Secretary, Department of Social Security v Davies, Nigel [1997] FCa 1024

[1997] FCA 1024

FEDERAL COURT OF AUSTRALIA

SOCIAL SECURITY - housing benefits paid under UK legislation - whether periodical payment by way of allowance “income” for the purposes of Social Security Act 1991 (Cth)

WORDS AND PHRASES - “allowance”, “periodical”

Social Security Act 1991 (Cth) s 8(1)

Kelleners v Secretary, Department of Social Security (1988) 20 FCR 53

Mutual Acceptance Company Limited v The Commissioner of Taxation (1944) 69 CLR 389

SECRETARY, DEPARTMENT OF SOCIAL SECURITY v NIGEL DAVIES
No. TG 32 of 1996

JUDGE:        HEEREY J
PLACE:        HOBART
DATE:          25 JUNE 1997          

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA  DISTRICT REGISTRY	TG 32 of 1996
BETWEEN:	SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant
AND:	NIGEL DAVIES Respondent

JUDGE:	HEEREY J
PLACE:	HOBART
DATE:	25 JUNE 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The decision of the Administrative Appeals Tribunal constituted by Commander M T Shotter, Member, given on 14 November 1996 at Hobart be set aside. 

3. The decision under review, namely the decision of the Social Security Appeals Tribunal on 23 November 1995 affirming a decision made by the authorised review officer on 11 August 1995 affirming a decision of a delegate of the applicant on 2 August 1995 to reduce the rate of disability support pension paid to the respondent, duly received by him of the UK housing benefit, be affirmed.

4. There be no order as to costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA  DISTRICT REGISTRY	TG 32 of 1996
BETWEEN:	SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant
AND:	NIGEL DAVIES Respondent

JUDGE:	HEEREY J
PLACE:	HOBART
DATE:	25 JUNE 1997

REASONS FOR JUDGMENT

The applicant appeals from a decision of the Administrative Appeals Tribunal which had the effect that a United Kingdom benefit known as a housing benefit under the Benefits Act 1992 (UK) was not to be deducted for the purpose of calculating the respondent's disability support pension. 

The respondent was born in the United Kingdom in 1942.  He lived in Australia between 5 October 1977 and 7 July 1994.  He then returned to United Kingdom where he has lived ever since.

On 14 September 1989 he was granted what was then known as an invalid pension. He has continued to receive that pension since his return to the United Kingdom. The question arose whether the benefit he received under the United Kingdom Act was "income" within the meaning of s 8(1) of the Social Security Act 1991 (Cth) (the Act). That definition provides that 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

(b) a periodical payment by way of gift or allowance; or

(c) a periodical benefit by way of gift or allowance. 

”Income amount” is defined to mean

(a) valuable consideration or

(b) personal earnings; or

(c) moneys; or

(d) profits (whether of a capital nature or not).” 

The expression “earned, derived or received” is defined in s 8(2) as follows:

“A reference in this Act to an income amount earned, derived or received is a reference to:

(a) an amount, 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.”

Section 8A contains an extensive list of various forms of payment which are excluded from the concept of income for the purpose of the Act. 

The United Kingdom benefit which the respondent receives is under the Social Security Contributions Benefits Act 1992 (UK).  Section 123(1) provides:

“Prescribed schemes shall provide for the following benefits (in this Act referred to as income-related benefits) ...

(d) housing benefit. “

Regulations have been made pursuant to this Act namely the Housing Benefit General Work Regulations 1987.  Those regulations are continued for the purpose of the 1992 Act by the Social Security (Consequential Provisions) Act 1992 (UK) s 2.  The relevant regulations include reg 10(1) which provides:

“Subject to the following provisions of this regulation the payments in respect of which housing benefit is payable in the form of a rent rebate or allowance are the following periodical payments which a person is liable to make in respect of the dwelling which he occupies as his home -

(a) payments of or by way of rent,

(b) payments in respect of a licence or permission to occupy the dwelling.”

Regulation 88 provides that the appropriate authority:

“... shall pay housing benefit to which a person is entitled under these regulations at such time and in such manner as is appropriate having regard to:

(a) at the times at which and which frequency with which a person liability to make payment of rent or rates arises; and

(b) the reasonable needs and convenience of the person entitled thereto.”

By reg 91 the rent allowance is to be paid at intervals of two or four weeks or one month or, with the consent of the person entitled, at intervals greater than one month. 

Regulation 92 provides that, subject to other regulations:

“Payment of any rent allowance to which a person is entitled shall be made to that person.”

Regulations 93 and 94 make provision for circumstances in which payment may be made to a landlord.  These include the case where the person has requested or consented to such payment (reg 94(a)). 

The Tribunal held that the moneys paid to the respondent were not income because they were:

“Not paid to the pensioner for his own use or benefit but paid ‘in trust’ for on-payment to the landlord.”

The Tribunal noted that after the application for review to the Tribunal had been made the respondent arranged (under reg 94) for direct payment of the benefit to the landlord.  The Tribunal relied on some other grounds, namely that the moneys were not gains derived by a person as a result of provision by that person of consideration in the form of personal exertion or other services or the disposition of property. 

The Tribunal also held that the payments were not "periodical" for the purpose of (b) and (c) of the definition of income.  In what I find a somewhat puzzling passage, the Tribunal referred in this context to the definition of “periodical” in the Concise Oxford Dictionary, namely “a newspaper, magazine, etc issued at regular intervals monthly or weekly” and went on to make the comment that the definition of income in the Act:

“... particularly paragraphs (b) and (c) makes little sense and should be altered to be less ambiguous.”

In my opinion, the payments made under the United Kingdom legislation were either a payment or benefit, or perhaps both, made by way of "allowance."  The ordinary meaning of the term "allowance" would include a payment which the payee does not earn by personal exertion or income from property but which is received by way of statutory entitlement or charitable disposition.  That view is consistent with the view that Ryan J took in Kelleners vSecretaryto the Department of Social Security (1988) 20 FCR 53 at 61. His Honour, after quoting from the discussion of the term "allowance" in Mutual Acceptance Company Limited v The Commissioner of Taxation (1944) 69 CLR 389 at 396 and 402, held that the payments in question, which were made by the Dutch Government by virtue of the applicant being a “‘persecuted person’ unable to earn an average income as a consequence of an illness or disability caused or aggravated by persecution” constituted an “allowance”.

I think, as did Ryan J in relation to the similar payments in Kelleners, that the payments here were periodical in the sense that they were regularly recurring and made by reference to periods of time. 

Having come to this conclusion, it is not necessary to express any view as to whether the income was for the respondent's "own use or benefit." Nor is it necessary to deal with the question of the agreement between the Australian and United Kingdom Governments which is schedule 2 to the Social Security Act 1981.

There will be orders:

1. That the appeal be allowed.

2. That the decision of the Administrative Appeals Tribunal constituted by Commander M T Shotter, Member, given on 14 November 1996 at Hobart be set aside. 

3. That the decision under review, namely the decision of the Social Security Appeals Tribunal on 23 November 1995 affirming a decision made by the authorised review officer on 11 August 1995 affirming a decision of a delegate of the applicant on 2 August 1995 to reduce the rate of disability support pension paid to the respondent, duly received by him of the UK housing benefit, be affirmed.

The applicant did not seek costs.

I certify that this and the preceding four pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey

Associate:

Dated:            25 June 1997

Counsel for the Applicant:	Ms E A Strong
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	There was no appearance for the respondent
Solicitor for the Respondent:
Date of Hearing:	25 June 1997
Date of Judgment:	25 June 1997