I refer to your memorandum, dated 23rd December, 1946, in regard to the above-mentioned question.

(2)  It appears that the Foreign Office, at the request of the Deputy Commissioner of Pensions, London, made maintenance payments to Australian pensions while in enemy occupied countries. The question has been asked whether it would be in order to reimburse the Foreign Office from arrears of pension due to the pensioners.

(3)  The cases may be divided into two classes, namely:

1. Those cases in which the recipient acknowledged in his receipt for payment that the amount received was a loan to him from the Australian Government and stated—‘I authorize and direct the Deputy Commissioner of Pensions, London, to repay to the Australian Government the abovementioned sum’.
2. Those cases in which the recipient acknowledged the loan but did not authorize the Deputy Commissioner of Pensions to repay.

A memorandum from the Department of External Affairs (23rd January, 1947) indicates that the standard form of receipt used by the United States Authorities (while protecting power) at most of its posts read as follows—

I draw a pension of ……. from and I hereby authorize His Majesty’s Government in the United Kingdom to recover from that source any advance made to me.

It is stated that this form was filled in by pensioners when receiving relief payments as a matter more or less or course. It is not stated whether the form was modified in any way in the case of relief payments to Australians.

(5)  At the outset, I think I should express the view that the Foreign Office should be reimbursed by the Commonwealth whether the amounts advanced are recovered from the recipients or not. I express this view on the assumption that in making the payments the Foreign Office was acting merely as the agent of the Commonwealth. Accordingly, the question on which my opinion is sought is really whether the Commonwealth may deduct the amounts owing from arrears of pension.

(5)  It is clear that the payments were not made as gifts. That being so, the position appears to be that the Commonwealth is indebted to pensioners in respect of arrears of pension and the pensioners are indebted to the Commonwealth in respect of the advances made to them. Under these circumstances and in the absence of any law to the contrary, the rule as to set-off would normally apply to permit the Commonwealth to set-off against instalments of pension which have become actually due and payable to a pensioner the debt due by the pensioner to the Commonwealth. The Assistant Crown Solicitor reached this conclusion notwithstanding the provisions of section 52 of the Australian Soldier’s Repatriation Act.

(6)  Whilst this view may as a matter of strict law be tenable, I think that the implications as well as the express words of section 52 should not be overlooked.