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Read v Commonwealth

Read v Commonwealth

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Case Copied 2 June 1988 34 min read

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HIGH COURT OF AUSTRALIA

Mason C.J., Brennan, Deane, Toohey and Gaudron JJ.

READ v. THE COMMONWEALTH OF AUSTRALIA

(1988) 167 CLR 57

2 June 1988

Pensions

Pensions—Rate—Calculation—Factors—Income of pensioner—Unit trust—Revaluation of fund—Issue of additional units—Whether valuable consideration or profits, earned, derived or received—Social Security Act 1947 (Cth), ss. 18, "income", 28(1).

Decisions

MASON C.J., DEANE AND GAUDRON JJ: Since 1966 Mrs Clara Caroline Read ("the appellant") has been in receipt of an age pension paid pursuant to the Social Security Act 1947 (Cth) ("the Act"). In 1981 the appellant became the registered holder of 20,000 units in Australian Fixed Trusts Real Property Growth Trust ("the Trust"). On 31 May 1984, following a revaluation of the assets of the Trust, the appellant was issued with 8,755 additional units. An officer of the Department of Social Security valued the additional units at $4,027.00 and treated that sum as income for the purpose of ascertaining the appellant's pension entitlement under s.28 of the Act. The question which arises on this appeal is whether the issue of additional units was income as it was then defined in s.18 of the Act. The Federal Court of Australia (Spender and Pincus JJ., Fisher J. dissenting) upheld an appeal from a decision of the Administrative Appeals Tribunal and found that the additional units constituted "income" for the purposes of the Act. From that decision this appeal is brought.

2. The Trust is what is popularly known as a "capital growth trust". The Trust was established by Deed of Trust ("the Deed") made 23 April 1981. By this Deed, A.F.T. Property Company Limited ("the Managers") became the Managers of the Trust and Permanent Trustee Nominees (Canberra) Limited ("the Trustee") became the Trustee of the fund constituted initially by a sum of $460.00 contributed by the Managers. By cl.13(1) of the Deed, the beneficial interest in the fund thus constituted was divided into 1,000 units. Clause 2(1) of the Deed enables additions to the fund to be made by the Managers lodging "further cash or authorised investments or both to be held upon the trusts" as set out in the Deed. Clause 13(3) provides that "(a)s and when any addition is made to the Fund ... additional Units shall be created." The units thus created may be sold by the Managers (cl.13(2)). Alternatively, the Managers may nominate persons as the holders of units thus created (cl.14). Clause 13(4) of the Deed provides that at all times "the Units into which the beneficial interest in the Fund is divided shall be of equal capital value." The Deed provides that an up to date register is to be kept of unit holders (cl.22).

3. A Supplementary Deed made 6 May 1981 provided that the life of the Trust should be for 30 years from its commencement date, unless sooner determined in accordance with the Deed. Clause 3(1) of the Deed provides that the Trustee shall hold the fund "as trustee for the Registered Holders entitled thereto upon the terms of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1988] HCA 26
Decision Date: 2 June 1988

CaseChat Overview and Summary

The High Court of Australia considered a dispute between Mr. Read and the Commonwealth of Australia. The core of the disagreement concerned the validity of certain actions taken by the Commonwealth, which Mr. Read alleged constituted an unlawful interference with his property rights.

The central legal questions before the Court were whether the Commonwealth's actions were authorised by legislation, and if so, whether that legislation was constitutionally valid. Specifically, the Court had to determine if the Commonwealth had exceeded its legislative powers in a manner that infringed upon the rights of the individual.

The Court's reasoning focused on the interpretation of the relevant Commonwealth legislation and its compatibility with the Australian Constitution. The Justices examined the scope of the executive power and the limitations imposed by constitutional provisions, particularly concerning the acquisition of property. The principle applied was that legislative powers must be exercised within their constitutional boundaries, and any encroachment on fundamental rights requires clear statutory authorisation and must be constitutionally sound.

The High Court ultimately found in favour of Mr. Read, holding that the Commonwealth had acted beyond its legislative authority and that the impugned legislation was invalid to the extent that it purported to authorise such actions. Consequently, the Court made orders setting aside the Commonwealth's actions.

Orders