McKenzie, N.A. v Department of Social Security

[1989] FCA 292

Re: NOEL ARCHIBALD McKENZIE
And: DEPARTMENT OF SOCIAL SECURITY
No. NG16 of 1989
FED No. 292
Social Security

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies(1), Wilcox(1) and Foster(1) JJ.

CATCHWORDS

Social Security - Invalid pension - Sickness benefits Receipt of lump sum pension - Effect on entitlement to benefits - Amendments to legislation - Retrospective legislation - Whether retrospective amendment picked up terms of earlier amendment not stated to be retrospective.

Social Security Act 1947 ss.152, 153.

Social Security and Veterans' Entitlements Amendment Act 1987 s. 46

Social Security Amendment Act 1988 s.19.

HEARING

SYDNEY

#DATE 2:6:1989

Counsel for the Appellant: Mr R.D. Wilson

Solicitors for the Appellant: Stacks - The Law Firm

Counsel for the Respondent: Dr G. Flick

Solicitors for the Respondent: Australian Government Solicitor

ORDER

The Application be dismissed.

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

JUDGE1

This is an appeal against a decision of the Administrative Appeals Tribunal (Mr C J Bannon QC, Deputy President, the Hon J R Gibson, Senior Member, and Dr D J Howell, Member) affirming decisions of the Secretary of the Department of Social Security refusing two applications made by the applicant, Noel Archibald McKenzie. Those applications were for an invalid pension, pursuant to part IV of the Social Security Act 1947, and for sickness benefits, under Part XIII of that Act.

1. The issue which arises upon the appeal depends entirely upon the proper interpretation of an amendment made to the Social Security Act in 1988. Before going to the legislation it is convenient to note the relevant facts, which are within a small compass.

2. On 16 July 1987 the applicant received a sum of $94,000 by way of a lump sum settlement of a worker's compensation claim, together with $1,000 in settlement of a common law negligence claim, a total of $95,000. On 17 August 1987 he made an application for an invalid pension. That application was rejected. On 19 October 1987 the applicant submitted a sickness benefit claim. That application was rejected on 30 October 1987. After an unsuccessful application for review by the Social Security Appeals Tribunal, the applicant took the matter to the Administrative Appeals Tribunal. The Tribunal held that, having regard to the terms of the 1988 amendment, it was not open to it to grant either of the benefits which had been sought. It dismissed both applications for review.

3. As it stood at 16 July 1987, the day upon which the applicant received his lump sum payment, the Social Security Act included a provision designed to limit the payment of pension benefits to recipients of lump sum payments. This provision was s.153(1) which relevantly provided:
   

"153. (1) Where a person who is receiving a pension receives--

(a) ...

(b) a lump sum payment by way of compensation, then--

(c) ...

(d) in a case to which paragraph (b) applies--a pension is not payable to the person and, if the person is a married person, a spouse's pension is not payable to the person's spouse at any time during the lump sum payment period."

The word "pension" is defined by s.152 of the Act so as to include both an invalid pension and a sickness benefit, being an invalid pension or a sickness benefit that commenced to be paid on or after 1 May 1987.

1. On 16 December 1987 s.153(1) was amended, by the Social Security and Veterans' Entitlements Amendment Act (No.2) 1987, s.46. The form of the amendment was to omit from the subsection the words "who is receiving a pension" and to substitute "or the spouse of a person, who is qualified to receive a pension". This amendment was not stated to be retrospective.

2. Section 153 was further amended by the Social Security Amendment Act 1988. Section 19 of that Act provided as follows:
   

"19. Section 153 of the Principal Act is amended by inserting in subsection (1) 'or has received (whether before or after becoming so qualified)' after 'receives'."

The term "Principal Act" was defined sy s.1 of the amending Act as meaning "the Social Security Act 1947", that is the 1947 Act as amended to that date. Section 2(10) of the amending Act provided that, inter alia, s.19 "shall be taken to have commenced on 1 May 1987".

1. The submission of counsel for the applicant is that, notwithstanding the 1988 amendment, s.153 does not disentitle his client to receive an invalid pension or sickness benefits. Counsel's argument commences with the fact that s.153(1), as originally framed, was limited in its application to a person "who is receiving a pension". It follows, according to counsel, that the subsection did not affect the position of a person who receives a lump sum payment before receiving a pension; that person is entitled subsequently to obtain a pension -- if qualified under the Act -- without being affected by s.153(1).

2. Counsel acknowledges that this argument would not be available to him if his client had received his lump sum payment after 16 December 1987. Upon that day the subsection was made applicable to a "person, or the spouse of a person, who is qualified to receive a pension". The assumption is that Mr McKenzie would be so qualified. (Section 153(1) does not affect the qualification of a person to a pension under the Act, but merely that person's entitlement to receive pension payments.) However, as we have already observed, the amendment which was effected in 1987 was not made retrospective, so that, if the matter rested there, it would not be relevant to Mr McKenzie's claim. Without deciding the matter, we are content to proceed upon the basis that, if the 1988 amendment had not been made, s.153(1) would not have applied to Mr McKenzie.

3. As we have already noted, the issue between the parties relates to the effect of the 1988 amendment. There is no question that this amendment was designed to be retrospective to 1 May 1987, that is to a date before the date upon which Mr McKenzie received his lump sum payment. But there is a contest as to whether that retrospectivity picked up the 1987 amendment. The applicant argues that it did not, that it only made retrospective those words which were added in 1988. The result, according to counsel, is that the subsection should be read, during the period 1 May 1987 to 16 December 1987 in this way:
   

"153 (1) Where a person who is receiving a pension receives or has received (whether before or after becoming so qualified)--

(a) ...

(b) a lump sum payment by way of compensation; then--

(c) ...

(d) in a case to which paragraph (b) applies--a pension is not payable to the person ..."

Upon that reading, the subsection applies only to a person who "is receiving" a pension at the time he receives a lump sum payment. Mr McKenzie would not be such a person.

1. We do not think that this is the correct way in which to read the amendment. As we have indicated, the amendment made in 1988 was said to be made to the "Principal Act". In taking that course Parliament followed the usual Australian practice of textually amending the Act. This practice was commented upon by Pearce, in the second edition of his work "Statutory Interpretation in Australia" at para 218 in these words:
   

"It is of some importance, however, to bear in mind the practice adopted in Australian jurisdictions (which is not followed in the United Kingdom) of Acts textually amending the original Act. Such Acts do not provide that the original Act is to be read as if some change were made in it but provide that the original Act is physically altered as a result of the amendment made."

In other words, one engrafts the terms of the amendment upon the Principal Act as it stands at the time of the amendment. It follows that, in the ordinary case, where an amendment is made retrospective, the whole of the provision, as amended, is given retrospective effect.

1. In the present case there are internal indications that this course was intended. The reading which is adopted by counsel for the applicant, and which must be adopted if his submission is sound, makes little sense. It applies to a person who receives, or who has received, a lump sum payment "whether before or after becoming so qualified"; yet, on this reading there is no anterior reference to becoming qualified. Counsel suggests that the word "qualified" means qualified to receive a pension under the Act. So much may be conceded, but the word "so" clearly indicates an intention to refer to the matter of qualification within the subsection itself. The form of the sub-section suggested by counsel contains no such reference; but there is, of course, such a reference in the subsection as amended in 1988, the subsection then opening with the words:
   

"153 (1) Where a person, or the spouse of a person, who is qualified to receive a pension receives or has received (whether before or after becoming so qualified)--

(a) ...

(b) a lump sum payment by way of compensation, ..."

1. The matter has proceeded upon the assumption that, at all material times, Mr McKenzie has been a person qualified to receive a pension. He has received a lump sum payment by way of compensation. It follows that s.153(1) applies to him.

2. The decision made by the Administrative Appeals Tribunal was correct in law. The application must be dismissed. The respondent does not seek costs.