Duncan v Defence Force Retirement and Death Benefits Authority and Commonwealth of Australia

[1980] FCA 72

Re: PETER GEORGE DUNCAN
And: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY and COMMONWEALTH OF
AUSTRALIA (1980) 47 FLR 256
No. VG 37 of 1979
Defence Force Retirement and Death Benefits - Administrative Law - Crown -
Statutes

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Brennan(1), Keely(1) and Lockhart(1) JJ.

CATCHWORDS

Defence Force Retirement and Death Benefits - Member holding acting rank - Contributions payable by member - Defence Force Retirement and Death Benefits Act 1973, ss.3,19(1), 20 and 23 - Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations, regs.3 and 4 - Defence Force (Salaries) Regulations, regs. 4, 5 and 7 - Naval Financial Regulations,reg.4.

Administrative Appeals Tribunal - Jurisdiction - Whether opinion constitutes "decision" - Defence Force Retirement and Death Benefits Act 1973, ss.8(1) and 99(1) - Administrative Appeals Tribunal Act 1975, ss.3(3), 25(1) and 44.

Administrative Law - Defence force retirement benefits - Contributions payable by member holding acting rank - Fortnightly and annual rate of pay of member holding acting rank - Defence Force Retirement and Death Benefits Act 1973 (Cth), ss. 3, 19 (1), 20, 23 - Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations, regs. 3, 4 - Defence Force (Salaries) Regulations, regs. 4, 5, 7 - Naval Financial Regulations, reg. 4 (1).

Crown - Power of Administrative Appeals Tribunal - Opinion of administrative authority - Whether decision made in exercise of powers conferred by enactment - Defence Force Retirement and Death Benefits Act 1973 (Cth), ss. 8 (1), 99 (1) - Administrative Appeals Tribunal Act 1975 (Cth), ss. 3 (3), 25 (1), 44.

Statutes - Interpretation - Annual rate of pay of member - Regulations referring to other regulations for purpose of quantifying rate of pay - Definition of terms in regulations referred to - Acts Interpretation Act 1901 (Cth), s. 46 - Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations, reg. 4 (4) - Naval Financial Regulations, reg. 4 (1).

HEADNOTE

The applicant, a commander in the Permanent Navy, was granted the acting rank of captain and during the relevant period immediately prior to his compulsory retirement acted in that rank and was paid salary and allowances accordingly.

The applicant was liable to make contributions to the Commonwealth in accordance with ss. 17 and 19 (1) of the Defence Force Retirement and Death Benefits Act 1973 ("the Act") and eventually entitled to receive a retirement benefit under s. 23 of the Act. The applicant contended that during the relevant period he was liable by way of contributions to have deductions made from his salary in amounts appropriate to a captain's rate of pay. As a consequence his retirement benefit would be calculated on a similar rate. However the respondent maintained that the relevant rate of pay was that of a commander and deductions were made accordingly. In support of its conclusion the respondent relied in particular upon the definition of "rank" appearing in s. 3 (1) of the Act.

The amount of a member of the Defence Force's contributions and his entitlement to a retirement benefit were calculated by the Act upon the basis of a percentage of the member's fortnightly or annual rate of pay respectively (ss. 19 (1) and 23 (2) of the Act).

The respondent notified its view to the applicant by letter of 8th May, 1978, and he applied to the Administrative Appeals Tribunal to review that decision. The Tribunal affirmed the respondent's decision.

On appeal.

Held: per curiam: (1) The Administrative Appeals Tribunal had possessed jurisdiction to review the respondent's decision as, in forming and communicating its views by the letter of 8th May, 1978, the respondent had: (a) acted in fulfilment of its function of administering the Act under s. 8 (1) thereof, and (b) made a decision in the exercise of powers conferred by an enactment within the meaning of ss. 3 (3) and 25 (1) of the Administrative Appeals Tribunal Act 1975.

(2) To determine the extent of the applicant's liability to contribute it was necessary to decide his fortnightly rate of pay and this was to be calculated, by reason of the definition of "fortnightly rate of pay" in s. 3 (1) of the Act, by reference to a percentage of the applicant's annual rate of pay.

(3) The applicant's annual rate of pay was calculated: (a) first by reason of the definition of annual rate of pay in s. 3 (1) of the Act by reference to the Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations made under the Act. By reg. 4 (4) for the purpose of calculating the annual rate of pay of a member of the Defence Forces reference is made to the rate of salary fixed by the Defence Force (Salaries) Regulations. (b) (i) The quantification of the member's annual rate of pay was the function of the Defence Force (Salaries) Regulations. However those regulations were not incorporated into the Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations made under the Act. Consequently a reference to "rank" in the Defence Force (Salaries) Regulations could not be construed as though it bore the meaning it bore in the Act. (ii) The Defence Force (Salaries) Regulations fixed a member's annual rate of salary according to his rank, and by reg. 4 (3) "rank" bore the meaning it had in the Naval Financial Regulations which included "acting rank". (c) Consequently the annual rate of pay of the applicant was fixed according to his acting rank, namely the rank of captain.

(4) Decision of the Administrative Appeals Tribunal set aside.

HEARING

Sydney, 1980, March 24-25; May 27. #DATE 27:5:1980

APPEAL.

The applicant appealed from a decision of the Administrative Appeals Tribunal. The appeal was heard by a Full Court pursuant to s. 44 (3) of the Administrative Appeals Tribunal Act 1975. The facts appear from the judgment.

A. Chernov, for the applicant.

R. A. Sundberg, for the respondents.

Cur. adv. vult.

Solicitors for the applicant: Mallesons.

Solicitors for the respondents: B. J. O'Donovan, Commonwealth Crown Solicitor.

T. J. GINNANE

ORDER

1. The appeal be allowed.

2. It be declared that, for the purposes of regulation 4(4) of the Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations, the amount of the annual rate of salary of the applicant under the Defence Force (Salaries) Regulations on the days between 8 November 1977 and 16 July 1979 was the annual rate of salary payable to a Captain who had completed the longer period of service that is specified in the latter Regulations in relation to an officer holding that rank.

3. That the matter be remitted to the Administrative Appeals Tribunal to be heard and decided again, and that the Tribunal be directed:
(a) to make such order as to the receipt of additional amounts by way of contribution under Part III of the Defence Force Retirement and Death Benefits Act as appears to it to be appropriate consistently with the liability of the applicant as declared by this Court; (b) to hear such further submissions, and summon such persons to give further evidence and to produce further documents, as it deems necessary to assist it to determine what order is appropriate.

4. The respondents pay to the applicant his costs of the appeal.

Orders accordingly.

JUDGE1

Pursuant to s.44 of the Administrative Appeals Tribunal Act 1975, the applicant appeals from a decision of the Administrative Appeals Tribunal "to affirm the decision of the Defence Force Retirement and Death Benefits Authority notified on 8 May 1978 and confirmed on 16 February 1979". The question which was before the Authority for consideration, and before the Tribunal on review, stems from the grant to the applicant, then a Commander in the Permanent Navy, of the acting rank of Captain. From 8 November 1977 until 16 July 1979 when he was compulsorily retired, the applicant acted in the rank of Captain. During that time he was paid salary and allowances at the annual rates fixed by the Defence Force (Salaries) Regulations (the Salaries Regulations) in respect of officers holding the rank of Captain.

The applicant was "an eligible member of the Defence Force" as that term is defined by the Defence Force Retirement and Death Benefits Act 1973 (the DFRDB Act), and he was therefore liable to pay fortnightly contributions to the Commonwealth in accordance with that Act (s.17). Section 19(1) determined the quantum of the contribution, providing -
"The amount of each fortnightly contribution to be paid by a contributing member is an amount equal to five and one-half per centum of the fortnightly rate of pay applicable to the member on the day on which the contribution is payable."

The respondent Authority construed the complex of provisions, to which reference will presently be made, and came to the view that although the applicant was receiving a Captain's pay during the time relevant to these proceedings, he was liable to make contributions in amounts which would have been appropriate to the rate of pay applicable to a Commander, as that was the substantive rank which the applicant held at that time. Deductions were made from the applicant's fortnightly pay in accordance with the Authority's view. The applicant contended, however, that deductions should have been made in amounts appropriate to the rate of pay applicable to a Captain, and that he was liable to have a larger sum deducted from his fortnightly pay.

If the applicant's contention was correct, the payment of a larger contribution to the Commonwealth would not merely acquit him of his true statutory liability under ss.17 and 19(1): it would tangibly assert Captain Duncan's claim to a retirement benefit (to which he was shortly to become entitled under s.23) calculated on the basis of a Captain's pay. Section 23(2) provides that, in the circumstances in which the applicant retired, he was entitled to "an amount per annum that is equal to such percentage of the annual rate of pay applicable to him immediately before his retirement as, having regard to the number of complete years included in his total period of effective service, is ascertained under Schedule 1."

And so the liability to contribute and the entitlement to benefit were to be quantified by reference to "the rate of pay" (fortnightly or annual) applicable to him. The Authority formed one view as to the applicable rate; the applicant formed another.

On 27 April 1978, the applicant wrote to the Authority to convey his view. The Authority considered the letter, but held to the construction of the relevant Act and Regulations which led to the making of the smaller deduction. Its view was notified to the applicant by letter dated 8 May 1978. That letter contains the decision of the Authority which the Tribunal was invited to review. The letter reads:
"Dear Captain Duncan

I refer to your letter of 27 April 1978 concerning your contributions to the Defence Force Retirement and Death Benefits Scheme.

2. The question that you have raised concerning your rate of contribution does not take account of the definition of "annual rate of pay" which is contained in Sub-section 3(1) of the DFRDB Act 1973. The definition is as follows:-

'Annual rate of pay' in relation to a member of the Defence Force on a particular day, means the amount, that, under the regulations, is the annual rate of pay applicable to the member on that day.

3. The Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations (Statutory Rule 1973 No.188) prescribes the annual rate of pay for the purposes of the definition of "annual rate of pay" in sub-section 3(1) of the DFRDB Act 1973. In general, the annual rate of pay prescribed for a member holding a specified rank is the maximum annual rate prescribed under the Defence Force (Salaries) Regulations to which is added the amount of $950.00. In the case of some specified ranks the annual rate of pay is specified in a Schedule to the Regulations.

4. As the regulations are made under the Defence Force Retirement and Death Benefits Act 1973 the definition in that Act applies to the word "rank" used in the Regulations (i.e. substantive rank or provisional rank).

5. I trust that the above fully explains the provisions of the Act and Regulations in relation to your rate of contribution.

Yours sincerely,

(Sgd)

for R.C. Davey

Chairman DFRDB Authority"

On 18 May 1978, the applicant requested the Authority to reconsider the matter. The Authority obtained legal advice, and in accordance with the advice, it confirmed its earlier view. It notified the applicant by letter dated 9 March 1979, which stated, inter alia:

"In substance, the legal advice received was as follows:-

(a) acting rank is not included within the definition of 'rank' in sub-section 3(1) of the DFRDB Act 1973;

(b) acting rank should be ignored for the purpose of determining the annual rate of pay under the Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations;

(c) the rate of contribution required under sub-section 19(1) of the DFRDB Act should be based on substantive rank;

(d) retirement benefits payable under the Act should be based on substantive rank; and

(e) for the purposes of sub-paragraph 23(1)(a)(ii) of the DFRDB Act, the rank held by the member immediately before his retirement is the rank as defined in sub-section 3(1) of the Act and does not include acting rank.

1. The Authority resolved that it should act in accordance with the legal advice and confirmed the decision conveyed to you in the letter dated 8 May 1978 that for the purposes of the DFRDB (Annual Rates of Pay) Regulations, the definition of 'rank' contained in sub-section 3(1) of the DFRDB Act 1973 applies and, therefore, contributions payable under sub-section 19(1) of the Act are based on your substantive rank of Commander."

The applicant applied to the Tribunal to review the Authority's decision. If the Authority's decision as notified in its letter of 8 May 1978 was a "decision" within the meaning of that term in s.99 of the DFRDB Act, the Tribunal had jurisdiction to review that decision, for it was a decision which the Authority reconsidered and the Tribunal has jurisdiction to review decisions that the Authority has reconsidered under the provisions of that section. By s.99(1) of the DFRDB Act, "decision" has the same meaning as in the Administrative Appeals Tribunal Act 1975 (the AAT Act), and it thus extends to giving or refusing to give a direction, approval, consent or permission, to making a declaration, or to doing or refusing to do any other act or thing (AAT Act, s.3(3)).

A question arises as to whether the formation and communication of its view by the Authority is a "decision" within the meaning of the definition in the AAT Act. The Authority did not alter rights, nor impose a liability. The legal liability of the applicant to contribute under s.19 and his legal entitlement under s.23 were alike unaffected by the Authority's view: the Authority had no power judicially to decide these matters, nor to determine them in any final sense. Yet in practice, as we were told, the Authority's view is accepted by the Navy Pay Office which makes the deductions from pay in accordance with ss.17 and 19 of the DFRDB Act, and no doubt the Authority authorizes the making of payments under s.23 in accordance with its view of a particular member's entitlement. The Authority declared what was the measure of the applicant's liability to contribute, and although the declaration did not affect the applicant's true legal liability, it was nevertheless effective in practice to prevent the deduction of a large contribution from Captain Duncan's pay. And the Authority refused its consent to the making of a larger contribution. What the Authority did thus falls within one or more of the categories defined by s.3(3) of the AAT Act to constitute a "decision". Not all decisions within the meaning of s.3(3) of the AAT Act are reviewable decisions. The AAT Act contemplates that, when other enactments confer jurisdiction upon the Tribunal to review particular classes of decisions, those decisions will be "made in the exercise of powers conferred by the enactment" (s.25(1)). Assuming that this provision limits the classes of decisions reviewable under s.99 of the DFRDB Act to decisions made by the Authority in the exercise of powers conferred upon it, it is necessary to find the power to make the administrative decision which the Tribunal was invited to review. The power is to be found in s.8(1) of the DFRDB Act, which confides to the Authority the "general administration" of the DFRDB Act.

The Authority acted as it did in fulfilment of its function of administering the Act, and in the exercise of the powers conferred upon it in that behalf by s.8(1). The making and notifying of its decision as to the measure of the applicant's liability to contribute was a "decision" within the meaning of that term in the AAT Act, and it was reviewable by the Tribunal under s.99 of the DFRDB Act. It was not contended that jurisdiction was not properly invoked to review the Authority's original decision, although the application to the Tribunal did not in terms relate to the Authority's letter of 8 May 1978.

The Tribunal was constituted by three non-presidential members. The Senior Member (Mr. Edmunds) and Mr. Skermer decided that the Authority's decision should be affirmed; Mr. Hutchison dissented. When the appeal to this Court was instituted, an application that this Court be constituted as a Full Court for the purpose of hearing and determining the proceedings was granted although the proceedings are in the original jurisdiction of this Court (cf. AAT Act, s.44(3)).

The appeal is limited to a question of law only (s.44(1)). The nature of the question appears from the recited correspondence, and it takes its origin from the definition of the term "rank" in s.3(1) of the DFRDB Act. That definition, which applies unless a contrary intention appears, defines "rank" in relation to a member of the Defence Force to mean -
"(a) his substantive rank or, if he is appointed provisionally or on probation, the rank to which he is so appointed; or

(b) if he is provisionally promoted to another rank - that other rank;"
The respondent contends that this definition is carried into each of the statutory instruments to which reference must be made to understand the meaning of s.19, and that, for the purpose of applying each of those instruments the applicant must be regarded as holding his substantive rank, namely, the rank of Commander. We heard some argument as to whether the applicant had been appointed provisionally, or provisionally promoted, to the rank of Captain, but for reasons which will appear, it is unnecessary to resolve that question.

The question of law raised on this appeal is to be answered by reference to certain provisions of the DFRDB Act, of the Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations made under that Act (the Annual Rates of Pay Regulations), and of other Regulations to which the steps of the reader are directed in the journey of interpretation.

The first step in that journey is to ascertain what is meant by the use of the phrase "fortnightly rate of pay" in s.19(1) of the DFRDB Act, for the amount of a member's contribution under that section is 5 1/2% of the fortnightly rate of pay applicable to the member. It is defined by s.3(1) of the DFRDB Act:
" 'fortnightly rate of pay', in relation to a member of the Defence Force on a particular day, means an amount calculated in accordance with the formula -

14 x A

------

365 '

where A is the annual rate of pay applicable to him on that day;"

This definition uses the term "annual rate of pay". So the next step is to discover what is the "annual rate of pay" applicable to the member, in order to quantify the factor "A" in the formula. The term "annual rate of pay" is defined by s.3(1) to mean -

"in relation to a member of the Defence Force on a particular day . . . the amount, that, under the (Annual Rates of Pay) regulations, is the annual pay applicable to the member on that day."

The annual rate of pay is therefore an amount that may, in relation to a member, vary from day to day. It varies according to the "annual pay" applicable to the member under the Annual Rates of Pay Regulations. It may be observed, at this point of the journey, and before entering the thicket of regulations, that there has been no need to refer to the definition of "rank" in s.3(1), because "rank" has not been used by the legislature in defining either fortnightly rate of pay or annual rate of pay.

The next step is to the Annual Rates of Pay Regulations, regs. 3 and 4 of which are each expressed to apply "for the purposes of the definition of 'annual rate of pay' in sub-section 3(1) of the Act." (regs.3(1) and 4(1)). Regulation 3 contains nothing of present relevance. Regulation 4(4) provides:
"Subject to sub-regulations (5),(6),(7), (8) and (9), the annual pay applicable to a member of the Defence Force on a particular day is the amount ascertained by adding $950 to an amount equal to the amount of the annual rate of salary of the member under the Defence Force (Salaries) Regulations on that day."

Now the present case does not fall within any of the sub-regs.(5) (6) (7) (8) or (9) of reg.4, and the annual pay applicable to the applicant on a particular day was therefore $950 more than "the amount of the annual rate of salary", an amount which is to be ascertained by reference to the Salaries Regulations. The reader is referred to the Salaries Regulations in order to ascertain an amount which those Regulations specify. However, the Salaries Regulations are merely referred to for that purpose: they are not incorporated into the Annual Rates of Pay Regulations. If they had been incorporated, it would have been necessary to read the provisions of both sets of regulations as though they were contained in the one statutory instrument (Cadbury-Fry-Pascall Pty.Ltd. v. Federal Commissioner of Taxation (1944) 70 C.L.R.362 at p.389), and it may have been arguable that "rank" in the incorporated regulations bore the same meaning as it bears in the Annual Rates of Pay Regulations (see The Producers' Co-operative Distributing Society Ltd. v. Commissioner of Taxation (N.S.W.) (1944) 69 C.L.R.523 at p.531; Commissioner for Government Transport v. Deacon (1957) 97 C.L.R.535 at pp.543,546). Indeed, that appears to have been the reasoning which led the majority of the Tribunal, and the Authority, to their respective decisions. That was, if we may respectfully say so, a wrong legal turn on the journey of interpretation suggested by some confusing signposts contained in reg.4(3) and (5) to which we shall later return.

For the moment, it is sufficient to observe that the Annual Rates of Pay Regulations refer to the Salaries Regulations merely to ascertain the amount of the member's annual rate of salary under the Salaries Regulations. Quantification is the function of the regulations referred to, not of the regulations which contain the reference. It is not permissible to alter what would otherwise be the operation of the Salaries Regulations in fixing a member's annual rate of salary by construing the Salaries Regulations as though "rank" in those regulations bore the same meaning as it is defined to bear in the DFRDB Act.

Hitherto, the expression "rank" has not been found along the path of interpretation, but it is to be found in the Salaries Regulations and its meaning affects the operation of those Regulations. Those Regulations, made under the Defence Act and the Naval Defence Act, operate independently of the DFRDB Act and regulations made under the DFRDB Act. Regulation 5 of the Salaries Regulations reads as follows:
"Members shall be paid salaries and allowances in accordance with the annual rates fixed by this Part according to their respective ranks and the respective classes into which they are divided."
By virtue of reg.4(3) of the Salaries Regulations, the expression "ranks" in reg.5 has the same meaning as that expression has in the relevant Service Financial Regulations - in this case, the Naval Financial Regulations. The regulation evinces a clear intention as to the meaning which the term is to bear in the Salaries Regulations. By reg.4(1) of the Naval Financial Regulations, "rank" includes "acting rank". These Regulations were not made under the DFRDB Act and accordingly there is no room for the operation of s.46 of the Acts Interpretation Act 1901. Thus the annual rate of salary of the applicant, fixed by the Salaries Regulations, is fixed according to his acting rank, namely, the rank of Captain. His annual rate of salary, being the rate appropriate to a Captain, was the rate specified from time to time in schedule 2 (reg.7(b) of the Salaries Regulations). And that is almost the end of the journey. From schedule 2, the annual rate of salary is ascertained; by adding $950 to that amount, the applicant's annual pay is ascertained; that sum is then the annual rate of pay and fourteen 365ths of that sum is the fortnightly rate of pay to be brought into the calculation under s.19 of the DFRDB Act. The calculation under that section yields the amount of the fortnightly contribution. The Authority, in making its calculations, used the annual rate of salary appropriate to a Commander under the Salaries Regulations because it was of the opinion, expressed in paragraph 4 of its letter of 8 May 1978, that "as the regulations are made under the DFRDB Act, the definition in that Act applies to the word 'rank' used in the Regulations." The fallacy in this approach is that, in the Annual Rates of Pay Regulations, which are made under the DFRDB Act, the word "rank" is not used; whereas it is used in the Salaries Regulations which are made under other Acts. In the relevant sets of Regulations made under other Acts, the expression "rank" is given a meaning which includes acting rank.

It was submitted that s.20 of the DFRDB Act exhibited a legislative intention which is inconsistent with the construction above set out, but the submission is not supported by the terms of s.20. If a member, holding acting rank, is liable to contribute and contributes a larger sum than he would have been liable to contribute if he had not been granted the acting rank, and he reverts to his substantive rank and is liable to contribute a lesser amount, s.20 gives him an election: he may continue to contribute as though his annual rate of pay had not changed (in which event his entitlement under s.23 would be calculable on the same annual rate of pay if he should retire while his s.20 election governed his contribution); or he may obtain a refund of the excess of past contributions over the amount of his present liability to contribute. This provision sits comfortably with the construction above accorded to the DFRDB Act and the several sets of regulations.

We return to the confusing signposts in the Annual Rates of Pay Regulations. If reg.4(4) requires a member's annual rate of salary to be ascertained by the criterion of the rate applicable to the officer's acting rank, it deals with the annual pay of officers falling within its terms in a way which appears to be different from the way in which reg.4(5) deals with the annual pay of officers who fall within its provisions. Annual pay of officers under reg.4(5) is ascertained by reference to Schedule 2 of the Annual Rates of Pay Regulations, and it may be that the "ranks" specified in Schedule 2 (Commodore and more senior ranks) are substantive ranks only, in accordance with the definition of "rank" in the DFRDB Act. If this be so (and it is not necessary to decide the point), there is yet no difficulty in construction: the annual pay of an acting Commodore would not be ascertained under reg.4(5) but under reg.4(4); the annual pay of officers holding the substantive rank of Commodore or higher would fall exclusively under reg.4(5); and the annual pay of officers of the rank of Captain (whether substantive or acting) or of a rank lower than Captain would fall exclusively under reg.4(4).

The second confusing signpost is in reg.4(3) which reads:
"Where, under the Defence Force (Salaries) Regulations, different annual rates of salary for a member holding a specified rank are prescribed according to the number of years of service that a member holding that rank has completed, the annual rate of salary under those Regulations of a member who holds that rank shall, for the purposes of sub-regulation (4), be deemed to be the annual rate of salary payable to a member who has completed the longer or longest period of service that is specified in those Regulations in relation to a member holding that rank."

Now here is a provision in regulations made under the DFRDB Act which uses the term "rank", and uses the term for the purpose of modifying the effect of the reference in reg.4(4) to the Salaries Regulations. Regulation 4(3) takes the "annual rate of salary payable to a member who has completed the longer or longest period of service" which the Salaries Regulations specify in relation to a member holding a particular rank, and, for the purposes of reg.4(4), deem that amount to be the annual rate of salary under the Salaries Regulations for any member holding that rank. Clearly enough, reg.4(3) is a machinery provision to assist reg.4(4) in arriving at the "annual rate of salary of the member" under the Salaries Regulations. Regulation 4(3), operating for the purposes of reg.4(4), has effect only when the member's rank is found to entitle him, under the Salaries Regulations, to incremental levels of annual salary; and reg.4(3) then deems him to be entitled to the highest incremental level for that rank. Regulation 4(3) does not alter the criterion of entitlement under the Salaries Regulations, namely, the criterion of rank (which may be acting rank). Regulation 4(4) is not concerned with the criterion which the Salaries Regulations adopt to determine entitlement to a particular level of annual salary; it is concerned merely with the annual rate of salary to which a member is entitled. As reg.4(3) is ancillary to reg.4(4), it must be read in a way which is consistent with the Salaries Regulations: that is, it must be read as though the reference in reg.4(3) to rank held by a member is a reference to the rank which confers entitlement under the Salaries Regulations (including acting rank).

It follows that the Tribunal's decision must be set aside. This Court should declare that, for the purposes of reg.4(4) of the Defence Force Retirement and Death Benefits (Annual Rates of Pay) Regulations, the amount of the annual rate of salary of the applicant under the Defence Force (Salaries) Regulations on the days between 8 November 1977 and 16 July 1979 was the annual rate of salary payable to a Captain who had completed the longer period of service that is specified in the latter Regulations in relation to an officer holding that rank.

Now that the applicant has retired, the administration of the DFRDB Act may make it desirable that some adjustments be made in respect of contributions under s.17 and retirement pay under s.23 conformably with the declaration made. The order to give effect to the declaration can best be framed by the Tribunal, and the case should be remitted to the Tribunal accordingly pursuant to s.44(5) of the Administrative Appeals Tribunal Act. It may be that the parties can agree the form of order which the Tribunal should make, but we would give the following directions in the event that agreement is not reached:
1. The Tribunal make such order as to the receipt of additional amounts by way of contribution under Part III of the DFRDB Act as appears to it to be appropriate consistently with the liability of the applicant as declared by this Court;

2. The Tribunal hear such further submissions, and summon such persons to give further evidence and to produce further documents, as it deems necessary to assist it to determine what order is appropriate.

The respondents should pay the costs of the appeal to this Court.