Read v The Commonwealth [1988] HCA 26

High Court of Australia Mason C.J. Brennan, Deane, Toohey and Gaudron JJ. Read v The Commonwealth [1988] HCA 26

ORDER Appeal allowed with costs. Set aside the order of the Full Court of the Federal Court of Australia dated 10 March 1987 and in lieu thereof dismiss the appeal to that court with costs.

Cur. adv. vult.

The following written judgments were delivered:—

1988, June 2 Mason C.J., Deane and Gaudron JJ.

Since 1966 Mrs. Clara Caroline Read ("the appellant") has been in receipt of an age pension paid pursuant to the Social Security Act 1947 Cth ("the Act"). In 1981 the appellant became the registered holder of 20,000 units in Australian Fixed Trusts Real Property Growth Trust ("the Trust"). On 31 May 1984, following a revaluation of the assets of the Trust, the appellant was issued with 8,755 additional units. An officer of the Department of Social Security valued the additional units at $4,027 and treated that sum as income for the purpose of ascertaining the appellant's pension entitlement under s. 28 of the Act. The question which arises on this appeal is whether the issue of additional units was income as it was then defined in s. 18 of the Act. The Federal Court of Australia (Spender and Pincus JJ., Fisher J. dissenting) upheld an appeal from a decision of the Administrative Appeals Tribunal and found that the additional units constituted "income" for the purposes of the Act. From that decision this appeal is brought.

The Trust is what is popularly known as a "capital growth trust". The Trust was established by Deed of Trust ("the Deed") made 23 April 1981. By this Deed, A.F.T. Property Company Ltd. ("the Managers") became the Managers of the Trust and Permanent Trustee Nominees (Canberra) Ltd. ("the Trustee") became the Trustee of the fund constituted initially by a sum of $460.00 contributed by the Managers. By cl. 13(1) of the Deed, the beneficial interest in the fund thus constituted was divided into 1,000 units. Clause 2(1) of the Deed enables additions to the fund to be made by the Managers lodging "further cash or authorised investments or both to be held upon the trusts" as set out in the Deed. Clause 13(3) provides that "[a]s and when any addition is made to the Fund additional Units shall be created". The units thus created may be sold by the Managers: cl. 13(2). Alternatively, the Managers may nominate persons as the holders of units thus created: cl. 14. Clause 13(4) of the Deed provides that at all times "the Units into which the beneficial interest in the Fund is divided shall be of equal capital value". The Deed provides that an up to date register is to be kept of unit holders: cl. 22.