Unlike other federal judges, who are entitled a fixed, non-contributory pension, Federal Magistrates belong to a superannuation scheme. Adelaide Law School PhD Candidate Anna Olijnyk looks at the recent case of Baker v The Commonwealth, in which the Full Federal Court considered whether Federal Magistrates’ post-retirement income arrangements violated Chapter III of the Constitution. The case concerned s 72(iii) of the Constitution but also involved broader questions about what we mean by judicial independence, and how Chapter III requires that independence to be protected.
Judges in many jurisdictions enjoy generous pension entitlements. There are good reasons for this. It is a factor that attracts high quality candidates to the bench. It helps secure judicial independence by reducing the risk of partiality or corruption. And, by reducing the need for judges to support themselves with post-retirement work, it lowers the risk that judges will see litigants as potential employers.
Federal Magistrates are, and always have been, subject to less favourable post-retirement arrangements than their counterparts in other federal Courts. Under the Judges’ Pensions Act 1968 (Cth) (‘Pensions Act’), judges of the High Court, the Federal Court and the Family Court are entitled to receive life-long non-contributory pensions fixed at a (high) percentage of their salary at retirement. Federal Magistrates, on the other hand, belong to a superannuation scheme. Not only does this result in Federal Magistrates receiving a lower percentage of their annual salary as post-retirement income (between 15.98% and 25.78%, compared to 60% for most other members of the Federal judiciary) but it also means that their income is less secure, being ‘subject to the vagaries of the market’.
Baker v The Commonwealth  FCAFC 121 was a challenge by 24 Federal Magistrates to these arrangements, on the ground that they offended Chapter III of the Constitution. The Full Court of the Federal Court dismissed the Magistrates’ claim on 31 August this year. Keane CJ and Lander J wrote a joint judgment, while Perram J wrote a separate concurring judgment.
Claims for relief
The failure of the Magistrates’ action was in part a result of the way their claims for relief were framed. There was a primary claim for relief, and an alternative claim, in both of which the Magistrates sought declaratory relief.
Primary claim: Invalidity of amendment to the Pensions Act
To understand the Magistrates’ primary claim for relief, it is necessary to delve into the brief history of the Federal Magistrates Court.
The Federal Magistrates Court was created by the Federal Magistrates Act 1999 (Cth) (‘Magistrates Act’). The first Federal Magistrates were sworn in on 28 June 2000 and sittings commenced on 3 July 2000. Under the Magistrates Act, remuneration of Magistrates is to be fixed by the Remuneration Tribunal. The Magistrates Act does not deal with post-retirement income, but does provide for the Governor-General to specify further terms and conditions of office in a written determination. On 2 February 2000, the Governor-General made a determination setting up the superannuation scheme to which Federal Magistrates belong.
Under the Pensions Act, ‘Judges’ receive fixed non-contributory pensions. Prior to the creation of the Federal Magistrates Court, ‘Judge’ was defined to include ‘a Justice or Judge of a federal court’. Schedule 18 of the Federal Magistrates (Consequential Amendments) Act 1999 (Cth) (‘Amendment Act’) amended this definition to exclude Federal Magistrates from the definition of ‘Judge’.
The primary relief sought by the Magistrates in Baker was a declaration that Schedule 18 of the Amendments Act was invalid. They also sought a series of consequential declarations that the definition of ‘Judge’ in the Pensions Act included the Magistrates and that they were therefore entitled to receive a pension under the Pensions Act.
For Perram J, the decision to focus on the validity of Schedule 18 was determinative of this claim. The superannuation scheme had come into effect some months after the passage of the Amendment Act, and therefore could not possibly affect the validity of the Amendment Act. His Honour considered that the constitutional arguments the Magistrates wished to raise could have arisen if the Magistrates had claimed that the absence of any provision in the Magistrates Act for the retirement income of Magistrates made that Act invalid; or that the Governor-General’s determination was itself invalid. But they did not frame their case in either of these ways. Justice Perram therefore found it inappropriate to deal with the Magistrates’ substantive constitutional arguments.
Alternative claim: Entitlement to a pension
In the alternative to their primary claim, the Magistrates sought a declaration ‘that Ch III of the Constitution requires the provision of a life-long guaranteed pension to all Federal Magistrates as an incident of their status as justices appointed under Ch III of the Constitution.’
This ambitious claim faced insuperable difficulties. It effectively asked the Court to replace the legislative scheme with a provision requiring the Parliament to make specific provision for the post-retirement income of Federal Magistrates. Such a remedy would go well beyond the accepted role of courts in judicially reviewing legislation. Furthermore, s 72(iii) of the Constitution expressly leaves it up to Parliament – not courts – to fix judges’ remuneration. These difficulties were fatal to this alternative claim.
For both claims of relief, the Magistrates relied on the terms of s 72(iii) of the Constitution, and on a broader argument based on judicial independence.
Section 72(iii) of the Constitution provides that judges of Federal courts ‘shall receive such remuneration as the Parliament may fix; but the remuneration shall not be diminished during their continuance in office.’
The Magistrates’ superannuation arrangements clearly did not breach the express terms of s 72(iii). This was because the scheme was established by the Governor-General’s determination on 2 February 2000, well before any Federal Magistrates were appointed. Therefore, there was no question of remuneration being ‘diminished’ while the Magistrates were serving.
The Magistrates’ case also depended on a broader argument that the pension arrangements undermined judicial independence. This was because of the uncertainty of superannuation payments as compared to a pension. In light of this uncertainty, it was said, Magistrates were likely to seek employment after retiring from the bench. It might appear that Magistrates lacked impartiality when hearing cases involving potential employers, including members of the executive government.
In one of the most interesting aspects of this judgment, Keane CJ and Lander J determined this question by applying a modified version of the test for apprehended bias. Their Honours asked whether (at )
a reasonable, well-informed lay observer would apprehend that Federal Magistrates might not be independent or impartial because of the arrangements in relation to their remuneration.
The observer would have regard not just to the superannuation scheme, nor merely to remuneration in general. He or she would know that there are a plethora of mechanisms to protect judicial independence and impartiality, and that historically, different courts have adopted different combinations of these mechanisms. Looking at the whole picture, the observer would not apprehend that the Federal Magistrates lacked impartiality or independence.
The authors of the joint judgment went on to explain that, while they had applied the ‘reasonable observer’ test in accordance with the submissions of both sides, they had ‘misgivings’ about importing the test from its natural justice homeland (at ):
It might be thought that reference to the hypothetical reasonable and informed observer as a touchstone of constitutional validity of a statute involves an unnecessary anthropomorphic distraction. One can readily understand that the touchstone of apprehended bias on the part of an individual judge in a particular case should be a standard free of the influence of judicial sensibilities and experience; but there may be a question as to its suitability as a test of the institutional integrity of a court. The judiciary do not conduct opinion polls and they are not dependent on the support of the electorate to continue in office. If the constitutional validity of laws were to be determined by reference to the standards of reasonable and well-informed citizens, then the elected Parliament might be thought to offer a more reliable gauge of that assessment.
This passage echoes many of the criticisms surrounding the application of a ‘public confidence’ test of validity in the Kable cases: chiefly, concern about the appropriateness of a court substituting its view for that of Parliament.
Baker reminds us that judicial independence, like some other constitutional concepts, comes in many colours. A fixed pension is a well-established means of protecting independence, but it is not the only means. Independence can be secured in many ways.
The case also illustrates the importance of anchoring implications in the ‘text and structure’ of the Constitution; as Keane CJ and Lander J explained,
the existence and extent of the constitutional guarantee of judicial independence is a consequence of the text and structure of the Constitution; it is not a principle which, having been derived from the text and structure of the Constitution, returns to its origins to modify them.
The Magistrates’ argument that the principle of judicial independence required Parliament to provide a particular form of post-retirement income could not get around the fact that the text of the Constitution allowed Parliament to fix the terms of judges remuneration.
Last week, Commonwealth Attorney-General Nicola Roxon announced that the Federal Magistrates Court was to be renamed the Federal Circuit Court, and that Magistrates were to be redesignated ‘Judges’ (although they remain excluded from the Pensions Act). In this respect at least, the judges of Australia’s youngest federal court have achieved a degree of equality with other federal courts.
Anna Olijnyk is a PhD Candidate at the Adelaide Law School. She is currently researching the judicial role in the management of mega-litigation.