FEDERAL COURT OF AUSTRALIA

Secretary, Department of Family & Community Services v Michael [2001] FCA 1811

SOCIAL SECURITY – invalid pension – residential qualification – whether respondent entitled to receive disability support pension – when applicant first had a continuing inability to work – whether the respondent satisfied subpar 94(1)(e)(i) of the Social Security Act 1991 (Cth)

WORDS & PHRASES – Continuing inability to work

Social Security Act 1991 (Cth), ss 94(1), 94(2), 94(5)

Social Security (Administration Act) 1999 (Cth), s 37, s 29(1)

Secretary, Department of Social Security v Raizenberg (1993) 47 FCR 531, considered

SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES v SAMIR MICHAEL

Q 161 of 2001

DRUMMOND, KIEFEL and DOWSETT JJ

18 DECEMBER 2001

BRISBANE

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. The matter be remitted to the Administrative Appeals Tribunal for further consideration.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

REASONS FOR JUDGMENT

DRUMMOND J:

1                     I have had the benefit of reading the reasons in draft of Dowsett J.

2                     Section 94(1) the Social Security Act 1991 (Cth) declares that an applicant for a disability support pension must satisfy the five criteria there set out to be qualified for the grant of that pension. Under s 37 Social Security (Administration) Act 1999 (Cth) (formerly s 114 Social Security Act), the Secretary can only determine to grant the pension if he is satisfied that the applicant then, ie, at the date of determination of the pension claim, meets those criteria. Having determined that an applicant has an impairment which satisfies each of the criteria in s 94(1)(a) and (b) at that date, the Secretary will next have to determine whether the applicant satisfies the criterion in s 94(1)(c)(i), as defined in s 94(2), ie, to determine whether, at the date of deciding the pension claim, that particular impairment is sufficient of itself to prevent the applicant from doing any work, as defined in s 94(5), within the next two years, ie, the two years following the date of the decision. If the Secretary accepts that the applicant satisfies this third criterion, the next matter for determination is whether the applicant satisfies s 94(1)(d) at that same date of decision, ie, whether the applicant has turned 16 by then.

3                     If the applicant satisfies all four of these criteria, the Secretary must finally determine whether the applicant satisfies the criterion in s 94(1)(e)(i). If s 94(1)(e)(i) is read literally, a pension applicant who satisfies s 94(1)(c)(i) will automatically satisfy this final criterion: the only date at which a pension applicant must satisfy s 94(1)(c)(i) is the date on which the decision on the claim is made. But a person must be an Australian resident on that date since only an Australian resident can lodge a valid claim for a disability support pension: s 29(1) the Social Security (Administration) Act (formerly s 110 Social Security Act). It would follow that a person who satisfies s 94(1)(c)(i) necessarily also satisfies the criterion in s 94(1)(e)(i) (if the theoretical possibility is ignored that a person may lodge a claim while resident here but may cease to be so resident at the date of determination of the claim).

4                     The literal reading of the provision gives it no work to do. It is plain that par (e) of the sub-section was intended by Parliament to ensure that a non-Australian resident who enters Australia with an impairment that is sufficient to satisfy s 94(1)(c)(i) will not be entitled to a disability support pension until the person has resided in Australia for the substantial period of time sufficient to amount to “10 years qualifying Australian residence” within s 94(1)(e)(ii) (unless the person, though a non-Australian resident at the time, contracted that impairment while the dependent child of an Australian resident parent and subsequently entered Australia while still so dependent: see s 94(1)(e)(iii)).

5                     Section 94(1)(e)(i) should therefore be read as requiring the pension applicant to be an Australian resident when the person first suffers the particular impairment which is found, as at the date of determination of the pension claim, to be sufficient to prevent the person from doing any work within the two years immediately following that date.

6                     Subject to the foregoing, I agree with Dowsett J’s reasons for allowing the appeal and with the order he proposes.

Associate:

Dated: 18 December 2001

ON APPEAL FROM THE ADMINSITRATIVE APPEALS TRIBUNAL

REASONS FOR JUDGMENT

KIEFEL AND DOWSETT JJ:

7                     This is an appeal from a decision of a Presidential Member of the Administrative Appeals Tribunal (the “AAT”) setting aside an earlier decision of the Social Security Appeals Tribunal. The latter decision affirmed a decision of the present applicant, rejecting a claim by the respondent for a disability support pension pursuant to the provisions of the Social Security Act 1991 (Cth) (the “Act”). The appeal was conducted upon the basis that the facts were not in dispute. Whether they go far enough for the purposes of the Act is another matter to which we will return at a later stage.

8                     The respondent was born in Iraq on 9 May 1984. He, his mother and his two elder brothers entered New Zealand as refugees. They are now citizens of that country. On 16 February 1999 the respondent was diagnosed as suffering from autism, significant intellectual impairment, epilepsy and nocturnal enuresis (bed-wetting). His communication and language skills were at an infantile level. It was said that his behaviour was “less compliant, if not more defiant” than it had previously been. He demonstrated inappropriate responses to requests, and his behaviour was becoming more uninhibited in sexual aspects. Goals were set for his management, presumably with a view to improving his behaviour. On 19 February 2000, the respondent and his mother arrived in Australia. Both now hold permanent resident visas. They came to Australia so that the respondent’s mother could be closer to her daughter and so that the latter could assist in the care of the respondent. The daughter is married and living in Brisbane. On 6 April 2000, when the respondent was aged fifteen years and eleven months, he lodged the claim for a disability support pension which claim is the subject of these proceedings. It was refused, and the refusal was upheld by the Social Security Appeals Tribunal. The AAT set aside that decision, and this appeal is against that order.

9                     Subsections 94(1) and 94(2) of the Act provide:

“(1) A person is qualified for disability support pension if:

(a) the person has a physical, intellectual or psychiatric impairment; and

(b) the person’s impairment is of 20 points or more under the Impairment Tables; and

(c) one of the following applies:

(i) the person has a continuing inability to work;

(ii) the Health Secretary has informed the Secretary that the person is participating in the supported wage system administered by the Health Department, stating the period for which the person is to participate in the system; and

(d) the person has turned 16; and

(e) the person either:

(i) is an Australian resident at the time when the person first satisfies paragraph (c); or

(ii) has 10 years qualifying Australian residence, or has a qualifying residence exemption for a disability support pension; or

(iii) is born outside Australia and, at the time when the person first satisfies paragraph (c) the person:

(A) is not an Australian resident; and

(B) is a dependent child of an Australian resident;

and the person becomes an Australian resident while a dependent child of an Australian resident.

(2) A person has a continuing inability to work because of an impairment if the Secretary is satisfied that:

(a) the impairment is of itself sufficient to prevent the person from doing any work within the next 2 years; and

(b) either:

(i) the impairment is of itself sufficient to prevent the person from undertaking educational or vocational training or on-the-job training during the next 2 years; or

(ii) if the impairment does not prevent the person from undertaking educational or vocational training or on-the-job training - such training is unlikely (because of the impairment) to enable the person to do any work within the next 2 years.”

10                  Subsection 94(5) defines “work” to mean:

work:

(a)               that is for at least 30 hours per week at award wages or above; and

(b)               that exists in Australia, even if not within the person’s locally accessible labour market.

11                  It is common ground that the respondent satisfied pars 94(1)(a), (b), (c) and (d). The respondent asserted that he also satisfied subpar 94(1)(e)(i). That is the subject matter of this appeal.

12                  When the respondent became an Australian resident the condition which led to his impairment for the purposes of pars 94(1)(a) and (b) had already been diagnosed, or at least as much was assumed for the purposes of these proceedings. The applicant submitted that the respondent’s continuing inability to work for the purposes of par 94(1)(c) had therefore also arisen prior to that time. It was said to follow that he was not an Australian resident at the time at which he first satisfied par 94(1)(c), and so he did not satisfy subpar 94(1)(e)(i). The AAT rejected that view. Its reasons for so doing are quite complex, involving a detailed examination of the history of statutory provisions concerning pensions of this kind, commencing with the decision of this Court in Secretary, Department of Social Security v Raizenberg (1993) 47 FCR 531. The relevantly analogous provisions of the Act (subs 94(1)) were as follows:

“A person is qualified for an invalid pension if:

(a) the person is permanently incapacitated for work; and

(b) the degree of the incapacity for work is 85 % or more; and

(c) 50 % or more of the incapacity for work is directly caused by a physical or mental impairment; and

(d) the person has turned 16 and is under the pension age; and

(e) the person either:

(i) is an Australian resident at the time when the person first satisfies paragraphs (a), (b) and (c); or

(ii) has 10 years qualifying Australian residence; or

(iii) is born outside Australia and, at the time when the person first satisfies paragraphs (a) (b) and (c), the person:

(A) is not an Australian resident; and

(B) is a dependent child of an Australian resident;

and the person becomes an Australian resident while a dependant child of an Australian resident.”

13                  The claimant in Raizenberg was born on 12 November 1973 in Canada. She and her parents came to Australia as permanent residents in 1988. She had suffered from cerebral palsy since birth and was seriously disabled. The question for the Court was whether she had first satisfied pars (a) (b) and (c) of subs 94(1) at a time when she was already an Australian resident as required by par 94(1)(e). The Secretary rejected her application for an invalid pension upon the ground that her incapacity was so severe at birth that it was then possible to say that she would always be incapacitated for work. Thus she first satisfied the relevant test before she became an Australian resident. The contrary argument (which was rejected) was that the expression “permanently incapacitated for work” was concerned with the economic consequences of incapacity and was to be assessed at the time determined by the legislature as the age when persons were expected to work or, if unable to do so, to qualify for the invalid pension, namely at the age of sixteen years.

14                  The majority (Wilcox and Beazley JJ) undertook a detailed examination of the history of the legislation concerning the invalid pension, concluding at 540 that:

“The history of the legislation reveals that it has always recognized that a child may be incapacitated for work. At the time of the introduction of the 1991 legislation, of which section 94 forms part, the Minister stated that the new legislation did not introduce any policy changes and this was also stated in the Explanatory Memorandum.”

15                  Their Honours then continued:

“In our opinion, the phrase “permanently incapacitated for work” in s 94(1) means loss of earning capacity. We appreciate that it will not always be easy to determine whether there is a loss of earning capacity, and if so its extent, before the person reaches the usual working age. But, if there is a difficulty, this was one deliberately accepted by the Parliament. In any event, the problem may not be as serious as is suggested by counsel to the respondent. The loss of earning capacity will often be able to be assessed even though a person has not yet reached employment age, whether that age be identical to the age specified in section 94 or some earlier age, depending upon the legislation in the various States and Territories as to the age that a person may leave school.”

16                  In the present case the AAT, after discussing Raizenberg, considered various subsequent amendments to the legislation. Of particular importance to the logic of the AAT’s decision was the 1991 amendment in which subs 94(1) was adopted in a form substantially similar to its present form and subs 94(2) was adopted in the following form:

“A person has a continuing inability to work if the Secretary is satisfied that:

(a) the person’s impairment is of itself sufficient to prevent the person from doing:

(i) the person’s usual work; and

(ii) work for which the person is currently skilled;

for at least 2 years; and

(b) either:

(i) the person’s impairment is of itself sufficient to prevent the person from undertaking educational or vocational training during the next 2 years; or

(ii) the person’s impairment does not prevent the person from undertaking educational or vocational training but such training is not likely to equip the person, within the next 2 years, to do work for which the person is currently unskilled.”

17                  The AAT referred at par 43 of its reasons to the Second Reading Speech in connection with the 1991 amendment which broadly speaking, disclosed the intention of the 1991 amendments as being to encourage invalids to seek re-entry to the workforce. We will return to this aspect at a later stage. The AAT considered that the references in subs 94(2) to the relevant person’s “usual work” and “work for which the person is currently skilled” were inappropriate to describe the position of a young person who had never worked. It concluded (at par 51) that:

“Given the focus of the concept of a “continuing inability to work” upon a person’s present ability and not upon some hypothetical ability in the future, it seems to me that a consideration of when a person first had that continuing inability must be grounded in a time when it would be expected that the person might work if he or she were able to do so and minded, when faced with the choice of furthering his or her studies, to do so. It would follow that it would not be relevant to consider the person’s capacity for work as an infant when there would be no such expectation. That this is what is intended is confirmed by reference to the Minister’s Second Reading Speech where the emphasis is upon people’s moving into the labour market rather then remaining on what had until then been the invalid pension.”

18                  The AAT concluded that this provision required assessment of inability as at age sixteen years. In light of this conclusion, it then considered the 1995 amendments which introduced the legislation in more or less its present form, noting that the Second Reading Speech did not indicate any intention to change the time at which the assessment of capacity to work was first to be carried out. The AAT concluded that the section in its present form should therefore be relevantly construed as complying with the AAT’s construction of the section in the form in which it was after the 1991 amendment and before the 1995 amendment. With all respect we query the validity of an approach to construction of legislation which focuses upon previous provisions, at least where there has been no well-settled judicial interpretation of them.

19                  The applicant submitted that subs 94(2) requires that in order that there be a continuing inability to work, the relevant impairment be “itself sufficient to prevent the person from doing any work within the next two years” and that this necessarily implies that other factors which might prevent a person from working are not relevant. In particular it submitted that the person’s age at the relevant time cannot be a relevant factor. The applicant pointed to other textual justifications for this conclusion but also submitted that the decision in Raizenberg must have been known to the Parliament at the times of the various amendments and yet there was no clear indication of an intention to depart from it. The applicant submitted that for the purposes of subpar 94(1)(e)(i), the time at which a person first satisfies par (c) is the time at which the relevant impairment first arises or perhaps, the point at which it first becomes such as to prevent the person from working for two years. The respondent’s submission was, in effect, that a person could suffer an inability to work for the purposes of subs 94(1) only after his or her sixteenth birthday. Prior to that time, there would be no expectation that he or she would, or perhaps legally could work.

20                  We consider that the Second Reading Speech to which the AAT referred is of some significance for present purposes. We set out below the content of par 43 of the Tribunal’s reasons which incorporates a relevant extract from that speech:

“The reasons for the change are found in the Second Reading Speech of the Hon Peter Staples, the then Minister for Aged, Family and Health Services, representing the Minister for Social Security (Hansard, House of Representatives, 31 May, 1991, page 4477). The 1991 Amendment Act was intended, the Minister said, to “… restructure income support for people who are disabled or sick …” and to introduce “… an entirely new strategy – which will help us deal far more effectively with the needs of people with disabilities in the 1990’s … (page 4477). Problems, he said, had developed under earlier legislation with concepts such as “permanently incapacitated for work” and “85% incapacity” (pages 4477-4478). The Minister continued:

“The AAT went a considerable way in taking account of socioeconomic factors and the labour market in assessing a person’s incapacity for work. We reached the stage where a person could suffer from a minor medical condition but, because of a combination of age, education, lack of skills in English, work history and workers (sic) compensation, could end up receiving invalid pension. Subsequent legislative amendments in 1987 went some way to reducing the impact of socioeconomic factors by introducing a requirement that at least half of the permanent incapacity had to be directly caused by a physical or mental impairment.

At the same time, there were a small but significant percentage of cases of relatively young people, even people in their twenties, who were not manifestly impaired but who were being awarded invalid pension with the expectation that they would continue to receive it on an indefinite basis. The concept of permanent incapacity for work became self-fulfilling and only some 2 per cent of invalid pensioners went off pension because of their return to employment. Overall, there has been minimal movement into the labour market by invalid pensioners.

Another important issue has been the failure of any significant number of invalid pensions to benefit from rehabilitation. Very few were referred or, if referred, accepted for rehabilitation. This was basically due to a lack of motivation which again appears to be linked to the fact that invalid pension was regarded as a permanent payment.” (page 4478).

21                  It is clear from the above and from the terms of the Act that the expression “continuing inability to work” does not imply permanent incapacity. The Act recognizes that a person may be unable to work at one point in time but may not necessarily be permanently incapacitated. It is easy to identify a number of factors which may operate to remove the incapacity. His or her condition may improve. He or she may adapt to the incapacity and so recover capacity to work. New developments in technology, knowledge or skills may assist the relevant person to work. New jobs may become available for which he or she is suited notwithstanding the relevant incapacity.

22                  Obviously enough, subs 94(2) is intended to define the expression “continuing inability to work” for the purposes of par 94(1)(c). It is of interest that the expression defined in subs 94(2) is “a continuing inability to work because of an impairment”. Impairment is referred to in pars 94(1)(a) and (b) but not in conjunction with the expression “a continuing inability to work” in par 94(1)(c). Its presence in subs 94(2) demonstrates that the continuing inability referred to in subpar 94(1)(c)(i) must be the result of the impairment referred to in pars 94(1)(a) and (b). It is not necessary for present purposes to consider the significance of subpar 94(1)(c)(ii) or subpar 94(2)(b)(ii).

23                  In determining whether or not a person satisfies par 94(1)(c), it is therefore necessary to ask whether or not he or she has a continuing inability to work because of an impairment which is of itself sufficient to prevent him or her from doing any work within the next two years, that is for the two year period commencing upon the date on which the relevant claim is under consideration. In other words, if the claim were being considered on 30 November 2001, the relevant period would be the period of two years commencing on that date. If the relevant person is relevantly impaired as to be unable to work for that period, and otherwise satisfies the requirements of subs 94(1)(a) to (d), then the next question is whether or not he or she satisfies par 94(1)(e) and in particular, for present purposes, subpar 94(1)(e)(i). As we understand it the applicant’s submission is that one simply looks to see whether or not the relevant claimant has, at some time prior to becoming an Australian resident, satisfied subs (c) in the sense that he or she has been so impaired as to be unable to work for two years, presumably from the time at which the impairment was diagnosed or perhaps, first arose. The respondent’s submission, on the other hand, is that as the respondent would not have worked, or perhaps could not legally have worked, until his sixteenth birthday, he had no continuing inability to work until that event, by which time he was an Australian resident.

24                  We find no support in the text of the section for the respondent’s submission. The approach to construction taken by the AAT in upholding that submission is, in our view, somewhat contrived and artificial. As to the applicant’s submission, it fails to recognize the importance of the identified two year period in the operation of the section. The expression “first satisfies paragraph (c)” may refer either to:

•                 the first occasion on which a claimant is impaired from any cause so as to be unable to work for any two year period; or

•                 the time at which he or she first suffers the actual impairment which causes the continuing inability to work for the identified two-year period.

25                  Although there is a degree of artificiality surrounding both approaches, the former is the less satisfactory. It would require that the decision-maker enquire into other conditions which may have previously caused inability to work, going back over many years. The latter approach focuses only upon the impairment relevant for the purposes of par 94(1)(c) and its effect during the identified period. We concede that there is an anomaly in this approach. A person who suffered from an impairment which caused a relevant continuing inability immediately prior to his or her becoming an Australian citizen might, without recovering the capacity to work, suffer another impairment, by itself causing a relevant inability. It is arguable that the second impairment would entitle the person to a pension, notwithstanding his or her inability to work even apart from the relevant impairment. It is not necessary that we decide whether or not that is the case, but assuming that it is, we make two observations:

•                 Such an event will be very rare; if there is an anomaly, it is not of great significance.

•                 It is quite possible that relevant policy considerations would favour such a result.

26                  The former approach may also involve an anomaly. A particular claimant may have had an impairment causing a relevant inability to work immediately prior to his or her becoming an Australian resident, but subsequently manage to obtain work as the result of one or more of the variable factors to which we have referred. He or she may then again become incapacitated by some other condition. We doubt whether Parliament intended that such a person be disqualified from receiving the pension. It is not an outcome which is clearly dictated by the terms of the section. The applicant’s submission overlooks the policy of the legislation as outlined in the Second Reading Speech, namely to encourage disabled people to overcome their incapacities.

27                  We favour the construction of subpar 94(1)(e)(i) which requires the decision-maker to determine when the actual impairment identified for the purposes of pars 94(1)(a), (b) and (c) was first such as to prevent the claimant from doing any work within the two year period identified for the purposes of par 94(1)(c). It is true that such an exercise will sometimes be difficult to perform. As was recognized by the Full Court in Raizenberg, any exercise of this kind will pose problems. However in most cases, the decision-maker will have only to determine whether or not the impairment as it is at the relevant time was present at the time at which the claimant became an Australian resident. It is only where the condition has become more or less acute, or where one of the other variable factors to which we have referred has come into operation that the matter will become more difficult.

28                  Clearly, the AAT did not consider the matter upon this basis. It was accepted that the respondent was incapacitated so that he could not work as at the date when he became an Australian resident. However no decision was made as to whether he was, at that time, relevantly incapacitated for work during the appropriate two year period. The appeal should be allowed and the matter remitted to the AAT for further consideration. Should there be any request for an order as to costs, the parties will be at liberty to make written submissions which they should exchange and forward to the District Registrar within fourteen days of the delivery of this judgment.

Associate:

Dated: 18 December 2001