Solicitors for appellant: Murdoch Clarke Cosgrove and Drake

ZEEMAN J This is an appeal pursuant to the Retirement Benefits Regulations 1994 ("the Regulations"), reg107, against a determination of the Retirement Benefits Fund Board whereby it declined to accept an election purportedly made by the appellant pursuant to the Regulations, reg99(1). The Attorney-General has intervened in the proceedings pursuant to the Crown Proceedings Act 1993, s16(1)(a).

2. The facts are not in issue. The appellant was employed as a school teacher with the Education Department from 28 May 1963 until he retired on 18 June 1996. Until his retirement the appellant contributed to the Retirement Benefits Fund. In January 1978 the appellant was appointed to the position of senior master in charge of technical subjects at the Triabunna District High School. He remained employed at that school until his retirement. He then held the position of advanced skills teacher, level three. On numerous occasions the appellant acted as principal or assistant principal of the school. In particular, he acted as principal from 19 June 1995 until 25 January 1996 whilst the holder of that office was on sick leave. By reason of so acting, the appellant was paid a higher duties allowance at the rate of $9,166 per annum from 19 June 1995 until 31 December 1995.

3. The appellant's terms of employment were governed by the Teaching Service (Tasmanian Public Sector) Award 1995, made by the Australian Industrial Relations Commission. Paragraph 6 of the award provided for the rates of salary payable to persons employed in the Education Department by reference to various classifications and other criteria. Paragraph 7 provided that, in addition to salary at the applicable rate, allowances of various descriptions were to be paid in particular circumstances. The first type of allowance provided for, described as a "higher duty allowance", was payable to an employee who, at the request or direction of the employer, performed temporarily the duties of an employee with a higher classification. The parties accept that the payments by way of a higher duty allowance paid to the appellant were paid pursuant to this provision of the award.

4. On 2 January 1996 the appellant gave to the respondent a notice in the following terms:

"I hereby elect, pursuant to Regulation 99, to continue payment

of contributions, applicable to my december (sic) 1995 salary

level of $54512 notwithstanding that I expect to return to my

substantive salary of $45254 from the Pay Period ending 10 Jan

1996."

5. The question for determination is whether that notice constituted an election under reg99(1). The Board determined that it was not. It so determined because it was of the view that it was not competent for the appellant to make an election under reg99(1) unless the respondent first made a relevant determination under reg95. The Board has not made any such determination under reg95 and, indeed, has not been asked by the appellant to make it.

6. The relevant provisions of the Regulations provide as follows:

"3 (1) In these Regulations ...

'salary' includes wages, allowances and discretionary benefits

paid or payable to a person as an employee who has the option of

receiving the amount as salary or in another form of benefit and

(a) any amount paid by an Agency to a complying superannuation

fund on behalf of an employee; and

(b) any amount paid for, or value assessed of non-salary

benefits received by, an employee who has the option of

receiving the amount as salary or in another form of benefit

but does not include

(c) any bonus or payment for special circumstances of an

occasional nature; or

(d) any payment in respect of travelling or other work related

expenses; or

(e) any payment in respect of accrued recreation leave or long

service leave; or

(f) any wages, allowances or discretionary benefits in respect

of which contributions have not been paid by a person while an

employee;"

"95 (1) If a question arises as to

(a) whether any payment periodically received by an employee is

to be regarded as part of the employee's salary for the purposes

of these regulations; or

(b) the rate of an employee's salary at any particular time; or

(c) whether any payment received by an employee is to be

regarded as the payment of an allowance; or

(d) the nature or length of an employee's service the question

is to be determined by the Board.

(2) For the purpose of subregulation (1)(b) the Board is not to

make a determination which has retrospective effect."

"99 (1) A contributor, other than an amalgamated contributor

whose salary is reduced, by notice in writing to the Board, may

elect that this regulation is to apply to the contributor in

respect of the relevant period and, on the making of the

election

(a) the contributor's pension or lump sum entitlement is to be

calculated as if the contributor's salary had remained

unaltered; and

(b) the contributor is to continue to pay the same

contributions to the Fund during the relevant period as the

contributor was paying immediately before the reduction took

effect.

(2) For the purposes of subregulation (1), a contributor must

not elect to include as salary any allowance previously

received, unless otherwise determined by the Board under

regulation 95.

(3) For the purposes of subregulation (1), the relevant period

is the period commencing on the day on which the reduction in

the contributor's salary took effect and ending on

(a) the day on which, by reason of a subsequent increase of

salary, his or her salary becomes equal to or greater than the

salary payable immediately before the reduction took effect; or

(b) the day of retirement or death

whichever happens first."

7. The effect of an election under reg99 made by a contributor in respect of whom the "relevant period", as defined by reg99(3), ends on the day of retirement or death is that substantially higher benefits are then payable in respect of that contributor because, in part, those benefits are based on the level of salary. Regulation 99 enables benefits to be calculated by reference to a salary higher than the salary actually received by the contributor.

8. Central to the argument addressed is the proper construction of reg99(2). All counsel recognised that this subregulation suffers from the following drafting defects:

1 Although it purports to prohibit a contributor from electing

to include as salary any allowance, reg99(1) does not provide

for an election in such terms.

2 The reference to a determination under reg95 appears to

proceed on the erroneous assumption that that regulation confers

a power to deem a payment be salary or an allowance,

notwithstanding that it is not. It may be that it was intended

that reg99(2) augment the powers conferred by reg95(1).

9. It should also be noted that reg99(1) is not well drafted. Read literally, it applies to any contributor, other than an amalgamated contributor, whether or not that contributor's salary has been reduced. It seems that the second comma has been misplaced and that it should appear after "contributor" (firstly appearing) rather than after "reduced". However, read together with reg99(3), it is clear that reg99(1) only applies to a contributor, other than an amalgamated contributor, whose salary is reduced because, unless there has been such a reduction, there can be no "relevant period" as defined by the former subregulation.

10. The primary argument advanced by the appellant may be shortly stated. He submits that:

1 the higher duty allowance falls within the definition of

"salary" contained in reg3(1);

2 upon the cessation of the payment of the higher duty

allowance, the salary of the appellant thereby was reduced;

3 the reduction gave rise to the right to make an election;

4 an election was made in the terms of reg99(1); and

5 reg99(2) is irrelevant because the election made did not, and

was not required to, "elect to include as salary any allowance".

11. The difficulty which stands in the way of accepting the last of those submissions is that it would have the result that reg99(2) would have no operative effect. Regulation 99(2) only applies for the purposes of reg99(1). The latter subregulation does not provide for any form of election by which a contributor expressly elects to include an allowance as salary. It is a cardinal rule of statutory construction that all words in a statute must be given some meaning and effect unless that is impossible. Unless it is impossible, reg99 must be construed so as to give reg99(2) operative effect (see Brown v C (1993) 2 Tas R 264 at 271 - 272).

12. Despite the drafting deficiencies, I consider the purpose and effect of reg99(2) to be sufficiently clear. It must be read in conjunction with reg99(1). Although the latter subregulation does not provide for an election to include an allowance as salary, it does provide for an election to be made on a reduction in salary (which, by virtue of the definition in reg3(1), includes certain allowances) which reduction, either wholly or in part, may be as the result of an allowance no longer being paid or being paid at a lesser rate. The effect of reg99(2) is that, to the extent that a reduction in salary is by reason of an allowance ceasing to be paid or being paid at a lesser rate, it is not a reduction in salary for the purposes of reg99(1). It follows that, if the higher duty allowance paid to the appellant was an allowance within the meaning of reg99(2), the appellant was not a person who was eligible to make an election under reg99(1).

13. Alternatively, the appellant submitted that the higher duty allowance was not an allowance within the meaning of reg99(2). The word "allowance" is not defined by the Regulations or the Act under which they were made. The word "allowance" may connote different things in different contexts. In Mutual Acceptance Co Ltd v Commissioner of Taxation (Cth) [1944] HCA 34; (1944) 69 CLR 389, Dixon J noted, at 402:

"'Allowance' is one of many words which take their meaning from

a context rather than affecting or controlling the meaning of

other words of the context in which they occur. For, considered

alone and at rest rather than at work with other words, it means

the allowing of a thing or a thing allowed. It is only by its

application that you discover the kind of thing in mind."

14. The word "allowance" commonly is used to describe payments of a variety of descriptions to which employees are entitled pursuant to industrial awards and agreements. The entitlement of a public servant to an additional payment whilst performing the duties of an office higher than the office held by that public servant has long been provided for (eg, Public Service Act 1925, s22(3)). Both in industrial awards and in common parlance such a payment is described as a higher duties allowance. The word "allowance", as it appears in reg99(2), is to be construed upon the basis that it includes those payments which are known and described as allowances in the context of employment and industrial relations. Where an award makes provision for the payment of what it describes as an allowance in addition to salary, it is an allowance within the meaning of reg99(2). The draftsman of reg99 may be assumed to have proceeded upon the basis that in the normal course of events the terms of employment of contributors would be governed by an industrial award or agreement or by regulations and that the terms provided for would include provision for the payment of sums of money described as allowances in addition to salary. That approach is consistent with that adopted in Scott v Sun Alliance Australia Ltd [1993] HCA 46; (1993) 178 CLR 1. The higher duties allowance paid to the appellant was an allowance within the meaning of reg99(2).

15. It follows that, on my construction of reg99, the appellant was not a person who could make an election under reg99(1). The Board's decision was correct. The appeal is dismissed.