2) provides:
" Subject to this section, the amount of a fortnightly instalment
of a pension shall be ascertained by dividing
the annual rate of the
pension by twenty-six."
In cases where the pension is paid at intervals determined by the
Director-General pursuant to s.135W(2), no less than in cases where
it is paid
pursuant to s.41(2), the pension is payable in instalments (s.135W(7)) and the
amount payable on the pension payday is
necessarily governed by the annual
rate of the pension. To ascertain the amount that should be paid by way of
pension on any pension
payday, the s.28(2) rate must be known and that rate
can be known only when the variables of the s.28(2) calculation are known.
The Director-General, to whom the general administration of the Act is
confided subject to any direction of the Minister (s.7),
knows the s.28(1)
rate but he must ascertain the annual rate of income of the pensioner. As
variations in the excess of an annual
rate of income over one or other of the
amounts per annum specified in s.28(2) result in variations in the amount
which should be
paid by way of pension from time to time, a particular power
to reduce or increase the rate of the pension which is being paid is
conferred
on the Director-General by s.46(1). That subsection provides:
" If -
(a) having regard to the income of a pensioner;
(b) by reason of the failure of a pensioner to comply
(c) for any other reason,paid to a pensioner should be cancelled or suspended, or that the rate of the pension which is being paid to a pensioner is greater or less than it should be, the Director-General may cancel or suspend the pension, or reduce or increase the rate of the pension, accordingly."
the Director-General considers that the pension which is being
The s.28(2) rate changes whenever either of the variables in the s.28(2)
calculation changes, that is to say, whenever the s.28(1)
rate is adjusted or
whenever the annual rate of income over the relevant sum per annum specified
in s.28(2) changes. Variations
in the s.28(1) rate do not occur, or do not
necessarily occur, at the same time as variations in the pensioner's annual
rate of income.
The s.28(1) rate may change at 6-monthly intervals, but the
annual rate of income may change at any time: it is not an annual amount,
but
an annual rate. When there is a change in either the s.28(1) rate or in the
excess of the annual rate of income over the relevant
specified sum per annum
in s.28(2), it is necessary to exercise the powers conferred by s.46(1) in
order that the pension which is
being paid conforms with the s.28(2) rate.
The powers conferred by s.46(1) may be exercised at any time. An occasion for
exercising
those powers is when the s.28(2) rate so changes that the rate of
pension which is being paid is greater or less than it should be.
Provision is made in the Act to enable the Director-General to be given or
to obtain the information necessary to ascertain the
pensioner's annual rate
of income. In addition to his general powers to summon witnesses, receive
evidence on oath or affirmation
and require the production of documents
(s.16), the Act confers on the Director-General a power to require written
information from
a pensioner of his income. Section 44 provides:
" A pensioner, not being a permanently blind person, shall,
whenever so required by the Director-General, furnish
to such officer,
and within such time, as the Director-General specifies, a statement, in
accordance with a form approved
by the Director-General, relating to the
income of the pensioner and of his spouse (if any).
Penalty: Forty dollars."Under s.45(1) a pensioner is obliged, without prior request, to give information. That sub-section provides:
(b) is not a permanently blind person; andsection 30A,
(c) is not a person in receipt of an allowance under
The Act thus provides for notification of what may be significant
increases in average weekly rates of income and arms the Director-General
with
powers to obtain further information. Upon such information as the
Director-General is given and obtains, he must ascertain
from time to time the
pensioner's annual rate of income. That is a question of fact, but the
difficulty in this case arises from
uncertainty as to what is meant by "the
annual rate of income of the claimant or pensioner" in s.28(2).
The distinction between an annual amount of income and an annual rate of
income is critical to an understanding of s.28(2).
If an annual amount of
income were a component in the s.28(2) calculation, it would be necessary to
identify a commencing date of
the income year in order to ascertain what
receipts fell into one year and what into the next. But a rate of income, like
a rate
of interest, may vary within any annual period though it is expressed
as an annual rate. It is a current rate of income, expressed
as so much per
annum. An annual rate of income may not subsist for a year: an annual rate of
income that obtains in one week may
change in the week following. Annual
income is the sum of the products of each annual rate of income that obtained
during any part
of the year multiplied by the fraction of the year during
which it obtained.
Income can be derived from various sources, as the definition of "income"
in s.18 makes clear. Some items of income may be received
at frequent and
regular intervals during a year (for example, weekly or fortnightly wages paid
to an employee), some intermittently
(for example, profits of a business) and
others at lengthy intervals (for example, annual dividends on shares).
Subject to the exceptions
stated in the s.18 definition and subject to the
limitations expressed in s.29, no income derived from any source is to be left
out
of account in ascertaining the annual rate of income. At the time when an
annual rate of income is ascertained, it is necessary
to have regard to the
pensioner's sources of income at that time and to find what each of those
sources would yield over the period
of a year assuming the current yields from
those sources were to continue. It is not necessary to predict whether the
pensioner
will retain his sources of income for the year or whether the
current yields will be maintained, for the annual rate of income is
the
current rate of income though it is calculated and expressed as an annual
rate. If the current income from a current source
is receivable as so much
per week or per month, it must be calculated and expressed as an amount per
annum. But an annual rate of
income is not ascertained merely by extending to
a year the income receipts of a shorter period without considering the period
in
respect of which the particular item of income has been received. A
pensioner whose only income apart from his pension is $1,000
paid annually as
a dividend on an investment has an annual rate of income of $1,000. It is
wrong in law as it is absurd in fact
to say that he has an annual rate of
income of $52,000 in the week in which he receives the dividend and a nil
annual rate of income
for 51 weeks of the year. His investment, the source of
his income, yields an annual sum and, so long as the pensioner retains the
investment, his annual rate of income from that source will be $1,000. If
that source of income were lost, the annual rate of income
from that source
would be reduced to nil from the time of the loss. When a pensioner is in
receipt of weekly wages from employment,
however, his annual rate of income
from that source is calculated on the assumption that his earnings at the
current rate will continue
for the year. If he were to retire from work, that
source of income would be gone and the annual rate of income attributable to
that source would be nil. In cases where pensioners or claimants are employed
intermittently, it may be appropriate in some cases
to treat the intermittent
work as a continuing source of income and to take an average of earnings over
a period as the yield from
that source, and in other cases to treat each
employment as a separate source of income yielding its particular amount of
earnings.
The former method would establish a comparatively constant annual
rate of income; under the latter method, the annual rate of income
would
change as the pensioner or claimant went into and out of employment. The
circumstances of the particular case would show which
method is more
appropriate.
Similarly, if a change occurs in the level of income derived from a
particular source, the new level is the basis on which, from
the time of the
variation, the annual rate of income attributable to that source is to be
calculated. If a pensioner is in casual
employment earning different amounts
each week, as Mrs Harris was, it may be appropriate - it is a question of fact
- to determine
the annual rate of income attributable to casual employment by
striking an average of earnings over a period. Section 45(1) refers
to a
period of eight consecutive weeks. Although that provision relates to
notification, not to calculation, it may be administratively
sound in many
cases to strike an average over a period of eight weeks. But the
circumstances of the case must determine what is
a fair method of ascertaining
the current rate of income at a particular time. The rolling periods of eight
weeks referred to in
s.45(1) do not impose a restriction on the fair methods
of ascertaining the current rate of income.
An annual rate of income, at whatever time it is ascertained for the
purposes of s.28(2), is the aggregate of those income payments
which would be
received by the pensioner during the ensuing year on the assumption that he
retains all his current sources of income
for the year and that they continue
to yield income at the current level. The annual rate thus ascertained enures
until something
occurs which falsifies the assumption on which the particular
annual rate was ascertained - that is, until a source of income is
gained or
lost, or the level of income yielded by a source of income changes. Then a
new annual rate of income must be ascertained
on a new set of assumptions that
accord with the then current sources of income and the then current levels of
income yielded by
those sources. If the s.28(2) rate changes, the pension
that is being paid should be changed pursuant to s.46(1).
The majority in the Federal Court (Fox and Northrop JJ.), placing emphasis
on the notification of increases in the weekly rate
of income required by
s.45(1), held that the s.28(2) calculation should be based on the total amount
received in the eight-week period
referred to in s.45(1). The difficulty with
this approach is twofold: first, that the receipts in an eight-week period
notified
by a pensioner may be treated as though they represent the
eight-weekly income from all sources of income, whether or not a source
of
annual income has yielded a payment in the eight-week period and whether or
not a continuing source of income has not yielded
a payment in that period;
and secondly, that the circumstances of the case may make the rolling
eight-week period method unfair or
inaccurate.
Ellicott J. in the Federal Court and the majority of the Administrative
Appeals Tribunal (Messrs R.K. Todd and M.J. Cusack),
placing emphasis on the
annual rate of pension prescribed by s.28(1) and the automatic reduction
effected by s.28(2), thought that
each pension year commencing on the
anniversary of the date of grant of the pension was a discrete period and that
the income received
in each pension year determined the adjustment that had to
be made pursuant to s.28(2) at the end of that year. However, Ellicott
J.
found in s.46 a power to enable the Director-General to make a provisional
adjustment pending the end of the pension year assessment.
Messrs Todd and
Cusack regarded the goal of fixing the correct fortnightly instalment to be
paid throughout the year to a pensioner
in receipt of fluctuating income as
"unattainable". It is not necessary to fix a pension year to ascertain an
annual rate of income
and it is erroneous to regard either the s.28(1) rate or
the s.28(2) rate as importing a need to assess the amounts of income actually
received in any annual period. In our respectful opinion, although Ellicott J.
was right to reject an approach which required a prediction
to be made of the
future income that the pensioner was likely to receive, he was in error in
thinking that it was necessary to predict
future income. Current income from
all current sources expressed as an annual rate is the variable to be
ascertained for the purposes
of s.28(2).
The fixed year approach, as Mr Tickle demonstrated in his reasons for
decision, is productive of the gravest anomalies if income
is received at
different times. If annual receipts are treated as the receipts of a
particular week, the results are equally anomalous.
But an annual rate of
income that is calculated and expressed on the assumption that current sources
of income and levels of income
- whether annual or not - will continue, being
a rate that subsists only until the assumption is changed, removes the
anomalies to
which the Full Court and the Administrative Appeals Tribunal
referred. This was substantially the approach favoured by Mr Tickle.
He
rightly emphasized that the ascertainment of the annual rate of income from
time to time is a question of fact once the meaning
of "annual rate of income"
is defined. As Mrs Harris' income from her casual employment fluctuated
widely, and as the issue for
the Tribunal's determination was the amount of
overpayment in past years, Mr Tickle thought it right to aggregate her
earnings into
two periods: the year following her commencement of employment,
and the following 49 weeks until she ceased work. There is no error
of law in
a finding based on such a calculation, though retrospective calculation is
impossible when an adjustment is to be made
under s.46(1) to the amount of a
pension being paid. Section s.46(1) would have permitted more frequent reviews
of Mrs Harris' annual
rates of income and more frequent changes pursuant to
s.46(1) in the pension she was being paid, but the knowledge of hindsight
removes
the need to reconstruct intermittent reviews and adjustments which, in
theory, ought not to produce a substantially different result.
It was common ground that, once the s.28(2) rate was calculated, the
correct result of the proceedings before the Administrative
Appeals Tribunal
could be determined. It is unnecessary, therefore, to consider the limits of
the right to recoup under s.140(2).
For our part, we would reserve for future
consideration the question of what is required to satisfy the criterion of a
pension,
etc., "which should not have been paid", and particularly whether
that criterion is any wider than the elements of the right of recovery
conferred by s.140(1).
Though the right of recoupment was conceded in this case, it does not
follow that the Court should undertake the calculation
of the amount which
should be recouped under s.140(2). The jurisdiction of the Federal Court of
Australia is limited to appeals
from the Tribunal on questions of law (s.44(1)
of the Administrative Appeals Tribunal Act 1975 (Cth)), though that Court "may
make such order as it thinks appropriate by reason of its decision" (s.44(4)).
Where the decision under review by the Tribunal turns on a question of fact,
the Federal Court (or this Court on appeal from the
Federal Court) should by
its order leave to the Tribunal the function of finding the facts if the
Tribunal has not already found
them. The Tribunal is bound to find the facts
in accordance with the principles expressed by the judgment of the Court. In
the
light of those principles, the Tribunal decides the order it should make
under s.43 of the Administrative Appeals Tribunal Act. In
this case, if the
calculations made by Mr Tickle are correct in fact, it would be appropriate
for the Tribunal to affirm the
decision
under review; if the Tribunal is
unable to determine whether that calculation is right or not, it may be
appropriate for
the Tribunal
to remit the matter to the Director-General for
reconsideration in accordance with the principles expressed by the judgment
of
this
Court.
The appeal should be allowed, the order of the Full Court of the Federal
Court of Australia set aside and in lieu thereof the
matter should be remitted
to the Administrative Appeals Tribunal to proceed in accordance with the
principles expressed by the judgment
of this Court. There should be no order
as to costs.
WILSON J. The appellant has been in receipt of an age pension since 29 April 1976. She was not then in employment and her only income at that time was about $400 per annum in the form of interest on savings bank deposits and other investments. Consistently with his general practice, the Director-General of Social Security determined, in accordance with s. 28(1) of the Social Services Act 1947 (Cth) as amended ("the Act"), that the appellant was entitled to receive a pension at the maximum rate permitted by the Act. On 9 September 1977 she commenced employment on a casual basis as a nursing aide at a nursing home. This employment ceased on 2 September 1979. During this period she received a gross amount of $3,276.62 in wages, paid fortnightly but in irregular amounts. There were some fortnights when she did not receive any wages at all and at other times her fortnightly wage varied from $35.65 to $231.16. The receipt of this income was significant because the appellant's pension was subject to the means test prescribed by s. 28(2) of the Act. Unfortunately, the appellant failed to notify the Department as she should have done in accordance with s. 45 of the Act, with the result that the Department remained unaware of the change in her circumstances until she furnished upon request an Entitlement Review form in July 1979. Thereafter, the Director-General, as he was empowered to do by s. 140(2) of the Act determined that there should be deducted from her pension the amount of the overpayment, that being an amount "which should not have been paid".
The question which has agitated the Department, the Social Services
Appeals Tribunal, the Administrative Appeals Tribunal, the
Full Court of the
Federal Court and now this Court is the manner in which the amount which
should not have been paid is to be determined.
The history of the proceedings
reveals a bewildering array of conflicting theories as to how that question is
to be answered, all
of them claiming support from the provisions of the Act.
Although in this case the question arises in the context of s. 140(2), the
answer will be found in the construction of those provisions of the Act which
govern the operation of the means test itself. It
should be noted that no
question arises for decision in the present case touching the circumstances
surrounding overpayments of pension
which attract the operation of s. 140(1)
and s. 140(2) and the precise manner of that operation. It is common ground
that the appellant
received by way of pension an amount "which should not have
been paid" within the meaning of those words in s. 140(2). The only
issue is
as to the method of determining the quantum of that amount. It is therefore
unnecessary for me to decide whether Ellicott
J. was correct in concluding
that the Director-General must make a revised determination pursuant to s. 14
of the Act before it can
be said that the overpayment to the appellant "should
not have been paid" so as to attract the provisions of s. 140(2). As at
present
advised, I would have thought that the automatic operation of s. 28(2)
provided sufficient basis for a conclusion that the payment
to the appellant
of the pension at the rate determined by the Director-General without the
adjustment required by s. 28(2) included
an overpayment "which should not have
been paid".
The principal provisions of the Act which are said to be relevant to the
question which falls for decision may be described briefly.
Section 28(1)
provides for the Director-General to determine a rate of an age pension which
shall be reasonable and sufficient in
all the circumstances of the case but
which shall not exceed the maximum rate fixed by or in accordance with the
eight succeeding
subsections. As I have said, his practice is to determine a
rate at the maximum rate permitted or prescribed by those subsections.
Section 28(1A) fixed the maximum rate of age pension in the case of the
appellant at $2,766.40 per annum. Section 28(2), which is
not one of the eight
succeeding subsections referred to in s. 28(1), provides as follows:
"28.(2) The annual rate at which an age or invalid pension is
determined shall, subject to sub-section (2AA), be
reduced by one-half of
the amount (if any) per annum by which the annual rate of the income
of the claimant or pensioner
exceeds -
(a) in the case of an unmarried person - $1,040 per
annum; or
(b) ..."Both pension rates and the means test provisions are to be adjusted in accordance with movements in the consumer price index (s. 28A). The actual figures mentioned in the sections to which I have referred varied during the period under consideration but the variation is immaterial to the issue. Pensions are to be paid in fortnightly instalments, the amount of an instalment being ascertained by dividing the annual rate of the pension by twenty-six (s. 41). A pensioner may be required at any time to furnish a statement to the Director-General relating to his income (s. 44). Sections 45 and 46, so far as they are relevant, provide:
(a) is not married, ...of the income last specified by him in a claim, statement or notification under this Part, the pensioner shall, within 14 days after the expiration of that period, notify a Director of the amount of the income received by him in that period."
(b) ...
(c) ...
is higher than $20 per week and is higher than the average weekly rate
"46.(1) If -with either of the last two preceding sections; or
(a) having regard to the income of a pensioner;
(b) by reason of the failure of a pensioner to comply
(c) for any other reason,a pensioner should be cancelled or suspended, or that the rate of the pension which is being paid to a pensioner is greater or less than it should be, the Director-General may cancel or suspend the pension, or reduce or increase the rate of the pension, accordingly."
the Director-General considers that the pension which is being paid to
The appellant's contention is that the description of the maximum rate of
pension in s. 28(1A) and s. 28(2) in terms of an annual
sum indicates the
legislative intent that the means test provisions are to be administered on
the basis of a yearly period, commencing
on the date from which the pension is
first payable ("the pension year"). The opposing contention, advanced by the
Department, is
that the means test provision revolves around the concept of a
fortnightly equation of pension and income, with the comparison being
made on
what is described as a "rolling eight-weeks" period. It is frankly admitted
by counsel for the Director-General that his
submission is not the same as
that advanced on behalf of his client at earlier stages in the proceedings and
that it is not the only
view that is reasonably open on the material
provisions of the Act but he argues that the construction for which he
contends is attended
with fewer anomalies and difficulties than any
alternative approach and that it both advances the evident purpose of the Act
and
conforms to its language.
It seems to me that the solution offered by the respondent encounters a
substantial difficulty at the outset. The solution provides
no explanation
for the prescription of the maximum rate of age pension in terms of an annual
amount. If an annual period was not
intended to be of significance, the Act
could have fixed a weekly or fortnightly rate of pension and provided a means
test threshold
of an amount of income received in each week or fortnight as
the case may be. A scheme expressed in that form when coupled with
the
eight-weeks period referred to in s. 45 would fit the respondent's contention
admirably. However, the Act does not do that.
Having expressed the maximum
allowable pension rate in terms of an annual amount, the Act requires that the
annual rate of the pensioner's
income be ascertained in terms of an amount
which can then be measured against the stated ceiling of $1,040 per annum. The
amount
by which the sum so ascertained exceeds that ceiling is then halved to
yield the amount by which the rate of pension entitlement
for that year is to
be reduced (s. 28(2)). In defence of his submission, counsel for the
respondent relies on the fixation in terms
of a rate as rendering the
reference to an annual rate as of only formal significance in providing a
basis for calculation of the
pension entitlement for any particular period and
he points to the provision for payment in fortnightly instalments (s. 41) in
this
regard. But the reference to an annual rate of pension identifies that
amount of pension which will be received in the course of
a year if the rate
remains unchanged and it is this amount which must be divided by twenty-six to
yield the amount of each fortnightly
instalment. I regard s. 41 as no more
than a machinery provision directed to the manner in which the pension is to
be paid. It
falls into the same category as s. 135W which, as I have already
noted, allows for a pension to be paid into a bank account at such
intervals
as may be determined. Turning to s. 45, the argument for the respondent
advances this section as the linch-pin for the
whole scheme because from it is
gleaned the entitlement of the pensioner to whatever, on the basis of an
eight-weeks period, the
means test rate of income allows him. But, in my
opinion, s. 45 is plainly no more than another machinery provision, obliging
the
pensioner to notify the Department of an increase in income beyond the
stipulated sum so that the actual amount of pension paid to
him during the
course of the year will maintain a general correspondence with whatever
entitlement is ultimately determined.
I accept that the general purpose of the age pension scheme may be
described as one of income maintenance but that does not mean
that the
pensioner is to be assumed to spend his entire income, when it exceeds the
amount allowed by the means test, in the period
when it is received. The
extreme case was mentioned in argument of a pensioner who receives his entire
annual income of $7,000 in
dividends in one month of the year. On the
argument advanced for the respondent that pensioner would be entitled to
receive his
pension at the determined rate (on current practice, the maximum
rate) for the other ten months of the year. I do not think the
principle of
income maintenance should be understood to require such a result. Of course,
there may be other powers available to
the Director-General, for example in s.
46, which would enable him to adjust the pension rate in such a case but such
action would
merely demonstrate the limitations necessarily implicit in the
income maintenance principle.
I therefore broadly agree, with respect, with the view taken by the
majority in the Administrative Appeals Tribunal and by Ellicott
J. in the
Federal Court to the effect that the means test requires that attention be
given to the actual income of the pensioner
during the pension year. As
Ellicott J. expressed it in colloquial terms, it means that a pensioner is
permitted to earn up to $1,040
in each year without affecting the amount of
his or her pension. I agree with his Honour in thinking this is what
Parliament intended.
I have not yet mentioned all the considerations which lead me to this
conclusion. I regard it as important that the means test
provision (s. 28(2))
is not incorporated into those provisions of the Act whereby the rate of
pension is determined. It operates
by force of the Act, independently of the
exercise of any discretion by the Director-General, to reduce that rate, being
an annual
rate, by one-half of the amount (if any) per annum by which the
annual rate of the income of the appellant exceeds $1,040 per annum.
The Act
is not explicit as to the meaning of the phrase "the annual rate of the
income". It is not comparable in meaning to the
phrase "the annual rate at
which an age ... pension is determined". The latter phrase is quite explicit.
It is the annual rate which
at any particular time has been determined. Such
a rate may vary from time to time in the course of a year by reason of a
change
in the rate in accordance with s. 14 or with s. 46 or there may be an
automatic variation by reason of a change in the consumer price
index (s.
28A). The former phrase, however, is not the subject of any determination
under the Act. It merely identifies an objective
fact. In my opinion, in the
absence of any selection by the Act of any shorter period by reference to
which the income earned within
that period permits an annual rate to be
determined, the annual rate of income is simply the total income received over
the year.
The word "rate" is a flexible term, of which many definitions are to
be found, and what it means in a particular instance must depend
on the
context and subject matter. The term "rate" may be defined as meaning amount,
degree, proportional or comparative amount
or degree, proportion, proportion
or standard, percentage, ratio. The further definition of the term includes
price, charge, sum,
value, valuation, and also a charge, payment, or price
fixed according to a ratio, scale, or standard. The "rate" may be a measure
or the measure of a thing. Similarly, the term may be employed to mean a
fixed measure of estimation, the measure of a thing by
its ratio or relation
to some fixed standard, a rule or measure of assessment, or a proportional
estimation according to some standard:
See generally 75 Corpus Juris
Secundum, "Rate", pp. 607-608. "Rate" and "amount" have been held to be
synonymous (see Smith v.
Board of Trustees 25 N.W. 2d 858, at p. 859), but the
terms have also been distinguished: see 3A Corpus Juris Secundum, "Amount",
p.
441. Accordingly, the word "rate" in some circumstances may simply mean
"amount" as for example where one speaks of an income
rate of $1,000 per annum
to describe the total amount of income received during that period. This
construction finds support in the
use in the subsection of the phrase
"one-half of the amount (if any) per annum" (my emphasis). This phrase
suggests that the calculation
required by the means test must result in a
determination of the actual sum of money by which the person's pension for
that year
is to be reduced. I have already described ss. 41 and 45 as
machinery provisions designed to facilitate the payment of pensions
during the
year (s. 41) and to ensure that those fortnightly payments are reduced from
time to time to correspond with increased
income.
It will have been noticed that s. 45 applies only when the average weekly
rate of income received in any period of eight consecutive
weeks increases. A
pensioner is not required to notify the Department of a decrease in his
earnings, yet the administration by the
Department of the means test provision
on the basis of a rolling eight-weeks period cannot be implemented with any
accuracy or fairness
unless that information is available. Counsel for the
respondent was obliged to rely on what he described as an enlightened
self-interest
to activate a pensioner to supply the information and so enable
the scheme to operate. On the other hand, the construction which
I prefer
would enable any impairment of that enlightened self-interest to be
accommodated by the review that in apropriate cases
I would expect to be
undertaken at the end of each pension year. Section 44 empowers the
Director-General to secure from the pensioner
all the information that may be
relevant to that review.
I would allow the appeal with costs, set aside the decision of the Full
Court of the Federal Court and restore the decision of
the Administrative
Appeals Tribunal.
ORDER
Appeal allowed.Set aside the order of the Full Court of the Federal Court of Australia and in lieu thereof order that the decision of the Administrative Appeals Tribunal, dated 28 August 1981, be set aside and the matter be remitted to the Administrative Appeals Tribunal to proceed in accordance with the reasons for judgment of the majority of this Court.
No order as to costs.
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