The Public Service Commissioner has forwarded the following case for opinion:

Public Service Regulation 170 provides that every officer appointed to the Public Service shall effect an assurance on his life with any of the assurance companies or societies approved by the Governor-General which are willing to arrange for the necessary progressive increases from time to time on the sum assured without any medical examination other than that which was required in connection with the original assurance.

Regulation 172 provides that every policy taken out under the foregoing regulation shall provide for the payment of an amount in accordance with the following scale to the person assured on his attaining the age of 60 years, or to his personal representatives within three months from the date of his death if the person assured should die before reaching that age:

[Table setting out scale of amounts to be paid omitted.}

In regulation 173 it is provided that the amount of assurance shall be increased whenever the salary exceeds the amount of assurance, and that such additions to assurance shall be made in conformity with a specified table of rates, and according to the ages of the assured at the times the assurances are increased.

Regulation 180 prescribes that the Chief Officer shall notify the company concerned of any increase of the salary or wage of the officer assured which involves an increase in the amount of assurance, and the necessary addition to the amount assured shall thereupon be inscribed on the policy or a new policy issued.

It has been decided by the Government that the premiums on life assurance policies which become payable during the absence from Australia of officers of the Commonwealth Public Service who are members of the Australian Expeditionary Forces are to be paid by the Departments concerned. It has also been decided by the Government to grant leave of absence without pay to the officers referred to, and that during their absence on active service they should be granted, on resuming duty, such increased pay as they would have received under ordinary circumstances. Instructions were issued to all Departments in following terms:

I have to inform you that the question has been raised as to whether in the case of an officer joining the Expeditionary Forces whose salary has been increased to an amount which necessitates increase in the amount of life assurance action should be taken prior to his return to his official position, and, if so, whether the society holding the policy should be permitted to impose any war risk on the additional amount of assurance. It has been decided that the Department should take the action prescribed in regulation 180, viz. notify the company concerned, paying the necessary premium, and have the addition made to the existing policy or obtain the issue of a new policy. Under the regulation the assured officer is not required to take any action in the matter.

No policy should be accepted unless it is made in accordance with the specified table of rates prescribed in regulation 173, i.e. no increase can be made in the rates previously specified because of war risks which are not chargeable under the existing policy.

In the event of a society refusing to effect the increased assurance as prescribed in the Regulations, the facts should be reported immediately to the Commissioner.

It was brought under the Commissioner's notice when certain officers who had been promoted to positions which required that the amount of life assurance should be increased that a proviso was added to the policies that active military duty outside Australia etc. is not covered by the policy unless an extra premium of not more than £5 per £100 assured be paid in advance.

The following correspondence between one of the life assurance societies and the Commissioner ensued:

The Commonwealth Public Service Commissioner:

Life Assurance under Public Service Regulations

There has recently been referred to me by some of our Branches in connection with the refusal of Departments to accept certain policies issued by the Association the question of war risk under policies of additional assurance issued in accordance with the Regulations.

We have endorsed such policies to provide for the payment of an additional premium in the event of the person assured engaging in active naval or military service outside of Australia, so as to make them accord in this respect with other policies issued by the Association after the outbreak of war, and I am informed that acting under your instructions the Departments contend that no such endorsement is permissible in view of the fact that the scale of premiums to be charged is fixed in each case under the conditions of the original policy.

Regarding this contention, I would say that there is nothing in the endorsement inconsistent with the Regulations and the conditions of the original policy.

The undertaking to issue further policies at rates of premiums according to a fixed scale without further medical examination contemplated-

1. That the increased assurance would be necessitated by increased salary due to promotion-a virtual guarantee of a reasonably high standard of health at the time of further assurance, and

2. That the person assured had still before him the duties falling to a public servant in any of the ordinary Departments of State.

The condition incorporated in the policies by the endorsement does not cause a departure from the undertaking in any way so long as the person assured continues in the Public Service in the sense contemplated by the Regulations; it only provides for payment of an increased premium when he shall in reality have left the Public Service and taken up another occupation-that of a soldier.

I am aware that there is a technical sense in which the person assured remains in the Public Service, but the actual fact is that he has for the time being left the Service with a promise that a position shall be vacant for him if he is fit to occupy it on his relinquishing the occupation of soldier.

I understand that the salary of members of the Public Service who have enlisted ceases on their leaving their respective Departments, and if a strictly technical position is to be maintained it is doubtful whether the additional-or any life assurance is required under the Regulations from the time salary ceases.

I shall be glad to hear from you to enable me to deal with the situation which has arisen at our Branches.

The following reply was sent by the Commissioner on 30.10.15:

With reference to your communication of the 22nd instant, relative to the question of war risk under policies of additional assurance in accordance with the Public Service Regulations, I am directed to inform you that the Public Service Regulations require officers to increase assurance upon advancement in the Public Service under certain prescribed conditions which provide that: 'Such addition to assurance shall be made in conformity with a specified table of rates'.

Any additional assurance effected which requires the payment of rates exceeding those specified cannot therefore be accepted, as there is no power to authorise acceptance when such does not accord with the law in the matter.

Officers of the Public Service who have enlisted are granted authorised leave of absence for the purpose and their positions in the Service are not affected in any way by their absence on active war service. Their rights are identical with those of officers who continue to occupy their ordinary positions and their tenure of office is equally secure and the contract entered into at the time of effecting their original assurance cannot under the law as it stands be varied. A further communication dated 10.11.15 has been received: The Commonwealth Public Service Commissioner:

Life Assurance under Public Service Regulations I have received your letter of 30th ult.

The Association is quite prepared to grant the additional assurances to public servants in accordance with the Regulations, but I cannot consider that persons who have left the Public Service to take up an entirely different occupation-that of a soldier-who are not in receipt of a salary or wages from their Departments, and who are no longer within the control of the Public Service Commissioner are bona fide public servants for all purposes of the Regulations.

The Association made a contract with the various persons assured to issue further policies on certain conditions, and it is a well-established principle that a contract shall be interpreted according to the intentions of the parties when the contract was made, and there is no question that the intention of the persons assured in regard to additional assurances was that they should continue in their ordinary occupations as public servants.

There are two groups of cases to be considered. The first group comprises those officers who still remain in their Departments, and the policies of additional assurance in this group are issued at the schedule rates of premium as of course they must be. As we know from present circumstances that any of these officers may take up another and specially hazardous occupation outside of the Service we protect the Association in regard to this special risk outside of the Service by requiring payment of an extra premium so long as the service outside the Public Service continues.

The second group comprises those officers who have left the Service to become soldiers. We have lately received advice of such a group from the Deputy Postmaster-General and we are asked to grant additional assurances (which can only be required by an increase in salary) to men who are at present out of the Department and are not in receipt of any salary. The Deputy Postmaster-General did not comply with the regulation which requires him to notify us of the increase in salary which necessitates the increased assurance, and I presume this was because there was no actual increase.

The fact that no salary is paid during the indefinite leave which is granted for military service also affects the first group, as, adopting your contention that the person assured is still a bona fide public servant and subject to the Regulations, he is subjected to a reduction of his salary which renders it possible for him to correspondingly reduce his assurance, and it is therefore competent for the Association in anticipation of the period of reduced salary to state the terms on which it is willing to continue the assurance which is not required under the Regulations.

The only object we have in contending for the right to endorse new policies as to war risk is to place our members who are public servants in exactly the same position as regards war risks as those who are not. To do otherwise would be to give public servants an advantage to which they are not entitled.

It is considered that there is nothing in the further communication from the Assurance Society which would justify departure from the views previously expressed. The matter is governed by Public Service Regulations, and so long as the assured persons are officers of the Public Service recognised by the Commonwealth Government in the liability it has undertaken to pay the premiums of its officers on active service there appears to be no other course but to require compliance with the Regulations.

Under the Regulations and conditions affecting life assurance by public servants the latter are accorded an advantage not shared by members who are not public servants, and this rests in the undertaking to increase assurance when required without medical examination and in accordance with a specified table of rates. The Commissioner has no power to authorise a departure from the conditions laid down by law, and while giving every consideration to the position of the life assurance societies must necessarily ask for adherence to such conditions.

It was proposed to advise the Assurance Society in the terms of the two preceding paragraphs, but before doing so the Commissioner would be glad to receive an opinion as to whether the legal position is as held by this office, i.e. that the Regulations preclude acceptance of a policy of additional assurance which contains a provision for payment of increased premiums for war risks, if the original policy and specified table of rates contained no such provision.

Regulation 180 is as follows:

180. The Chief Officer shall notify the company concerned of any increase of the salary or wage of the officer assured which involves an increase in the amount of assurance, and the necessary addition to the amount assured shall thereupon be inscribed on the policy, or a new policy issued. Assurances so increased shall be continued with the company which issued the original policy.

Reading regulations 173 and 180 together I am of opinion that when an officer is required in consequence of his promotion to effect an increase in the amount of his assurance, the policy for the increased amount is virtually part of, or a continuation of, the original policy, and should therefore be upon the same terms and conditions as those upon which the original policy was issued. If the specified table of rates in force when the officer was insured did not contain any provision for payment of an extra premium on account of war risk, no such premium is payable on the policy issued for the increased amount.

I do not regard as sound the contention of the Association that an officer is only technically a public servant while serving as a soldier. The officer is granted leave of absence under the Act. He receives no salary it is true: but he remains a public servant, just as does any officer who is granted leave for any of the other purposes for which leave can be granted under the Act. If a vacancy occurs he may be appointed to the vacant position during his absence. If he commits any offence against section 46 of the Act he is liable to be dealt with under the Act. If he is convicted of any criminal offence against the law of the Commonwealth or a State he may be dismissed by the Governor-General. If his estate is sequestrated for the benefit of his creditors his liability under the Act remains. If he becomes entitled to long service leave during his service as a soldier he may be granted such leave, and thereupon becomes entitled to payment of salary as a public servant.

From the foregoing it will I think be evident that officers who are on leave continue subject to the provisions of the Act.

I see no reason therefore why the assurance companies should not be required to issue any extra policies, which are rendered necessary by an officer's promotion, without attaching thereto the war risk condition and requiring the payment of an extra premium.

The position is of course different where an officer who is insured under the provisions of the Public Service Act desires but is not legally required to effect an additional assurance on his life. In such case the company is in my opinion under no legal liability to increase the amount of his assurance upon the terms and conditions of the original policy.

[Vol. 14, p. 159]

(1)In the Opinion Book this opinion is undated, but this date is derived from a reference to this opinion in a later opinion, not published, dated 20 November 1917 [Vol. 15, p. 329], by Sir Robert Garran as Solicitor-General.