Repatriation Commission v. Hall, H.S. & Anor [1988] FCA 128

Administrative Appeals Tribunal Act 1975 (Cth), the appeal is

brought with respect to, and 1s limited to, points of law.

The matter arose under legislation substantially identical to that appearing in ss.6AD and 6AE of the Social

Security Act 1947 (Cth), provisions which were considered by a

Full Court of this Court in Secretary, Department of Social

Security v. Copping (1987) 73 A.L.R. 343. Relevant provisions

of the Veterans' Entitlements Act 1986 (Cth)("the Act")

(a) the annual rate of a service pension, a wife's service pension or a carer's service pension payable to a person is calculated under or by reference to paragraph 47(5)(b) or 48(4)(b);

(b) section 52 does not apply in relation to the person or the Commission determines in writing that the application of section 52 in relation to the person should, for the purposes of this section, be disregarded;

(c) any of the property of the person or, if the person is a married person, of the person and the person's spouse is property that the person, or the person or the person's spouse, as the case may be -

(i) cannot sell or realize or could not reasonably be expected to sell or realize; and

(ii) cannot use as security for borrowing or could not reasonably be expected to use as security for borrowing; and

(d) the Commission is satisfied that the person would suffer severe financial hardship if this section did not apply in relation to the person,

the Commission shall determine in writing that this section applies in relation to the person.

this section applies in relation to a person, the annual rate of the service pension, wife's service pension or carer's service pension payable to the person shall, notwithstanding sections 47 and 48, be determined in the following manner:

the value of any of the property of the person and, if the person is a married person, of the person's spouse, that is property referred to in paragraph (1)(c) shall be disregarded;

there shall be deducted from the maximum annual rate of service pension, wife's service pension or carer's service pension that would be payable to the person apart from the operation of sub-section 47(4) or (5) or 48(4), as the case requires (in this section referred to as the 'maximum rate'), an amount per annum equal to the sum of -

(i) the annual rate of income of the person (other than income from property of the person or of the person's spouse that is not property referred to in paragraph ({1)(c) or property to which paragraph 50(1){a) applies); and

(ii) an amount per year equal to $26 for each $250 of the value of the property of the person (other than property referred to in paragraph (1)(c) or property to which paragraph 50(1){a) applies).

the annual rate of service pension, wife's service pension or carer's service pension applicable to a person under sub-section (2) should, having regard to the annual rate of income that could reasonably be expected to be derived from, or produced with the use of, property of the person or the person's spouse that is property referred to in paragraph (1)(c), be reduced, the Commission may direct that the annual rate of service pension, wife's service pension or carer's service pension payable to the person be reduced by such amount per year as the Commission determines in writing.

person who is eligible to receive a service pension, a wife's service pension or a carer's service pension

where the value of the property of the person exceeds

(a) in the case of an unmarried person to whom sub-paragraph 50(1)(a)(i) applies - $70,000;

(b) an the case of any other unmarried person - $120,000;

(c) in the case of a married person to whom sub-paragraph 50(1)(a)(ii) applies ~ $50,000; or

(d) in the case of any other married person - $75,000,

and the amount of that pension reduction amount is an

amount equal to that excess (disregarding any part of that excess that is not a multiple of $250)."

The case involved trust property held in a discretionary - trust created by deed dated 30 June 1973 called the "Harry

The firstnamed respondent, Mr H.S. Hall, 1s an ex-serviceman who, together with his wife, the secondnamed respondent, owned a rice growing property, known as Murray Pine, situated near Deniliquin, consisting of 286.6 hectares acquired as a Closer Settlement Lease and held on Perpetual Lease. Murray -

Pine has on it a dwelling house occupied by the respondents.

The respondents, with the aid of an advance from the Rural Assistance Board, purchased an adjacent property known as Pine View consisting of 108 hectares. A dwelling was erected on

1.065 hectares which is known as Lot 3 and is in the names of the

The case before the Tribunal proceeded on the basis that

the balance of Pine View, being 107.7 hectares and known as Lot

4, was part of the property of the Trust, which also included what was formerly the livestock, farming equipment and stock in

The respondents leased Murray Pine to the Trust and Murray Pine and Pine View are worked as one property by the respondent's son, Roger, under a sharefarming agreement with the

Trust. Roger and his son live in the dwelling on Lot 3 of Pine

There were still substantial amounts owing by the respondents in respect of advances obtained by them to purchase and finance the operation of the properties. A number of the expenses of operating the properties were met out of the profits of the Trust. The Tribunal concluded that "it appears the (respondents) are really producing a little more from the property than the fair market rental" as fixed by an independent

The trustee of the Trust is Mayrung Nominees Pty Limited of which the respondents were the sole directors and the respondents, their children and their grandchildren were the principal possible beneficiaries. The net profit of the Trust for the year ended 30 June 1985 was $3,194 after payment of

These facts before the Tribunal raised like issues to

those considered in many decisions of the Administrative Appeals

Tribunal. In Re Williamson and Repatriation Commission (1986) 10

19, a tribunal had held that, in considering whether a

farmer could reasonably be expected to sell or realise a farm

property and what income could reasonably be expected to be

derived from the property, it was proper to have regard to the

circumstances of the farmer and of other members of his family

living on or deriving income from the land. Other decisions of

the Administrative Appeals Tribunal subsequently took the same

The propriety of this view was considered by this Court

in Secretary, Department of Social Security v. Copping, cited

above, which held it to be correct in law. The decision

considered the operation of s.6AD(3) of the Social Security Act

1947, the equivalent of s.53(3) of the Act. Jenkinson J., with

whom Foster and Burchett JJ. agreed, said at pp.346-8:-

"The tribunal's reasons in writing for its decisions make it clear that in reasoning to its determination, for the purposes of s.6AD(3), of 'the annual rate of income that could reasonably be expected to be derived from, or produced with the use of!' each respondent's interest in the farm land or the interest of that respondent's spouse in that farm land, the tribunal assumed that the only person to be considered as a possible payer of income in respect of occupation of the farm land or in respect of use of the farm land was the respondents' son, Peter. It is also, I think, clear that, in considering what payment in respect of use or occupation Peter might make, the tribunal assumed that the relevant inquiry was what amount he would be able, without serious harm to his own economic interests, to pay in all the circumstances of his own and his family's economic activities.

These assumptions accorded with reasons for decision of the tribunal in Re Butler and Secretary, Department of Social Security (s.85/94). After hearing contradictory submissions, the tribunal in that case had stated that the determination of what 'could reasonably be expected to be derived from, or

produced with the use of, property' for the purposes of s. 6AD(3) required a consideration, not only of what could be derived or produced in an open market between strangers dealing at arm's length, but also of what should be considered reasonable in all the circumstances, personal as well as economic, as between the particular applicant for a pension and those (usually relatives) who were in fact interested in occupying or using the property. In this case the tribunal adopted the same understanding of what the words just quoted from sub-section 6AD(3) required, and the applicant's representative on the hearing of the review acquiesced in that course. Upon that construction of the words, the tribunal's exclusive concern with Peter as the user and occupier of the farm land resulted naturally from a consideration of the history of his relations with his parents and the history of his association with the land. However, counsel for the applicant on the hearing of this appeal advanced the submission that, on their proper construction, those words designate a reasonable expectation of what could be derived or produced if economic exploitation of the property were sought without regard to personal considerations or feelings.

«.. the policy which underlies the provisions of the section, considered as a whole, and the use of the word 'reasonably', suggest strongly, in my opinion, that in s. 6AD(3) the words under consideration direct inquiry as to what annual rate of income could reasonably be expected to be derived, in all the circumstances relevant to a judgment as to what might be reasonable. I think that the word 'reasonably', in the context which sub-section 6AD(3) supplies, directs the Secretary's attention to, inter alia, all the circumstances, including the personal relations of those concerned in the property, which in his judgment might reasonably be taken into account by "the person' or 'the person's spouse', as the case may be, in deciding how the property was to be exploited to produce income. And he is required, in my opinion, to have regard to the annual rate of income that could reasonably be expected to be derived from, or produced with the use of, that property in all the circumstances, including those circumstances to which I have just referred. The construction suggested does not direct inquiry merely as to the annual rate of income likely in fact to be derived from, or produced with the use of, the property by 'the person' or 'the person's spouse', as the case may be, but rather inquiry as to what annual rate of income the Secretary, or the Administrative Appeals Tribunal on a review, considers would be likely to be derived from, or produced with the use of, the property by that person if that person made

decisions concerning the exploitation of the property which in all the circumstances, including personal circumstances, the Secretary, or the tribunal on review, considered reasonable."

Mr B.J. Sully QC, senior counsel for the applicant,

challenged the view taken in Secretary, Department of Social

Security v. Copping, and-submitted that that decision did not

apply to the provisions of s.53 of the Veterans' Entitlements

Act but only to the provisions of the Social Security Act. However, having regard to the history of the legislation, and to the introduction of the assets test into both social security and repatriation legislation by the Social Security

and Repatriation (Budget Measures and Assets Test) Act 1984,

we are satisfied that the provisions in both the Social

Securities Act 1947 and in the Veterans' Entitlements Act 1986

with respect to the assets test should be given a like

Mr Sully submitted that s.53(1) of the Act was concerned only with the personal financial circumstances of the claimant for a pension. He submitted that the test of reasonableness did not take into account matters such as the circumstances of other members of the family who might be living on and deriving income from the farm property. In our opinion, if the legislation had intended to apply a financial test of that restricted character, it would have done so in clear terms. It did not do so. The tests prescribed in ss.53{1) and (3) specifically require that other circumstances shall be taken into account. When s.53 requires that a

decision be made as to whether the claimant for a pension

could not reasonably be expected to sell or realise an asset, it requires all matters that ought to bear upon the reasonableness of a decision to sell or realise to be taken into account. In doing so, the sub-section provides a separate and distinct test from the test of severe financial

hardship which the sub-section also prescribes. Moreover, in

Secretary, Department of Social Security v. Copping, the Court

rejected a like submission. It is not correct to say, as Mr Sully contended, that the whole emphasis of the legislation is upon the personal financial capacity of the applicant for a

In our opinion, the Tribunal was not obliged to characterize the factors which it took into account as personal and social on the one hand, and financial and economic on the other, and exclude the former from consideration. It was called upon to apply a very broad test, namely what the respondents could be reasonably expected to do, and was entitled to have regard to the whole of their

delivered 3 November 1987), an Administrative Appeals Tribunal described the test as subjective rather than objective. However, in our opinion, it is clearly an objective test. Though the test takes account of personal circumstances, it is not dependant upon the personal view of the claimant for a pension as to what should or what should not reasonably be

done. As was said by Jenkinson J. in Copping's case, the

decision as to what is or what is not reasonable 1s one for the Secretary, Department of Social Security, or by the Tribunal on review, though it is to be made after taking all relevant circumstances, including personal circumstances, into account. Among the relevant factors to be considered are the purpose or object of the assets test provisions and the aim of the legislation to ensure that pensions are not paid to those who can afford to maintain themselves. The test of reasonableness takes into account the public or community interest as well as the interests of the claimant for a pension and of other persons with whom the claimant is associated. In Re Williamson, cited above, a Tribunal specifically referred to elements of the public interest, as

In the present case, the Tribunal considered the application of the provisions of s.53(1), the equivalent of s.6AD(1) of the Social Security Act, and applied the principles we have mentioned. In the application of s.53(1) to this case, there were two issues to be considered. One was whether the subject property was property which Mr Hall or the "Harry Stewart Hall Family Trust", which the respondents controlled, could not reasonably be expected to sell or realise. The other was whether, if so, the respondents would suffer severe financial hardship 1f s.53 of the Act did not

Tribunal did not clearly distinguish between the two questions

it had to face. It is true that, neither in the reasoning nor in the order which the Tribunal made, were these two questions dealt with separately. Nevertheless, the Court must be careful not to look too critically at the words used by a busy Tribunal. The question which the court must resolve is whether, as a matter of substance, the Tribunal turned its

attention to, considered and dealt with the two issues raised

In the present case, we are satisfied that the Tribunal answered the two questions. The facts which bear upon the question whether a claimant for a pension could not reasonably be expected to sell or realise assets which he holds and the facts which bear upon the question whether the claimant would suffer severe financial hardship if s.53 did not apply may, in a particular case, be substantially the same, especially when the issue arises in relation to a farming property. Such properties tend to have a capital value out of proportion to the incomes which they produce. It is the commitment of the family to the land, the involvement of succeeding generations in the one property and the lack of a sufficient return from the property to support more than the one generation which leads so often to the conclusion that the elderly parents who own the farm property could not reasonably be expected to sell or realise the property and that they would suffer severe financial hardship if s.53 were not applied. Thus, in this case, the Tribunal found that:-

"The properties together will support one family only and that is at a somewhat meagre level."

As to the question whether Mr and Mrs Hall and the Trust could reasonably be expected to sell the properties and the other

"We also note in the case of Re Williamson the Commission conceded that Mr Williamson could not reasonably be expected to sell the farm now worked by his son. Although such concession was not made in the present case the principle is in our view transferable. It 1s this principle which is enunciated in the decision of President J.D. Davies J. and Mr Attwood in Re Williamson. Even if such principle was not applicable, the evidence in the present case supports the fact that in the current economic climate a sale of the properties would be difficult to achieve. It provides a livelihood for Roger Hall, the applicants' son, this being the only type of work for which he is skilled, and it provides a residence for the applicant which has been their family home for many years. While not a primary factor underpinning our decision, we nevertheless accept that people have a right to remain living in their normal social and geographical environment when they reach an age when they can no longer earn an income from their labours. In this case, being forced to sell the property would of necessity require the applicants to adapt to a different lifestyle in a different locality."

"Taking into account the circumstances in which the applicants are placed, and excluding Roger from having a financial responsibility to provide maintenance, we consider severe financial hardship has been established in this case and that a determination should be made that section 53 of the Act applies in relation to the applicants. We come to this conclusion acknowledging that the minutiae of the personal expenditure of the applicants is not known to the Tribunal. However, we know that the only income available to the applicants for the year 1984/85 was $3,194, being the net profit as shown in the profit and loss account of the Trust, supplemented by motor vehicle expenses, rates, electricity and telephone bills being paid by the Trust, and meat supplies being provided from their own property. Overall this still-infers a very meagre income, vastly below the poverty line."

We are satisfied that the Tribunal did as a matter of substance turn its attention to the issues which it had to

Mr Sully also attacked the finding of the majority of the Tribunal that Mr and Mrs Hall would suffer severe financial hardship 1£ s.53 did not apply. It was on this factual aspect that one member of the Tribunal dissented. Mr Sully submitted that there was no evidence on which the Tribunal could be satisfied that Mr and Mrs Hall would suffer severe financial hardship if s.53 of the Act were not applied in their favour. He submitted that Mr and Mrs Hall did not give detailed evidence as to their living conditions or

evidence that they were unable to acquire food or clothing or

It was, in our opinion, open to the Tribunal to find "severe financial hardship" on the evidence before it. We do not read this expression as requiring proof of destitution. The words must be read in the context in which they appear. The levels of pensions and benefits which the Veterans'

Entitlements Act and the Social Security Act provide and the

levels of income and assets which will bring about a reduction in the rate of pensions or benefits provide some guide to the level of income which, in Australia, 1s accepted as requiring the provision of government assistance. It would be wrong to read the assets test provisions as requiring destitution when

What is or what is not severe financial hardship is a matter to be resolved in each case by the Repatriation Commission and, on review, by the Administrative Appeals Tribunal. As Lord Brightman, with whom the other members of the House agreed, said in Puhlhofer v. Hillingdon London Borough Council [1986] 1 A.C. 484 at 518:-

"Where the existence or non-existence of a fact is left to the judgment and discretion of a public body and that fact involves a broad spectrum ranging from the obvious to the debatable to the just conceivable, it is the duty of the court to leave the decision of that fact to the public body to whom Parliament has entrusted the decision-making power save in a case where it is obvious that the public body,

consciously or unconsciously, are acting perversely."

Likewise, in Waterford v. Commonwealth of Australia

"A finding by the AAT on a matter of fact cannot be reviewed on appeal unless the finding 1s vatiated by an error of law. Section 44 of the AAT Act confers on a party to a proceeding before the AAT a right of appeal to the Federal Court of Australia 'from any decision of the Tribunal in that proceeding' but only 'on a question of law'. The error of law which an appellant must rely on to succeed must arise on the facts as the AAT has found them to be or it must vitiate the findings made or it must have led the AAT to omit to make a finding it was legally required to make. There is no error of law simply in making a wrong finding of fact.".

The majority of the Tribunal reviewed the evidence before them and came to the view that the income of Mr and Mrs Hall was low, "vastly below the poverty level". They found that Mr and Mrs Hall would suffer severe financial hardship if s.53 of the Act were not applied in their favour. We find no

error of law in their approach, having regard to the facts

counsel were agreed that the Tribunal's order be varied as

In order 2 by substituting '/direction' for 'recommendation'.

reduce the service pension of H.S. Hall or wife's service pension of J.E. Hall subject to any relevant change of circumstances of the veteran and spouse arising since the hearing before the Tribunal, it being noted that the Tribunal proceeded on the basis that no further distributions would be made from the H.S. Hall Family Trust otherwise than to the veteran and for his spouse while the veteran and/or his spouse is receiving a service pension, so that such a distribution would be a change of circumstances."

I certify that this and the 14 preceding pages are a true copy of the Reasons for Judgment herein of

Counsel for the Applicant: Mr B.T. Sully Q.Cc. with Mr J.S. Hilton

Solicitors for the Applicant: Australian Government Solicitor

Solicitors for the respondent: Australian Legal Aid Office