JUDGMENT No. .Botcund KLEZ IN THE FEDERAL COURT OF AUSTRALIA ) ) SOUTH AUSTRALIA DISTRICT REGISTRY ) No. G.16 of 1987 ) ) GENERAL DIVISION On Appeal from _ the Administrative Appeals Tribunal BETWEEN: SECRETARY, DEPARTMENT OF SOCIAL SECURITY Applicant > mz lw) | RUBY MAY BARNES Respondent CORAM: Forster, Northrop & Burchett JJ, PLACE: Adelaide DATE: 14 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 2. question whether subsections 10 and 11 of section 6AC 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 6AC(10) 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, less half the cost of purchase and spreading of superphosphate. The respondent was responsible for rates and taxes, and toa 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 $4720 per annum net. 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 chaff" 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 (10) provides: (10) 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 4. 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 - (i) to obtain or enable the person's spouse to obtain a pension under Part III or IV, a benefit under Part IVAAA, an allowance under Part VIIA, a rehabilitation allowance under Part VIII or a service pension under the Repatriation Act 1920; (ii) 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 (iii) 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 123AB 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 5. 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 [1925] 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: "Tt is obvious ... that during its present period of dormant life it has very little to do." He also said: "(T)he operation of receiving and thus discharging the annuity payments goes on 6. 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. a> won Gx Associate Der, Dated: 14 May, Counsel for the Applicant: Solicitors for the Applicant: Counsel for the Respondent: Solicitors for the Respondent: Date of hearing: Mr. M.R. Robertson Q.C. with Ms S.A. Pickham Australian Government Solicitor Mr. G.B. Hevey Germein Reed & Partners 14 May 1987