Longa v Secretary, Department of Family and Community Services

[2002] FCA 1032

FEDERAL COURT OF AUSTRALIA

Longa v Secretary, Department of Family & Community Services
[2002] FCA 1032

SOCIAL SECURITY – calculation of age pension entitlement – pension received by applicant from Defence Force Retirement and Death Benefit (“DFRDB”) Fund was taken into account as income when calculating the rate of age pension payable to him – applicant contributed to the Fund during 25 years of service in RAAF – applicant decided in 1973 to re-engage for further service of 5 years – applicant contended that at time of re-engagement the DFRDB pension was not treated as income for the purpose of calculating the age pension – applicant asserted that this induced him to re-engage for further RAAF service – also asserted that amendments subsequently made to Social Security Act introduced requirement that DFRDB pension payments be assessed as income for the purpose of calculating the rate of age pension – applicant became eligible for age pension in 1997, applied and was granted age pension with effect from 8 January 1998 – applicant claimed that he would not have re-engaged for a further period of 5 years service had he known that the DFRDB pension payments would be assessed as income for the purposes of calculating the rate of age pension – whether repealed legislation should apply to applicant – whether any relevant right or privilege preserved – whether any error of law on the part of the Administrative Appeals Tribunal.

Social Security Act 1991 (Cth), ss 8(1), 9(1), 55, 1064, 1099
Acts Interpretation Act 1901 (Cth), s 8(b) and (c)

IMERIO LONGA v SECRETARY, DEPARTMENT OF FAMILY AND
COMMUNITY SERVICES

W296 of 2001

CARR J
19 AUGUST 2002
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W296 OF 2001

BETWEEN:	IMERIO LONGA Applicant
AND:	SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES Respondent
JUDGE:	CARR J
DATE OF ORDER:	19 AUGUST 2002
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1. The application be dismissed.

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

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W296 OF 2001

BETWEEN:	IMERIO LONGA Applicant
AND:	SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES Respondent

JUDGE:	CARR J
DATE:	19 AUGUST 2002
PLACE:	PERTH

REASONS FOR JUDGMENT

INTRODUCTION

1. This application is an appeal, on a question of law, from a decision of the Administrative Appeals Tribunal (“the Tribunal”), on 11 June 2001, affirming a decision of the Social Security Appeals Tribunal (“the SSAT”) made on 11 October 2000.  The SSAT had affirmed a decision of a delegate of the respondent which had also been affirmed, on 24 July 2000, by an Authorised Review Officer.  The decision was to assess the applicant’s Defence Force Retirement and Death Benefit Fund pension (“the DFRDB Pension”) as income for the purpose of calculating his age pension entitlements under the Social Security Act 1991 (Cth) (“the Act”).

   FACTUAL BACKGROUND

2. On 24 January 1949 the applicant enlisted in the Royal Australian Air Force.  In 1973 he decided to re-engage for a further period of five years.  On 16 October 1973 he signed an agreement to re-engage for such further service in the RAAF. 

3. Throughout the applicant’s employment in the RAAF he was required to contribute to a compulsory superannuation scheme, currently referred to as “the DFRDB Scheme”.  The applicant retired in or about 1978 and began receiving payments of pension under the DFRDB Scheme. 

4. On 27 December 1997 the applicant reached the age at which he qualified for an age pension. He applied for the age pension, which was granted with effect from 8 January 1998. The respondent, when calculating the rate of age pension payable to the applicant, assessed the DFRDB Pension payments received by him as income within the meaning of the Act.

5. At the applicant’s request, various reviews of that decision took place as described in paragraph [1] above. 

   THE LEGISLATIVE FRAMEWORK

6. Section 55 of the Act relevantly provides that a person’s aged pension rate is worked out by using what is described as “Pension Rate Calculator A” at the end of s 1064. Pension Rate Calculator A at the end of s 1064 of the Act relevantly requires that certain steps be taken when calculating the rate of age pension payable to a person. One of those steps is to assess that person’s income.

7. Sections 8 and 9 of the Act contain the following relevant definitions:

   “8(1)   ‘income’, in relation to a person means:

   (a)an income amount earned, derived or received by the person for the person’s own use or benefit; or

   . . .

   8.(2)A reference in this Act to an income amount earned, derived or received is a reference to:

   (a)an income amount earned, derived or received by any means; and

   (b)an income amount earned, derived or received from any source (whether within or outside Australia).

   *9(1)   deductible amount, in relation to an immediate annuity or a superannuation pension, is that amount that would be the deductible amount in relation to the annuity or superannuation pension in relation to a year of income under subsection 27H(2) of the Income Tax Assessment Act if “undeducted purchase price” had the same meaning in that subsection as “non-assessable purchase price” has in this Act.

8. By the operation of paragraph 43 of Schedule 3 to the Social Security and Veterans’ Affairs Legislation Amendment (Budget and Other Measures) Act 1998 [No 93, 1998] (“the Amendment Act”), s 1099 of the Act in its form prior to the coming into force of the Amendment Act continued to apply to the applicant’s circumstances, as did the definition of “deductible amount”, against which I have placed an asterisk above. Section 1099 had been in the following terms:

   “For the purpose of working out the annual rate of ordinary income of a person from a superannuation pension, the person is to be taken to receive from that pension each year an amount worked out by reducing the amount payable each year by the deductible amount in relation to the superannuation pension.”

   THE TRIBUNAL’S DECISION

9. The applicant gave evidence to the Tribunal.  He told the Tribunal that he was induced to re-engage in the RAAF in 1973 because amendments which had recently been made to the Social Services Act 1947 (Cth) excluded instalments of a superannuation pension from the definition of income for the purposes of calculating the age pension.

10. The Tribunal found that the applicant’s DFRDB Pension had been properly treated as income for social security purposes. 

11. There was no evidence before the Tribunal about the specific calculation of the amount of ordinary income arising on an annual basis from the receipt by the applicant of the DFRDB Pension or whether he was entitled to a deductible amount.  The Tribunal noted that, for that reason, it was unable to check the accuracy of the calculation of the amount of income received by the applicant.  But that calculation was not the matter in issue.  As the Tribunal correctly noted, the matter before it was whether the DFRDB Pension payments received by the applicant should be treated by the respondent as income when calculating the amount of his entitlement to the age pension.  The Tribunal, as I have mentioned, held that it should.  The Tribunal concluded its reasoning in the following terms:

    “21.The applicant claimed that he should be given the choice as to whether his DFRDB payments as assessed according to the provisions of the 1947 Act or the Act as it currently applies. The Tribunal notes that the respondent is bound by the provisions of the Social Security Act 1991, and has no discretion to apply the 1947 Act which is no longer in force. The Tribunal finds that the respondent’s decision to treat the applicant’s DFRDB as income for social security purposes is correct and in accordance with the requirements of the Act.”

    THE NOTICE OF APPEAL

12. The applicant was not legally represented.  The grounds stated in his notice of appeal were as follows:

    “4. GROUNDS: I claim that the AAT decision denies me natural justice or procedural fairness. I contend it is inequitable that the 1991 Social Security Means Test for Age Pension should apply to me. Although the Age Pension is now administered under the 1991 Social Security Act it has to be considered on common law grounds that I have a legitimate expectation of having my DFRDB superannuation payments means tested under the repealed 1947 Social Services Act which was law from 1^st July 1947 to 27^th September 1972 stating that instalments of a superannuation pension are not counted as income. Refer Social Services Act 1947-1973 Part III – Age and Invalid Pensions Division 1 section 18, subsection (ba). The 1947 Act was in force for the majority of the time I contributed to my superannuation fund. Consideration should also have been given that a compulsory period of twenty or more years of Regular Defence Force service applied to get an entitlement to the superannuation pension.
    The Act as it stood during the majority of the time I was contributing to the DFRDB superannuation fund induced me to continue with service life to achieve the entitlement to the superannuation pension. 
    I certainly would not have been induced to achieve entitlement to the superannuation pension under the 1991 Social Security Act.
    I contend the commonwealth has a moral and legal obligation to not count my DFRDB superannuation as income for age pension.”

13. The applicant filed an outline of submissions in support of his appeal.  Omitting formal parts, that outline was in the following terms:

    “1.  The tribunal breached the rules of procedural fairness (sometimes referred to as “natural justice”) in connexion with the making of the decision on 11 June 2001, in that procedures that were required by law to be observed in connexion with the making of the decision were not observed.

    2.  In substantiation of paragraph no.1 above, the Tribunal did fail to take into account and consider the law available on the effects of repealed legislation enunciated in Acts Interpretation Act 1901 section 8, when this was clearly necessary on the evidence presented at the hearing on 26 March 2001.  This fact can be proved by referring to the Tribunal’s ‘Reasons for Decision’ that is shown in Appeal Book, Reference: AMV: AGC:60-1094055, pages 85-86, paragraphs 19, 20 & 21.”

14. The applicant appeared in person at the hearing.  He made oral submissions. When it became apparent that, in making those submissions, the applicant was reading from a document, I invited him to pass the document up and it became a set of further submissions. 

15. The submissions which the applicant made at the hearing were substantially similar to the grounds stated in his notice of appeal. 

16. However, the applicant developed and refined his contentions somewhat. He submitted that by an amendment to s 18 of the Social Services Act 1947 (Cth) (“the Principal Act”) made by Social Services Act (No 4) 1972 (Cth) (“the 1972 Amendment Act”), it was provided in effect that payments of a superannuation pension were not included as income for the purposes of calculating the amount receivable as an aged pension. The applicant said that before re-engaging for a further 5 years of service with the RAAF, he researched the relevant legislation and was induced by the effect of the 1972 Amendment Act to re-engage. He submitted that he had a legitimate expectation that “… the 1972 re-engagement agreement is a protected right” earned under the 1972 Amendment Act. He submitted that the Commonwealth had failed to honour the terms of his re-engagement agreement.

17. The applicant further contended, in effect, that s 8(b) and (c) of the Acts Interpretation Act 1901 (Cth) applied. The applicant argued that subsequent amendments to the social security legislation should not affect what he maintained was the previous statutory scheme, whereby his service pension would not be taken into account in calculating the rate of his entitlement to the age pension. He submitted that this was a right, privilege, or obligation which was not affected by the subsequent amending legislation. The Tribunal, so the applicant contended, had erred in law by not applying s 8(b) and (c) of the Acts Interpretation Act. 

18. During the course of the hearing, Mr A G Castledine, counsel for the respondent, took me through some of the provisions relevant to the calculation of the rate of the applicant’s entitlement to the age pension.  There were some provisions, for example any exceptions to the definition of the term “superannuation fund”, where Mr Castledine, quite understandably given the limited issues raised by the notice of appeal, was unable to take me to all of the specific provisions.  The relevant parts of the statutory scheme are extremely complicated. 

19. Had the applicant been legally represented, I would have been able to confirm with his counsel that the applicant was not contending that the Tribunal had applied the wrong provisions of the legislation to the calculation of the rate of his entitlement to the age pension. 

20. Given the fact that the respondent’s delegate, the internal review officer and the Social Security Appeal Tribunal had each, in turn, overlooked the saving provision in the Amendment Act (referred to at paragraph [8] above), I thought that it would be appropriate for the respondent to prepare a document describing a pathway through the numerous relevant statutory provisions of the various Acts applicable directly or by incorporation by reference.  The purpose of that document would be to enable me to be satisfied that, apart from the matters raised by the applicant, his DFRDB pension should be taken into account when calculating the amount of his entitlement to the age pension.  The respondent readily accepted the task of preparing such a document as falling within his obligations as a model litigant.

21. Accordingly I adjourned the hearing, having first made directions for the filing of such a document and a responsive document from the applicant. I also made a direction that if neither party, within a time which I specified, indicated that he wished to make further oral submissions, then judgment would be reserved. The respondent duly filed supplementary submissions dealing with the legislative regime. The applicant filed a written response which substantially repeated his claims concerning the application of s 8 of the Acts Interpretation Act.  Neither party sought to make further oral submissions. 

    MY REASONING

22. My examination of the further submissions filed by the respondent satisfies me that, subject to the matters raised by the applicant and summarised above, under the various legislative provisions applicable, some of which are summarised earlier in these reasons, payments to the applicant of his DFRDB Pension must be brought into account as income for the purposes of calculating the rate of age pension to which the applicant is entitled under the Act. In my opinion, the Tribunal correctly identified the relevant legislative provisions applicable to the applicant’s circumstances and correctly construed those provisions when it decided that the DFRDB Pension paid to him should be treated as income. The applicant has not argued to the contrary.

23. I have considerable doubt about the effect which the applicant ascribes to the relevant amendments made by the 1972 Amendment Act. When sections 5 and 7 of the 1972 Amendment Act are read with sections 18 and 18A of the Principal Act, it seems to me that the effect of the amendments was as follows. First, in the definition of “income” an exception was inserted to exclude instalments of a superannuation pension. But, secondly, the definition of “property” was extended to include a superannuation pension. A superannuation pension was then (by the 1972 Amendment Act) defined in terms which would have included the DFRDB Pension. It appears that under the terms of the Principal Act in force immediately after the coming into effect of the 1972 Amendment Act, a person’s property was to be taken into account in the calculation of the rate of his or her age pension. Section 7 of the 1972 Amendment Act inserted a new s 18B in the Principal Act. Section 18B read as follows:

    “18B.  Where –
       (a)    a superannuation pension is payable to a person; and 

    (b)the rate of pension under this Part payable to the person would be greater if that superannuation pension were not included in the property of the person for the purposes of this Part but each instalment of that superannuation pension were treated as income of the person for the purposes of this Part,

    the superannuation pension shall be treated accordingly.”

24. It would seem, contrary to the applicant’s assertion, that the 1972 amendments did not exclude a superannuation pension from being taken into account for the purposes of the calculation of the rate of age pension payable to a particular person.  The superannuation pension would be taken into account as “property”, but if this resulted in a lower rate of pension than if the superannuation pension were treated as income, then it was to be treated as income of that person. 

25. The Social Services Amendment Act (No 3) 1976 (Cth) (“the 1976 Amendment Act”) relevantly removed the exclusion of superannuation pensions from the definition of income and repealed s 18B.

26. If my impression of the relevant amendments brought about by the 1972 Amendment Act is correct, then the assumptions on which the applicant’s arguments are based fall away completely.  However, I shall deal with the submissions made by the applicant because, in my view, they can be disposed of quite briefly.

27. From the above summary of the applicant’s submissions it can be seen that he claims to have a common law “legitimate expectation” and a statutory right to have his DFRDB Pension treated in the same manner as he claims it would have been treated under the Social Services Act 1947. 

28. In my view, the applicant’s references to natural justice or procedural fairness, giving rise to a common law legitimate expectation on his part, are misplaced in the present context. He appears to be asserting procedural rights as being equivalent to substantive rights.  I do not consider that he has any common law rights of the type asserted.

29. Similarly, I consider that the applicant’s reliance on s 8 of the Acts Interpretation Act 1901 (Cth) is also misplaced. The relevant portions of s 8 of the Acts Interpretation Act are as follows:   

    “Effect of repeal

    8.  Where an Act repeals in the whole or in part a former Act, then unless the contrary intention appears the repeal shall not:
    (a)      …

    (b)affect the previous operation of any Act so repealed, or anything duly done or suffered under any Act so repealed; or

    (c)affect any right privilege obligation or liability acquired accrued or incurred under any Act so repealed;

    . . .”

30. The Principal Act had no relevant operation in relation to the applicant at all at the time when the 1972 Amendment Act came into force. He was then aged 49 and would not become entitled to an age pension until slightly in excess of 25 years had expired (assuming that he lived that long and the Principal Act was not amended). In my view, the applicant’s argument that s 8(b) applies in the manner in which he contends is wrong. I now turn to the applicant’s argument based on s 8(c) of the Acts Interpretation Act. 

31. On the facts of this matter the applicant turned 65 years of age on 27 December 1997 and thereupon became entitled to an age pension under the Act. The amendments to the Act which required his DFRDB Pension to be brought to account as income for the purposes of calculating the rate of the age pension had by then long been in force. The Social Services Act 1947 was repealed in 1991. In my view, there was no basis for the application of s 8(c) of the Acts Interpretation Act to the applicant’s circumstances.  The applicant had no relevant right or privilege at the time of the repeal of the Social Services Act 1947.

1. The applicant’s real complaint (and he said as much at the beginning of the hearing) is that he alleges that the Commonwealth, by amending the social security legislation in a sequence of amending Acts commencing with the 1976 Amendment Act, has failed in some way to honour the agreement entered into when he re-enlisted in the RAAF in 1973.  But that is not, nor could it be, the subject matter of this application, which is an appeal on a question of law in relation to the calculation of the rate of the applicant’s entitlement to an age pension.   

   CONCLUSION

2. As no error of law on the Tribunal’s part has been disclosed, the application will be dismissed.  The respondent, through counsel, said that if he were successful in the application, he would not seek an order for costs.  In those circumstances there will be no order in relation to costs.

I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr.

Associate:

Dated:             19 August 2002

The Applicant appeared in person:
Counsel for the Respondent:	Mr A G Castledine
Solicitors for the Respondent:	Messrs Minter Ellison
Date of Hearing:	11 June 2002
Date of last submissions:	26 July 2002
Date of Judgment:	19 August 2002