Administrative law - Appeal from Administrative Appeals Tribunal - Defence Force Retirement and Death Benefits - Authority "may" treat contributing member as if retired on ground of invalidity - Whether "may" permissive or mandatory - Whether discretion vested in Chiefs of Staff or Authority Words and Phrases - "may" at B its 1973 (Cth) ss.23, 24, 25, 26, 28, 29, 37, 38, 43A CE FO IT AUTHORITY v DOUGLAS HARRY BRITT 8A G.15 of 1984 Coram : Fox, Woodward and Davies JJ 30 October 1984 Canberra IN_THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIAN DISTRICT REGISTRY) No. SA G.15 of 1984 ) BETWEEN : PF RES Appellant AND +s DOUGLAS HARRY BRITT Respondent ORDER JUDGES MAKING ORDER t Fox, Woodward and Davies JJ DATE OF QRDER 3 30 October 1984 WHERE MADE 3 Canberra ORDER 2 The decision of the Administrative Appeals Tribunal is set aside and the matter is remitted to the Tribunal to be reheard. IN THE FEDERAL COURT OF AUSTRALIA > ) SOUTH AUSTRALIAN DISTRICT REGISTRY) No. SA G.15 of 1984 ) GENERAL DIVISION ) Appellant Respondent CORAM : Fox, Woodward and Davies JJ 20 _ October 1984 This is an appeal froma decision of the Administrative Appeals Tribunal. The short issue in the appeal is whether the word "may" in 8.37 of the Defence Force Retirement and Death Benefits Act 1973 (Cth) ("the Act") confers a wide discretion upon the Defence Force Retirement and Death Benefits Authority ("the Authority") or whether it merely confers a power which the Authority is under a duty to exercise if the other elements of the section be satisfied. It was in that latter sense that the Administrative Appeals Tribunal read the section, which provides : "37. Where a contributing member has been retired otherwise than on the ground of invalidity or of physical or mental incapacity to perform his duties but, after his retirement, the Chief of Naval Staff, the Chief of the General Staff or the Chief of the Air Staff or a person authorized in writing by the Chief of Naval Staff, the Chief of the General Staff or the Chief of the Air Staff, as the case requires, informs the Authority that, at the time the member was retired, grounds existed on which he could have been retired on the ground of invalidity or of physical or mental incapacity to perform his duties, he may, for the purposes of this Act, be treated as if he had been retired on that ground." The principles to be applied were stated in Ward v Williams (1955) 92 CLR 496 by Dixon CJ, Webb, Fullagar, Kitto and Taylor JJ at p.505-6 as follows : "In considering the correctness of this interpretation it is necessary to bear steadily in mind that it is the real intention of the legislature that must be ascertained and that in ascertaining it you begin with the prima facie presumption that permissive or facultative expressions operate according to their ordinary natural meaning. 'The authorities clearly indicate that it lies on those who assert that the word "may" has a compulsory meaning to show, as a matter of construction of the Act, taken as a whole, that the word was intended to have such a meaning' - per Cussen J. : Re Gleeson £1907] VLR 368, at p.373. 'The meaning of such words is the same, whether there is or is nota duty or obligation to use the power which they confer. They are potential, and never (in themselves) significant of any obligation. The question whether a Judge, or a public officer, to whom a power is given by such words, is bound to use it upon any particular occasion, or in any particular manner, must be solved aliunde, and, in general, it is to be solved from the context, from the particular provisions, or from the general scope and objects, of the enactment conferring the power' - per Lord Selborne : Julius v. Bishop of Oxford (C€18807] LR 5S AC 214, at p.235. One situation in which the conclusion is justified that a duty to exercise the power or authority falls upon the officer on whom it is conferred is described by Lord Cairns in his speech in the same case. His Lordship spoke of certain cases and said of them 'Cthey] appear to decide nothing more than this : that where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the Legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the Court will require it to be exercised' [1880] LR 5 AC, at p.225." An example of the interpretation adopted by the Tribunal may be seen in Finance Facilities Pty Limited v Federal Commissioner of Taxation (1971) 127 CLR 106. Windeyer J, with whom Barwick CJ agreed, said, at pp.134-5 : "This does not depend on the abstract meaning of the word 'may' but of whether the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the 'may' becomes a 'must'. Illustrative cases go back to 1663 : R v Barlow (1663) Carth, 293 €90 ER 7733; 2 Salk.609 £91 ER 5163. Today it is enough to cite Julius v Bishop of Oxford £18801] S App.Cas.214; and add in this Court Ward v Williams (1955) 92 CLR 496, at pp.505-506. But I select one other reference out of a multitude : Macdougal] v Paterson (1851) 11 CB 755 C138 ER 672]. There Jervis C.J. said in the course of the argument (1851) 11 CB, at p.766 C138 ER, at p.6771 'The word "may" is merely used to confer the authority : and the authority must be exercised, if the circumstances are such as to call for its exercise'. And, giving judgment, he said (1851) 11 CB, at p.773 £138 ER, at p.6791 : 'We are of opinion that the word "may" is not used to give a discretion, but to confer @ power upon the court and judges; and that the exercise of such power depends, not vron the discretion of the court or judge, but upon the proof of the particular case out of which such power arises.' I consider that to be directly applicable to the present case. If the Commissioner, having considered the matter, is satisfied of facts out of which the power to allow a rebate arises, he cannot nevertheless refuse to allow it." In considering the issue, it is necessary to turn to the contezt in which s.37 appears. The Act provides for retirement and death benefits for members of the Defence Forces and their dependants, establishes the Authority and confers upon it duties and discretions. As examples of the provisions conferring retirement henefits, we set out the provisions of s88.23(1) and 24(1) 3 "23.(1) Where a contributing member retires and is not entitled to invalidity benefit and - (a) on his retirement - (1) his total period of effective service is not less than twenty years; or (id) his total period of effective service is not less than fifteen years and he has attained the retiring age for the rank held by him immediately before , his retirement; or (b) he had previously become entitled to retirement pay under this Act or pension, other than invalidity benefit, under the previous legislation that was cancelled under section 62 upon his becoming an eligible member of the Defence Force, he is entitled, on his retirement, to retirement pay at the rate applicable to him in accordance with this section." "24.(1) A recipient member may, by notice in writing given to the Authority, within a period of one year after becoming entitled to retirement pay, or within such further peric2 as the Authority, in special circumstances, allows, elect to commute a portion of his retirement pay in accordance with this section." An invalidity benefit is conferred by s.26, which reads : "26. Subject to sections 27, 28 and 29, where a contributing member is retired on the ground of - invalidity or of physical or mental incapacity to perform his duties, he is entitled, on his retirement, to invalidity benefit in accordance with this Part." One of a number of death benefits is provided by s.38, which reads : "38. Where a member of the scheme who is a contributing member dies before retirement and is survived by a widow, the widow is entitled toa pension ata rate equal to five-eighths of the rate at which invalidity pay would have been payable to the deceased member if, on the date of his death, he had become entitled to invalidity benefit and had been classified as Class A under section 30." ° It will be noted that the above provisions confer no discretion upon the Authority to determine the type of benefit which is payable. The nature of the benefit depends upon whether the member retired after certain service, whether he was retired on the ground of invalidity or whether he died while in the service. Section 37, which we have set out above, in terms confers a discretion upon the Authority to treat a former contributing member as if he had been retired on the ground of invalidity though he was not in fact so retired. Mr P. Heywood-Smith, of counsel, who appeared for the respondent, submitted that s.37 imposes a duty upon the Authority to exercise the power once the elements of the section, including the notification from the Chief of Staff or other appropriate person, have been made out. Mr Heywood-Smith submitted that the Authority is an inappropriate body to make a decision to treat a member as if he had been retired on the ground of invalidity and that that decision is effectively made, for the purposes of 8.37, in each case by the Chief of Staff or other appropriate person. Mr Heywood-Smith submitted that the Authority has only a limited function under the Act, that it has no power to retire a member on the ground of invalidity but determines matters such as the percentage of incapacity once the member has been so retired. However, Mr Heywood-Smith's argument immediately confronts an obstacle which, in our view, it cannot overcome. Section 37 does not confer upon the Chiefs of Staff power to determine that @ person be treated as if he had been retired on the ground of invalidity. Section 37 confers on the Chiefs of Staff only the function of determining and informing the Authority that, at the time the member was retired, grounds existed on which he could have been retired on the ground of invalidity. There remains a decision to be made, namely, whether, in the circumstance of the case, the member should be treated as if he had been retired on that ground. Is that decision a matter of discretion? In our opinion, it is. Section 26 does not confer an invalidity benefit both upon a contributing member who was, in fact, retired on the ground of invalidity, and also upo:: a contributing member who could have been retired on that ground. It confers an invalidity benefit only upon the former. Section 37 uses the word "may" and, in the context in which it appears, we cannot read it as doing other than conferring a discretion to treat a person who could have been retired on the ground of invalidity as having in fact been so retired. There are obviously sound reasons for the conferral of the discretion. Whereas a retirement benefit may, at the time of retirement, have appeared to have been the most beneficial benefit to the member, a medical condition which he had at the time of retirement may subsequently deteriorate so as to make an invalidity benefit more beneficial to him. Moreover, there will be other factors to be taken into account, as, for example, whether the former member has commuted a portion of his retirement pay in accordance with 3.24. However, considerations of this type are not necessary to support a reading of s.37 as conferring a discretion. In terms it does so and, having regard to the provisions of s.26, it would not be possible to read it in any other sense. Is this discretion imposed upon the Chiefs of Staff or upon the Authority? In terms it is imposed upon the Authority and we can see no justification for reading the section in any other way. The section confers a specific function upon the Chiefs of Staff, that is, the function of determining whether the member could have been retired on the ground of invalidity and informing the Authority of that fact. This is a function properly imposed upon the Chiefs of Staff for they are aware of the requirements of service and are therefore able to determine whether the member's medical condition was such as to justify his retirement on the ground that he was unable to perform his duties. But that is the only function which 3.37 confers upon the Chiefs of Staff. It does not confer upon them the power to decide whether, in the whole of the circumstances of the case, the former member should be treated as if he had been retired on the ground of invalidity or even the power to request that he be so treated. The section makes the advice of a Chief of Staff a pre-condition of the exercise of the discretion which the section confers and not in itself an exercise of that discretion. Mr Heywood-Smith submitted that the Chiefs of Staff have statutory power under other enactments to amend records with respect to retirement and the like. He submitted that s.37 of the Act is ancillary to, and in aid of, those other provisions. However, we think that s.37 deals with a quite distinct subject matter and ought to be read having regard to the context of the Act and not by reference to other enactments. Mr Heywood-Smith further submitted that the Authority has only a limited function under the Act and is not qualified to make a decision of the type required to be made by s.37. We see nothing in the Act which supports this contention. The Act reposes in the Authority many important decision-making roles in addition to the assessment of incapacity. Part V itself contains several such provisions. Section 25 confers upon the Authority a power to decide whether the invalidity was due to a wilful act on the member's part for the purpose of obtaining an invalidity benefit. Section 28 empowers the Authority to decide whether the invalidity was caused, or was substantially contributed to, by a physical or mental condition that existed at the time when the member became a contributing member and as to whether the condition was materially aggravated by his service after becoming @ contributing member. Section 29 empowers the Authority to decide whether the invalidity was caused, or substantially contributed to, by an occurrence that happened at the time when the member was absent without leave and had been so absent for a period exceeding sixty days. These are but examples, but they make it clear that the Authority may be concerned with events which occurred prior to service and during service as well as subsequent to retirement. Moreover, the Act imposes on the Authority significant discretions. For example, s.43A empowers the Authority to grant special pensions in the circumstances there specified "at such rate and on such conditions as the Authority, having regard to such matters (if any) as are prescribed and such other matters as it considers' relevant, determines." In the light of these matters, we see no reason for concluding that s.37 did not intend the Authority to exercise the significant discretion which in terms it confers upon the Authority. It follows, in our opinion, that the interpretation which the Administrative Appeals Tribunal put upon s.37 was incorrect and that the decision of the Tribunal should therefore be set aside and the matter remitted for hearing according to law. Save as set out above, the nature of the discretion and of the factors to be taken into account in its exercise were not discussed in the appeal and we make no comment thereon. 10. Mr B.M. Debelle, QC, senior counsel for the appellant, with the substance of whose submissions we agree, did not seek an order for costs. The order of the Court will be that the decision under appeal be set aside and the matter remitted to the Administrative Appeals Tribunal to be re-heard. I certify thac tins aud the 7 preceding pages are a true copy of the reasons for 'Judgment herein of the Court Associate Dated 20 //0/o# : 2