CATCHWORDS SUPERANNUATION - compliance with occupational superannuation standards - appeal from Administrative Appeals Tribunal - breach of standards - s12(3A) Superannuation Entities (Taxation) Act 1987 - when must breach have occurred - effect of Taxation Laws Amendment (Superannuation) Act 1993 - s49 - retrospective operation - principles to be applied (the then Occupational Superannuation Standard Act 1987 s7(2)(h), 12(3), 12(3A) 13(1)now Superannuation Entities (Taxation) Act 1987) Superannuation (Consequential Amendments) Act 1992 Taxation Laws Amendment (Superannuation) Act 1993 s49 The Queen v Guardians of Ipswich Union (1877) 2 QBD 269 Refd Maxwell v Murphy (1957) 96 CLR 261 Refd R v Marshall ex parte Baranor Nominees Pty Ltd [1986] VR 19 Refd Pardo v Bingham (1869) LR 4 Ch App 735 Refd Hutchinson v Jauncey [1950] 1 KB 574 Refd Insurance and Superannuation Commissioner v Wayne Cyril Hiscock as Trustee for the Osborne Fruit Drinks Superannuation Fund No QG 159 of 1994 Kiefel J Brisbane 1 September 1995 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG 159 of 1994 (ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY MS S A FORGIE (DEPUTY PRESIDENT), MR K L BEDDOE (SENIOR MEMBER) AND MR J D HORRIGAN (MEMBER)) BETWEEN: INSURANCE AND SUPERANNUATION COMMISSIONER Applicant AND: WAYNE CYRIL HISCOCK as Trustee for the OSBORNE FRUIT DRINKS SUPERANNUATION FUND First Respondent JUDGE MAKING ORDER: Kiefel J. DATE OF ORDER: 1 September 1995 WHERE MADE: Brisbane MINUTES OF ORDERS THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The decision of the Administrative Appeals Tribunal of 24 October 1994 be set aside. 3. The matter be remitted to the Administrative Appeals Tribunal for further consideration. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION No. QG 159 of 1994 (ON APPEAL FROM THE GENERAL ADMINISTRATIVE DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL CONSTITUTED BY MS S A FORGIE (DEPUTY PRESIDENT), MR K L BEDDOE (SENIOR MEMBER) AND MR J D HORRIGAN (MEMBER)) BETWEEN: INSURANCE AND SUPERANNUATION COMMISSIONER Applicant AND: WAYNE CYRIL HISCOCK as for the OSBORNE FRUIT DRINKS SUPERANNUATION FUND First Respondent CORAM: Kiefel J. DATE: 1 September 1995 PLACE: Brisbane REASONS FOR JUDGMENT Section 7(2)(h) of the Occupational Superannuation Standards Act 1987 provides that standards may be prescribed with respect to the investment of assets of Superannuation Funds. If there is compliance with those standards the trustees of the Fund receive a notice to that effect by the Insurance and Superannuation Commissioner ("Commissioner") under s.12(3) which then entitles the Fund to concessional rates of taxation. The Osborne Fruit Drinks Superannuation Fund did not comply with those standards during the income year ended 30 June 1991 and the trustee sought the exercise of the Commissioners' discretion under s.13(1) of the Act which provided that the trustee might satisfy the Commissioner that because of "special circumstances" that existed it would be reasonable for the Commissioner to treat the Fund as if it had satisfied the standards. The Commissioner could then give a notice to that effect. On 21 October 1992 the delegate of the Commissioner decided that the discretion under s.13 ought not be exercised in favour of the Fund for reasons not presently relevant and that decision was affirmed on 22 January 1993 by another delegate. By the date of that decision however, s.12(3A) had been inserted by amendment (Act No. 92 of 1992) taking effect on 1 July 1992. It provided that in making the decision under s.12(3), as to whether the Fund satisfied the conditions, the Commissioner was obliged to disregard a breach of a superannuation fund if certain conditions were present. The reference to a "breach" was not further qualified as to its nature or as to the time when it was to have occurred. On 24 October 1994 the Administrative Appeals Tribunal substituted a decision, that the Fund satisfied the conditions in relation to the income year ended 30 June 1991. It did so by applying the provisions of s.12(3A) which, as it observed, was not in force during 1991 but was in force when the delegate's decision was made, and held that the section was to be applied by the Tribunal. It noted in particular that there were no transitional provisions relating to the amendment in question and nothing else to suggest that its ordinary meaning could not be given effect to, that is to say, that it was to be applied when a decision was made after 1 July 1992. The requirements of s.12(3A) were found by the Tribunal to have been fulfilled and accordingly, in its view, the breach was to be disregarded. Since that was the only matter which prevented satisfaction of compliance with the Fund conditions, the requisite notice under s.12(3) ought to be given. This appeal concerns whether the Tribunal ought to have applied s.12(3A) as it stood following the 1992 amendment. It was not drawn to the Tribunal's attention that the sub-section itself had been the subject of further statutory provision, by amendments taking effect on 30 July 1993, and more specifically by a provision (s.49 of Act No. 7 of 1993) entitled "Transitional" and which came into effect on 27 May 1993. It was in these terms. "49. Subsection 12(3A) of the Principal Act applies, and is taken always to have applied, to a breach of a superannuation Fund condition as follows: (a) if the breach continued over a period - that subsection applies to so much of the breach as occurred after 30 June 1992; (b) in any other case - that subsection applies if the breach occurred after 30 June 1992." The Commissioner contends that one must read s.12(3A) as if it had always contained the qualification of the "breach" that might be disregarded. So read it did not have any application to the Fund, since the breaches in question occurred prior to 1 July 1992. Mr Hiscock, a Trustee of the Fund, appeared and made submissions against a retrospective operation being given to s.49. The Courts lean against giving retrospective operation to amending legislation. It has been explained as a principle of legal policy that, except in relation to procedural matters, changes in the law should not take effect retrospectively: Bennion "Statutory Interpretation" Section 131. A retrospective operation is highly artificial, deeming something to be what it was not. The approach taken by the Courts is not however to deny retrospectivity where it is clearly intended, since it lies within the power of the legislature. Rather the Courts assume that an Act is intended to apply to a state of affairs coming into existence after the legislation: The Queen v. Guardians of Ipswich Union (1877) 2 QBD 269, 270 unless there is some clear statement to the contrary: see generally Maxwell v. Murphy (1957) 96 CLR 261, 267 or it arises by necessary implication: Maxwell on Interpretation of Statute 10th ed. p. 213. Where the legislation is open to two interpretations, one operating prospectively and the other retrospectively, the assumption will be that it is to have prospective effect: Craies on Statute Law 7th ed. p. 390. To give retrospective effect here would be to limit the availability of the beneficial provisions of s.12(3A) to Funds and to apply the qualification as to when the breach was to have occurred to decisions made since the coming into the effect of the 1992 Act and those pending upon it. It is not then declaratory of s.12(3A). It does not explain what was intended by that provision but operates as truly retrospective. It does not supply an obvious omission (as to which see Craies, 395) although it may be that it was subsequently realised that s.12(3A) took effect with respect to decisions made after 1 July 1992 but with respect to breaches occurring at any time earlier than the commencement of those provisions. Mr Hiscock submitted that it could not be said Parliament intended a retrospective operation to s.49 for, if it had, it could have expressed it more clearly by providing for an earlier commencement date for s.49 in the provisions of s.2 of the 1993 Amending Act. Certainly such a course may leave little doubt upon the matter. And the Act could have expressly provided that it take effect "as if originally enacted": see the example given in Craies' p. 392. But these are only methods of achieving a retrospective operation and the fact that they are not the mode utilised in the amending legislation in question is not conclusive. In addition to providing that an Act or part of it is deemed to have come into operation on a date past, the amending legislation may achieve retrospectivity by its own terms: see R v. Marshall ex parte Baranor Nominees Pty. Ltd. [1986] VR 19,24. The question is whether it can be seen to be necessarily intended that s.49 was to affect not only decisions made by the Commissioner from its commencement, but to affect those already made and those in the process of review. Regard should then be had to its language and to its purpose, to the provisions existing before and what it sought to be achieved by the amendment: see Pardo v. Bingham (1869) LR 4 Ch App 735, 740. When the Act was passed in 1992, absent transitional provisions as the Tribunal found, the Commissioner was obliged to disregard a breach of a Fund condition regardless of when it had occurred. The new provision speaks only of breaches occurring on and after 1 July 1992, its obvious purpose being to limit the breaches to which the decision relates to those occurring after the commencement of that Act. When regard is had to the words used in s.49, if it had only been intended to operate with respect to future decisions, on and from the commencement of the 1993 Act, it would have been sufficient to provide that s.12(3A) now "applies" to the breaches then set out. But the difficulty in denying any retrospective operation to it lies in the additional words provided "and is taken always to have applied", which I presume to mean "is to be taken ...". But even supplying a present tense does not overcome the following words, which attempt to reach back to the original provision. And one may observe that it is in the nature of a statement of fact, operating in a sense like a deeming provision. It is not expressed in imperative terms as is more common in drafting. But regardless of these observations it seems clear that the section is attempting to have s.12(3A) read as if it has always spoken of the breaches in the now limited sense, and that would be so with respect to administrative decisions yet to be made and those already made subject to review. To hold that it has only prospective operation would be to deny those words any meaning. It is true that it has the unfortunate result of affecting the law to be applied to administrative decisions already made and under review or subject to appeal, although it is not here suggested that the Commissioner's decision resulted in any vested right in the Fund. But where the statute shows a clear intention to effect such a variation in the law, the Courts will give effect to it: Hutchinson v. Jauncey [1950] 1 KB 574, 578. Whilst it seems to me then that the Tribunal, not properly informed, fell into legal error in applying the provisions in s.12(3A) there remains the question as to the application of s.13(1) of the 1987 Act. Indeed it was that provision upon which the delegate's decision was originally based and its application was argued before the Tribunal. It has not however determined that question. The parties concur that in the event I should uphold the appeal the matter must be remitted for consideration and that appears to be the correct course. It is appropriate that the Commissioner does not seek costs of this Appeal. The orders will be that: 1. The appeal be allowed. 2. The decision of the Administrative Appeals Tribunal of 24 October 1994 be set aside. 3. The matter be remitted to the Administrative Appeals Tribunal for further consideration. I certify that this and the preceding six pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel. Associate Date: 1 September 1995 Counsel for the applicant: Mr P Hack Solicitors for the applicant: Australian Government Solicitor Respondents: Mr Hiscock (as trustee for the Osborne Fruit Drinks Superannuation Fund) Date of Hearing: 23 August 1995 Place of Hearing: Brisbane Date of Judgment: 1 September 1995