Fox v Commissioner for Superannuation

Federal Court of Australia|1997-02-13|Before: Merkel J, Branson J, Sackville J, Black CJ, Sackville JJ

Introduction 1 This is an application under Order 35 rule 7 of the Federal Court Rules for an order setting aside the judgment of the Court, as presently constituted, in Fox v Commissioner for Superannuation (1997) 78 FCR 151 ("Fox"), and granting a rehearing of that appeal. The original hearing of the appeal, which was brought by the applicant against a decision of the Administrative Appeals Tribunal ("AAT"), was an exercise of the Full Court's original jurisdiction (see Administrative Appeals Tribunal Act 1975 (Cth) subs 44(1)). The basis of the present application is that in reaching its decision to dismiss the appeal the Court did not consider what is now said to be the determinative effect of s 48B of the Superannuation Act 1922 (Cth) ("the Act"). That section, which was introduced into the Act in 1942 by the Superannuation Act 1942 (Cth) ("the 1942 Act"), was not referred to by either party in the original hearing despite their seemingly exhaustive examination of the relevant legislation. 2 The Court should be very reluctant to reopen a case in circumstances such as the present. Despite this I agree, for the reasons given by Branson J and Sackville J, that it should do so here if it is persuaded that it would have reached a different conclusion on the issues in question in the original appeal had it been referred to s 48B. For reasons I shall now explain, I am not so persuaded. The Decision of the Full Court 3 The nature of the appeal that the applicant seeks to have reopened and the issues raised in support of his application are described in the reasons for judgment of the other members of the Court. As they point out, reference should also be made to the Court's reasons for judgment in Fox. In essence, the issue before the Court in the original appeal was whether the AAT was wrong in law in its determination of the method used to calculate the pension to which the applicant was entitled under the Act. The background to that issue, accepted by the parties, is as follows. · The applicant's entitlement to a pension derives from s 60N of the Act, and is to "the full pension for which he was contributing at the time of his retirement". · At the time of his retirement the applicant was actually contributing for eight units of pension, but was liable to contribute for ten units. · To succeed on the appeal the applicant had to establish that the words "full pension for which he was contributing" in s 60N are to be understood as meaning "full pension for which he was liable to contribute" so as to entitle him to a pension of ten units, and not eight units as the Superannuation Board and the AAT determined. 4 On appeal to the Full Court the applicant identified two broad questions. The first was whether "salary" in the Act means the actual salary paid to the applicant as a member of the Permanent Military Forces in 1945 ("the salary question"). The second was whether the applicant's position as a contributor under the Actlimits the pension payable to him to an amount less than the amount that would have been calculated using his actual salary ("the contribution question"). 5 The Full Court determined the appeal solely on the contribution question. It held that the applicant's entitlement to a pension under s 60N is an entitlement to the number of units of pension for which he was actually contributing at the time of his retirement. As there was no error of law involved in the AAT's finding that the applicant was contributing for eight units of pension when he retired, eight units of pension is the extent of his entitlement under the Act. In reaching its decision the Full Court was influenced substantially by the decision of the High Court in University of Newcastle v Chopra (1989) 63 ALJR 397. 6 The issue for determination now is whether a consideration of the meaning and effect of s 48B requires a different decision to the decision reached by the Full Court without considering that section. A Literal Construction of Section 48B 7 Section 48B of the Actprovides: "Subject to this Act, where in pursuance of this Act any employee becomes liable, or elects, to contribute for any units or additional units, he shall be deemed to be a contributor in respect of those units or additional units as from the date when he becomes liable, or elects, to contribute (as the case may be), but if any pension or benefit becomes payable to or in respect of that contributor before he has actually commenced to make contributions or additional contributions there shall be deducted from the first payment of pension or benefit such contributions as are due by him in respect of those units or additional units or, if a pay day has not occurred before the pension or benefit becomes payable, one fortnightly contribution." 8 The terms of the first part of this section (finishing before the words "but if") lend strong support to the applicant's case that s 48B applies in the present circumstances in the following way. · On 23 March 1944 the applicant was appointed retrospectively to the rank of substantial Captain in the 2nd Australian Imperial Force as a result of which he become liable under the Act to contribute for ten units of pension. From that date (at the latest) he was therefore deemed, by virtue of s 48B, to be a contributor in respect of those ten units. · On 23 March 1945, following his retirement from the Permanent Military Forces on the ground of invalidity or incapacity to perform his duties, the applicant became entitled to "the full pension for which he was contributing at the time of his retirement" under s 60N of the Act. At the date of his retirement the applicant was deemed, by operation of s 48B, to be contributing for ten units of pension. The pension to which he was entitled under s 60N was therefore a pension of ten units. 9 The respondent contends, however, that there are three problems with this construction of s 48B. The first is that it does not reflect the purpose for which s 48B was introduced. The second is that it would effect an unintended fundamental change to the payment structure already established by the Act. And the third is that it is contrary to the language of s 48B itself. All of these problems show, the respondent argues, that s 48B was not intended by the legislature to be construed in the manner contended for by the applicant. 10 The construction of s 48B for which the applicant contends is based on a literal reading of the section, whereas the problems with that construction identified by the respondent arise (with the exception of the third problem) principally from matters external to those terms; namely, by reference to the context in which s 48B is found. 11 There is also, the respondent argues, an indication within s 48B itself that that provision was not intended to operate in the way contended for by the applicant. Literal v Purposive Statutory Interpretation 12 It was once thought that a statutory provision was to be interpreted literally unless its terms disclosed an ambiguity of meaning, in which case regard could be had to its context in order to discern the intention behind the provision's enactment and thereby resolve the ambiguity. This, however, is contrary to the modern approach to statutory interpretation described by Brennan CJ, Dawson J, Toohey J and Gummow J in CIC Insurance Ltd v Bankstown Football Club Ltd (1995-7) 187 CLR 384 ("CIC Insurance") at 408. "[T]he modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses 'context' in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy". 13 It follows that context must be considered at the beginning of any inquiry into the meaning of a statute, regardless of the apparent clarity of the literal terms of the relevant provision itself. Indeed, as the High Court acknowledged in CIC Insurance (at 408) and as demonstrated by the respondent's argument in the present case, it may be precisely that context that reveals an ambiguity in the provision's meaning. "Instances of general words in a statute being so constrained by their context are numerous. In particular, as McHugh JA pointed out in Isherwood v Butler Pollnow Pty Ltd, if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent". (Footnotes omitted.) 14 Where a conflict exists between the constructions of a provision revealed by two principles of interpretation - here, by a literal reading and a purposive reading - a court "must proceed with its primary task of extracting the intention of the legislature from the fair meaning of words by which it has expressed that intention", remembering always the mischief that the provision was enacted to address (see Waugh v Kippen (1986) 160 CLR 156 at 164 per Gibbs CJ, Mason, Wilson and Dawson JJ). It may be expected, however, that in most cases a genuine conflict of this nature will be resolved in favour of the purposive construction. By "genuine conflict" I mean to exclude those cases, described by McHugh J in Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 ("Newcastle City Council") at 109, in which the express words of a legislative provision are reasonably capable of only one construction, and neither the purpose of the provision nor any other provision in the legislation throws doubt on that construction. In such cases, as McHugh J said, the Court cannot "ignore [that construction] and substitute a different construction because it furthers the objects of the legislation." The view that a genuine conflict between a literal and purposive construction of a provision will generally be resolved in favour of the purposive construction is consistent with subs 15AA(1) of the Acts Interpretation Act 1901 (Cth) and with the recent approach of the High Court and this Court in this area: see for example Newcastle City Council; CIC Insurance; Saraswati v The Queen (1991) 172 CLR 1 at 21-23 (per McHugh J); Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297 at 304-305 (per Gibbs CJ) and at 319-323 (per Mason and Wilson JJ); MBF v Pullinger (1990) 95 ALR 463 at 467 (per Pincus and Burchett JJ); Hilton v Commissioner of Taxation (1992) 38 FCR 170 at 175-177 (per Hill J); Chun Wang v Minister for Immigration and Multicultural Affairs (unreported, 13 February 1997, Merkel J). 15 A further difficulty arises where a purposive construction of a provision actually strains the provision's terms. In some cases this will support an argument that the purposive construction is "unreasonable or unnatural", and therefore not a legitimate alternative to the literal construction. Thus in Newcastle City Council McHugh J said(at 113): "If the legislature uses language which covers only one state of affairs, a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances. As Brennan CJ and I said in IW v City of Perth, even when a court adopts a purposive construction to remedial legislation it 'is not at liberty to give it a construction that is unreasonable or unnatural'." (Footnotes omitted.) 16 There will be instances, however, in which even a purposive construction that strains the express terms of a provision, or that requires a provision to be treated as containing additional words, will be justified in order to give effect to the intention of the legislature. In Newcastle City Council McHugh J went on to say (at 113): "Nevertheless, when the purpose of a legislative provision is clear, a court may be justified in giving the provision 'a strained construction' to achieve that purpose provided that the construction is neither unreasonable nor unnatural. If the target of a legislative provision is clear, the court's duty is to ensure that it is hit rather than to record that it has been missed. As a result, on rare occasions a court may be justified in treating a provision as containing additional words if those additional words will give effect to the legislative purpose. In Jones v Wrotham Park Estates, Lord Diplock said that three conditions must be met before a court can read words into legislation. First, the court must know the mischief with which the statute was dealing. Second, the court must be satisfied that by inadvertence Parliament had overlooked an eventuality which must be dealt with if the purpose of the legislation is to be achieved. Third, the court must be able to state with certainty what words Parliament would have used to overcome the omission if its attention had been drawn to the defect." (Footnotes omitted.) The Act Prior to the Enactment of Section 48B 17 The pension scheme established by the Act is described in detail in the reasons for judgment in the original appeal, but certain aspects of the scheme should be emphasised here. The Act established a Superannuation Fund into which all pension contributions required by the Act were to be made, and out of which all pensions owing under the Act were to be paid (s 5). The pension contributions required of each employee were set out in tables prescribed by the Act (s 17 and Schedules I to VIII), and varied from employee to employee depending on: · the number of units of pension in respect of which the employee was contributing; · the age at which the employee had commenced to contribute for each unit of pension; and · the employee's sex (s 16). Contributions were deducted from the contributor's salary at each (fortnightly) salary payment and paid to the Superannuation Board (s 22). 18 The number of units of pension in respect of which each employee was required to contribute varied according to the employee's salary in accordance with a scale set out in subs 13(1). As an employee's salary increased, so did the number of units of pension for which he was required to contribute (par 13(4)(a)). However, an employee in receipt of a salary increase who was aged forty or older, or who was an employee not less than thirty years of age at the commencement of the Act, could elect to contribute for a lesser number of units of pension than the number corresponding to his increased salary (par 13(4)(a)). 19 A contributing employee of the Permanent Military Forces who retired on the ground of invalidity or incapacity to perform his duties, not due to his own fault, was entitled to the full pension for which he was contributing at the time of retiring (s 60N). 20 In summary, therefore, the scheme established by the Act - as it existed immediately prior to the insertion of s 48B - required employees to contribute throughout the term of their employment for the number of units of pension corresponding to their salary or, for many employees, some lesser number elected by them, and rewarded them upon retirement with a pension comprised of the number of units of pension for which they were contributing at the time of retiring. The overall effect of this scheme was to give contributors some choice - albeit only at particular points in time (for example, upon receipt of a salary increase) - in determining the number of units of pension in respect of which they contributed, and therefore the amount of their contributions and of their pensions. Any possible resulting inequity between employees of the same age, gender and salary was minimised in the following two main ways. · First, by calculating employees' pension entitlements by reference to the number of units of pension for which they were actually contributing, rather than the number of units corresponding to their salary. · And secondly, by calculating employees' compulsory contributions by reference, amongst other things, to the age at which they commenced contributing for the number of units of pension in respect of which they were contributing. This scheme applied to members of the Permanent Military Forces, such as the applicant, by operation of s 60D of the Act. The Act After the Enactment of Section 48B 21 Section 48B was inserted into the Act with a series of other amendments contained in the 1942 Act. A primary objective of the 1942 Act was the implementation of several of the recommendations of the Report of the Actuaries Appointed by the Board to Make a Valuation of the Commonwealth Superannuation Fund ("the Actuaries' Report") endorsed by the Superannuation Board in December 1941 for the purpose of addressing the perceived deficiency of the Superannuation Fund. As the Court noted in the original appeal, that deficiency was thought to have been caused by the high rate of retirement on invalidity and the low rate of mortality amongst pensioners (Fox at 161-162). 22 The 1942 Act was introduced a year after the outbreak of war against Japan at a time when many Australians were on active service. Although the Actuaries made their recommendations solely on the basis of the past experience of the Superannuation Fund and did not think it practicable to take into account any possible effects of the War upon the future experience of the Fund, they were conscious of the potential increase of liabilities on the Fund resulting from the War that were not contemplated when the Act was framed. 23 The principal change effected by the 1942 Act was to increase the rates of employee contributions (set out in s 17 and the Schedules to the Act) without increasing the number of units of pension in respect of which employees were required to contribute under subs 13(1), and therefore without increasing employees' pensions. This change gave effect to the following central recommendation of the Actuaries' Report. "The … original rates of contribution, which have remained unaltered throughout, are not sufficient to support the present scale of benefits. Every new unit effected at these rates entails a financial strain on the Fund and so increases the deficiency…. SUMMARY OF RECOMMENDATIONS. …(g) That the position of the Fund be improved, either by increasing the scales of contributions, or by increasing the proportion of pensions payable by the Commonwealth (combined with a smaller adjustment of the contribution scales) as regards units effected in the future. (Paragraph 39.)" 24 The Superannuation Board responded to this recommendation in the following terms. "The Board has given this recommendation very careful consideration and has reluctantly decided to recommend that the scale of contributions in respect of units of pension effected in the future be raised in accordance with the scale contained in Appendix A of the Actuaries' Report. The Board does not recommend that any variation be made in the proportion of pensions payable by the Commonwealth as at present prescribed by the Superannuation Act." 25 Another significant change effected by the 1942 Act - also aimed at addressing the perceived deficiency of the Superannuation Fund - was the introduction of a new subs 13(4) governing the impact of salary increases on employees' contribution obligations. Under par 13(4)(a), a contributor aged forty or older in receipt of a salary increase who was contributing for the number of pension units corresponding to his lower salary immediately before the increase, was required to increase the number of units in respect of which he was contributing to the number corresponding to his higher salary, or to elect within a prescribed time: (a) not to increase the amount of his contribution; or (b) to increase his contribution to a sum corresponding to a number of pension units less than the number corresponding to his increased salary. Under par 13(4)(b), however, an employee in this age bracket in receipt of a salary increase who was not contributing for the number of pension units corresponding to his lower salary immediately prior to receiving the increase, could only increase the number of pension units in respect of which he was contributing to the number corresponding to his lower salary or, upon election, some lesser number. An exception to this provision applied where the employee had satisfied the Superannuation Board that he was not aware of any condition likely to render him incapable of performing his duties before reaching the compulsory age of retirement, in which case the employee could increase the number of units of pension for which he was contributing to the number corresponding to his increased salary. 26 The effect of subs 13(4) was to prevent employees from contributing for a lesser number of units of pension than the number corresponding to their salary through one or more salary increases and then, upon receipt of a salary increase immediately prior to retiring for invalidity, increasing the number of units of pension for which they were contributing to the number corresponding to the increased salary so as to be entitled to a pension comprised of that number of units upon retirement. An employee wishing to increase the number of units of pension for which he was contributing in this way immediately before compulsory (ie, age-based) retirement could presumably elect to do so under par 13(4)(c). Subject to that election being invalidated by the Superannuation Board (in the event of not being satisfied that the employee was not suffering from any condition likely to require his retirement before reaching the age of compulsory retirement), the contributions of that employee would be calculated in the normal way, by reference to the number of units in question and the employee's sex and, most significantly, age. 27 The broad policy objectives of subs 13(4) were further reflected in subs 13(4B), which was inserted into the Act a year after the 1942 Act. Subsection 13(4B) enabled an employee who before the commencement of that subsection was contributing for less than the number of units of pension corresponding to his salary, to elect within a prescribed time to increase that number to an amount not more than the number of pension units corresponding to his salary, subject to satisfying the Superannuation Board that he was not suffering from any condition likely to require his retirement before reaching the age of compulsory retirement. This provision - similar to subs 13(4) - was clearly aimed at encouraging employees to increase their contributions under the Act, whilst ensuring that employees did not "abuse" the pension scheme by knowingly increasing their contributions immediately prior to retiring for invalidity. The Proper Construction of Section 48B 28 I now turn to consider the construction of s 48B, commencing with consideration of that section's context. As discussed earlier in these reasons, in 1942 there existed a contributory pension scheme for certain Commonwealth employees which extended to members of the Permanent Military Forces. Section 48B was inserted into that scheme to facilitate the introduction of a series of other amendments designed to address a perceived deficiency in the Superannuation Fund. There is, in my view, no contextual indication of any intention on the part of the legislature to effect, by the enactment of s 48B, a fundamental change to the elements of the pension scheme. On the contrary, in my view a consideration of the context of s 48B points compellingly against any such intention. Of principal significance in this regard is the potential adverse effect that the construction of s 48B contended for by the applicant would have on the mischief that the section and its accompanying amendments were intended to address. Specifically, the construction of s 48B contended for by the applicant would have the potential to exacerbate the very deficiency in the Superannuation Fund that the section was enacted to help alleviate. This is because it would entitle all retired employees to the number of units of pension for which they were liable to contribute at the time of their retirement, and not the number of units for which they were actually contributing. The construction advanced by the applicant would remove the link between the amount paid by an employee by way of contributions (which were to enhance the Fund) and the amount received by the employee by way of pension, which could only further deplete the available resources of the Superannuation Fund while further increasing its liabilities. 29 There is therefore in my view a fundamental tension between the purpose of the 1942 Act as discerned from its context on the one hand and the literal construction of s 48B contended for by the applicant on the other. Indeed, it may be said that to read s 48B in the way proposed by the applicant would be to undermine that purpose significantly by increasing the strain on the Superannuation Fund. In addition, the literal construction of s 48B would tend to undermine the legislature's attempt, through subs 13(4), to ensure equity between employees by preventing them from receiving a pension that did not fairly reflect the contributions made by them over the period of their employment. In short, I do not see the literal construction of s 48B contended for by the applicant as consistent with the legislative intention as discerned from the context of that section and the 1942 Act as a whole. 30 It is also difficult to reconcile the literal construction of s 48B contended for by the applicant with the broader pension scheme established by the Act. The reason is that such construction undermines the very foundation of that scheme by severing the link described above between employee contributions on the one hand and employee pension entitlements on the other. In my view this is of central importance to the present case, because the link between pension contributions and entitlements is the primary mechanism by which the overriding purpose of the Act was to be achieved. That purpose, which permeates the entire Act and provides the starting point from which all provisions of the Act should be read, was to establish a self-funding pension scheme. In the original appeal the Court observed (at 161-162) that: "The Fund was clearly intended to be financed by contributions from members, together with the 50 per cent subvention by the Commonwealth, provided for in s 18 of the Superannuation Act. Contributions were set at levels that clearly reflected an actuarial assessment of the likely cost of benefits to be provided to contributors, having regard to their life expectancy and the risk of early retirement or of death prior to retiring age. The Superannuation Act itself contained references to actuarial calculations, suggesting that it was intended that the level of contributions should be adjusted from time to time to ensure that, subject to the Commonwealth's subvention, the scheme was self funding: see, for example, ss 29, 35(1), 36(1). In fact, the legislation was amended in 1942 to increase contribution rates This was done to rectify a deficiency in the Fund…. The Minister's speech noted that the Commonwealth Actuary was in constant touch with actuarial matters affecting the Fund: Cth Parl Deb, HR, 18 September 1942, 534-536 (the Treasurer). The emphasis on the actuarial integrity of the Fund, both in the legislation itself and in the process of determining contribution rates, suggests that actual contributions received by the Fund were regarded as the key to pension entitlements of contributors." 31 A court should be very slow to interpret any provision of an act in a way that significantly frustrates the act's defining purpose or that displaces the primary mechanism by which that purpose is achieved. As I have noted, the defining purpose of the Act was the establishment of a self-funding pension scheme, and the primary mechanism by which that purpose was achieved was the configuration of employee contributions and pension entitlements respectively. In my view the construction of s 48B contended for by the applicant would significantly frustrate this defining purpose by displacing the mechanism by which it was achieved, thereby straining the actuarial integrity of the Superannuation Fund. 32 This is not, of course, to deny that s 48B was intended to confer a benefit on employees at the cost of the Superannuation Fund. Rather, it is to say that the scope of that benefit and corresponding cost was intended to be much more limited than that suggested by the applicant. Indeed, in my view it is clear from the context of s 48B that that section was intended to operate only to the extent required to relieve any injustice caused by the increase in payment obligations effected by its accompanying amendments. It was, as the respondent argued, intended only to permit a minor accounting adjustment consequential upon a temporary delay between an increase in an employee's compulsory contributions and payment of those contributions. Thus the purpose of section 48B was to minimise any prejudice caused by the increase in the required contributions of certain employees to those employees who, for example, became entitled to a pension in the period between the commencement of the 1942 Act and the first payment of salary from which the increased contributions were to be deducted. 33 In my view this construction of s 48B is also supported by the terms of s 48B itself, to which I now turn. Whilst, as I have noted, the words used in the first part of s 48B (ending with "but if") - when read literally and without full regard to context - provide compelling support for the applicant's contentions, the section as a whole limits those words' operation. Specifically, the provision in s 48B for the deduction of the unpaid contributions "from the first payment of pension or benefit … or, if a pay day has not occurred before the pension or benefit becomes payable, [the deduction of] one fortnightly contribution" cannot be ignored. This provision contemplates a real-world situation in which the totality of the unpaid contributions is capable of being deducted from the first payment of a pension. 34 Overall, therefore, I consider that to construe s 48B in the way contended for by the applicant would be contrary to the intention of the legislature. In my view context and language show that s 48B was intended to have a much more limited operation, and one that does not extend to entitling all employees to a pension calculated by reference to the numbers of pension units for which they were liable to contribute at the time of their retirement. I do not think it necessary, in the present case, to define the scope of s 48B more precisely than to say that the context and language of s 48B point to a scope no broader than required to achieve the purpose of ensuring that the increase in the required pension contributions of certain employees did not cause those employees any undue prejudice. I do not consider that this construction of s 48B strains the terms of the section in the manner discussed by McHugh J in Newcastle City Council but consider that, even if it does, the strain would be justified by the context in which the language is used. 35 For these reasons I have concluded that the application to have the Full Court's judgment in Fox set aside should fail on the ground that s 48B does not require a different decision to the decision reached in that appeal. The application should be dismissed with costs. I certify that the preceding thirty-five (35) paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice.

The Earlier Judgment 36 On 20 August 1997, the Court as presently constituted, dismissed an appeal by the applicant under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). The judgment, to which we refer as the "earlier judgment", is reported: Fox v Commissioner for Superannuation (1997) 78 FCR 151. The present judgment should be read in conjunction with the earlier judgment. 37 The applicant appealed from a decision of the Administrative Appeals Tribunal ("AAT") made on 19 December 1995, which had affirmed an earlier decision made by the Commissioner of Superannuation. The effect of the AAT's decision was that, on the applicant's retirement on the ground of invalidity from the Permanent Military Forces ("PMF") on 23 March 1945, he became entitled to a pension under the Superannuation Act 1922 (Cth) ("Superannuation Act"), but at a rate calculated by reference to the salary applicable to him by virtue of his rank of Lieutenant in the Australian Staff Corps. The applicant's claim was that, from the date of his retirement, he was entitled to a pension at a higher rate, calculated by reference to the salary applicable to his rank of Captain in the Second Australian Infantry Force ("2nd AIF"). 38 The applicant entered the Royal Military College, Duntroon, as a staff cadet, in February 1938. He was appointed to the Australian Staff Corps (a corps of the Australian Military Forces), with the rank of Lieutenant, on 18 August 1940. On 1 March 1942, the applicant volunteered for service in the 2nd AIF and was seconded to the 2nd AIF with the rank of Lieutenant. However, he was subsequently appointed to the temporary rank of Captain and, on 23 March 1944, he was appointed to the substantive rank of Captain in the 2nd AIF, with retrospective effect from 1 September 1942. 39 At the time of his retirement, the applicant was being paid the daily rate applicable to a Captain in the 2nd AIF. He also received the benefit of a dependants allowance. His rate of pay was greater than that applicable to a Lieutenant in the Australian Staff Corps. As explained in the earlier judgment, from the time of his secondment to the 2nd AIF, the applicant's superannuation contributions had been paid by the Commonwealth on his behalf, in accordance with a decision made by the War Cabinet in October 1939. However, the contributions made by the Commonwealth were calculated by reference to the applicant's salary as a Lieutenant in the Australian Staff Corps and not to the higher pay and allowances due to him as a Captain in the 2nd AIF. It was common ground that the applicant was not aware that the contributions made on his behalf had been calculated and paid on this basis. 40 The applicant's entitlement to a pension derived from s 60N(a) of the Superannuation Act, which provided as follows: "60N Where a contributor under this Part is retired on the ground of invalidity or physical or mental incapacity to perform his duties, he shall- (a) if the invalidity or incapacity is not due to wilful action on his own part for the purpose of obtaining pension, be entitled to the full pension for which he was contributing at the time of his retirement…". 41 The parties identified two issues for determination on the appeal. The first was whether the applicant, at the time of his retirement, was obliged to make contributions by reference to the remuneration received by him as a Captain in the 2nd AIF, rather than by reference to the salary level applicable to a Lieutenant in the Australian Staff Corps. The second was whether the expression "the full pension for which he was contributing" meant the full pension for which the applicant was liable to contribute or the full pension for which he was actually contributing. 42 The earlier judgment addressed only the second question. We held (at 161) that, as a matter of construction, the words "the full pension for which he was contributing" in s 60N(a) should be given their "usual or primary meaning", namely, the contributions in fact made by the contributor. We rejected the applicant's contention that the expression in s 60N(a) should be construed to mean the "full pension for which he was liable to contribute". Since the applicant was in fact contributing at his retirement for eight units of pension (the number attributable to a Lieutenant's salary), we concluded that the AAT had made no error in concluding that his entitlement was limited to eight units of pension. In view of this conclusion, it was unnecessary to resolve the other issue in the case.

The Motion to Set Aside the Judgment 43 By a notice of motion filed on 28 November 1997, the applicant sought orders pursuant to Federal Court Rules ("FCR"), Order 35, Rule 7, setting aside the judgment of the Full Court and directing a rehearing of the appeal. FCR, O 35, r 7 provides as follows: "7(1) The Court may vary or set aside a judgment or order before it has been entered. … (3) A clerical mistake in a judgment or order, or an error arising in a judgment or order from an accidental slip or omission, may at any time be corrected by the Court." Order 35, r 7(3) is usually referred to as the "slip rule". 44 The basis of the applicant's motion was that the Court, in the earlier judgment, had overlooked a critical statutory provision, namely, s 48B of the Superannuation Act. Mr Jackson QC, senior counsel for the applicant (who did not appear on the hearing of the appeal) accepted that, despite extensive oral and written argument ranging over a considerable body of now-repealed legislation, the applicant had failed to draw the attention of the Court to s 48B. Nonetheless, Mr Jackson submitted that s 48B (which itself was repealed in 1965) undercut the reasoning of the Court and that this was a sufficient reason to set aside the judgment and rehear the appeal under the slip rule. He further submitted that the fact that the applicant's legal representatives had not drawn the Court's attention to s 48B was no barrier to the success of the application. 45 The parties to the present application filed written submissions canvassing both the principles governing the slip rule and the construction of s 48B of the Superannuation Act. The submissions were developed in oral argument. The parties conducted the argument on the footing that, if the Court were minded to set aside the earlier judgment, it should resolve the appeal without hearing the parties further on issues already debated.

Should the Judgment be Set Aside? 46 The first question is whether the Court should set aside the judgment. In this connection, it should be noted that the applicant provided no explanation for the failure of his legal representatives to refer the Court to s 48B of the Superannuation Act at the hearing of the appeal. Nor was any explanation provided for the delay of some three months after delivery of the judgment, before the applicant filed the motion to set aside the judgment. In these circumstances, it might be thought that to attempt to reopen the case "would be to subvert the finality of litigation and to invite interminable arguments about the importance of the legal questions to be recanvassed…" Autodesk Inc v Dyason [No 2] (1993) 176 CLR 300, at 310, per Brennan J. 47 The applicant relied, however, on the observations of Mason CJ in Autodesk (at 302-303), a case in which an application was made relying on the inherent jurisdiction of the High Court: "These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases." Although this passage refers to the High Court's role as the final court of appeal, the observations have been treated as applicable to an intermediate court of appeal: Wykes v Samilk Pty Ltd [No 2], NSWCA, unreported, 18 August 1998, at 10. See also L Shaddock & Associates Pty Ltd v Council of the City of Parramatta [No 2] (1983) 151 CLR 590, at 594-597. The present proceedings, although an appeal under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth), invoke the original jurisdiction of the Court. 48 Mr Hanks, who appeared for the respondent, initially submitted that, even if s 48B of the Superannuation Act were critical to the outcome of the case, the Court should not reopen the judgment. In oral argument, he took a somewhat different stance, in effect conceding that if the applicant's contention as to the effect of s 48B were correct, it would be difficult for the respondent to resist the application. He did not take any point about the application being made under the slip rule, rather than FCR, O 35, r 7(1), nor that the proceedings constituted an exercise of the original jurisdiction of the Court. 49 We think that, in the unusual circumstances of the present case, Mr Hanks was right to make the concession he did. The earlier judgment, if based on erroneous reasoning, might affect not only the present applicant but others in a similar situation. It is important, therefore, that the Court address the legal issues fully informed as to the terms of the relevant legislation. Moreover, while it is extremely regrettable that the applicant's legal representatives failed to draw the Court's attention to s 48B of the Superannuation Act, there is force in Mr Jackson's contention that the respondent must bear some of the responsibility for not remedying the omission. It might have been expected that the respondent's legal representatives would have referred the Court to provisions in the complex legislation (administered by the respondent) bearing directly on the issues presented by the appeal. It therefore cannot be said that the failure to refer to s 48B of the Superannuation Act was attributable solely to the neglect or default of the applicant. 50 It follows that whether the judgment should be set aside and the matter reopened depends on whether the applicant's argument as to the effect of s 48B of the Superannuation Act is correct. We therefore turn to that question. Section 48B of the Superannuation Act 51 Section 48B was introduced into the Superannuation Act by s 18 of the Superannuation Act 1942 (Cth) (the "1942 Act"), which came into force on 6 October 1942. It provided as follows: "48B Subject to this Act, where in pursuance of this Act any employee becomes liable, or elects, to contribute for any units or additional units, he shall be deemed to be a contributor in respect of those units or additional units as from the date when he becomes liable, or elects, to contribute (as the case may be), but if any pension or benefit becomes payable to or in respect of that contributor before he has actually commenced to make contributions or additional contributions there shall be deducted from the first payment of pension or benefit such contributions as are due by him in respect of those units or additional units or, if a pay day has not occurred before the pension or benefit becomes payable, one fortnightly contribution." 52 The 1942 Act amended the Superannuation Act in other respects. In particular, s 6 of the 1942 Act amended s 13 of the Superannuation Act, to provide as follows: · each employee over the age of 30 and each existing contributor, whose salary did not exceed Ł208 per annum, could elect to contribute for additional units of pension, up to a maximum of four units (s 13(2)(a)); · each new employee under the age of 30, whose salary did not exceed Ł208 per annum, was required to contribute for not less than four units of pension (s 13(2)(b)); · a contributor over the age of 40, whose salary was increased so that he or she fell within a higher salary-group, was required to increase the amount of contribution to such sum as would provide the higher number of units of pension specified in the table in s 13(1), unless the contributor elected within six months of the first payment of increased salary not to increase the amount of contribution (s 13(4)(a)); · a contributor over the age of 40, whose salary was increased, and who was contributing for less than the maximum number of units, could elect to increase his or her contribution in certain circumstances (s 13(4)(c)); and · a contributor under the age of 40, whose salary was increased so that he or she fell within a higher salary-group, was required to increase the amount of contributions to such sum as would provide the number of units of pension specified in the table in s 13(1) (s 13(4)(d)). 53 Section 13(4A) of the Superannuation Act, also introduced by the 1942 Act, provided as follows: "(4A) Any increased contribution payable in pursuance of [s 13(4)(a), (b) or (d)] shall be payable as from the date upon which payment of salary at the increased rate is approved or from the date upon which salary at the increased rate becomes payable, whichever is the later, and any increased contribution payable in pursuance of [s 13(4)(c)] shall be payable as from the date of the election: Provided that, where the date from which any increased contribution is payable is not a pay-day, the increased contribution shall be payable as from the next following pay-day". 54 The applicant's argument was simple. Mr Jackson submitted that s 48B of the Superannuation Act was intended to address the situation where an employee had become liable for increased contributions, either by reason of an increase in salary or an election made in accordance with the legislation. The plain effect of s 48B was to deem an employee who had become liable to contribute for additional units "to be a contributor in respect of those…additional units as from the date when he [or she became] liable…to contribute". Accordingly, an employee whose salary was increased, and who thereby became liable under s 13(4)(d) to contribute for additional units, was deemed to be a contributor for the additional units even if the higher contributions had not actually been paid (whether by the contributor or by the Commonwealth on behalf of the contributor). 55 The respondent, on the other hand, contended that s 48B of the Superannuation Act was intended to have only a limited operation. Mr Hanks accepted that s 48B had to be understood in the context of the amendments to s 13 of the Superannuation Act effected by the 1942 Act. However, he submitted that s 48B was intended to address a very specific situation. This was, relevantly, the case of a contributor · who was entitled to receive an increased salary from a particular date; · who, by virtue of s 13(4A) of the Superannuation Act, was liable to make increased contributions for additional units from the next pay-day following that date; and · who became entitled to a pension or benefit between the two dates (for example, because of an injury occurring between those dates). In those circumstances, the legislation deemed the employee to be a contributor from the date he or she became liable to contribute for additional units, but permitted a minor accounting adjustment consequential upon a short delay between the obligation to make increased contributions and the making of the required contributions. 56 In our view, it is very difficult to read s 48B of the Superannuation Act in the manner suggested by Mr Hanks in view of the express direction that an employee "who becomes liable…to contribute for…additional units shall be deemed to be a contributor in respect of those…additional units as from the date when he becomes liable…to contribute". That direction was not qualified by any words that would restrict its operation to the very specific case identified by Mr Hanks. The legislative intention, clearly enough, was to ensure that an employee who was retired on the ground of invalidity would receive a pension or benefit calculated by reference to the number of additional units for which he or she was "deemed to be a contributor". That this was the intention is reinforced by the fact that s 48B expressly contemplated that a pension or benefit could become payable to, or in respect of, a deemed contributor before that contributor actually commenced to make the additional contributions for which he or she was liable. 57 This construction of s 48B is consistent with the language used elsewhere in the Superannuation Act. As we noted in the earlier judgment, s 60N of the Act (which corresponded to s 29 in Part IV) provided that a contributor who was retired on the ground of invalidity was "entitled to the full pension for which he was contributing at the time of his retirement". Section 48B deemed an employee who had become entitled to a higher salary to be a contributor in respect of additional units from the date he or she became liable to contribute for the additional units. Thus, a contributor who had become entitled to a higher salary and who had thereby become liable to contribute for additional units was to be regarded as a contributor in respect of the additional units. Such a person was contributing for those additional units, for the purposes of s 60N(a) of the Superannuation Act,and thus was entitled to a pension calculated by reference to those units. 58 The conclusion we have expressed is also consistent with the view expressed in the earlier judgment (at 162) that the Superannuation Act (including the 1942 amendments) was intended to preserve the "actuarial integrity of the Fund". As we have already explained, s 48B contemplated that employees could receive benefits in respect of additional units for which they had not actually commenced to make contributions. Section 48B provided a mechanism whereby the Fund could recover the unpaid contributions. It is true that this section, as drafted, did not envisage that there could be a prolonged period during which the required contributions would remain unpaid. However, there is nothing to indicate that the mechanism adopted by s 48B, which was confined to deducting contributions from the "first payment of pension or benefit", was to be the exclusive means of recovering unpaid contributions from employees: see s 81, which empowered the Board to recover contributions in any court of competent jurisdiction. Given that s 48B contemplated the payment of benefits prior to the receipt of contributions in respect of those benefits, the actuarial integrity of the Fund would be protected by allowing recovery of unpaid contributions from contributors even if they exceeded the amount of the "first payment of pension or benefit". The provisions of the Superannuation Act imposing an obligation on employees to contribute to the Fund at the prescribed rates (ss 12(1), 13(1), 16, 22) would seem to imply that unpaid contributions would be recovered by the Board pursuant to the power conferred by s 81 of the Superannuation Act.

The Appeal Should be Re-Opened 59 It follows that, had we been referred to s 48B of the Superannuation Act during the hearing of the appeal, we would have reached a different conclusion on the issue addressed in the earlier judgment. We would not have regarded the reasoning in University of Newcastle v Chopra (1989) 63 ALJR 397 as applicable to the Superannuation Act. We would have held that, in the circumstances of the present case, the applicant was entitled to all units of pension for which he was liable to make contributions, including any liability for additional units attributable to his higher salary as a captain in the 2nd AIF. We would have reached this conclusion even if, at the time of the applicant's retirement, neither he nor the Commonwealth on his behalf, was making contributions in respect of those additional units. It follows that we would have held that the AAT had erred in finding (as it did) that the applicant's entitlement to units of pension was governed by the contributions actually made on his behalf, as distinct from the contributions he was liable to make under the Superannuation Act. 60 Although it is a matter of very great regret that we should have to reopen the appeal, for the reasons we have given we think that this is the appropriate course. Since we have found in the applicant's favour on the issue addressed in the earlier judgment, it is now necessary to return to the other issue in the case, namely, the meaning of the word "salary" as used in ss 4 and 13 of the Superannuation Act.

The Question 61 Section 13(1) of the Superannuation Act provided as follows: "13(1)Subject to this Act, contributions by an employee shall be in respect of units of pension as defined in section twenty-eight of this Act and the number of units in respect of which an employee shall contribute shall have relation to the salary of the employee in accordance with the following scale." The scale referred to in s 13(1), as in force at the time of the applicant's retirement, provided that an employee in receipt of a salary of between Ł416 and Ł468 per annum was liable to contribute an amount necessary to provide eight units of pension. If the employee's annual salary was between Ł468 and Ł520, he or she was liable to contribute an amount necessary to provide nine units of pension, while an annual salary of between Ł520 and Ł572 imposed a contribution liability in respect of ten units of pension. 62 Section 4(1) of the Superannuation Act defined "salary" as follows: "'Salary' means salary or wages, and includes the value of allowances such as allowances for rent, house allowed rent free, light, fuel, rations, and fees allowed regularly as emoluments of office, but does not include bonuses, overtime payments, or allowances for forage equipment, climatic disadvantages, cost of living or travelling expenses." 63 The AAT held that the applicant's salary at the date of his retirement did not include what the AAT described as "the allowance paid while he was a Captain in the [2nd] AIF". The AAT found that the applicant received an allowance for the temporary performance of a more highly paid position in the 2nd AIF, pursuant to reg 10 of the War Financial (Military Forces) Regulations 1942 ("War Financial Regulations"). It considered that the term "salary", as defined in s 4(1) of the Superannuation Act, did not cover what was, in effect, a higher duties allowance. The AAT therefore concluded that, even on the assumption that the applicant's entitlement to units of pension was governed by his liability to make contributions, his entitlement was limited to eight units of pension. This was because the applicant, at the date of his retirement, was liable to contribute only for eight units of pension, since his "salary" for the purposes of the Superannuation Act was that applicable to his permanent position as a Lieutenant in the Australian Staff Corps (Ł450 per annum). 64 On the appeal, the respondent conceded that the AAT had erred in law by finding that the applicant had been paid an allowance pursuant to reg 10 of the War Financial Regulations during his period of secondment to the 2nd AIF. Mr Hanks accepted that the applicant had been paid pursuant to regs 7 and 8 of the War Financial Regulations and that those regulations did not merely provide an allowance for the temporary performance by an officer of the Australian Staff Corps of the duties of a higher office. 65 Nonetheless, Mr Hanks submitted that the AAT's error did not vitiate its finding that the applicant's "salary" for the purposes of determining his liability to make contributions under the Superannuation Act was limited to the pay attributable to his rank of Lieutenant in the PMF. This followed because Part IVA of the Superannuation Act applied only "to and in respect of employees" (s 60B). The expression "employee" was defined to mean a member of the PMF (s 60A). The reference to "salary of the employee" in s 13(1) had to be construed as a reference to salary paid or payable to an employee by virtue of his or her particular employment as an "employee". Section 13(1) could not have been intended to refer to the salary or wages of an employee received from any source, whether or not connected with his or her duties as an "employee".

Reasoning 66 Part IVA of the Superannuation Act (ss 60A-60T) was inserted in 1924, by the Superannuation Act 1924 (Cth), s 16, although some provisions were subsequently amended. Section 60C(4) provided that an employee who was not, prior to the commencement of Part IVA, a contributor under the Act "shall not be required or permitted to contribute for units of pension under this Act, except in pursuance of the provisions of this Part, nor shall pension under this Act be payable to or in respect of that employee, except in pursuance of those provisions." Employees were to be liable and entitled to contribute in accordance with Part III of the Act for units of pension and, for the purpose of determining the rights and obligations of those employees in respect of contributions for units of pension, Part III applied in relation to contributions by those employees: s 60D. The most relevant provisions of Part III were ss 12, 13(1) and 22, all of which are referred to in the earlier judgment. The terms of s 13(1) have been set out above. 67 The Superannuation Act, in its application to military personnel, must be understood in the context of the Defence Act 1903 (Cth) ("Defence Act"). The Defence Act provided that the Defence Force was to consist of the Naval and Military Forces of the Commonwealth, divided into two branches, the Permanent Forces and the Citizen Forces: s 30. The PMF were to consist of appointed officers of those Forces and of soldiers bound to continuous military service during the continuance of their engagements: s 31. Section 33 empowered the Governor-General to raise, maintain and organise in the prescribed manner such Permanent and Citizen Forces as were deemed necessary for the defence and protection of the Commonwealth and the States. 68 By s 45, the Permanent Forces were "at all times [to] be liable to be employed on war service and in the defence and protection of the Commonwealth and of the several States". However, s 49 provided that members of the Defence Force who were members of the Military Forces were not required, unless they "voluntarily agree[d]" to serve outside the Commonwealth. Nonetheless, nothing in the Defence Act prevented any member of the Defence Force from volunteering for service outside the Commonwealth: s 117. The Governor-General had power to make regulations for carrying out or giving effect to the Act: s 124(1). 69 All provisions of the Defence Act to which we have referred were enacted before the introduction of Part IVA into the Superannuation Act. From an early stage, the Australian Military Regulations, 1927 reg 109, made pursuant to the Defence Act, provided for the secondment of officers of the Permanent Forces to other military appointments. However, the secondment of the applicant to the 2nd AIF was effected pursuant to reg 109(1)(ff), inserted by Statutory Rule 1941, No 14. This provided for an officer to be seconded in his regiment or corps on appointment to any Expeditionary Force outside Australia. 70 Regulation 43A of the Military Financial Regulations 1935 (inserted by Statutory Rules 1944 No 170) provided that regs 17 to 43 of the Military Financial Regulations (which governed the pay of members of the PMF) should not apply to, or in relation to, any member of the PMF to whom the War Financial Regulations applied. The applicant was such a member: see par (b) of the definition of "member" in reg 4(1) of the War Financial Regulations. Thus the Military Financial Regulations did not apply to the applicant during his period of service with the 2nd AIF. 71 It was ultimately common ground that the applicant's pay and allowances during his period of service in the 2nd AIF were determined in accordance with regs 7 and 8 of the War Financial Regulations. Regulations 7 and 8 provided for daily rates of pay and allowances, depending on the member's rank in the 2nd AIF. The applicant received the daily rates of pay and allowances appropriate to his rank of Captain. According to senior counsel for the applicant, these regulations applied to the applicant because reg 9(3) provided that "a member's pay and allowances shall be at the rates specified in these Regulations". The expression "member" was defined by reg 9(1) (as amended by Statutory Rules 1944 No 65) as follows: "'member' means any member of the Permanent Military Forces appointed or enlisted prior to the sixth day of October, 1939, and includes any such member who has been appointed or transferred to, or seconded for service with, the Australian Imperial Force." Senior Counsel submitted that the Applicant satisfied this definition because he had enlisted as a staff cadet at the Royal Military College in 1938. Mr Hanks did not dispute this reasoning. 72 This outline of the legislation and the regulations supports the applicant's contention that his service in the 2nd AIF constituted service as an "employee" for the purposes of the Superannuation Act and that "the salary of the employee", for the purposes of s 13(1) of that Act, was the salary received by him as a Captain in the 2nd AIF. At the time Part IVA of the Superannuation Act was enacted, the Defence Act expressly provided (as one might expect) that a member of the PMF, including a member of the Australian Staff Corps, was liable to be employed on war service. Moreover, the Defence Act specifically contemplated that a career officer of the Defence Force could volunteer to serve in any Force raised by the Commonwealth for service overseas. It can therefore hardly be said that Part IVA of the Superannuation Act did not contemplate that a member of the PMF, such as an officer of the Australian Staff Corps, might be seconded to a Force intended (in the words of s 45 of the Defence Act) "to be employed on war service". 73 Furthermore, at the time Part IVA of the Superannuation Act was enacted, the Defence Act contemplated that an officer volunteering for war service overseas might be paid a higher salary than his or her counterparts remaining in Australia. While the precise scheme for differential payments was introduced by the Regulations to which we have referred, s 124(1)(d) of the Defence Act, which was in force in 1924, authorised the Governor-General to fix rates of pay for members of the Defence Force who were paid for their services. This power was wide enough to provide differential rates of pay, depending upon the theatre in which the members served. Moreover, the legislation envisaged that a Force such as the 2nd AIF might be established. For example, s 124(1)(da) (also in force at that time) provided for certain deductions from the pay of a member of "any Expeditionary Force". In other words, at the time Part IVA of the Superannuation Act was enacted, Commonwealth legislation contemplated that members of the Australian Staff Corps might be seconded to a Force such as the 2nd AIF in time of war and that members' pay might be adjusted to reflect the rigours of that form of military service. 74 In our opinion, the applicant's service in the 2nd AIF was rendered by him in his capacity as an officer of the Australian Staff Corps and, in that capacity, as a member of the PMF. He therefore provided service as an "employee", as that term is defined for the purposes of Part IVA of the Superannuation Act (see s 60A). The salary he actually received was for services provided by him as a member of the Australian Staff Corps, albeit one seconded to the 2nd AIF. That salary was not the salary the applicant would have received had he remained a member of the Australian Staff Corps, but not volunteered for service in the 2nd AIF. However, he did volunteer for service in the 2nd AIF, as was his entitlement under the Defence Act as a member of the Australian Staff Corps. Thus, the salary he actually received during his period of service with the 2nd AIF was "the salary of the employee" within the meaning of s 13(1) of the Superannuation Act. 75 This conclusion receives some support from the terms of s 31(4) of the Defence Act, which was added to the legislation by the Defence Act (No 3) 1939 (Cth). The terms of s 31(4) and an extract from the Second Reading Speech were set out in the earlier judgment (at 155). The object of that provision was to ensure that an officer or soldier who enlisted in the 2nd AIF solely for service during the War, was not thereby to be regarded as an "employee" for the purposes of the Superannuation Act. The provision was thought necessary because the effect of s 31 of the Defence Act was that any officer or soldier enlisting in the 2nd AIF was part of the PMF, even if he or she enlisted solely for service during the War. It is clear enough that Parliament did not intend to apply the same exclusion to officers who were members of the Australian Staff Corps (and therefore part of the PMF) before volunteering to join, and being seconded to, the 2nd AIF. 76 It follows that the applicant, at the time of his retirement, was liable under the Superannuation Act to contribute in respect of the number of units related to the salary he received as a Captain in the 2nd AIF. The AAT was in error when it concluded otherwise.

Dependants Allowance 77 The respondent contended that if, contrary to his primary submission, the applicant's entitlement under the Superannuation Act to units of pension was governed by the extent of his liability to make contributions, that liability was not affected by the dependants allowance paid during his period of service with the 2nd AIF. It is not entirely clear whether the AAT was invited to address this question. In any event, it did not find it necessary to do so and made no findings concerning the circumstances in which the dependants allowance was paid. Nor did the AAT consider the effect, if any, of payment of that allowance on the applicant's liability to make contributions under the Superannuation Act. 78 Documentation before the AAT records that, at the time of his retirement, the applicant received the benefit of a dependants allowance. If the value of that allowance were simply to be added to the applicant's salary as a Captain in the 2nd AIF (Ł511 per annum), it seems that the effect would have been to require the applicant to make contributions in respect of at least ten units of pension. 79 The dependants allowance was provided for in reg 34 of the War Financial Regulations. Regulation 34 stated that, where a member had one or more persons wholly or partly dependent upon him, a dependants allowance could be paid at a rate determined by a prescribed authority, subject to a statutory maximum. In general, it appears that dependants allowances were not paid to the member, but to the dependants themselves or, in some cases, persons responsible for the dependants: see reg 36(1), (2), (3). In certain circumstances, the person to whom the allowance was paid was bound to use it for specific purposes, such as the maintenance and education of a child: see reg 36(12). 80 We have referred earlier to the definition of "salary" in s 4(1) of the Superannuation Act. In the absence of findings by the AAT as to how the dependants allowance was calculated and to whom it was paid, we think it undesirable to determine whether the allowance fell within the definition of "salary". We would, however, make this observation. If the dependants allowance was paid on a regular basis to the applicant's spouse (as contemplated, for example, by reg 36(2)), it is, perhaps, a little difficult to see why it would not fall within the ordinary concept of "salary": see Commissioner of Superannuation v Carpenter (1983) 48 ALR 230, at 233-234, per Bowen CJ and Woodward J.

Costs 81 The primary responsibility for the regrettable failure to refer the Court to s 48B of the Superannuation Act rests with the applicant although, as we have said, the respondent was not blameless. Since the applicant has ultimately succeeded on the appeal, it is appropriate that the order made in the earlier judgment, requiring the applicant to pay the respondent's costs, be set aside. In the circumstances, each party should bear his own costs of the appeal, including the application to reopen the appeal. 82 The following orders should be made:

The orders made by the Court on 20 August 1997, including the costs order, be set aside.
The decision of the AAT made on 19 December 1995 be set aside.
The matter be remitted to the AAT for further determination in accordance with law.
Each party bear his own costs of the appeal, including the costs of the application for rehearing. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Branson & Sackville.

Associate: Dated: 8 April 1999 Counsel for the Applicant: Mr D F Jackson QC with Mr B J A Shields

Solicitor for the Respondent: Australian Government Solicitor

60A-60T) Superannuation Act 1942(Cth)

Superannuation Act 1924(Cth)

Superannuation Act 1942(Cth)

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