FEDERAL COURT OF AUSTRALIA Chapman v Defence Force Retirement & Death Benefits Authority [2001] FCA 594 DEFENCE AND WAR – error of law – eligibility of member of Australian Regular Army to qualify for benefits under Defence Force Retirement and Death Benefits Act 1973 (Cth) – where member of Active Australian Army Reserve on and from 1 October 1991 and transferred to Australian Regular Army in December 1996 – where exclusions under s 5A(2) of the Defence Force Retirement and Death Benefits Act 1973 not available to member in the circumstances – member only eligible for benefits under the Military Superannuation and Benefits Act 1991 (Cth) Defence Force Retirement and Death Benefits Act 1973 (Cth) ss 3(1), 5, 5A(1)(a) and (b), 5A(2) Defence Act 1903 (Cth) ss 4, 30, 31, 32(1), 32(2), 32A(1), 32A(4), 50(3), 50D, 50E, 50F Military Superannuation & Benefits Act 1991 (Cth) s 55 PHILLIP GEORGE CHAPMAN v DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY V 84 OF 2001 WILCOX, WHITLAM and GYLES JJ MELBOURNE (via video link to Sydney) 25 MAY 2001 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 84 of 2001 BETWEEN: PHILLIP GEORGE CHAPMAN APPELLANT AND: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY RESPONDENT JUDGE: WILCOX, WHITLAM and GYLES JJ DATE OF ORDER: 25 MAY 2001 WHERE MADE: MELBOURNE (via video link to Sydney) THE COURT ORDERS THAT: 1. The appeal be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 84 of 2001 BETWEEN: PHILLIP GEORGE CHAPMAN APPELLANT AND: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY RESPONDENT JUDGE: WILCOX, WHITLAM and GYLES JJ DATE: 25 MAY 2001 PLACE: MELBOURNE (via video link to Sydney) REASONS FOR JUDGMENT WILCOX J: 1 I have had the advantage of reading in draft form the reasons for judgment of Whitlam and Gyles JJ. I agree with their Honours that the appellant is excluded from the definition of "eligible member of the Defence Force", in s 3 of the Defence Force Retirement and Death Benefits Act 1973 (Cth) ("DFRDB Act"), by virtue of para (c) of that definition, read with s 5A of that Act. 2 However, I prefer to rest my decision on para (a) of s 5A(1), rather than para (b). I have reservations about the application of para (b) to this case. Paragraph (b) does not expressly relate the condition of "being a member of the Reserve Forces or the Emergency Forces" to the date 1 October 1991. I think it is an arguable reading of para (b) that the relevant condition is one that applies at the commencement (on or after 10 October 1991) of rendering continuous full-time service of not less than 12 months, rather than on 1 October 1991. 3 As counsel for the appellant pointed out, such a reading would be meaningful: the Defence Act 1903 (Cth) contemplates a number of circumstances under which a member of the Reserve Forces or the Emergency Forces might, in that capacity, render 12 months continuous full-time service: see ss 50(3), 50D, 50E, 50F. 4 It is common ground in the present proceeding that the appellant's continuous full-time service on and after 2 December 1996 was rendered by him, not as a member of the Reserve Forces, but as a member of the Australian Regular Army. That is the reason I have reservations about the application of para (b). 5 At first blush, para (a) would seem not to apply to this case. At all material times, even when he was in the Australian Army Reserve, the appellant was a "member of the Defence Force", within the normal meaning of those words. If he had that status before and on 1 October 1991 a reasonable first impression would be that the appellant could not be a person who "becomes" a member of the Defence Force on or after that date. 6 However, s 5(2) of the DFRDB Act provides: "Where a contributing member ceases to be on continuous full-time service but continues to be a member of the Defence Force he shall, for the purposes of this Act, be deemed to have retired on the day on which he ceases to be on continuous full-time service." 7 In the absence of a definition, it might be thought that the word "retired" meant retired from the benefit scheme constituted by the DFRDB Act, rather than from the Defence Force itself. However, a definition in s 3 makes clear this is not the case. This definition reads: " 'retirement' means retirement as a member of the Defence Force, and includes discharge from the Defence Force, and 'retire' has a corresponding meaning;" 8 If this definition applies to s 5(2), it has the effect that, regardless of the true position, the appellant was deemed to have retired from the Defence Force when he ceased in 1988 to be a member of the Australian Regular Army and transferred to the Australian Army Reserve. On that basis, he once again became a member of the Defence Force when he commenced in 1996 to render continuous full-time service. 9 In an attempt to avoid the apparent effect of s 5(2), counsel for the appellant submitted the word "retired" should not be given its defined meaning. I cannot accept that submission. The opening words of s 3 provide that the defined meanings apply in the Act, unless the contrary intention appears. I see nothing in the Act to suggest a contrary intention, in relation to the word "retired" in s 5(2). The defined meaning leads to the exclusion from the DFRDB Act scheme of people in the position of the appellant. That result is comprehensible in policy terms and consistent with what was stated in the Minister's Second Reading Speech. 10 I agree with Whitlam and Gyles JJ that the appeal should be dismissed. The Authority does not seek an order for costs, in the event that the appeal is dismissed. Consequently, no costs order should be made. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. Associate: Dated: 25 May 2001 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 84 OF 2001 ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: PHILLIP GEORGE CHAPMAN APPELLANT AND: DEFENCE FORCE RETIREMENT AND DEATH BENEFITS AUTHORITY RESPONDENT JUDGE: WILCOX, WHITLAM and GYLES JJ DATE: 25 MAY 2001 PLACE: MELBOURNE (via video link to Sydney) REASONS FOR JUDGMENT WHITLAM and GYLES JJ: 11 This is an appeal from the decision of a judge of the Court which allowed an appeal from a decision of the Administrative Appeals Tribunal which had set aside a decision of the Defence Force Retirement and Death Benefit Authority ("the Authority") that Phillip George Chapman ("the appellant") was not eligible to qualify for benefits under the Defence Force Retirement & Death Benefits Act 1973 (Cth) ("the DFRDB Act") but, rather, was eligible and required to contribute to the Military Superannuation Benefits Scheme ("the MSB Scheme") introduced by the Military Superannuation & Benefits Act 1991 (Cth) ("the MSB Act"). The decision of the judge reinstates the decision of the Authority. 12 There is no dispute as to the facts, which are in a very short compass. The matter turns upon the proper construction of a few legislative provisions. The judgment appealed from sets out the relevant facts and statutory provisions and comprehensively sets out and analyses the competing arguments of the parties. This Court received detailed submissions in advance of and at the hearing. There is no need for us to essay another comprehensive analysis of the issues, but rather can go directly to what we regard as the decisive considerations. 13 Section 30 of the Defence Act 1903 (Cth) as in force in 1991 and in 1996 ("the Defence Act") provided that the "Defence Force" consisted of three arms: the "Australian Navy", the "Australian Army" and the "Australian Air Force". Section 31 provided that the Australian Army consisted of two parts, namely the "Permanent Military Forces" ("the PMF"), and the "Australian Army Reserve" ("the AAR"). Section 32(1) provided that the PMF consisted of three forces, namely the "Australian Regular Army" ("the ARA"), the "Regular Army Supplement" ("the RAS"), and the "Regular Army Emergency Reserve" ("the RAER"). Section 32(2) provided that the ARA consisted of, inter alia, officers appointed to, or transferred to, that force from any other part of the PMF or the AAR. Section 32A(1) provided that the AAR consisted of two forces: the "Active" AAR, and the "Inactive" AAR. Section 50 provided that members of the AAR were not generally bound to render continuous full-time military service. Section 32A(4) provided that the Active AAR consisted of, inter alia, officers appointed to, or transferred to, that force from the PMF or the Inactive AAR. 14 The appellant served in the ARA from 13 February 1973 to 10 November 1981, when he transferred to the RAER. In May 1982 the appellant was transferred to the Active AAR and he rejoined the ARA on 1 February 1983. On 31 January 1988 his appointment to the ARA expired. He became a member of the Active AAR on 1 February 1988, and continued as such until 2 December 1996, when he transferred to the ARA. 15 The DFRDB Act established a scheme that provided superannuation benefits for members of the Defence Force and their dependants to be administered by the Authority ("the DFRDB Scheme"). Membership of the DFRDB Scheme depended on the definition of "eligible member of the Defence Force" in s 3(1) of the DFRDB Act. That subsection relevantly, for present purposes, provided: ""eligible member of the Defence Force" means: (a) a member of the Defence Force who: (i) is serving on continuous full-time service under an appointment or engagement, or under a re-appointment or re-engagement, for a period of not less than one year; or … but does not include: (c) a person who, under s 5A, is excluded from this definition; …" 16 Section 5A of the DFRDB Act, which was added to the DFRDB Act by s 55 of the MSB Act, provided: "Persons excluded from definition of "eligible member of the Defence Force" 5A. (1) Subject to subsection (2), a person who: (a) becomes, on or after 1 October 1991, a member of the Defence Force; or (b) being a member of the Reserve Forces or the Emergency Forces, commences on or after that day to render continuous full-time service for a period of not less than 12 months; is excluded from the definition of eligible member of the Defence Force in subsection 3(1). (2) Subsection (1) does not apply to: (a) a person who: (i) ceased to be an eligible member of the Defence Force because he or she was transferred to a Reserve, was discharged from the Defence Force, or had his or her continuous full-time service terminated, under the Defence (Parliamentary Candidates) Act; and (ii) under Part III of that Act is transferred back to, reinstated in, or accepted for further continuous full-time service in, the force of which he or she was a member immediately before ceasing to be an eligible member of the Defence Force; or (b) a person to whom section 61B applies and who has elected under that section to become a contributory member; or (c) a person to whom s 63 applies." 17 The MSB Act established the MSB Scheme as from 1 October 1991. 18 In s 3 of the DFRDB Act "Reserve" was defined to mean (in relation to a member of the Army) "the Inactive Australian Army Reserve". In s 4 of the Defence Act "The Emergency Forces" was defined to include the "Naval Emergency Reserve Forces", the "Regular Army Emergency Reserve" and the "Air Force Emergency Force". The "Reserve Forces" was defined to mean the "Australian Naval Reserve", the "Australian Army Reserve" and the "Australian Air Force Reserve". As was noted in par 13 of our judgment, the AAR consists of both the Active and Inactive AAR. There was no definition of "the Emergency Forces" in the DFRDB Act. 19 It seems clear that the references to "Reserve Forces" and "Emergency Forces" in s 5A(1)(b) of the DFRDB Act referred to definitions in the Defence Act. The defined term in the DFRDB Act is not "Reserve Forces" but rather "Reserve" (a term used elsewhere in s 5A) and, as we have noted, there is no definition of "Emergency Forces" in the DFRDB Act. The close connection between the two Acts makes this cross-referencing sensible. It follows that the appellant, as a member of the AAR, was a member of the Reserve Forces within the meaning of s 5A(1)(b) of the DFRDB Act who, by transfer to the AAR after 1 October 1991, commenced continuous full-time service under an engagement or appointment for a period of not less than one year. So much is common ground between the parties. 20 However, counsel for the appellant submits that his client is not caught by subs 5(A)(1)(b) as he did not commence his continuous service as a member of the Reserve Forces but as a member of the Permanent Forces. He submits, correctly in our view, that s 50 of the Defence Act envisages that a member of the Reserve Forces may render continuous military service of more than twelve months in that capacity and argues that it is service in that capacity which is caught by the subsection. He points out that in s 6 of the MSB Act, which introduced the amendments to the DFRDB Act, the legislature was alive to that circumstance. He also submits that the legislation is beneficial and involves, in a loose sense, accrued entitlements and, in the event of doubt, should be construed in favour of eligibility. His submission involves reading s 5A(1)(b) of the DFRDB Act as if the words "as such" appear after "service", or the words "and remaining" appear after "being". 21 In our opinion, this is not the proper reading of s 5A(1)(b) in context. Subsection 5A(1) of the DFRDB Act makes the date 1 October 1991 a watershed. Eligibility, by operation of s 3 of the DFRDB Act, depends upon current continuous full-time service of certain kinds by members of the Defence Force, of whatever status. Section 5A(1) makes clear that, in general, any person actually joining the Defence Force in any capacity from 1 October 1991 will in no circumstances ever become eligible. Any person who was then a member of the Permanent Force will clearly continue to be eligible because of the full-time service obligation of that person. So far as the Army was concerned, that left members of the Reserve Forces and Emergency Forces as at 1 October 1991 to be dealt with. Any person joining these Forces after that date is caught by virtue of s 5A(1)(a). Against this background, s 5A(1)(b) identifies membership of the Reserve Forces or the Emergency Forces on 1 October 1991 as the class of person to whom the exclusion in the subsection applies. Therefore, it does not matter in what capacity the later continuous full-time service is rendered. It will be observed that the reference to "that day" in the subsection obviously refers to and, in that sense, incorporates the date of 1 October 1991. In this fashion, subs 5A(1) as a whole excludes eligibility for any person commencing continuous full-time service after 1 October 1991. This accords a sensible meaning to the words construed in context, and, if it be relevant, accords with the Second Reading Speech by the Minister for Defence, Science and Personnel on the 1991 Defence Force Superannuation Legislation Amendment Bill (Hansard, House of Representatives, 13 March 1991) where it was said that the Bill had the effect of making the scheme a closed scheme. 22 The appellant was therefore excluded from the definition of "eligible member of the Defence Force". He was a member of the Reserve Forces at 1 October 1991 and he has since commenced to render continuous full-time service for a period of twelve months. It is not suggested that he has the benefit of any of the exclusions in s 5A(2). This was the basis for the decision of the Authority which is in issue in these proceedings and, in our opinion, was correct. It is unnecessary to consider other bases for ineligibility which were put and we express no view one way or the other as to the correctness of the opinions of his Honour on these points. 23 The appeal should be dismissed. As the respondent does not seek costs, there will be no order as to costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Whitlam and Gyles . Associate: Dated: 25 May 2001 Counsel for the Appellant: JK Arthur Solicitor for the Appellant: Cahills Counsel for the Respondent: PJ Hanks QC Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 11 May 2001 Date of Judgment: 25 May 2001