McMullen, R. v. Commissioner for Superannuation [1985] FCA 143

Federal Court of Australia|1985-04-16|Before: Neaves JJ

CATCHWORDS Administrative Law - Appeal from Administrative Appeals Tribuna - Reference in decision of Tribunal to medical

publications not put to the parties, their advisers or expert witness - Whether a denial of natural justice.

Superannuation - Eligible employee - Invalidity retirement before maximum retiring age - Less than 20 years' service - False information furnished un connection with medical examination for entry to Superannuation Fund under Superannuation Act 1922 - Whether benefit classification certificate properly issued under sub-s.185(4) of Superannuation Act 1976 - Whether "paranoid personality" a

mental condition - Whether retirement substantially contributed to by that condition.

Statutory Interpretation - Interpretation so as to avoid absurdity and to enable provision to operate effectively and in

Constitutional Law - Acquisition of property on just terms - Whether superannuation legislation properly characterised as a law with respect to acquisition of property by any person for a purpose in respect of which the Parliament has power to make laws - Whether eligible employee had a right of property which was acquired by the legislation - Constitution, s.51(xxxi).

CORAM: Fisher, Gallop and Neaves JJ. fe or » 16 April 1985 EZ APR a5 iat Canberra ' " ; 7;

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY

BETWEEN; ROBYN McMULLEN Applicant AND: COMMISSIONER FOR SUPERANNUATION Respondent

JUDGES MAKING ORDER: Fisher, Gallop and Neaves JJ. DATE OF ORDER: 16 April 1985 WHERE MADE: Canberra

The applicant pay the costs of the respondent of and incidental to the application.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

CORAM: Fisher, Gallop and Neaves Jd. DATE: 16 April 1985

This is an appeal pursuant to sub-s.44(1) of the Administrative Appeals Tribunal Act 1975. That sub-section enables a party to a proceeding before the Administrative

Appeals Tribunal ("the Tribunal") to appeal to this Court, ona

question of law. from any decision of the Tribunal in that

proceeding. Robyn McMullen ("the applicant") has appealed against a decision of the Tribunal given in proceedings by way of review of a decision of the respondent, the Commissioner for

Superannuation ("the Commissioner"), made under the

Superannuation Act 1976 ("the Act"). Although the Tribunal

agreed in substance with the Commissioner's decision it set

aside his decision and substituted a decision in accordance

(a) to issue in respect of the applicant a benefit classification certificate

pursuant to sub-s.184(5) of the Act specifying the conditions "History of nervous disorder. namely anxiety state; paranoid personality"; and

the Act, that the incapacity which was the ground for the retirement of the applicant was substantially contributed

to by the mental condition specified in the benefit classification certificate, namely paranoid personality.

The effect of this decision was to reduce the benefits that would otherwise have been payable under the Act to the

The applicant commenced employment as a Clerical Assistant, Grade 1, with the Department of Health on 28

September 1970. At that time she was a married woman 31 years

of age with four young children aged respectively 12, 10

(twins) and 6. She had been admitted to Canberra Hospital for the period 21 September to 3 October 1967. From 21 September

to 26 September 1967 she was in M Ward (the Psychiatric Ward) from which she was discharged on the latter date to return to her home. On the following day she was re-admitted for further treatment. The final diagnosis recorded on her admission

On 27 July 1972 she underwent a medical examination in

connection with which she was required to answer a number of

questions concerning her previous medical history. This examination was not only for the purpose of determining her fitness for permanent appointment to the Commonwealth Public Service (as it was then called). It was also conducted for the purpose of determining whether her health and physical fitness

were such as to justify her acceptance as a contributor to the

Superannuation Fund or the Provident Account established by the Superannuation Act 1922-1971. She was in fact accepted as a

The relevant questions and the answers given by the

applicant at the time of her examination were as follows -

Have you now or have you previously had any of the following conditions?

1 (a) Nervous fatigue No (gq) Persistent headaches No (b) Mental or nervous (h) Dizziness or turns No conditions No {c) Anxiety state No (4) Attack of unconscious- ness or weakness No (d) Neurasthenia No (4) Migraine No (e) Fits No (k) Disturbance of sensation or muscular activity No (f£) Epilepsy No (1) Persistent breathlessness No"

The decisions of the Commissioner and the Tribunal were based on these negative answers. The Tribunal also attached significance to the fact that the applicant failed to make any reference to her previous history of a nervous condition. However it was ultimately accepted that, having answered each of the above questions in the negative, the applicant was under no obligation to make further reference to her previous history and her failure to do so did not amount to

a default under the relevant statutory provisions: see Fry v. Commissioner for Superannuation (Federal Court of Australia, Full Court - 31 July 1984 - unreported), a decision delivered after the Administrative Appeals Tribunal had given its decision in the present case. The Tribunal was of opinion, as

was the Commissioner, that the applicant's negative answer to

In December 1977 the applicant suffered an emotional upset in consequence of a decision to transfer her to another section of the Department of Health. Thereafter she had numerous absences from work. 1n respect of which her general practitioner provided medical certificates describing her

condition variously as "emotional upset". "nervous disorder" or

"anxiety symptoms". A medical examination conducted by a Commonwealth Medical Officer on 22 March 1979 found that she was unfit for continued employment and should be retired on the ground of unvalidity due to "anxiety". The Commonwealth Medical Officer recorded that she had "a history of anxiety neurosis dating back to eighteen months". The necessary steps

were taken to retire the applicant on the ground of invalidity

from the date when she had last worked, 12 February 1979.

Following the applicant's retirement on the ground of invalidity the Commissioner considered whether the provisions

of sub-s.184(5) of the Superannuation Act 1976 (being provisions enacted by the Superannuation Acts Amendment Act 1978) were applicable to her circumstances. He concluded that they were applicable and issued a benefit classification certificate accordingly. That decision was confirmed upon reconsideration by the Commissioner under sub-s.154(4) and the confirmed decision was subsequently reviewed by the Tribunal

with the result to which reference has already been made.

On the hearing of the appeal counsel for the applicant conceded that he must accept the finding of the Tribunal that

the applicant had "furnished false information" in connection

with her medical examination under the Superannuation Act 1922 (which may, for convenience be referred to, as it is in the Superannuation Act 1976, as "the superseded Act"). His primary submission was that, on its proper construction, sub-s.184(5) had no application to the applicant or to persons in her situation. He put alternative submissions on the basis that his primary submission was not accepted. He contended that the Tribunal had erred in holding that the condition which would have been specified in the benefit classification certificate that the Tribunal was satisfied would have been in force in respect of the applicant immediately before her retirement had she not furnished false information at her medical examination on 27 July 1972 was properly characterised as a "mental condition" within the meaning of that expression in the Act. It was also submitted that, in reaching that conclusion and the further conclusion that the incapacity which was the ground for the applicant's retirement was substantially contributed to by the mental condition so found, the Tribunal proceeded ina

manner which denied to the applicant natural justice.

The submission that sub-3.184(5), on its proper construction, had no application to the applicant or to persons

in the same situation as the applicant involved, inter alia, a

submission that the legislative scheme constituted by the

Superannuation Act 1976 and the Superannuation Amendment Act 1976 (as amended by the Superannuation Acts Amendment Act 1978)

depended in point of constitutional validity, at least in part, on s.51(xxxi) of the Constitution. It was said that to read sub-s.184(5) as applying to the applicant and to persons ina similar situation, would result in the scheme effecting an acquisition of property on other than just terms. It was then said that. in accordance with s.15A of the Acts Interpretation Act 1901, the law should be read so as not to exceed the

Although logically this argument should be considered

first, we propose to delay consideration of it until later in

The provisions of sub-s.184(5) of the Act are central to the arguments presented to the Court. They are, as the Tribunal correctly stated, both complex and obscure and they

are in urgent need of re-drafting. It will be necessary to set

out the provisions which are relevant to this appeal and then to attempt to understand them and their purpose but before doing so some reference should be made to the legislative

At the time the applicant was accepted as a contributor to the Superannuation Fund the relevant statutory

provisions were contained in the Superannuation Act 1922-1971.

The Superannuation Fund. into which were to be paid the contributions of employees accepted as contributors thereto and certain payments by the Commonwealth under the Act, was established by s.8, a provision within Part II. Part III made

provision for the payment of contributions by those accepted as contributors to the Fund and by the Commonwealth while Part IV

provided for the payment of pensions and other benefits out of

the Fund. Section 48B should be noticed. It provided -

(a) within three years after the obligation of a contributor to contribute to the Fund under Part III of this Act came into existence, the contributor dies or is retired on the ground of invalidity

or physical or mental incapacity to perform his duties;

(b) the Board is satisfied that the death, invalidity or incapacity was caused, or substantially contributed to, by a physical or mental condition that, to the knowledge of the contributor, existed at the time when he underwent the medical examination referred to in sub-section (1) or sub-section (2) of section five, or sub-section (2) of section seventy-nine, of this Act; and

(c) the contributor did not disclose the existence of the condition to the person who made the examination or made or furnished a false or misleading

statement to that person in respect of the condition,

pension is not payable to or in respect of the contributor but there is payable to him or to his personal representatives, as the case may he, an amount equal to the amount of the contributions paid by him under this Act."

Section 75 within Part V established the Provident Account into which were to be paid ail contributions by employees accepted as contributors to that Account and payments by the Commonwealth under Part V. That Part of the Act also provided for the making of contributions to the Account and for the payment thereout of benefits. The benefits payable out of

the Provident Account were lump sum payments calculated, in

most cases, by reference to the amount of the contributions to the Account made by the employee. Section 83A made provision in relation to contributors to the Provident Account similar to that made by section 48B in relation to contributors to the Superannuation Fund except that the sum that was payable to a

contributor to the Provident Account was an amount equal to the

amount of his contributions together with compound interest thereon. Although the Provident Account formed part of the Superannuation Fund (s.75), it is convenient to refer to it as

By virtue of 3.5 an employee was not permitted to contribute to the Superannuation Fund or the Provident Account unless he had undergone a medical examination as a result of which the Superannuation Board constituted by the Act was satisfied that his health and physical fitness were such as to justify his being accepted as a contributor to the Superannuation Fund or to the Provident Account. Under s.81 a contributor to the Superannuation Fund could, in certain circumstances, elect to become a contributor to the Provident

In 1976 the Superannuation Act 1976 was passed. It came into operation on 1 July 1976 ("the commencing day"). Its purpose was to establish a new superannuation scheme for persons employed by the Commonwealth and for certain other persons. A body by the name of the Superannuation Fund Investment Trust anda Fund to be known as the Superannuation Fund were established (s.28 and sub-s.40(1)). The uninvested moneys of the Fund established by the superseded Act ("the existing Fund") became moneys of the new Fund, the investment assets of the existing Fund became assets of the new Fund and the investment liabilities of the Superannuation Board established under the superseded Act became liabilities of the Superannuation Fund Investment Trust (s.171). Under the new

legislation there was nothing corresponding to the Provident

Superannuation Fund or the Provident Account established under

the superseded Act and who had not retired before 1 July 1976 became liable to pay contributions in accordance with Part IV of the Superannuation Act 1976 and on their death or retirement benefits were payable in accordance with Part V. The obligation to make contributions under the superseded Act came to an end and any entitlements to pension or other benefits

provisions both of the Superannuation Act 1976 and the

amendments made to them by the Superannuation Acts Amendment Act 1978 to which reference will hereafter be made, it is convenient to adopt certain shorthand expressions. The statutory provisions refer to the failure of a person to

furnish any information required to be furnished by him and to

the furnishing of false information. These two concepts will be referred to compendiously as the furnishing of false information. The provisions also refer, in relation to a person, to "the physical or mental condition or conditions which, in the opinion of the Commissioner, caused, or substantially contributed to, the death or the incapacity which was the ground for his retirement on the ground of invalidity". It will be convenient to shorten that expression to "the

Under the superseded Act persons who, by reason of a physical or mental condition, were considered unlikely to continue as eligible employees until maximum retiring age could be accepted as contributors to the Provident Account with consequentially limited benefits payable on death or

retirement. Section 16 of the Superannuation Act 1976,

however, introduced the concept of a benefit classification certificate. By virtue of the section a person who, after the

commencing day, proposed to become, or became, an eligible

employee was to undergo such medical examination as_ the

Commissioner required. The Commissioner was obliged to issue a benefit classification certificate if he was of opinion, after considering the report of the result of such medical examination, that the person was not likely, by reason of or for a reason connected with a physical or mental condition referred to in the medical report, to continue to be an eligible employee until be attained his maximum retiring age. The certificate was to specify the relevant physical or mental condition (sub-s.16(4)). Provision was made for the revocation

Sub-section 16(10) made provision, in the circumstances there set out, for the issue of a henefit

classification certificate after an employee had died or ceased to be an eligible employee by reason of retirement on the

ground of invalidity and deemed such certificate to have been in force at the time of the employee's death or retirement. Sub-section 16(11) dealt with the situation where the Commissioner was satisfied that. at or in connection with a medical examination which the person was required to undergo under s.16, the person furnished false information. The sub-section postulated that the person had ceased to be an

eligible employee by reason of death or retirement on the ground of invalidity, that his period of contributory service was less than 20 years, that at the time he ceased to be an

eligible employee he had not attained his maximum retiring age and that either -

(a) a benefit classification certificate was not in force in respect of him at the time he ceased to be an eligible

(b) such a certificate was in force in respect of him at that time but it did not specify the condition causing death or retirement. In such a case, if the Commissioner was also satisfied that, if the person had not furnished false information, there would

have been in force in respect of hima benefit classification

certificate specifying the condition causing death or retirement or a physical or mental condition connected with that condition, he was obliged to issue a benefit classification certificate specifying that condition. Such certificate was to be deemed to have been in force in respect

of that person at the time of his death or retirement.

Section 66 provided for the payment of benefits where a person ceased to be an eligible employee by reason of retirement on the ground of invalidity before attaining his maximum retiring age. Sub-section 66(2) provided for the case where there was in force in respect of the person a benefit classification certificate and the Commissioner was of opinion

that the incapacity which was the ground for his retirement was

caused, or was substantially contributed to, by a physical or

mental condition specified in the certificate or by a physical

or mental condition connected with such a condition.

Part XII of the Act was headed "Transitional Provisions", the provisions contained therein operating to allocate the existing Fund among persons who were pensioners under the superseded Act and contributors to that Fund who were to become contributors to the newly established Fund. Division 4 within that Part dealt with existing contributors. Section 184 within that Division dealt with medical examinations and benefit classification certificates. Its evident purpose was to equate, as far as possible, the situation of those who had been contributors to the Superannuation Fund or the Provident

Account under the superseded Act and had become contributors to the newly established Fund to the situation of new employees

contributing to that Fund. It began by providing that, subject

to sub-s.184(2), 3.16 did not apply to an existing contributor, that is to say a person who had been a contributor to the Superannuation Fund or the Provident Account under the superseded Act. Sub-section 184(2) provided that, for the

purposes of the Act, there was to be deemed to be in force, in

respect of an eligible employee to which the sub-section applied, a benefit classification certificate issued under sub-s.16(4) specifying the physical or mental condition by reason of which the Superannuation Board did not accept the person as a contributor under Part III of the superseded Act.

who was an existing contributor and who, immediately before the commencing day, was (otherwise than by reason of an

election under s.81 of the superseded Act) a contributor to the Provident

whose period of contributory service on the commencing day would have been less than 20 years if he had ceased to be an

an eligible employee who is an existing contributor (whether or not he was, immediately before the commencing day, a contributor to the Provident Account established under the superseded Act) has ceased to be an eligible employee by reason of death or retirement on the ground of invalidity;

his period of contributory service is less than 20 years and, at the time he ceased to be an eligible employee, he had not attained his maximum retiring age;

a benefit classification certificate was not, by virtue of sub-section (2), deemed to have been in force in respect of him on the commencing day or, ifa

benefit classification certificate was, by virtue of sub-section (2), deemed to

have been in force in respect of him on the commencing day -

in respect of him at the time he ceased to be an eligible employee; or

(ii) the certificate was in force in respect of him at that time but there was not specified in the certificate the physical or mental condition or conditions which, in the opinion of the Commissioner, caused, or substantially contributed to, the

death or the incapacity which was the ground for his retirement on

the ground of invalidity; and the Commissioner is satisfied -

(i) that, at or in connexion with a medical examination which the person was required to undergo by virtue of section 5 of the superseded Act, the person failed to furnish any information required to be furnished by him or furnished false information; and

(ii) that, if the person had not failed to furnish that information or had not furnished false information, he would, immediately before the commencing day, have been a contributor to the Provident Account established under the superseded Act or, if he was, immediately before that day, a contributor to the Provident Account, there would, by virtue of sub-section (2), be deemed to have been in force in respect of him at the time he

ceased to be an eligible employee a benefit classification

certificate in which the physical or mental condition or conditions

referred to in paragraph (c), or a physical or mental condition connected with that condition or those conditions, would have been deemed to have been specified, the Commissioner shall issue a benefit classification certificate in which the condition or

conditions referred to in paragraph (c) is or are specified and, for the purposes of this Act, the certificate shall be deemed to have been in force in respect of that person at the time of his death or retirement."

Under that sub-section the Commissioner was obliged in avariety of circumstances to issue a benefit classification certificate specifying the condition causing death or retirement. To justify the issue of the certificate it was necessary that the eligible employee had been a contributor to the Superannuation Fund or the Provident Account under the superseded Act and was a contributor to the newly created Fund, that he had ceased to be an eligible employee by reason of

death or retirement on the ground of invalidity, that his

period of contributory service was less than 20 years and that,

at the time he ceased to be an eligible employee, he had not attained his maximum retiring age. In addition, one or other

(a) a benefit classification certificate was not, by virtue of sub-section 184(2), deemed to have been in force in respect of the employee on the commencing day;

(b) a benefit classification certificate was so deemed to be in force in respect of

(c) a benefit classification certificate was so deemed to be in force in respect of him on the commencing day and was in force at the time he ceased to be an eligible employee but there was not specified in the certificate the condition causing death or retirement.

If the employee's situation fell within the above requirements there were further hurdles to be surmounted before the Commissioner's power to issue a benefit classification certificate would come into operation. The Commissioner was to be satisfied that, at or in connection with a medical examination required by virtue of s.5 of the superseded Act,

the employee furnished false information and either -

(a) that, if he had not furnished that false information, the employee would, immediately before the commencing day,

(b) that, if he was immediately before that date a contributor to the Provident

Account, there would, by virtue of sub-s.184(2), be deemed to have been in force in respect of him at the time he

benefit classification certificate in which the condition causing death or retirement, or a physical or mental condition connected with that condition would have been deemed to have been

The provisions of sub-s.184(2) deeming benefit classification certificates to be in force were expressed to apply only to persons who were, in fact, immediately before the commencing day contributors to the Provident Account established under the superseded Act and who had become such

otherwise then by reason of an election made under s.81 of that

Act. Sub-section 184(3) was not so limited. It was capable of an operation in relation to a person who immediately before the commencing day was a contributor either to the Superannuation Fund or to the Provident Account under the superseded Act. It, therefore, dealt with cases where a benefit classification certificate was deemed to be in force under sub-s.184(2) and

cases in which that deeming provision could have no operation.

Its evident purpose was to assimilate the position of those where no appropriate benefit classification certificate was deemed to be in force at the date the person ceased to be an eligible employee to the cases where such a certificate was

In order to achieve that result para.184(3)(d) (ii) required the Commissioner to address two questions. The first was whether, if the person had not failed to furnish the false information, he would, immediately before the commencing day, have been a contributor to the Provident Account. The second was whether, if he had then been a contributor to the Provident Account, there would, by virtue of sub-s.184(2) be deemed to have been in force in respect of him at the time he ceased to be an eligible employee a benefit classification certificate specifying the condition causing death or retirement. Neither of those questions required that the person had, in fact, been a contributor to the Provident Account - indeed, to the

Although the legislative intention which s.184 sought to effect is clear enough, the approach embodied in that provision appears to have proved unworkable, doubtless because its operation depended upon discovering the mental or physical condition by reason of which the Superannuation Board did not

accept the person as a contributor to the Superannuation Fund

established by the superseded Act. The Board had, however, not

been in the habit of expressly recording such information.

amendments made by the Superannuation Acts Amendment Act 1978 which must now be considered. By that Act s.16 of the

Superannuation Act 1976 was amended and 3.184 was repealed and

a new section inserted in its stead. Although s.16 was amended

in a number of respects it is sufficient for present purposes

to note that sub-s.16(11) was omitted anda new sub-section

(a) a person ceases to be an eligible employee by reason of death or retirement on the ground of invalidity;

{b) his period of contributory service is less than 20 years and, on the day on which he ceases to be an eligible employee, he has not attained his

(c) a benefit classification certificate is not in force in respect of the person immediately before his death or retirement or, if a benefit classification certificate is in force in respect of him at that time, the Commissioner is not of the opinion that the death or incapacity which was the ground for his retirement was caused, or substantially contributed to, by a physical or mental condition or conditions of the person specified in the certificate, or by a physical or Mental condition or conditions connected with such a condition or such conditions; and

(d) the Commissioner is satisfied - (i) that, at or in connexion witha

medical examination which the person was required to undergo

under this section, the person failed to furnish any information required to be furnished by him or furnished false information; and

(ii) that, if the person had not failed to furnish that information or had not furnished that false information, there would have been in force in

respect of the person, immediately before his death or retirement, a benefit

classification certificate in which there would have been specified the physical or mental condition or conditions which caused, or substantially contributed to, the death or retirement, or a physical or mental condition or conditions connected with such a condition er such conditions,

the Commissioner shall issue in respect of the person a benefit classification certificate in which

there is or are specified the physical or mental condition or conditions of the person which, in the opinion of the Commissioner -

(e) in a case where a benefit classification certificate is in force in respect of the person at the time he dies or retires - would have been the physical or mental ondition or conditions of the person specified in the certificate at that time; or

(f) in any other case - would have been the physical or mental condition or conditions of the person specified, at the time the person dies or retires, in the benefit classification certificate that would have been in force in respect

if the person had not failed to furnish that information or had not furnished that false information and, for the purposes of this Act, the certificate shall be deemed to have been in force in respect of the person immediately before his death or retirement."

this appeal is to be resolved, it is desirable that their text

"184.(1) This section applies to a person who is, or at any time has been, an existing contributor other than -

previously ceased to be an eligible employee by reason of retirement on the ground of invalidity, being an existing contributor to whon, upon his so ceasing, invalidity benefit was payable in accordance with section 69, 72 or 73; or

an existing contributor who had previously ceased to be an eligible

employee otherwise than by reason of retirement on the ground of invalidity.

a person to whom this section applies who, immediately before the commencing day, was (otherwise than by reason of an election made under section 81 of the superseded Act) a contributor to the Provident Account ceases to be an eligible employee by reason of death or

his period of contributory service is less than 20 years and, on the day on which he ceases to be an eligible

employee, he has not attained his maximum retiring age; and

the Commissioner is of the opinion that the death of the person or the incapacity which was the ground for the retirement of the person was caused, or was substantially contributed to -

(i) by the physical or mental condition of the person that was relevant for the purposes of the superseded Act or, if there was more than one such condition, by those conditions or one or more of those conditions; or

(ii) by a physical or mental condition or conditions of the person connected with the physical or mental condition of the person that was relevant for the purposes of the superseded Act or, if there was more than one such condition, with those conditions or one or more of those conditions,

the Commissioner shall issue in respect of the person a benefit classification certificate in which there is or are specified the physical or mental condition or conditions of the person that was or were relevant for the purposes of the superseded Act and, for the purposes of this Act, the certificate shall be deemed to have been issued under sub-section 16(4) and to have been in force in respect of the person immediately before his death or retirement.

(a) a person to whom this section applies (whether or not he was, immediately before the commencing day, a contributor to the Provident Account) ceases to be an eligible employee by reason of death or retirement on the ground of invalidity;

(b) his period of contributory service is less than 20 years and, on the day on which he ceases to be an eligible

employee, he has not attained his maximum retiring age;

(c) the person was, immediately before the commencing day, a contributor to the Fund or, if the person was, immediately before the commencing day, a contributor to the Provident Account, the Commissioner is not of the opinion that

the death of the person or the incapacity which was the ground for the

retirement of the person was caused, or was substantially contributed to -

(ii) by a physical or mental condition or conditions of the person connected with the physical or mental condition of the person that was relevant for the purposes of the superseded Act

or, if there was more than one such condition, with those

(1) that, at or in connexion with a medical examination which the person underwent for the purposes of the superseded Act, the person failed to furnish any information required to be furnished by him or furnished false information; and

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (354 paragraphs)

Cited By (1)