Secretary, Department of Social Security v Barnes

[1987] FCA 815

IN THE FEDERAL COURT OF AUSTRALIA ) )

SOUTH AUSTRALIA	DISTRICT	REGISTRY	)	NO. G.16 Of 1987
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GENERAL DIVISION )

On Appeal from the Administ-ive Appeals Tribunal

BETWEEN :

SECRETARY, DEPARTMENT

OF SOCIAL SECURITY

Applicant

AND :

RUBY MAY BARNES

Respondent

CORAM: Forster, Northrop & Burchett JJ.

PLACE: Adelaide

DATE: 1 4 May 1987

EX-TEMPORE REASONS FOR JUDGMENT

BURCHETT J.

This is an appeal by the Secretary, Department of Social Security from a decision of the Administrative Appeals Tribunal, constituted by Deputy President Layton, that the respondent, who was then aged 93, had not disposed of property or income within the meaning of section 6AC of the Social Security Act 1947, as

amended by the Social Security and Veterans' Affairs

(Miscellaneous Amendments) Act no. 106 of 1986.

Under section 44 of the Administrative Appeals Tribunal

- Act, the appeal is, of course, confined to a question of law.

Although a ground of the notice of appeal originally raised the

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question whether subsections 10 and 11 of section 6 A C provide exclusive definitions of the expression "disposed of" used in the section, the applicant expressly abandoned that ground, and

accepted, for the purposes of the argument, that the sole

criterion to be applied, to determine whether there had been a

disposition or dispositions within the section, was that provided

by subsections 10 and 11. On that basis, the only ground of

appeal argued was the following: that the tribunal erred in law

in deciding that the transfer of the respondent's interest in the

land comprised in certain crown leases to her son Allan Barnes

was "a course of conduct under which she ceased to engage in a

business" within	the meaning of section 6 A C ( 1 0 ) and	(11) of the
Act.

To understand this ground, it is necessary to

say something of the circumstances. The respondent and her

husband farmed the land	in question, and other land of the
husband, for many years.	Shortly before his death, her husband

transferred his land to one of their sons, Allan. Allan entered into an oral share farming arrangement in 1963 or 1964 with the respondent, and it was reduced to writing on 1 March 1977. Under

that agreement, as the learned deputy president said, the

respondent was to receive half the gross income from grain sales, provide materials for fencing and certain other improvements. On the termination of the period of the agreement, it was continued by an oral agreement on the same terms. Over the last five years, the respondent received under the agreement an average of

less half the cost of purchase and spreading of superphosphate.

$ 4 7 2 0 per annum net.

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The share farming agreement is an exhibit. It appears,

from perusal of it, that the respondent was also obligated to pay her share of the cost of seed, crop spray, corn sacks and twine required under the agreement, and she was the person, as the farmer, who directed a significant aspect of the farming work to

be carried out. Clause 5 of the agreement provided: "The Share

Farmers", that is the son Allan and his wife, "shall at the proper times each year sow with wheat, barley and/or oats or other cereals such of the said land as directed by the Farmer," that is the respondent, " according to the most approved methods and in a proper manner.. . . " The respondent also controlled,

under clause 8 of the agreement, the removal of the crop. The

parties were entitled to "the screening refuse, wheat,	barley and
cocky chafE" in equal proportions.

In late 1983 and the first half of 1984, it appears that arrangements were made between the respondent and Allan for her to transfer the land to him, which she did by transfer dated 14 September 1984.

The tribunal found the transfer was not motivated by any

consideration of the respondent's entitlement to her pension, and

that she was unaware that any effect on that entitlement could be

in question. Section 6AC ( 1 0 ) provides:

( 1 0 ) For the purposes of this section, a person shall be taken to have disposed of property of the person if the person engages in a course of conduct (not being a course of

conduct under which the person ceases

employment or ceases to engage in a business or profession or reduces the extent to which

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the person is employed or the extent to which

the person engages in a business or

profession) that diminishes, directly or

indirectly, the value of the property of the

person where -

(a) the person receives no consideration, or

inadequate consideration, in money or

money's worth: or

(b)	the Secretary is satisfied that the purpose, or the dominant purpose, of the
person in engaging in that course of

conduct was -

to obtain or enable the person's spouse to obtain a pension under Part 111 or Iv, a benefit under Part IVAAA, an allowance under

Part VIIA, rehabilitation a

allowance under.Part VI11 or a service pension under the Repatriation Act 1920:

to obtain or enable the person's spouse to obtain such a pension, benefit or allowance at a higher rate than that for which the person or the person's spouse would otherwise have been eligible: or

to ensure that the person or the person's spouse would become a person other than a prescribed person for the purposes of

section 83CA of this Act or

section 1 2 3 A B of	the Repatriation
Act 1920,

and the amount of that disposition of property shall be taken to be an amount equal to the amount of the diminution in the value of that property reduced by the consideration (if any) received by the person in respect of that disposition."

The sole question is whether it was open to the

tribunal, on the evidence, to find that the relevant course of

conduct engaged in by the respondent was "a course of conduct

under which (she) cease(d) .. . to engage in a business" within

the meaning of section 6AC (10); see Hope v. Bathurst Council 144

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C.L.R. 1, at pp. 7 to 8 . In my opinion, it was open to the

tribunal to reach this conclusion on the evidence. The section

looks to a process of disengagement from employment, business or

profession. The process will often be preceded by some slowing down of the activity involved, and the legislature should not be understood to have ignored that obvious feature of common human experience. But it is not necessary to attempt to define the

limits of the legislative phrase, which is expressed in broad

terms. The evidence here indicates that, right up to the

transfer, there was a series of share farming arrangements,

involving the carrying on of a farming business with the participation of the respondent, and the incurring by her of the appropriate obligations, and of course, the receipt by her of the appropriate payments under the agreements. If her activity grew less, that is not necessarily inconsistent with her continuing to be engaged in the business.

In South Behar Railway Company, Limited v. Commissioners

of Inland Revenue [ l 9 2 5 1 A.C. 476 , a railway company received an annuity in respect of a railway in India, with the construction

of which it had formerly been concerned. From the time of the

making of an agreement providing for the annuity, it did nothing

else. Nevertheless, it was held still to be carrying on

business. At pp.487 to 488, Lord Sumner said a number of things

which seem to me to be relevant. He said:

"It is obvious ... that during its present

period of dormant life it has very little to

do. I'

He also said:

"(T)he operation of receiving and thus discharging the annuity payments goes on

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continuously, and, however simple, it is not

a mere passive acquiescence. It is the

transaction of business between debtor and creditor resulting periodically in the discharge of a debt."

He went on to say:

"Not only did the company make the agreement

of 1896" - referring to the agreement out of

which its entitlements came - "but it plays its recurring part in every payment and

receipt of gains, and there is here,

therefore, that 'repetition of acts' which Brett L.J. says is implied in 'carrying on business' ."

Later he said:

"Business is not confined to being busy; in many businesses long intervals of inactivity

occur. "

Finally he said:

"The concern is still a going concern though a

very quiet one."

In my opinion, those passages are apt in the present

case, and I think it was open to the learned deputy president to

take a corresponding view of the present circumstances. The

appeal should therefore be dismissed with costs.

FORSTER J. I agree.

NORTHROP J. I would dismiss the appeal with costs for	the reasons
given by Mr. Justice Burchett.

FORSTER J. The order of the Court is then that the appeal be

dismissed with costs.

I certify that this and the

preceding five ( 5 ) pages are a

true copy of the Reasons for

Judgment of the Court.

& Associate

Dated: 14 May,q987.

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Counsel for the Applicant:

Mr. M.R. Robertson Q.C.

with MS S . A . Pickham

Solicitors for the Applicant:

Australian Government

Solicitor

Counsel f o r the Respondent: Mr. G.B. Hevey

Solicitors €or the Respondent:	Germein Reed & Partners
Date of hearing:	14 May 1987