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Yorke and Secretary, Department of Defence [2010] AATA 655 (1 September 2010)

Administrative Appeals Tribunal

Yorke and Secretary, Department of Defence [2010] AATA 655 (1 September 2010)

Last Updated: 1 September 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 655

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/6159

Applicant

Respondent

DECISION

Date 1 September 2010

Place Canberra

Decision

The decision under review, to refuse a subsidy certificate to the Applicant under  section 16  of the  Defence Home Ownership Assistance Scheme Act 2008  (Cth), is affirmed.

.....................[sgd]...............
Professor RM Creyke, Senior Member

CATCHWORDS

DEFENCE – Defence service homes loan – subsidy certificate – eligibility of ‘rejoining member’ – service credit – Applicant did not perform ‘effective service’ under the  Defence Home Ownership Assistance Scheme Act 2008  (Cth) – prior receipt of subsidy – whether ‘exceptional circumstances’ exist – decision under review affirmed

 Defence Home Ownership Assistance Scheme Act 2008  (Cth)  ss 3 ,  5 ,  7 ,  8 ,  11 ,  14 ,  16 ,  17 ,  29 , 46 and  47 

Defence Home Ownership Assistance Scheme Regulations 2008 (Cth) regs 3, 8, 9 and 20

Defence Force (Home Loans Assistance) Act 1990 (Cth)

Defence Service Homes Act 1918 (Cth)

Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 53 ALD 277

Coco v R [1994] HCA 15; (1994) 179 CLR 427

Ho v Professional Services Review Committee No 295 [2007] FCA 388

Maan v Minister for Immigration and Citizenship [2009] FCAFC 150; (2009) 179 FCR 581

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Secretary of Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 66 ALD 147

Secretary of Social Security v Hulls (1991) 22 ALD 570

31 August 2010 REASONS FOR DECISION

Professor RM Creyke, Senior Member

1. Mr Yorke was a permanent member of the Royal Australian Navy (RAN) between 22 January 1974 and 2 April 2006. On 3 April 2006 he transferred to the Royal Australian Navy Reserves (Reserves). He had accrued paid leave for the period to early 2007.
2. While a permanent member of the RAN, Mr Yorke received subsidy assistance under the Defence Service Homes Act 1918 (Cth) under the Defence Service Home Loan Scheme. That subsidy was accessed for a period of 12 years and five months.
3. On 1 July 2008, the Defence Home Ownership Assistance Scheme Act 2008 (Cth) (Act) and the Defence Home Ownership Assistance Scheme Regulations 2008 (Cth) (Regulations) came into force. This legislative package is a new scheme and replaced the scheme under the Defence Force (Home Loans Assistance) Act 1990 (Cth) ('Old Scheme': reg 3)
4. On 6 May 2009, Mr Yorke lodged an application for a subsidy certificate pursuant to  section 14  of the  Defence Home Ownership Assistance Scheme Act 2008  (Cth) (Act). He pointed out in his application form that between 3 April 2006 and 26 January 2009 he was an Active Reserve member, but that during this period he had not completed effective Reserve service, that is, a minimum of 20 days of service in a financial year. Between 27 January 2009 and 30 March 2009, he had completed effective Reserve service.
5. On 18 May 2009, the Department of Veterans' Affairs (DVA) denied Mr Yorke a subsidy certificate because he did not have sufficient service credit under  section 46  of the Act. On 25 June 2009, Mr Yorke sought internal review of DVA’s decision. On 29 October 2009, the Defence Delegate confirmed DVA’s decision. On 23 December 2009, Mr Yorke sought review by the Tribunal of the reviewable decision.

LEGISLATION

6. The relevant legislation is found in the  Defence Home Ownership Assistance Scheme Act 2008  (Cth) (Act) and the Defence Home Ownership Assistance Scheme Regulations 2008 (Cth) (Regulations).

Section 3 – Definitions

authorisation day has the meaning given by section 57.

effective service , in relation to a person who is, or has been, a member of the Defence Force, means service in the Defence Force by the person that:

...

(b) in any case--is recognised as effective service in accordance with the regulations.

eligible has the meaning given by section 7.

service credit has the meaning given by section 46.

service year means a year prescribed by regulations made for the purposes of the definition of effective service in this section.

subsidy means:

(a) subsidy payable under this Act; or

(b) in paragraph (c) of step 2 of the method statement in subsection 46(1) (working out service credits) – subsidy payable under the Defence Force (Home Loans Assistance) Act 1990 or the Defence Service Homes Act 1918 .

subsidy certificate means a certificate given under Part 3.

Section 5 – When a person is a member of the Reserves

Membership of the Reserves

(1) For the purposes of this Act, a person who has been engaged (by enlistment or appointment) as a member of the Reserves at a particular time (the engagement time) is to be treated as a member of the Reserves until:

(a) the engagement ends; or

(b) during a service year:

(i) the engagement does not end; but

(ii) the person does not perform effective service as a member of the Reserves.

(2) If a person's membership of the Reserves ends under paragraph (1)(b) in relation to a service year, this Act applies to the person, and is taken to have applied to the person, as if he or she had:

(a) in the case of a person who was a member of the Reserves at the end of the previous service year--stopped being a member of the Reserves immediately after the end of the previous service year; or

(b) in any other case--not been engaged as a member of the Reserves at the engagement time.

Section 7 – Eligibility – who is eligible?

A person is eligible if the person is eligible as any of the following:

(a) a serving member (see section 8); ...

(d) a rejoining member (see section 11); ...

Section 8 – Eligibility – serving members

(1) A person is eligible as a serving member at a particular time (the eligibility time ) if, at that time, the person:

(a) is a member of the Defence Force; and

(b) has completed (whether before, on or after the commencing day) the relevant qualifying service period under subsection (2).

(2) The qualifying service period for a serving member is:

(a) if the member is, at the eligibility time, a member of the Permanent Forces – 4 years of effective service; and

(b) if the member is, at the eligibility time, a member of the Reserves--8 years of effective service. ...

(3) A person is not eligible as a serving member at a particular time if the person is eligible ... as a rejoining member (see section 11) at that time.

Section 11 – Eligibility – rejoining members

A person is eligible as a rejoining member at a particular time (the eligibility time) if the person:

(a) before, on or after the commencing day, stopped being a member of the Defence Force; and

(b) was eligible immediately before he or she stopped being a member; and

(c) before, on or after the commencing day, again became a member of the Defence Force within 5 years after the day on which the person stopped being a member; and

(d) is a member of the Defence Force at the eligibility time.

Section 14 – Application for subsidy certificate

(1) A person may apply to the Secretary for a subsidy certificate.

(2) An application must be in the approved form.

Section 16 – Decision to give subsidy certificate – general

Scope

(1) This section applies if a person applies for a subsidy certificate in accordance with section 14.

Decision to give, or to refuse to give, subsidy certificate

(2) The Secretary must give a subsidy certificate to the applicant if:

(a) section 17 ... applies; and

(b) ...

(i) the applicant has a service credit (see section 46); ...

(3) The Secretary:

(a) must refuse to give a subsidy certificate to the applicant if subsection (2) does not apply ...

Section 17 – Decision to give subsidy certificate – eligible applicants

(1) Subject to this section, the Secretary must give a subsidy certificate to the applicant if the Secretary is satisfied that the applicant:

(a) is eligible; and

(b) does not hold a subsidy certificate that is in force ...

Section 29 – When subsidy becomes payable – eligibility and service credits

The following conditions must be met:

(a) a subsidy certificate held by the subsidised borrower must be in force;

(b) the subsidised borrower must have a service credit under section 46.

Section 46 – Working out service credits

(1) Whether a person has a service credit at a particular time (the subsidy time) for the purposes of an entitlement period, and the length of time standing to the person's service credit, is worked out as follows.

Method statement

(2) Step 2 of the method statement in subsection (1):

(a) includes months during a previous entitlement period or periods; and ...

(c) includes months during which subsidy was paid (under this or another Act) whether or not the months are continuous.

Section 47 – Service credits--working out accrued subsidy periods

(1) A person's accrued subsidy period , at a particular time, is the period that applies to the person in accordance with the following table.

Effective service covered

(2) This section covers effective service in the Defence Force whether that service takes place before, on or after the commencing day, unless the context otherwise requires.

Defence Home Ownership Assistance Scheme Regulations 2008 (Cth)

Regulation 3 – Reserve service means service in one or more of the Reserves.

...

(2) In these Regulations, a day of Reserve service is a day on which a member was required for, and attended, duty.

(3) For section 4 of the Act:

service year means the period from 1 July of one calendar year to 30 June of the following calendar year.

(1) This regulation prescribes the service types and periods that can be used to calculate the effective service that is to be counted in calculating the member’s qualifying service period.

(2) If the member performs Reserve service on 20 or more days in a service year, the member has 1 year of effective service.

(3) If:

(a) the member of the Reserves renders, in a service year, a period or periods of continuous full-time service; and

(b) the period, or the sum of the periods, of continuous full-time service is not greater than 6 months;

the member has 1 year of effective service.

(4) If:

(a) the member of the Reserves renders, in a service year, a period or periods of continuous full-time service; and

(b) the period, or the sum of the periods, of continuous full-time service is greater than 6 months;

the member has 2 years of effective service.

(5) Subject to subregulation (6), if the member has effective service in more than 1 service year, the member’s effective service for this regulation is the sum of the effective service calculated for each service year.

(6) If the amount calculated under subregulation (5) is more than the number of years of effective service that the member requires for his or her qualifying service period, any service in excess of that requirement is to be disregarded.

(1) If a member of the Reserves performs Reserve service on 20 or more days in a service year, the member has 1 year of effective service that is to be counted in calculating the member’s accrued subsidy period and loan limit.

(2) For subregulation (1), a day or days of continuous full-time service is counted as a day or days of Reserve service.

(1) If:

(a) a member’s service is not effective service under this Part; and

(b) the Secretary is satisfied that exceptional circumstances exist;

the Secretary may, on the application of a member, treat the member’s service as effective service.

(2) Without limiting subregulation (1), the following are taken to be exceptional circumstances:

(a) the member has had an extended period of illness or injury that prevents the member from performing their effective service;

(b) service has been performed but, as a result of a defective decision, is not recognised as service.

7. The Naval Defence Act 1910 (Cth) section 32A requires members of the Reserves to render service during training periods, as set out in the related regulations. No such periods were established in the regulations prior to the 1 July 2008

ISSUES

8. The issues in this application are as follows:
   • (a) Whether Mr Yorke is entitled to a subsidy certificate? That is,
     • (i) Whether Mr Yorke is ‘eligible’? and
     • (ii) Whether Mr Yorke has a ‘service credit’?
   • (b) If Mr Yorke does not have a service credit due to insufficient ‘effective service’, whether there are ‘exceptional circumstances’ that deem Mr Yorke’s service to be ‘effective service’?

EVIDENCE

9. Following his resignation as a permanent naval officer, Mr Yorke was employed as a consultant on a project managed by the Sea Change Implementation Team. His employers knew that he was willing to work as a Naval Reserve Captain and supported him when he was employed on Reserve service.
10. Mr Yorke said he has preserved his Active Reserve status in the Navy since transferring to the Reserves. He completed the formal requirements to remain in the Active Reserves category, including completion of the Reserve Availability Questionnaire, the Annual Reserve Contact Form, and an Annual Health Declaration. He also appears in Defence's official personnel system, PMKEYS, as a member of the Active Reserve. In the Navy List, the Navy's official publication, Mr Yorke was listed as a member of the Active Reserve in December 2007 and October 2008. He told the Tribunal at the hearing that he has maintained contact with the Directorate of Naval Officers' Postings (DNOP) concerning potential Reserve service.
11. Mr Yorke affirmed that there were no specific minimum training obligations or service commitments for members of the Navy’s Active Reserve during the period 3 April 2006 to 1 July 2008, when the  Defence Home Ownership Assistance Scheme Act 2008  (Cth) commenced. In evidence at the hearing, the representative of the Department of Defence (Department) confirmed that the Navy did 'not have a minimum service commitment for any category of Reserves'. So although the Naval Defence Act 1910 (Cth) provided that the nature of any such commitment would be set out in the related regulations, in the absence of any minimum obligation in the regulations at the relevant time no such obligation was imposed for members of the Naval Reserves.
12. Mr Yorke said that through the Reserve Posting pool he received the weekly Job Opportunities circulars, which he checked for potential Reserve service. Few opportunities for officers of the rank of Captain were advertised. However, he said he had offered to undertake Reserve service on several occasions. He gave evidence that he tried to negotiate a position as a model Commanding Officer in the Bridge Simulator program at HMAS Watson. He had also agreed to be available for up to 20 days to assist with HMAS Watson for SWIPE and Model CO periods. Noone of these matters were within Mr Yorke’s control.
13. These offers were not successful, either because his offer was not accepted by the Chief of Navy, who has the discretion to approve days of Reserve service; because the officer in charge did not understand the requirements of employing Reserve staff; because of a lack of offsets or funding; or, in the case of a position with the NATO Seasparrow consortium, because the application was not processed sufficiently promptly for his application to be considered.
14. The process for Mr Yorke's appointment to the NATO Seasparrow consortium had commenced in December 2006, when Mr Yorke was asked to consider a position as the Deputy Program Manager (Military). He maintained contact with those involved in the development of the application and the business case, and was officially nominated for the position in February 2008. However, the position was filled by a Netherlands Officer in March 2008.
15. When Mr Yorke applied for the SWIPE and Bridge Simulation assessments, he noted in an email dated 12 November 2007 that he did not believe he could be released from his then employment 'for anymore than 10-15 days per year, 2-3 days at a time'. Similarly, in an email dated 11 December 2007, Mr Yorke confirmed his availability for 'up to 10-15 days per year' for Reserve service. This suggested limit on his availability was not tested in the relevant years.
16. Mr Yorke pointed out that the Australian Army assigns members of the Army Reserve to particular units, which gives them the opportunity to attend fortnightly parades, monthly weekend parades, and a two week training block every year, thus easily fulfilling the minimum of 20 days' Reserve service each year.[1] By contrast, the Navy has no means to assign members of the Reserves to a Port Division, the Navy being an integrated force. Another potential barrier to performance of effective service is that for officers of the rank of Captain and above, Reserve service is under the sole authority of the Chief of Navy.
17. In the period 27 January 2009 to 30 March 2009, Mr Yorke completed 40 days of Reserve service. However, between 3 April 2006 and 26 January 2009 he completed no Reserve service. Despite not having completed effective service during this period, Mr Yorke claimed that he should be deemed to have effective service for this time under the ‘exceptional circumstances’ exemption in regulation 20 of the Regulations. The reason given was that Mr Yorke said he was entitled to long service and other leave for almost 12 months from April 2006, which he used, and because he could not perform 'effective service' since his offers to undertake Reserve service were not accepted by the Navy for reasons beyond his control.
18. In supplementary evidence to the Tribunal, the representative of the Department confirmed that the Navy is 'under no obligation to offer employment to any Reserve members and [has] no obligation to accept a member's notice volunteering for employment'. Employment was entirely at the discretion of the Chief of Navy.
19. The Navy’s policy on employment of Reserves members as at 2006 is set out in Defence Instruction (Navy) ADMIN 6-2 General and Administrative Instructions for the Naval Reserve, as follows:

A member of the NR [Naval Reserve] may voluntarily undertake to render one or more periods of service in each 'training period (year)' and if accepted, automatically becomes bound to render such service for the period(s) specified. Two categories of service are catered for, CFTS [Continuous Full-time Service] and service other than CFTS (referred to in this instruction as 'Part-Time Service' (PTS). A condition of a CFTS undertaking is a commitment to be deployed, unless otherwise stipulated in that undertaking. Members of the SR [Standby Reserve], while having no service obligation or training commitment, may volunteer to transfer to the AR [Active Reserve], and undertake periods of Naval service as members of the AR – subject to the CN's [Chief of Navy's] requirements.

20. The situation for members of the Army Reserve is set out in the Defence Instruction (Army) ADMIN 21-1 Army Policy on Army Reserve Training Salaries, also in force in 2006. That policy provides that members of the Reserves are allocated to specific units 'that have Reserve establishment positions in order for members in those establishment positions to meet their minimum annual service/training obligations' (at that time 14 days). Section 50(4) of the Defence Act 1903 (Cth) provides that, once a member of the Army’s Active Reserve has had an offer to render Reserve service accepted, the members is obliged to perform service or training in accordance with the undertakings, or as decided by the Chief of Army.
21. The Air Force in 2006 was governed by a determination under which members of the Active Reserve were required to undertake a minimum of 32 days compulsory service.[2] That figure for a member of the Active Reserve who was a Captain [Band 2 equivalent] did not change when a new determination was made on 27 October 2008.[3]
22. Until 1 July 2008, there was thus a minimum period of compulsory Reserve service for members of the Army Active Reserve, and the Air Force Active Reserve, but no such obligation for members of the Navy Active Reserve. In the face of this inconsistency in practices between the three arms of the Defence Force, the Act standardised the position. Since 1 July 2008, the Act requires at least 20 days of duty each financial year if a member of the Reserves is to have effective service and be eligible for benefits under the current housing subsidy scheme. The obligation attaches to each arm of the Defence Force. The Act recognised effective service for members of the Reserves of all classes, both Active Reserve and Standby Reserve members.
23. The submission by the representative for the Department of Defence pointed out that the intention to introduce this tri-service scheme was publicised within Defence from the second half of 2007. The information was promoted on the Defence Pay and Conditions webpage, and on both the Defence intranet and the Defence internet website. The information was also released through the Service news publications.[4]
24. For example, in the Navy publication Sea Talk of Spring 2007, the following information was provided in an article entitled ‘Reserves Entitled to Housing Help’:

Reserve Force members will become eligible for assistance under the DHOAS [Act] on completion of eight years of efficient service performed in consecutive years. They will then become entitled to payment of the subsidy assistance on completing each subsequent year of efficient service. ... For the purpose of eligibility and entitlement, efficient service across all categories of active Reserves will be 20 days of Reserve service performed in the Reserve training year [financial year] Eligible Reserve members will lose both eligibility and entitlement to the subsidy assistance where there is a break in efficient service of two years or more.[5] (emphasis added)

It is assumed that ‘efficient service’ is the equivalent of ‘effective service’ as defined in section 3 of the Act and regulations 8 and 9 of the Regulations.[6]

25. The submission also pointed out that Mr Yorke had a continuing entitlement under the 1918 Defence Service Home Loan scheme. Under that scheme he was entitled to a subsidised loan of up to $17,535 for 12 years and eight months, with an interest rate not to exceed 6.85 per cent, and to be at least 1.5 per cent below prevailing market rates. That entitlement was one which Mr Yorke remained able to activate.
26. An application for a subsidy certificate did not extinguish entitlements under the 1918 scheme unless the member was given a subsidy certificate under the 2008 Act. Any benefit received under the 1918 scheme was taken into consideration in calculating the member's entitlements under the 2008 Act. That reflected a policy that 'over their service a member may receive subsidy assistance for no more than the period of one standard 25 year mortgage to purchase their main residence'. The period is 20 years for personnel like Mr Yorke who do not have warlike service.[7]

CONSIDERATION

27. To receive a subsidy certificate under the Act, a member must be eligible. The eligibility criteria are set out in Part 2 of the Act. Eligibility is assessed at the ‘eligibility time’, that is, for a member who stopped being a member at the end of the 2005-06 service year and than again became a member in the 2008-09 service year, his eligibility must be tested as a rejoining member: section 11.
28. A member of the Reserves earns one year of ‘effective service’ where they perform Reserve service on 20 or more days [8] in each service year (that is, in each financial year).[9] Where a member performs Reserve service on 20 or more days in a service year, that member’s one year of ‘effective service’ is counted in the member’s ‘accrued subsidy period’ and loan limit.[10]
29. The Act provides that a person is to be treated as a member of the Reserves until the person does not perform effective service. In other words, if a member does not perform at least 20 days of effective service in a financial year, they cease to be a member of the Reserves for the purposes of the Act.[11]
30. The Tribunal finds that Mr Yorke performed effective service as a permanent member of the RAN until his resignation on 2 April 2006. Between 3 April 2006 and 26 January 2009, Mr Yorke did not perform any service. Since 27 January 2009, Mr Yorke performed more than 20 days of service in the Reserves.
31. Therefore, Mr Yorke’s service in the 2005-2006 financial year counted as ‘continuous full-time service’ and was ‘effective service’ for the purposes of the Act. Mr Yorke also performed in excess of 20 days’ service between 27 January and 30 March 2009 and had effective service for the 2008-2009 financial year. However, given no service was performed in the service years 2006-2007 and 2007-2008, Mr Yorke did not complete ‘effective service’ and therefore was not a ‘member’ of the Reserves for the purposes of the Act during the period 1 July 2006 to 30 June 2008.
32. Mr Yorke submitted that, on his resignation as a permanent member of the RAN, since he was entitled to take accrued leave from 3 April 2006 to early 2007, he also had effective service for the service year until 30 June 2007, based on his fulltime service prior to 3 April 2006. This argument was not pressed at the hearing. The Tribunal reject this argument. Once Mr Yorke became a member of the Reserves he became subject to an obligation to perform a minimum of 20 days’ effective service in each service year in order to remain as a member of the Reserves for the purposes of the housing subsidy scheme and to maintain his eligibility for the purpose of obtaining a subsidy certificate under the Act. Mr Yorke did not perform that minimum effective service obligation in the period 1 July 2006 to 30 June 2008. As a consequence, Mr Yorke ceased being a ‘member’ of the Reserves during that period for the purposes of the Act.
33. Mr Yorke is, however, classified under section 7 of the Act as a ‘rejoining member’.[12] That is, Mr Yorke was a person who had been eligible prior to 30 June 2006, but ceased to be a member of the Defence Force for the period 1 July 2006 to 30 June 2008, but again became a member because he had performed effective service under the Act, deemed to have occurred from 1 July 2008.[13] As a ‘rejoining member’ Mr Yorke is ‘eligible’ for a subsidy certificate but to be entitled he must also have a ‘service credit’.[14]
34. In order to decide whether someone has a service credit the person’s accrued subsidy period must be worked out under section 47 of the Act. Item 4 of section 47, referring to the calculation of service credit for ‘rejoining members’ is the relevant item because Mr Yorke became a ‘member’ of the Defence Force for the purpose of the Act within a period greater than two years, but less than five years, after ceasing to be a permanent serving member.
35. Item 4 provides that the ‘person’s accrued subsidy period’ is ‘the number of months of effective service the person has completed since again becoming a member of the Defence Force’.[15] Since 27 January 2009, Mr Yorke had more than 20 days effective service and as a consequence he is deemed to have accrued 12 months’ effective service. He therefore had an accrued subsidy period of 12 months.
36. In order to work out his service credit, Mr Yorke’s accrued subsidy period in completed months, that is, 12 months, must be considered alongside the number of months in respect of which subsidy has previously been payable to him. Mr Yorke had previously accessed 12 years and five months of subsidy assistance.[16]
37. In accordance with section 46 of the Act, when that period of subsidy assistance is subtracted from the 12 months’ entitlement accrued under the scheme, Mr Yorke had a negative balance. That means he does not have a service credit under the scheme and hence he cannot be issued with a subsidy certificate,[17] unless he can bring himself within the ‘deemed effective service’ exemption for ‘exceptional circumstances’ under Regulation 20.[18]

Deemed effective service in exceptional circumstances

38. The expression ‘exceptional circumstances’ is not defined. Regulation 20(2) provides examples of such circumstances, namely, when a member suffers a period of illness or injury that prevents the member from performing their effective service, or when that service has been performed, but due to a ‘defective decision’, it is not recognised as effective service. There is no suggestion that Mr Yorke performed service as a result of a defective decision. The examples in Regulation 20 are not exhaustive.
39. The Tribunal notes that the examples have in common events that prevent the performance of effective service due to circumstances outside the member’s control – becoming ill or injured or due to decisions taken by others. In that context, it is relevant to observe that the inability of Mr Yorke to undertake effective service in the period 3 April 2006 to 26 January 2009, being due either to decisions of Defence requiring offsets, taking account of financial exigencies, or following delay (see [12] to [15]) were all circumstances outside Mr Yorke’s control.
40. Notwithstanding that Mr Yorke had no control over the matters which prevented him performing effective service, the Tribunal does not consider this factor is the sole determinant. In this context the Explanatory Memorandum to the Act provides that:

There would be no exceptional circumstance where a reserve member is simply not offered service, or whether the member is not offered service because they have applied to serve in a rank or employment category for which they are not qualified or competent to serve.

41. The Tribunal also notes that the practice in the Navy was that approval of Reserve service for members of the rank of Captain or above was at the discretion of the Chief of Navy. The Tribunal assumes that Mr Yorke was aware of this practice.
42. There is no suggestion in the evidence that Mr Yorke was not qualified or competent to serve in the positions for which he applied. The issue is whether the example of a member like Mr Yorke not being offered Reserve service for reasons beyond his control can be categorised as an ‘exceptional circumstance’ that is capable of being deemed ‘effective service’?
43. Reference to an Explanatory Memorandum is a guide but is not binding and may be used as determinative only in accordance with the terms of the Acts Interpretation Act 1901 (Cth) section 15AB, that is, when the meaning of the provision is ‘ambiguous or obscure’, or the ordinary meaning ‘leads to a result that is manifestly absurd or is unreasonable’.

Meaning of ‘exceptional circumstances’.

44. The expression is commonly found in legislation and is generally not defined. As the Tribunal noted in Re Beadle and Director-General of Social Security[19] the expression ‘by its very nature [is] incapable of precise or exhaustive definition’.[20] To say that it is not capable of precise or exhaustive meaning does not mean that the expression is ‘ambiguous or obscure’. In Maan v Minister for Immigration and Citizenship[21] the Full Court of the Federal Court quoted with approval comments by Lord Bingham of Cornhill CJ in R v Kelly (Attorney-General’s Reference No 53 of 1998) [1999] UKHL 4; [2000] 1 QB 198 at 591:

We must construe ‘exceptional’ as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstances need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.[22]

45. In other words, the expression has an ordinary meaning which is easily ascertaining and understood. Mr Yorke’s circumstances would not be ‘unique, unprecedented or rare’. Given the absence of any statutory obligation on the Navy to provide work for the members of the Naval Reserves, and the Chief of Navy’s discretion whether to approve Reserve service for officers of the rank of Captain or above, it can be assumed that offers of service by members of the Reserves like Mr Yorke would often be refused, leaving those members unable to meet their ‘effective service’ obligations.
46. Nonetheless, it is the application of the ordinary meaning that determines whether the results are ‘manifestly absurd or unreasonable’. Deciding whether ‘exceptional circumstances’ exist requires the consideration of the particular circumstances.[23] Circumstances may also be exceptional where no one circumstance is unusual, special or uncommon but in combination the matters become so.[24] The discretion is ‘not lightly to be enlivened’.[25]
47. Mr Yorke argued that to interpret the expression narrowly was to produce a result which he suggested was neither ‘reasonable’, nor ‘morally fair’. He suggested that in his case, since the legislation was deemed to apply to him from 3 April 2006 but the Act did not commence until 1 July 2008, this was to give the Act retrospective effect contrary to the presumption against retrospectivity, and this was unfair.
48. The Tribunal does not accept the retrospectivity argument. The presumption can be displaced by clear words.[26] Clear words are to be found, for example, in the eligibility provision (section 8) of the Act which refers to the person’s qualifying period as covering periods ‘before, on or after the commencing day’,[27] and in the definition of ‘effective service’ which also refers to service in the Defence Force ‘at any time before, on or after the commencing day’.[28] Indeed, recognition of prior service is an integral part of the current housing subsidy scheme in order not to disadvantage members who have transferred immediately or within a short time from the permanent force to the Reserves.
49. Further, Mr Yorke must be taken, from the prior Defence publicity referred to at [24], to have known from at least the second half of 2007 that a new housing subsidy scheme was coming into force and that it contained criteria for eligibility, including a minimum of 20 days of Reserve service each year. There is no unfairness in this development and it is not an ‘exceptional’ circumstance.
50. Mr Yorke asserts other unfairness arises from the fact that he had lengthy permanent service, transferred to the Reserves immediately on cessation of his membership of the permanent forces, completed all the preliminary and annual documents required as a member of the Active Reserve and made assiduous attempts to perform effective service. These attempts were unsuccessful for reasons beyond his control. As a consequence, he failed to complete the minimum period of effective service for two years, is now classified as a ‘rejoining member’ and must accrue service credits afresh. As a consequence, it will be some considerable time before he can be eligible under the scheme in the current Act.
51. The Tribunal has sympathy for his position. While approval for effective service for someone of Mr Yorke’s rank remains at the discretion of the Chief of Navy, and there is no provision made by the Navy to enable members of the Reserves to fulfil their effective service obligations, the result is likely to be to disadvantage others in like circumstances to Mr Yorke. The current housing subsidy scheme is built on a policy of encouraging early transfer to Reserve membership and continuing active service while in the Reserves. The penalty faced by someone like Mr Yorke appears to contradict that policy. The former Minister for Defence, Science and Personnel, Mr Warren Snowdon, said in the second reading speech to the Bill that the current scheme ‘is a dramatic improvement’ on the previous scheme which, as the Minister said, ‘has long been inadequate and should have been replaced at least a decade ago’,[29] but to deny persons the benefit of the scheme in circumstances such as these appears to be inimical to that policy intent.
52. The issue for the Tribunal, however, is whether Mr Yorke’s circumstances can be considered to be ‘exceptional’. As referred to earlier, it can be assumed that Mr Yorke’s circumstances, even in combination, could not be considered unusual, special or uncommon, not least because of the discretion of the Chief of Navy to decide whether to employ members of the Navy Reserves at his rank or above, a discretion which it can be assumed is exercised on a regular basis for reasons similar to those in Mr Yorke’s case. They have had unfortunate consequences for him, but the Tribunal finds that they do not amount to ‘exceptional circumstances’.
53. In these circumstances, the Tribunal affirms the decision under review.
    

I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of

Signed: ....................[sgd]................................

C. Kocak, Associate

Date/s of Hearing 18 June 2010

Date of Decision 1 September 2010

Solicitor for the Applicant Self-represented

Solicitor for the Respondent Clayton Utz

[1] Evidence confirmed in Defence Instruction (Army) ADMIN 21-1 Army Policy on Army Reserve Training Salaries, dated 2006.
[2] Determination by the Deputy Chief of Air Force Air Vice-Marshal Blackburn, dated 31 October 2006, referring to the number of compulsory training days required under the Defence (Personnel) Regulations 2002 (Cth) reg 100 and the Air Force Act 1923 (Cth) s 4J(2): submission of 2 July 2010, by representative of Department of Defence, Attachment A.
[3] Determination of Deputy Chief of Air Force Air Vice-Marshal Brown, dated 27 October 2008: submission of 2 July 2010 by the representative of Department of Defence, Attachment B.
[4] As evidence in an article from the Navy news publication Sea Talk (Spring 2007).
[5] Sea Talk Spring 2007, 1.
[6] Id at 2-3.
[7] Act s 47(1).
[8] Regulations, reg 8(1).
[9] A ‘service year’ is a financial year: Act s 4; Regulations reg 3(3).
[10] Regulation, reg 9(1).
[11] Act s 5(1)(b)(ii), (2).
[12] Act s 11.
[13] Act s 11.
[14] Act s 46.
[15] Act s 47 Item 4, column 2.
[16] Mr Yorke accessed the subsidy under the Old Scheme.
[17] Act s 16(3).
[18] Regulations, reg 20.
[19] Re Beadle and Director-General of Social Security (1984) 6 ALD 1.
[20] Id at 3.
[21] Maan v Minister for Immigration and Citizenship [2009] FCAFC 150; (2009) 179 FCR 581.
[22] See also Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 53 ALD 277 at 282; Secretary of Social Security v Hulls (1991) 22 ALD 570; Secretary, Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 66 ALD 147, 148.
[23] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at [12].
[24] Ho v Professional Services Review Committee No 295 [2007] FCA 388.
[25] Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 53 ALD 277 at 281.
[26] Coco v R [1994] HCA 15; (1994) 179 CLR 427 at 437.
[27] See also Act, ss 3, 11, 47(2).
[28] Act s 3.
[29] House of Representatives, Second Reading Speech, Defence Home Ownership Assistance Scheme Bill 2008 at 3472.