Commissioner of Taxation v Scully [2000] HCA 6 | Case summary

Commissioner of Taxation v Scully [2000] HCA 6 | Case summary | Zoe

No doubt the Full Court was right in holding that, in the context of par (n), "consideration" should not bear the technical meaning that it has in the law of contract. Indeed, it would be almost absurd to speak of money being paid by one party in "consideration" of another party (voluntarily) suffering personal injury. Nevertheless, the use of the word in this context suggests that the payment or benefit is made to recompense the taxpayer for the injury and is referring to a payment or benefit that compensates or reimburses the taxpayer for the injury suffered, recompense being one of the standard meanings of "consideration"[12]. Consideration in par (n) therefore involves the notion of recompense - a payment or benefit to recompense the taxpayer for or in respect of a personal injury.
This construction of the word "consideration" is supported by the remaining words of par (n) which form the context in which it appears. In our opinion, the fact that the payment must be "reasonable having regard to the nature of the personal injury and its likely effect on the capacity of the taxpayer to derive income from personal exertion" envisages that the payment has been calculated by reference to the injury. Furthermore, no support for the Full Court's conclusion is given by the reference in pars (m) and (n) to "amount or value" and to reasonableness. Those terms are used for the entirely different purpose of permitting the Commissioner to disallow an excessive or fraudulent claim for an exclusion by a taxpayer.
Section 27G, although not decisive of the issue, provides another indicator to the proper construction of par (n). Given that ss 27G and 27A were introduced as part of a presumably coherent set of amendments, they should be given a harmonious construction. The scheme of subdiv AA points to the conclusion that a payment such as that made to the respondent in this case was to be treated as a "concessional" payment pursuant to s 27G, rather than excluded from the definition of "eligible termination payment", and hence from being treated as assessable income, via s 27A(1)(n). No doubt there is a degree of overlap between the provisions. In response to the Commissioner's contention that the respondent's construction of s 27A(1)(n) would effectively render s 27G otiose, the respondent suggested that, on the construction given to s 27A(1)(n) by the Full Court, s 27G would retain a residual role with respect to payments:

We see no reason to think that "personal injury" in par (n) excludes disease, illness or infirmity[14], which the respondent's construction of s 27G requires. Nor does there seem to us any reason in principle or policy why "personal injury" should be so limited. If the injury is such that it can ground an action in negligence or under workers' compensation legislation, there is no reason for thinking that it is outside the ambit of par (n). It is beyond doubt that many diseases contracted in the course of employment or otherwise may properly be the subject of such an action. The remaining areas of operation for s 27G may be accepted, but they apply whichever of the competing constructions is given to par (n). The fact that s 27G may have a limited role of operation outside of s 27A(1)(n) does not assist the respondent's case. If anything the existence of s 27G tends to deny the construction placed on s 27A(1)(n) by the Full Court; it certainly does not rebut the factors pointing in the other direction.
In this case, it is clear that the payment is a form of consideration passing between the member and the trustees of the Fund in that the payment is made by the Fund in satisfaction and discharge of its obligations to the member[15]. This does not, of course, answer the question whether such "consideration" is "for, or in respect of, personal injury to the taxpayer". Given that "consideration" in this paragraph involves the notion of recompense, it is not enough that there is a "consideration" which can be said to have a connection with personal injury. The payment must be compensation for or in respect of the particular injury.
However, the payment in this case cannot be said to be compensation for or in respect of the personal injury. Clauses 2.4.1 and 3.5.1, pursuant to which the respondent's payment was calculated, make no attempt to place a monetary value on a member's injury. They do not even provide for a formula, roughly comparable to the manner in which a court or tribunal might assess damages in a claim for personal injury, to quantify the amount of the payment. Indeed, the very similarity of the benefits for death, retirement, resignation, retrenchment and dismissal to those for total and permanent disablement deny that the purpose of a payment pursuant to cll 2.4.1 and 3.5.1 is concerned with the value of any injury sustained by an employee.
Moreover, ordinarily, it is not the purpose of superannuation schemes to compensate for personal injury, although that may sometimes be the effect of certain payments. This point is recognised in the principle that damages for loss of earning capacity in personal injury claims are not to be reduced by payments received pursuant to a superannuation scheme. In Watson v Ramsay[16], Brereton J said:

Provisions for the taxation of superannuation, termination of employment and kindred payments, are contained in subdiv AA of Div 2 of Pt III of the Act (ss 27A-27J). Subdivision AA was inserted by the enactment of the Income Tax Assessment Amendment Bill (No 3) 1984 (Cth). There have been no material amendments to that subdivision since the introduction of those provisions. The explanatory memorandum provided to the Parliament with the Bill stated that it "provides for the introduction of a comprehensive set of rules for the taxation of retirement and kindred payments". The legislative scheme covers payments made in connection with the termination of employment (such as severance payments), payments from superannuation funds and approved deposit funds (in the form of annuities or amounts in commutation of annuities), death benefits, invalidity payments, bona fide redundancy payments and approved early retirement scheme payments. A suggested theory behind the inclusion of superannuation payments in the taxpayer's assessable income is that, of their character, they amount to a kind of postponed increment of the taxpayer's income derived from years of employment. To that extent, even if capital in nature, they are notionally akin to an income payment. Whatever may be the theoretical justification of including such payments in taxable income to the extent provided, the Act was amended to give effect to the provisions of the Bill. As amended, its terms must be given effect by the courts.
The critical provision of the Act as amended, and the one defining the scope of the operation of subdiv AA[42], is that in s 27A(1) which defines an "eligible termination payment". The key parts of the definition are contained in the reasons of the majority[43].
Certain matters represented common ground between the parties or issues determined below which were not in dispute for the purposes of this appeal. First, the respondent accepted that the payment which she had received otherwise fell within par (b) of the definition of "eligible termination payment" in s 27A(1). However, it was her case that the payment was not an "eligible termination payment" within the Act because it fell within par (n) of the definition and was thus "not include[d]"[44]. Secondly, the payment was otherwise capital in nature[45]. Thirdly, the respondent had sustained "personal injury" within the meaning of that expression as used in par (n) of the definition of "eligible termination payment"[46]. Fourthly, the amount of the payment was "in the Commissioner's opinion, reasonable, having regard to the nature of the injury and its likely effect on the derivation of income from personal exertion"[47].
It was in this way that the question before this Court was reduced to a relatively narrow one of statutory construction. This was whether the payment made to the respondent fell within par (n) of the definition of "eligible termination payment" in s 27A(1) (and by reason of that fact is not included in that classification and thus not liable to taxation under the Act). Justice Cardozo thought that no one could make such a problem interesting. Whilst there are doubtless puzzles known to humanity of greater fascination, the resolution of this controversy is not without its own passing interest. This is because, as in many problems of statutory construction, there are arguments that can be arrayed for each side.
Courts today rarely pretend that only one construction is, objectively, possible in such cases[48]. The function of a court is to choose the construction which it regards as preferable. In part, this may be no more than an ex post rationalisation of the decision-maker's impression, and reaction to the words in contest. In part, it involves the explanation of the considerations which lead one judicial mind in a particular direction when others have gone off in the other direction. My impression of the provisions of the Act applied to the present problem is the same as that of the Full Court. I must therefore consider whether that impression is justified by closer analysis. I recognise that no single element in the reasons that follow is sufficient. It is the combination of a number of points that brings me to my conclusion and confirms the initial impression.
In problems of this kind, the mind of the decision-maker may be focussed more precisely if he or she recognises for their full worth the strength of the considerations which, it is urged, should cause the rejection of the initial contrary impression and the acceptance of the logic of competing arguments. So I will start my analysis with an acknowledgment of the points advanced by the Commissioner in support of the construction of the Act which he urged.

First, the Commissioner argued that the Full Court had fallen into error in atomising the provisions of par (n) of the definition of "eligible termination payment" in s 27A(1) of the Act. Instead, he submitted, it was necessary to consider the context in which the provisions appear, their purposes and the meaning of the paragraph when read as a whole. So far as the context and purposes of par (n) are concerned, the Commissioner argued that they should be derived from an understanding of the object of subdiv AA. He suggested that this could be assisted by reference to the terms of the explanatory memorandum which had accompanied the Bill. That document identified the legislative objectives as being to subject payments made from superannuation funds upon retirement through age or invalidity to the new provisions; to exclude from such payments "capital sums paid … as compensation for loss of income through personal injury"[49]; and, where a premature termination of employment gave rise to an eligible termination payment occurring "by reason of the taxpayer's physical or mental incapacity to engage in that employment", to accord concessional taxation treatment to such payment[50]. It was argued that the interpretation urged for the respondent, and accepted by the Full Court, would frustrate the achievement of these purposes, so explained. In giving effect to par (n) it was essential to do so in the context of the entire scheme of the subdivision. In that context, the existence of a personal injury was not simply a contemporaneous event. It was a necessary or essential precondition to attracting the effective exclusion ("but does not include") provided by the paragraph.
Secondly, the Commissioner placed emphasis on the choice of the word "consideration" in par (n), especially when contrasted with the use of the word "payment" or "payments" in most of the other paragraphs of the definition. In the context, and read with par (m), the use of the word "consideration" must be taken to have been deliberate. It would have been easy to have simply repeated the word "payment". In the context, the phrase "consideration … in respect of … personal injury" must therefore (so it was argued) mean something given in exchange "for … or in respect of" the "personal injury" referred to. The word, it was submitted, indicated a necessary relationship between the "personal injury" and the "consideration" so that the latter was assessed by reference to the former. Although the happening of the "injury" was a relevant "trigger" to occasion the steps necessary to enliven the respondent's rights under the Trust Deed, there was no necessary or essential relationship in this case between the "consideration" and the "personal injury". On the contrary, the payment made was not assessed in proportion to the "personal injury" and bore no relationship at all to the extent of the injury suffered. Instead, it was calculated by reference to the Trust Deed and specifically the respondent's final average salary, together with a return of her own contributions. These facts, it was submitted, made plain that the payment received was not "consideration" of the type envisaged.
Nor was the payment received consideration "for, or in respect of, personal injury to the taxpayer". Instead, it was consideration for or in respect of the respondent's membership of the Fund, her resignation from her employment and her claim to entitlements in accordance with the Trust Deed. That was the proper characterisation. In the context, the word "consideration" pointed to a closer connection between the personal injury and the sum that the taxpayer received. It would thus be apt to include a verdict in a damages action brought for or in respect of personal injury. But it would not be appropriate to apply it to the payment made in the present case which, from first to last, was one made from a superannuation fund by reason that the taxpayer was a member of such fund, just as par (b) contemplated.
Thirdly, the Commissioner accepted that the words "in respect of" had a wide meaning[51]. However, he contended that they possessed "a chameleon-like quality in that they commonly reflect the context in which they appear"[52]. When that context was examined, in the language used in par (b), it suggested the requirement that the payment should be proportionate with, or measurable by reference to, the loss or damage suffered in order to be characterised as a payment "in respect of … personal injury". That, it was said, was another element missing in the present case. The reference point in the Trust Deed which attracted the respondent's entitlement to the suggested "consideration of a capital nature" which she received was not the "personal injury" which she suffered. That was merely the occasion giving rise to the series of steps necessary for her receipt of payment pursuant to the Trust Deed. Although the definition of "total and permanent disablement" in the Trust Deed incorporated the definition of "disablement" and although this, in turn, referred to disablement "caused through bodily injury" (which could be taken as equivalent to "personal injury" in par (n) of the statutory definition), the definition in the Trust Deed was not so confined. It referred also to "physical or mental illness, disease, infirmity or accident". To characterise the payment made pursuant to a clause so widely expressed as being "consideration … in respect of … personal injury" was to attempt to squeeze the payment into an inappropriate category, bearing a different label the other elements of which were being ignored.
The Commissioner therefore argued that it was incorrect to regard the payment as being consideration "for" or "in respect of" any "personal injury to the taxpayer". Its proper characterisation was a payment in accordance with the Trust Deed of the Fund. The Commissioner's counsel, warming to his own arguments, went so far as to say that the payment had "nothing to do" with "personal injury to the taxpayer" as such. At most, the "injury" was only connected temporally with the entitlement to the payment. It could not, therefore, be classified as having been made "for … or in respect of" personal injury as that phrase was understood in the entire context of par (n) and in its place in the definition of "eligible termination payment" in s 27A(1) of the Act.
Fourthly, the Commissioner relied on the provisions of s 27G of the Act dealing specifically with "invalidity payments". He argued that the construction urged for the respondent, and accepted by the Full Court, would leave no work for s 27G to perform. It is an accepted principle of statutory construction that courts will approach the meaning of legislation so as to avoid capricious or irrational results or results which would deprive an enacted provision of any practical operation[53]. If at all possible, a construction of par (n) in the definition of "eligible termination payment" in s 27A(1) should not be accepted which would leave s 27G without a field of operation. The Full Court had agreed to this principle[54], which had also been relied on by the primary judge[55]. However, it sought to explain the scope that would remain for the operation of s 27G as illustrated by the present case. If payment were made from a superannuation fund on the ground of the other bases of entitlement in the definition of "total and permanent disablement" in the Trust Deed - such as the physical or mental illness, disease or infirmity of the member - this would, in some cases, fail the test of "consideration … in respect of … personal injury to the taxpayer". However, it would come within the test afforded by the definition of "invalidity payments" and, at the relevant time, have attracted the concessional rate of tax under s 27G[56]. If it were a "personal injury", whether in the general sense of a "bodily injury" as stated in the Trust Deed, or in an extended sense of "physical or mental illness, disease, infirmity or accident" which qualified as a "personal injury"[57], no tax would be paid. The payment would amount to "consideration" that was not included in the definition of an "eligible termination payment". It would thus not be brought to tax. If, however, there was no "personal injury", yet payment in the nature of consideration in respect of some other eligible condition, only concessional tax was (at the relevant time) to be paid.
The Commissioner suggested that this was not a sensible application of s 27G; nor one which should be adopted by an artificial characterisation of the "consideration" received by a taxpayer in circumstances such as the present. Quite properly, the Commissioner conceded that his argument based on s 27G was not conclusive. It is comparatively easy, in complex legislation criticised in this respect for its drafting[58], to arrive at results which, in particular circumstances, are less than wholly satisfying. However, the Commissioner submitted that the result accepted by the Full Court was out of harmony with the scheme of the Act. It failed to afford real scope for the operation of s 27G in a way compatible with the interpretation of par (n) of the definition of "eligible termination payment" accepted by the Full Court. So far as possible, the meaning of par (n) should reflect the symmetry that would be imputed to the Parliament as its purpose in enacting subdiv AA containing both the definition in s 27A(1) and the provision for concessional rates of tax for invalidity payments in s 27G.
I trust that this summary of the principal arguments for the Commissioner does justice to his submissions. Certainly, those submissions demonstrate that the construction of the Act urged by him is one which is available and has some attractions. Nevertheless, I am not convinced that the alternative construction is erroneous as to oblige this Court to set aside the orders of the Full Court. On the contrary, both as a matter of overall impression, and of analysis, I believe that the respondent's construction is to be preferred.

First, the construction urged for the respondent is not inconsistent, but accords with the explanatory memorandum provided with the Bill that contained the disputed provisions. There is nothing in the statement that subdiv AA has a purpose or objective to exclude capital sums paid as compensation for loss of income through personal injury that would apply to the sum paid to the respondent here. The Commissioner accepts that such sum is of a capital nature. He concedes that the amount is reasonable "having regard to the nature of the personal injury and its likely effect on the capacity of the taxpayer to derive income from personal exertion". The last-mentioned requirement, being contained in par (n) of the definition, adds emphasis to the purpose of the "non-inclusion" (the "exclusion"). The fact that the Commissioner is empowered to apportion the amount or value of the consideration paid "for, or in respect of, personal injury", according to its "likely effect on the capacity of the taxpayer to derive income from personal exertion", provides a check on artificially inflated payments which are not truly "for, or in respect of, personal injury". It also gives a clue to the purpose of the "non-inclusion" or "exemption" contained in par (n).
By inference, the Parliament concluded that consideration of a capital nature paid for or in respect of a "personal injury" will, to the extent that the Commissioner is of the opinion that it is reasonable on the stated criteria, not be deemed an "eligible termination payment" of the ordinary kind from a superannuation fund which must be brought to tax. Why should this be so? There must be a relevant legislative purpose or object. The reason for such a legislative judgment is actually not difficult to find. Subdivision AA introduces provisions of general application concerning superannuation and kindred payments, out of recognition of the rapid expansion of such payments in recent decades[59]. Whereas it has been judged appropriate to levy tax upon the generality of such payments, the Parliament has held back where the payment made represents (relevantly) "consideration … for, or in respect of, personal injury". At least it has done so to the extent that the Commissioner regards such "consideration" as reasonable by the stated criteria. This view of the purpose and operation of par (n) is reinforced when regard is had to par (m). There too the payment is not within the ordinary scope of the superannuation and kindred payments brought to tax by subdiv AA. It represents "consideration" which has, as a component (to the extent judged reasonable by the Commissioner), an element extraneous to the ordinary features of superannuation. There it is "consideration … for, or in respect of, a legally enforceable contract in restraint of trade by the taxpayer". Thus, far from supporting the arguments of the Commissioner, I consider that the explanatory memorandum supports the respondent by directing attention to the overall objects of subdiv AA. Paragraphs (m) and (n) are within exceptions to the general provision, recognised by the Parliament.
Secondly, I cannot accept the construction of the word "consideration" as appearing in par (n) urged by the Commissioner. Neither at first instance nor in the Full Court was such a narrow view adopted. Whilst it is true that some weight should be given to the differential use of the word "consideration" in par (n) (as in par (m)), too much should not be attached to this difference. This is so because the "consideration" is, within the structure of the definition of "eligible termination payment", necessarily an exemption from earlier paragraphs in the definition, all of which refer to "any payment"[60] or "a payment"[61]. Thus the "consideration" must itself be a "payment". The attempt to impose on the word, in this statutory context, notions derived from the special sense in which "consideration" is used in the common law of contract (ie as a promise given or an act done in exchange for an act or promise of another party) gains little support from the statutory context which surrounds the word, relevantly in par (n).
In particular, the phrase "in respect of", and especially in juxtaposition with the use of the word "for", makes it clear that the "consideration" is not intended to contain a notion of particular proportionality between the "consideration" paid and the "personal injury" suffered. The fact that the Commissioner is empowered to adjust the "amount or value of the consideration" by reference to the stated criteria indicates that the drafter addressed attention to the kind of exchange which the paragraph contemplated. The Parliament provided a mechanism to ensure that the relationship deemed necessary to the context between the "consideration" and the "personal injury" could be established. In any case, I agree with the conclusion of the Full Court that it is "accurate to speak of the benefits provided under the scheme as having been earned by the members. It is in that sense that the payment is a form of 'consideration' moving to the member … from the Trustees … in satisfaction of the Trustees' obligations and responsibilities to the member."[62] Such a finding accords with judicial descriptions of the nature of superannuation funds and the relationship which they typically establish between their trustees and their members[63]. As a member of the Fund, the respondent was bound by the Trust Deed. She was required to pay her contributions to the Fund, as she did. In return, she received the right to payment of a sum of money under the Trust Deed, relevantly in accordance with cll 2.4.1 and 3.5.1(c). The sum paid to her was received in discharge or satisfaction of that right. In such circumstances, the payment sufficiently attracts the statutory description as "consideration". It is "something given in payment"[64]. It is a word used outside its special, technical, and presently irrelevant context in the law of contract[65].
Thirdly, it is necessary to meet the Commissioner's argument about the characterisation of the "consideration" in this case. There are several answers to this argument. The words "in respect of" are indisputably very wide words of connection. They signify "some discernible and rational link" between the subjects postulated[66]. Whilst, like any other statutory phrase, they take their meaning from the context[67], here the context does little to cut back the potential width of the relationship. This is especially so because of the contrasting use of the preposition "for". It is not sufficient to point to a connection which is "merely coincidental or extraneous"[68]. Nor is it inherent in the phrase that the link must be causal. To adapt language used to describe an equally wide phrase ("with respect to"), the connection "can be direct or indirect, close or distant"[69] provided that the consideration can fairly be described as "in respect of … personal injury to the taxpayer". It is not to the point to say that the "consideration" is paid "in respect of" the taxpayer's entitlements under the superannuation deed. It is a necessary postulate of the application of par (n) that there has been (relevantly) a "payment made from a superannuation fund in respect of the taxpayer". Otherwise the exclusion would have no operation. Therefore, a postulated connection, even a close and direct one, between the consideration and the member's rights under the Trust Deed is a given. It cannot affect, one way or the other, the further task of characterisation which the words "in respect of … personal injury" call forth.
The construction urged by the Commissioner is not one apt to a provision in subdiv AA dealing with the entire class of superannuation and kindred payments. Whereas on its face par (n) appears to be an exclusion of the specified consideration "in respect of … personal injury", the construction favoured by the Commissioner would confine its operation to an extremely narrow category. Substantially it would be that of a damages verdict or settlement "in respect of … personal injury". It is not self-evident as to why par (n) should be so confined, given that the context is that of superannuation payments generally. Furthermore, the other broad categories of exclusion such as payments made for a legally enforceable covenant in restraint of trade, do not suggest a narrow operation of par (n).
Even if some of the Commissioner's criticisms of the construction urged for the respondent hit their mark, his own preferred construction involves artificialities. It contemplates borderline cases which invite the complaint that the operation of the Act postulated by him also lacks symmetry. All legislation, applied to variable facts, involves the drawing of lines. The fact that a Trust Deed might require payment of "consideration of a capital nature" in respect of disease, illness or infirmity not amounting to "personal injury" is scarcely to the point. The Act in question here can hardly be described as a pristine model of symmetry and internal cohesion. All that can be done is to apply the language of the Act to the facts of the particular case. If those facts fairly fall within the exclusion invoked, the "consideration" received by the taxpayer as a payment from a superannuation fund will not be an "eligible termination payment". The distinction between a disablement which constitutes a "personal injury" and one which does not is not unknown to the law[70]. Arguments about the meaning and operation of this Act are not advanced by complaining about the artificialities of the distinctions required by its terms.
Fourthly, as the Full Court noted, the respondent's argument still leaves an appropriately large field of operation for s 27G[71]. That section may operate where, in the particular case, the relevant payment is of an income nature[72]. It may operate where, although incapacity is the cause of the termination of employment, there is no material connection between the payment and a personal injury to the taxpayer[73]. It may operate where the incapacity to derive income is caused by a condition other than a "personal injury" such as a "disease, illness or infirmity" falling outside that classification. And it may operate to the extent that the Commissioner is not of opinion that the amount or value of the consideration, for or in respect of personal injury, is "reasonable having regard to the nature of the personal injury and its likely effect on the capacity of the taxpayer to derive income"[74].
A payment from a superannuation fund may thus amount to consideration of a capital nature but not, to that extent, attract the exclusion contemplated in par (n). Indeed, the enactment of s 27G, with the concessional tax treatment applied to an "invalidity payment" within that section prior to 1 July 1994, itself suggests that par (n) of the definition of "eligible termination payment" should have a broad and not a narrow or restricted meaning. Since 1 July 1994, invalidity payments under s 27G have been exempt from income tax under the Act[75]. In these circumstances, it would be a curious result, if the provisions of the Act with respect to an "eligible termination payment" made as "consideration … for, or in respect of, personal injury" were given a narrow or restricted operation. The scheme of the Act, as it now stands, suggests a general legislative purpose to treat receipts by the taxpayer from a superannuation fund beneficially and protectively where they are "in respect of … personal injury to the taxpayer", or in circumstances where the employment of the taxpayer has been terminated "because of … physical or mental incapacity to engage in that employment"[76]. There are many reasons why the Parliament should have adopted this course in subdiv AA. Not all of them are based on such nebulous reasons as sentiment or warm-hearted compassion.

Conceding that the arguments for and against the construction adopted by the Full Court are finely balanced, there are two considerations of a general character that should be placed in the scales to help resolve this controversy. The first is that par (n) of the definition of "eligible termination payment" is in the nature of an exemption from general provisions of the Act designed to bring to tax, relevantly, payments made to a taxpayer from a superannuation fund. Given the generality of the operation of the definition to achieve the purposes of the new subdiv AA of the Act and the generality of the exemptions, of which par (n) is but one, it would be normal to construe such an exemption so as to avoid an unduly narrow or restricted field of operation. This is, in part, because the Parliament has gone to the trouble of enacting the exemption as an exception to the general rule. In part, it is because of the wide variety of the provisions of the Trust Deed to which the paragraph must apply. In part, it is because of the protective idea which lies behind an exemption expressed in the ample language of "consideration … in respect of … personal injury". Where the Parliament has afforded this benefit or advantage to a class of taxpayers who have suffered a "personal injury" which is "likely" to have an "effect on the capacity of the taxpayer to derive income from personal exertion", it is not for the courts to cut back the applicable exemption. This is especially so because the Parliament has enacted a substantial practical check against abuse of, or disproportion in, claims to such an exemption. That check is afforded by the discretion given to the Commissioner to determine the "amount or value of the consideration" which, in his opinion, is "reasonable".
The second consideration of a general character brings me back to Justice Cardozo's comments with which these reasons opened. Questions of statutory construction are generally thought uninteresting because, upon many of them, it is perfectly legitimate for different decision-makers to reach opposite opinions. The present may be such a case. The problem here arises in an appeal from the construction favoured by the Full Court. This Court has said several times that, normally, it is for the Full Court to settle contested matters of construction affecting the Act[77]. Of course, when special leave is granted, this Court must perform its own appellate function. But it should do so with due recognition of the function of the Full Court, and with an appreciation that it ought not to disturb that Court's orders unless it can be demonstrated affirmatively that the reasoning on which those orders are based is wrong. Even if differing views may be held about the meaning of par (n) in the definition of "eligible termination payment" in s 27A(1) of the Act, I am not convinced that the construction preferred by the Full Court was wrong. Indeed, in my view it was right. It should stand.

It is necessary once again to refer to the ruling of the Court of an application to intervene in an appeal. The Victorian WorkCover Authority[78] ("the Authority") moved the Court for leave to intervene. Alternatively, it asked leave to be heard as an amicus curiae. By majority, the application was granted but the right to be heard orally was rejected. The Authority was permitted to leave its written submissions with the Court. They were then adopted by the Commissioner to supplement his own submissions.
In two recent decisions I have expressed my opinion that this Court should adapt its procedures to permit, in appropriate cases and subject to appropriate conditions, leave to be given to persons and organisations that seek to intervene or act as an amicus curiae before the Court[79]. I will not repeat what I said there.
There were, in my view, particular reasons why the Authority should have been given unrestricted leave to intervene in this appeal. First, neither party to the appeal objected. Secondly, the Authority, in support of its motion, had filed written submissions which were concise, precisely argued and, in part at least, concerned with matters not addressed in the submissions for the Commissioner. Thirdly, the Authority (unlike many organisations making such applications) had an actual legal interest of its own in the outcome of these proceedings. The respondent had commenced separate proceedings in the County Court of Victoria in Melbourne against the Authority and another defendant in respect of the injuries received in the motor car accident which initiated the payment from the Fund. The Authority contended that the "proper characterisation of the superannuation lump sum payment" the subject of this appeal, and whether or not it was an "eligible termination payment", would, in fact and in law, determine the Authority's liability to the respondent in the County Court proceedings. This was because of a provision of Victorian law suspending for a specified period the entitlements of a person otherwise qualifying for payment if that person had received an "eligible termination payment" within the meaning of the federal Act[80]. Before that question was determined, the Authority asked to be heard by this Court. The Authority did so in circumstances where its interests were potentially adversely affected in proceedings before a court that would be bound by this Court's decision on the point. Even if the somewhat broader view which I favour in these matters were rejected and the test applied which Brennan CJ expressed in Levy v Victoria[81], it is plain that this was a case where "[a] declaration of a legal principle or rule by this Court will govern proceedings that are pending or threatened in any other Australian court to which an applicant to intervene is or may become a party".
Fourthly, during the special leave hearing, one ground which attracted this Court to the grant of special leave in a matter which would otherwise ordinarily terminate in the Full Court of the Federal Court was expressed to be the "considerable importance" of the case and, "as the submissions of the 'intervener' show, [its] ramifications outside the scope of the Act"[82]. If these were factors pertinent to opening the door of this Court to the appeal, it seems unreasonable, that door having been opened, to exclude their full argumentation to assist this Court, including with oral submissions.
Fifthly, it was not as if, the written submissions being furnished in advance, oral supplementation would have taken long or extended the hearing beyond the day assigned to the appeal. Either the Authority had no entitlement to be heard or, if it had such an entitlement, it should have been heard fully. To receive its written submissions but to exclude short oral elaboration (counsel being present and willing to provide it) seems, with respect, difficult to reconcile with principle.
Sixthly, this Court was on notice that the Commissioner and the Authority had agreed (whatever the outcome of the application for leave to intervene) that they would share equally the respondent's costs of the appeal[83]. On the grant of special leave, this Court ordered that such costs should be paid, whatever the outcome of the appeal, given that it was accepted that the case was in the nature of a test case on a "question of public interest"[84]. Although an applicant to intervene cannot by such arrangements purchase an entitlement to be heard as an intervener, the legal and practical interest of the Authority, reflected by such arrangements, warranted acceding to its application. That is why I would have made the order which the Authority sought and which no party opposed. In my opinion, the Authority should have been given unrestricted leave to intervene and to present its arguments.
The written submissions for the Authority, which I have read, do not, however, cause me to change the opinion which I have expressed in this appeal. In particular, I do not consider that it is legitimate to construe federal legislation, such as the Act, by reference to a derivative use made in State legislation (such as the Accident Compensation Act 1985 (Vic)) of expressions used in a federal Act (such as the definition of "eligible termination payment" in the Act). The federal Act must be construed in accordance with its own terms and for its own purposes and to achieve its own objectives. Different State legislatures might well have different purposes in enacting laws that relate in some way to a federal Act. The impact of that Act on State law must take its course in the normal way provided by the Constitution. It is true that the interpretation of "eligible superannuation fund" for the purposes of the federal Act will have significant consequences for the operation of the Victorian Act. But that is because, by the choice of the Victorian Parliament, it has incorporated reference to that phrase in its own enactment. It must consequently be taken to accept whatever meaning is ultimately assigned to that phrase as appearing in the federal Act. Its use of it in its own legislation cannot control that meaning in any way.

Commissioner of Taxation v Scully

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