CATCHHORDS Administrative Law - Administrative Appeals Tribunal - appeal from - statutory interpretation - Social Security Act s.6 AD - income reasonably to be expected to be derived - relevance of economic and personal considerations. Social Security Act 1947, s.6 AD Re Butler and Secretary to the Department of Social Security (unreported —- Administrative Appeals Tribunal) Clyne v. Deputy Commissioner (1981) 150 C.L.R. 1. Matter No. Gi5 of 1987 SECRETARY, DEPARTMENT OF SOCIAL SECURITY and ROSS BODEY COPPING and IRMA COPPING FORSTER, JENKINSON & BURCHETT JJ. ADELAIDE 1 JUNE 1987 IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G15 of 1987 ) ) GENERAL DIVISION On Appeal from the Administrative Appeals Tribunal BETWEEN: SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant - and - ROSS BODEY COPPING and IRMA COPPING Respondents MINUTE OF ORDERS FORSTER, JENKINSON & JUDGES MAKING ORDERS BURCHETT JJ. WHERE MADE 1 ADELAIDE DATE OF ORDERS : 1 JUNE 1987 THE COURT ORDERS THAT: 1. The Appeal be dismissed. 2. The Applicant pay the Respondents' costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G15 of 1987 ) GENERAL DIVISION ) On Appeal from the Administrative Appeals Tribunal BETWEEN: SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant - and - ROSS BODEY COPPING and IRMA BERRY COPPING Respondents CORAM: Forster, Jenkinson & Burchett JJ. DATE: 1 June 1987 PLACE: Adelaide REASONS FOR JUDGMENT FORSTER J. I have had the advantage of reading in draft the reasons for judgment of Jenkinson and Burchett JJ. I agree with what both of their Honours say and with the orders proposed. I certify that this is a true copy of the Reasons for gudgment of Mr eg) Forster. Associate bol Dated: , FSF IN THE FEDERAL COURT OF AUSTRALIA ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G15 OF 1987 GENERAL DIVISION ) On Appeal from the Administrative Appeals Tribunal BETWEEN: SECRETARY, DEPARTMENT OF ~~: SOGIAL SECURITY ==——— Applicant AND: ROSS BODEY COPPING AND IRMA BERRY COPPING Respondents CORAM: Forster, Jenkinson and Burchett JJ. PLACE: Adelaide DATE: 1 June 1987 REASONS FOR JUDGMENT JENKINSON J. Appeal against decisions of the Administrative Appeals Tribunal, pursuant to s.44 of the Administrative Appeals Tribunal Act 1975. The respondents applied to the Tribunal for review of "a decision" of a delegate of the applicant affirming "a decision" of an officer under the Social Security Act 1947. I said "a decision", as I have said "appeal", because the parties have consistently treated contemporaneous administrative decisions 2. concerning the separate entitlement of each of the respondents to a pension as though those contemporaneous decisions constituted a single decision. The decisions affirmed by the applicant's delegate were that from 21 March 1985 the respondent Ross Bodey Copping was no longer entitled to an invalid pension and that from that date his wife, the respondent Irma Berry Copping, was no longer entitled to an age pension. The Tribunal's reviews extended to a consideration of the questions whether at the time of the Tribunal's decisions in February 1987 either respondent was entitled to a pension. The decisions in writing of the Tribunal were expressed thus: "The decision of the delegate of the Secretary to the Department of Social Security the subject of this review is set aside, and the calculation of the applicants' rate of pension is remitted back to the Secretary to be determined in accordance with the following directions: (1) That pursuant to sub-s.6AD(1) of the Social Security Act 1947, the Secretary shall determine in writing that 5s.6AD applies to the applicants; (2) That pursuant to sub-s.6AD(3) of the said Act, there is no income which the applicants could reasonably be expected to derive from the farm property." The direction numbered 1 should be understood, in my opinion, as requiring a determination in writing in respect of each of Mr. and Mrs. Copping that s.6AD applies in relation to that person. The direction numbered 2 and the reasons given by the Tribunal for the conclusions to which that direction is intended to give expression are the subjects of this appeal. Section 6AD of the Social Security Act 1947 provides: "(1) Where - (a) the annual rate of a pension under Part III or IV, a benefit under Part IVAAA or an allowance under Part VIIA or VIII payable to a person 15 calculated under or by reference to paragraph 28(2)(b), 32(2)(b), 34(2)(b) or 63(2)(b); (b) section GAC does not apply in relation to the person or the Secretary determines in writing that the application of section 6AC in relation to the person should, for the purposes of this section, be disregarded; (c) any of the property of the person or, if the person 15 a married person, of the person and the person's spouse, is property that (i) the person or the person's spouse cannot sell or realize or could not reasonably be expected to sell or realize; and (ii) the person or the person''s spouse cannot use as security for borrowing or could not reasonably be expected to use as security for borrowing; and (da) the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply in relation to the person, the Secretary shall determine in writing that this section applies in relation to the person. (2) Subject to sub-sections (3) and (4), where this section applies in relation to a person, the annual rate of the pension, benefit or allowance payable to the person shall, notwithstanding section 28, 32, 34 or 63, be determined in the following manner: (3) (4) (a) the value of any of the property of the person and, if the person is a married person, of the person's spouse, that is property referred to in paragraph (1)(c) shall be disregarded; (b) there shall be deducted from the maximum annual rate of pension, benefit or allowance that would be payable to the person apart from the operation of sub-section Z2B(1EA) or (2), 32(2), 34(2) or 63(2), a5 the case requires (in this section referred to as the 'maximum rate'), an amount per annum equal to the sum of - (i) the annual rate of income of the person (other than income from property of the person ofr the person's spouse that is not property referred to in paragraph (1)(c) or property to which paragraph 6AA(1) (a) applies); and (ii) an amount per annum equal to $26 for each $250 of the value of the property of the person (other than property referred to in paragraph (1) (c) or property to which paragraph 6AA(1)(a) applies). Where the Secretary is of the opinion that the annual rate of pension, benefit or allowance applicable to ae person under sub-section (2) should, having regard to the annual rate of income that could reasonably be expected to be derived from, or produced with the use of, property of the person or the person's spouse that is property referred to in paragraph (1)(c), be reduced, the Secretary may direct that the annual rate of pension, benefit or allowance payable to the person be reduced by such amount per annum as- the Secretary determines in writing. Where the sum of the annual rate of pension, benefit or allowance that would, apart from this sub-section, he payable to a person under this section and the annual rate of income of the person exceeds the maximum rate, the annual rate 50 payable shall be reduced by the amount per annum of that excess." At relevant times two parcels of farm land, separated by a road, were jointly owned by Mr. and Mrs. Copping and their s5o0n Peter. The value of the land exceeded $450,000. The aggregate of the values of the respondents' interests therefore exceeded $300,000; and the value of the interest of each exceeded $150,000. Even after deduction, in accordance with the provisions of sub-paragraph 6AA(1)(a)(ii) (as expounded in sub-section GAA(3)), of the value of each respondent's interest in the principal home of the respondents, which was part of the farm land, the amount of the "pension reduction amount" applicable to each of them (calculated in accordance with s.6AE) was so great as to have the effect, by reason of the operation of paragraph 28(2)(b), of reducing to nil the annual rate of the pension payable to each of then. Accordingly, the condition specified in paragraph 6AD(1)(a) was satisfied in relation to each. The Tribunal decided that the condition specified in paragraph 6AD(1)(b) had been satisfied and the grounds of this appeal which challenged that decision were abandoned. The applicant had not contended before the Tribunal in respect of either respondent that the conditions specified in paragraph 6AD(1)(c) were not satisfied. The Tribunal was satisfied, in terms of paragraph G6AD(1)(d), that each respondent would suffer severe financial hardship if s.6AD did not apply in relation to that respondent. Accordingly the Tribunal gave the applicant the direction numbered 1 in the decisions in writing which it made. The ground of this appeal which challenged 6. the Tribunal's conclusion of satisfaction in terms of paragraph 6AD(1)(d) was abandoned. The Tribunal's reasons in writing for its decisions make it clear that in reasoning to its determination, for the purposes of sub-section 6AD(3), of "the annual rate of income that could reasonably be expected to be derived from, or produced with the use of" each respondent's interest in the farm land or the interest of that respondent's spouse in that farm land, the Tribunal assumed that the only person to be considered as a possible payer of income in respect of occupation of the farm land or in respect of use of the farm land was the respondents' son Peter. It is also, I think, clear that, in considering what payment in respect of use or occupation Peter might make, the Tribunal assumed that the relevant enquiry was what amount he would be able, without serious harm to his own economic interests, to pay in all the circumstances of his own and his family's economic activities. These assumptions accorded with reasons for decision of the Tribunal in Re Butler and Secretary to the Department of Social Security (5.85/94). After hearing contradictory submissions, the Tribunal in that case had stated that the determination of what "could reasonably be expected to be derived from, or produced with the use of, property" for the purposes of sub-section 6AD(3) required a consideration, mot only of what could be derived or produced in an open market between strangers dealing at arms length, but also of what should be considered reasonable in all the circumstances, personal as well as economic, 7. as between the particular applicant for a pension and those (usually relatives) who were in fact interested in occupying or using the property. In this case the Tribunal adopted the same understanding of what the words just quoted from sub-section 6AD(3) required, and the applicant's representative on the hearing of the review acquiesced in that course. Upon that construction of the words, the Tribunal's exclusive concern with Peter as the user and occupier of the farm land resulted naturally from a consideration of the history of his relations with his parents and the history of his association with the land. However, counsel for the applicant on the hearing of this appeal advanced the submission that, on their proper construction, those words designate a reasonable expectation of what could be derived or produced if economic exploitation of the property were sought without regard to personal considerations or feelings. This is perhaps an unfortunate case in which to advance the submission. Not only is it in contradiction of what was submitted on the applicant's behalf before the Tribunal. There is the further difficulty that in this case the property in question is in the co-ownership of three persons. The word "property" is not the subject of definition for the purposes of s.6AD, except that it is declared to include property situated outside Australia (s.6(1)). It seems right to understand the word "property" in that section as designating, in relation to land, the estate or interest of "the person", concerning whom the section is expressed to operate, in that land, or the estate or interest of "the Person's spouse", as the case may be. If, therefore, the enquiry were, as the applicant submitted to this Court that sub-section 6AD(3) required, what annual rate of income could be derived if the personal feelings and circumstances of the persons concerned in the land were disregarded, it would be the annual rate of income that could be derived co-operatively by two of the three joint owners of a fee simple estate in the land, without the co-operation or consent of the third, that would be in question. For if the respondents are ta be conceived as pursuing the maximum economic return to themselves from the land, the third co-owner of the land, Peter Copping, like the hypothetical purchaser of a lease of the land, must also be conceived as seeking his own Maximum economic return from the land. Unless he were induced to take another course in consideration of a share of the rent, Peter could be expected, if he were conceived merely as homo oeconomicus, to continue to exercise the right to possession of the whole of the land which his co-ownership confers on him. The hypothetical prospective tenant could he expected to offer scant rent for a lease by the respondents of their interests in the land while Peter maintained his own right to possession of the whole. There was in fact no evidence before - or consideration by - the Tribunal of what rent in an open market the respondents might be offered by a stranger for a lease, or leases, of the respondents' interests in the land while Peter stood aloof and maintained his own possession of the whole. (See Mendes da Costa _: Co~ownership under Victorian Land Law. (1961) 3 M.U.L.R. 137-148, 156-159, 317-323.) In Re Butler and Secretary to the Department of Social Security, supra the Tribunal found support for the construction it placed on the words in sub-section 6AD(3) - "the annual rate of 9. income that could reasonably be expected to be derived from, or produced with the use of, property of the person or the person's spouse" ~- in the circumstance that in another sub~section of the same section - s.6AD(1)(c) - the same verbiage - "could .... reasonably be expected to" - had been employed in a sense which, as the applicant conceded, admitted to consideration the personal circumstances, relationships and feelings of those who were interested in the property. The Tribunal cited judicial authority for the propositions that "it is a fundamental rule of construction that any document should be construed as far as possible so as to give the same meaning to the same words wherever those words occur in that document, and that applies especially to an Act of Parliament, and with special force to words contained in the same section of an Act" : per Hodges J. in Craig, Williamson Pty. Ltd. v. Barrowcliff C1915] V.L.R. 450 at 452. The rule of construction has been authoritatively declared to yield readily to the context : Clyne _v. Deputy Commissioner of Taxation (1981) 150 C.L.R. 1at 10 (per Gibbs C.Jd.), 15 (per Mason J). In my opinion the presumptive rule lacks its full force in application to the identical verbiage of s.6AD(1)(c) and s.6AD(3), because in the first use of the words a person is the subject of the verb "could not be expected", but in the second instance an abstract noun phrase, "the annual rate of income", is the subject of the verb. In the first instance the idiomatic connotation suggested is of an enquiry as to what it would be reasonable to expect of the verb''s subject - "the person" or "the person's spouse". In the second instance it is easier to conceive a connotation of enquiry as to what annual rate of income 10. it would be reasonable to expect the property to produce 1f it were exploited to yield income, without regard to the identity - and therefore without regard to the circumstances or feelings - of the exploiter. Those circumstances do not, however, deprive the rule of construction of all force. Further, the policy which underlies the provisions of the section, considered as a whole, and the use of the word "reasonably", suggest strongly, in my opinion, that in s.6AD(3) the words under consideration direct enquiry as to what annual rate of income could reasonably be expected to be derived, in all the circumstances relevant toa judgment as to what might be reasonable. I think that the word "reasonably", in the context which sub-section 6AD(3) supplies, directs the Secretary's attention to, inter alia, all the circumstances, including the personal relations of those concerned in the property, which in his judgment might reasonably be taken into account by "the person" or "the person's spouse", as the case may be, in deciding how the property was to be exploited to produce income. And he is required, in my opinion, to have regard to the annual rate of income that could reasonably be expected to be derived from, or produced with the use of, that property in all the circumstances, including those circumstances to which I have just referred. The construction suggested does not direct enquiry merely as to the annual rate of income likely in fact to be derived from, or produced with the use of, the property by "the person" or "the person's spouse", as the case may be, but rather enquiry as to what annual rate of income the Secretary, or the Administrative Appeals Tribunal ona review, considers would be likely to be 1l. derived from, or produced with the use of, the property by that person if that person made decisions concerning the exploitation of the property which in all the circumstances, including personal circumstances, the Secretary, or the Tribunal on review, considered reasonable. That is the enquiry which in my opinion the reasons of the Tribunal indicate that the members of the Tribunal undertook. It was not submitted on behalf of the applicant that, if that was the enquiry which 5.6AD(3) required, the conclusion reached by the Tribunal was not one which the material before the Tribunal could justify. The conclusion found expression in the direction numbered 2. The expression is elliptical. It is to be understood as a direction, in relation to each respondent and in respect of the Secretary's performance of the function committed to him by 5.6AD(3), to find to be nil the annual rate of income that could reasonably be expected to be derived from, or produced with the use of, that respondent's interest in the land to which reference is made in the direction as "the farm property" or the interest of that respondent's spouse in that land. So understood, the direction has not been shown to have been in any respect erroneous. I respectfully accept the observation of Burchett J. in his reasons for judgment that personal considerations would in any event be relevant in the formation of the opinion to which sub-section 6AD(3) refers, and in the exercise of the 12. discretionary power of direction which is available if that opinion 1s formed. I would order that the appeal be dismissed with costs. I certify that this and the eleven preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice Jenkinson. { ) Associate Dated: ({ Wire 196% IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G.15 of 1987 ) GENERAL DIVISION ) On Appeal from the Administrative Appeals Tribunal BETWEEN: SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant AND: ROSS BODEY COPPING and IRMA BERRY COPPING Respondent CORAM: Forster, Jenkinson and Burchett JJ. PLACE: Adelaide DATE: 1 June 1987 REASONS FOR JUDGMENT BURCHETT J. I agree that this appeal should be dismissed with costs, substantially for the reasons given by Jenkinson J. It should, I think, be added that even if a different view were taken of the effect of the words "having regard to the annual rate of income that could reasonably be expected to be derived ...", the personal and family considerations relied on by the Tribunal could not be excluded from consideration, since the subsection requires an opinion to be formed, in the exercise of a discretion, as to what should be the relevant consequence of the finding to be made. In my opinion, if the applicant's argument 2. had prevailed it would only have transferred the same discretion from one step in the making of the decision to the next. I certify that this and the preceding one (1) page are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett. Bis Cay srt Dated: ' ; LVS Counsel for Applicant : Mr M.R. Robertson, Q.C. with Mr J.J. O'Halloran Solicitors for the Applicant: Australian Government Solicitor Counsel for the Respondents: Mr P. Humphries Solicitors for the Respondents: W.E. Downs, Humphries & Co. Date of hearing: 14 May 1987