Harris v Director-General of Social Security - [1985] HCA 1 - HCA 1981 case summary — Zoe

CTHHCA

Harris v Director-General of Social Security

[1985] HCA 1

High Court of Australia|1981-08-28|Before: Gibbs CJ, Dawson JJ, Northrop JJ

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At a glance

Source facts

Court

High Court of Australia

Decision date

1981-08-28

Before

Gibbs CJ, Dawson JJ, Northrop JJ

Source

Original judgment source is linked above.

Judgment (50 paragraphs)

[1]

High Court of Australia Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ Harris v Director-General of Social Security [1985] HCA 1

[2]

ORDER Appeal allowed. Set aside the order of the Full Court of the Federal Court of Australia and in lieu thereof order that the decision of the Administrative Appeals Tribunal, dated 28 August 1981, be set aside and the matter be remitted to the Administrative Appeals Tribunal to proceed in accordance with the reasons for judgment of the majority of this Court. No order as to costs. Gibbs CJ, Brennan, Deane and Dawson JJ

[3]

Mrs Harris, the appellant, was paid an age pension under the Social Services Act 1947 Cth (the Act) on and from 29 April 1976. On 9 September 1977 she obtained casual employment as a nursing aide. In most fortnights between that date and 2 September 1979 she received some pay, the amounts of which varied from fortnight to fortnight. Her lowest pay was $35.65, her highest $231.16. She also received some amounts of income by way of interest on bank deposits and other investments. She did not notify a Director of Social Services of her earnings. An entitlement review form containing questions about her income was sent to her on 19 July 1979. She answered those questions candidly. Thus it was discovered that she had been paid her pension at a rate higher than the rate that was appropriate having regard to the income-test provisions of s 28(2) of the Act to which reference will presently be made. In purported exercise of the power conferred by s 140(2), it was decided to deduct $10 each fortnight from Mrs Harris' pension until $1,177.90 should be recouped. That was the amount assessed as overpaid age pension during the period from pension payday 13 October 1977 to pension payday 30 August 1979.

[24]

Income can be derived from various sources, as the definition of income in s 18 makes clear. Some items of income may be received at frequent and regular intervals during a year (for example, weekly or fortnightly wages paid to an employee), some intermittently (for example, profits of a business) and others at lengthy intervals (for example, annual dividends on shares). Subject to the exceptions stated in the s 18 definition and subject to the limitations expressed in s 29, no income derived from any source is to be left out of account in ascertaining the annual rate of income. At the time when an annual rate of income is ascertained, it is necessary to have regard to the pensioner's sources of income at that time and to find what each of those sources would yield over the period of a year assuming the current yields from those sources were to continue. It is not necessary to predict whether the pensioner will retain his sources of income for the year or whether the current yields will be maintained, for the annual rate of income is the current rate of income though it is calculated and expressed as an annual rate. If the current income from a current source is receivable as so much per week or per month, it must be calculated and expressed as an amount per annum. But an annual rate of income is not ascertained merely by extending to a year the income receipts of a shorter period without considering the period in respect of which the particular item of income has been received. A pensioner whose only income apart from his pension is $1,000 paid annually as a dividend on an investment has an annual rate of income of $1,000. It is wrong in law as it is absurd in fact to say that he has an annual rate of income of $52,000 in the week in which he receives the dividend and a nil annual rate of income for 51 weeks of the year. His investment, the source of his income, yields an annual sum and, so long as the pensioner retains the investment, his annual rate of income from that source will be $1,000. If that source of income were lost, the annual rate of income from that source would be reduced to nil from the time of the loss. When a pensioner is in receipt of weekly wages from employment, however, his annual rate of income from that source is calculated on the assumption that his earnings at the current rate will continue for the year. If he were to retire from work, that source of income would be gone and the annual rate of income attributable to that source would be nil. In cases where pensioners or claimants are employed intermittently, it may be appropriate in some cases to treat the intermittent work as a continuing source of income and to take an average of earnings over a period as the yield from that source, and in other cases to treat each employment as a separate source of income yielding its particular amount of earnings. The former method would establish a comparatively constant annual rate of income; under the latter method, the annual rate of income would change as the pensioner or claimant went into and out of employment. The circumstances of the particular case would show which method is more appropriate.

[45]

It seems to me that the solution offered by the respondent encounters a substantial difficulty at the outset. The solution provides no explanation for the prescription of the maximum rate of age pension in terms of an annual amount. If an annual period was not intended to be of significance, the Act could have fixed a weekly or fortnightly rate of pension and provided a means test threshold of an amount of income received in each week or fortnight as the case may be. A scheme expressed in that form when coupled with the eight-week period referred to in s 45 would fit the respondent's contention admirably. However, the Act does not do that. Having expressed the maximum allowable pension rate in terms of an annual amount, the Act requires that the annual rate of the pensioner's income be ascertained in terms of an amount which can then be measured against the stated ceiling of $1,040 per annum. The amount by which the sum so ascertained exceeds that ceiling is then halved to yield the amount by which the rate of pension entitlement for that year is to be reduced (s 28(2)). In defence of his submission, counsel for the respondent relies on the fixation in terms of a rate as rendering the reference to an annual rate as of only formal significance in providing a basis for calculation of the pension entitlement for any particular period and he points to the provision for payment in fortnightly instalments (s 41) in this regard. But the reference to an annual rate of pension identifies that amount of pension which will be received in the course of a year if the rate remains unchanged and it is this amount which must be divided by 26 to yield the amount of each fortnightly instalment. I regard s 41 as no more than a machinery provision directed to the manner in which the pension is to be paid. It falls into the same category as s 135W which, as I have already noted, allows for a pension to be paid into a bank account at such intervals as may be determined. Turning to s 45, the argument for the respondent advances this section as the linch-pin for the whole scheme because from it is gleaned the entitlement of the pensioner to whatever, on the basis of an eight-week period, the means test rate of income allows him. But, in my opinion, s 45 is plainly no more than another machinery provision, obliging the pensioner to notify the Department of an increase in income beyond the stipulated sum so that the actual amount of pension paid to him during the course of the year will maintain a general correspondence with whatever entitlement is ultimately determined.

[48]

I have not yet mentioned all the considerations which lead me to this conclusion. I regard it as important that the means test provision (s 28(2)) is not incorporated into those provisions of the Act whereby the rate of pension is determined. It operates by force of the Act, independently of the exercise of any discretion by the Director-General, to reduce that rate, being an annual rate, by one-half of the amount (if any) per annum by which the annual rate of the income of the appellant exceeds $1,040 per annum. The Act is not explicit as to the meaning of the phrase "the annual rate of the income". It is not comparable in meaning to the phrase "the annual rate at which an age pension is determined". The latter phrase is quite explicit. It is the annual rate which at any particular time has been determined. Such a rate may vary from time to time in the course of a year by reason of a change in the rate in accordance with s 14 or with s 46 or there may be an automatic variation by reason of a change in the consumer price index (s 28A). The former phrase, however, is not the subject of any determination under the Act. It merely identifies an objective fact. In my opinion, in the absence of any selection by the Act of any shorter period by reference to which the income earned within that period permits an annual rate to be determined, the annual rate of income is simply the total income received over the year. The word "rate" is a flexible term, of which many definitions are to be found, and what it means in a particular instance must depend on the context and subject matter. The term "rate" may be defined as meaning amount, degree, proportional or comparative amount or degree, proportion, proportion or standard, percentage, ratio. The further definition of the term includes price, charge, sum, value, valuation, and also a charge, payment, or price fixed according to a ratio, scale, or standard. The "rate" may be a measure or the measure of a thing. Similarly, the term may be employed to mean a fixed measure of estimation, the measure of a thing by its ratio or relation to some fixed standard, a rule or measure of assessment, or a proportional estimation according to some standard: See generally 75 Corpus Juris Secundum, "Rate", pp. 607-608. "Rate" and "amount" have been held to be synonymous (see Smith v Board of Trustees (1947) 25 NW. (2d) 858 at 859), but the terms have also been distinguished: see 3A Corpus Juris Secundum, "Amount", p. 441. Accordingly, the word "rate" in some circumstances may simply mean "amount" as for example where one speaks of an income rate of $1,000 per annum to describe the total amount of income received during that period. This construction finds support in the use in the subsection of the phrase "one-half of the amount (if any) per annum" (my emphasis). This phrase suggests that the calculation required by the means test must result in a determination of the actual sum of money by which the person's pension for that year is to be reduced. I have already described ss 41 and 45 as machinery provisions designed to facilitate the payment of pensions during the year (s 41) and to ensure that those fortnightly payments are reduced from time to time to correspond with increased income.