CATCHWORDS SOCIAL SECURITY - Appeal from Administrative Appeals Tribunal - Age pension - Determination of rate of pension payable - Whether expenditure incurred in researching and writing a book for publication deductible from income unconnected with the writing of the book in order to determine the annual rate of income - Meaning of "income" Social Security Act 1947, ss. 18, 28 JAMES PATRICK HALDANE-STEVENSON v. THE DIRECTOR-GENERAL OF SOCIAL SECURITY No. ACT G 25 of 1984 CORAM: Neaves J. 1 February 1985 Canberra IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G 25 of 1984 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN : JAMES PATRICK HALDANE-STEVENSON Applicant AND: THE DIRECTOR-GENERAL OF SOCIAL SECURITY Respondent ORDER JUDGE MAKING ORDER : Neaves J. DATE OF ORDER 3 1 February 1985 WHERE MADE 3 Canberra THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The applicant pay the respondent's costs of the appeal. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G 25 of 1984 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN : JAMES PATRICK HALDANE- STEVENSON Applicant AND: THE DIRECTOR-GENERAL OF SOCIAL SECURITY Respondent CORAM: Neaves J. DATE: l February 1985 REASONS FOR JUDGMENT This 1s an appeal by James Patrick Haldane-Stevenson ("the applicant"), ona question of law, from a decision of the Administrative Appeals Tribunal ("the Tribunal") affirming a decision of the Director-General of Social Security ("the respondent"). The appeal 18 brought pursuant to sub-section 44(1) of the Administrative Appeals Tribunal Act 1975. The question of law involved in the appeal concerns the meaning and effect of certain of the provisions of section 28 of the Social Security Act 1947 bo ("the Act") dealing with the rate of age pension payable under the Act. The period with which the appeal 15 concerned is the period from 18 December 1981 to 6 August 1983. It is common ground that during that period the applicant was qualified to receive, and did receive, an age pension under the Act. It is also common ground that during the whole of the period the applicant was an unmarried person who had attained the age of seventy years. The rate of pension paid to the applicant varied from time to time but for the purpose of this appeal it 15 unnecessary to refer 1n detail to those variations or to the reasons which gave rise to them. What 1s of significance for the purpose of the appeal is that. in determining the rate of pension payable, the respondent took into account amounts which the applicant admittedly received by way of a retiring allowance as an ordained clergyman within the Church of England, by way of a United Kingdom pension and as interest on an investment and an amount representing the value of free lodgings. The applicant does not dispute that it was proper that those amounts should have been taken into account but he says that the aggregate of those amounts should have been reduced by the amount of the expenditure (which he estimates at $10 per week) that he incurred during the relevant period in connection with research for, and the writing of, a book yet 3. to be published on the future of the monarchy in Australia under the title "Monarchy in Crisis". It is convenient at this point to refer to the relevant provisions of the Act in the form in which they stood during the relevant period. Section 28 provided that. subject to Part III, the rate of an age pension was in each case to be a rate determined by the respondent as being reasonable and sufficient, having regard to all the circumstances of the case, but was not to exceed the maximum rate fixed by or in accordance with other provisions of the section (sub-section (1)). The maximum rate of age pension was, in the case of an unmarried person, the rate per annum ($2,766.40) specified in sub-section (1A), provision being made in section 28A for that rate to be varied by reference to the formula therein set forth in respect of the periods of six months commencing on 1 May and 1 November 1n each year. The annual rate at which an aqe pension was determined was, subject to sub-section 28(2AA) which had no relevance to the applicant's situation, to be reduced by one-half of the amount (if any) per annum by which the annual rate of income of the claimant or pensioner exceeded, in the case of an unmarried person, $1,040 per annum (sub-section 28(2)). Sub-section 28(2AB) provided that, notwithstanding sub-section (2), where a claimant or 4. pensioner had attained the age of 70 years, was in receipt of, or was qualified to receive, an age pension and was an unmarried person, the annual rate at which that pension was determined was to be not less than the specified rate. Different minimum rates were specified. Ina case such as that of the applicant the specified minimum rate was $2,675.40 per annum. "Income", in relation to a person, was defined in section 18 to mean "any personal earnings, moneys, valuable consideration or profits earned, derived or received by that person for his own use or benefit by any means from any source whatsoever, within or outside Australia". The definition then went on to identify certain payments or benefits that the expression was on the one hand to include and on the other hand not to include but that part of the definition provides no assistance in resolving the issue that arises on the present appeal and itis, therefore, unnecessary to refer further to it. No precise details have been given of the amounts of expenditure which the applicant seeks to have taken into account in determining the rate or rates of pension payable during the relevant period. Their general nature may, however, be sufficiently appreciated from the material that was before the Tribunal. They include expenditure on 5. postage (including overseas postaqe), telephones, photocopying of documents and travelling. Two alternative bases were put forward to support the applicant's claim. The first basis postulated that, when in due course the applicant receives moneys by way of royalties or otherwise consequent upon the publication and sale of the book, assuming that at that time the applicant were qualified to recelve or 1n receipt of an age pension under legislation similar to that in force during the relevant period, section 28 of the Act read with the definition of "income" in section 18 would require that, in determining the rate of pension payable, account be taken of the receipt of such moneys. It was submitted that the provisions should be construed so as to permit expenditure incurred, or necessarily incurred, in producing the work which would result in those moneys being earned to be taken into account in the period in which 1t was incurred in determining the annual rate of income earned, derived or received. Unless the provisions were so construed, so i1t was argued, an advantage would be available to a pensioner weiter who could produce and sell a work within a year, in which case the expenditure incurred in doing so could be offset against the royalties received from the sales made in the year in order to determine the income or profits derived during that year, that advantage not being available to the author of a more scholarly work which might take years to 6. research and complete. According to the arqument' the applicant was entitled to have the expenditure incurred by him during the period 18 December 1981 to 6 August 1983 deducted from the moneys received by him during that period from the sources which have been identified above. On the view which I take it is unnecessary to express a definitive opinion upon the question whether the definition of "income" in section 18 of the Act would, in the circumstances where a pensioner within a period of one year both incurred expenditure in researching and completing a book and earned royalties from the publication and sale of the same, require the gross or the net amount to be brought to account. But assuming, as the applicant submits, that only the net amount would need to be brought to account, that circumstance provides no support for the view that, in ascertaining the applicant's annual rate of income in respect of a period well before any royalties from the sale of his book are likely to be received, expenditure incurred zn or in connection with research for, and the writing of, the book may be deducted from moneys received during that period from sources having no connection ina legal sense with the writing of the book. There is, in my view, nothing in the language of the definition of "income" which requires or indeed, permits the reduction of amounts of income admittedly derived from other sources by reference to items of expenditure incurred in pursuing an activity which, at 7. the time the annual rate of income is being determined, hag mot produced any monetary benefit or gain. The alternative basis of the claim postulates that scholarly writing, if he has the talent for it, is a proper field of endeavour for an ordained clergyman within the Church of England as part of his community service. It was submitted that expenditure incurred in performing such community service was properly deductible from the church emoluments received by the applicant, whether those emoluments took the form of a stipend, fees or a pension, as being expenditure incurred, or necessarily incurred, in gaining or producing those emoluments. It was said that those emoluments are subject to the expenses of authorship just as they are subject to the cost of travelling to preach at the cathedral or in maintaining the cleric's robes, In my opinion this argument cannot be accepted. Expenditure which the applicant incurred 1n the relevant period 1n or in connection with research for, or the writing of, his book cannot, in my view, be said to answer the description of expenditure incurred, or necessarily incurred, in earning the income which the applicant derived by way of pension from the Church of England. This must be so even 1f that test be an appropriate one to apply in determining the amount of "income" to be brought to account for the purpose of determining the annual rate of pension payable under section 28 of the Act. In my opinion the applicant has not demonstrated that the Tribunal erred in law in reaching the conclusion that the decision of the respondent be affirmed. The appeal is dismissed with costs. I certify that this and the preceding 7 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves. Associate Dated: 1 February 1985