FEDERAL COURT OF AUSTRALIA

Burgess v Centrelink [2007] FCA 595

PRACTICE AND PROCEDURE – consideration of an application for security for costs of an appeal from a decision of a Federal Magistrate – consideration of the principles to be applied – consideration of the circumstance that the controversy is one between a citizen and the executive

Social Security Act (1991)

Social Security (Administration) Act 1999

Federal Court of Australia Act (1976), s 56

Federal Court Rules, O 28, O52, r 20

Burgess v Centrelink and Ors [2006] FMCA 1952 - cited

Carey-Hazell v Getz Brothers & Co (Aust) Pty Ltd [2004] FCA 1334 - cited

Cooper v Universal Music Australia Pty Ltd [2006] FCA 642 - cited

Equity Access v Westpac Banking Corporation (1989) ATPR 40-972 – cited

KP Cable Investments Pty Ltd v Melt Glow Pty Ltd (1995) 56 FCR 189 - cited

DARREN JOHN BURGESS v CENTRELINK, SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS AND SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

QUD34 OF 2007

GREENWOOD J

24 APRIL 2007

BRISBANE

THE COURT ORDERS THAT:

1.                  Darren John Burgess provide security for the costs of the respondents of and incidental to an appeal from a decision of Federal Magistrate Wilson made on 18 December 2006 dismissing an application by Darren John Burgess for an extension of time to file and serve a notice of appeal from a decision of the Administrative Appeals Tribunal given on 6 September 2006 in an amount of $2,000. 

2.                  The appeal the subject of the notice of appeal filed by Darren John Burgess on 22 January 2007 is stayed until security in accordance with Order 1 is provided by Darren John Burgess or until further order. 

3.                  Each party has liberty to apply to the court on seven days notice to the other.

4.                  Darren John Burgess is to pay the costs of the respondents (being the applicants on the notice of motion) of and incidental to the notice of motion filed 5 April 2007. 

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

EX TEMPORE REASONS FOR JUDGMENT

1                     The applicants on the motion for an order for security for costs, namely Centrelink, the Secretary of the Department of Employment and Workplace Relations, and the Secretary, Department of Families, Community Services and Indigenous Affairs are the respondents to an appeal to the Federal Court of Australia by Mr Darren John Burgess, from a decision of Federal Magistrate Wilson on 18 December 2006 (Burgess v Centrelink and Ors [2006] FMCA 1952), dismissing the appellant’s application for an extension of time to file and serve a notice of appeal from the Administrative Appeals Tribunal given on 6 September 2006.

2                     The appellant on 22 January 2007, filed, in this court, an application for leave to appeal from the decision of Federal Magistrate Wilson and a notice of appeal.  The applicants on the motion acknowledge that leave to appeal is not required from the decision of Federal Magistrate Wilson on the footing that the decision is a final decision of that court. 

3                     Mr Burgess has appeared this morning by telephone in response to the application for security for costs.

4                     The background to the matter involves these circumstances. 

5                     Mr Burgess has been in receipt of a disability support pension since 16 April 2002.  On 22 January 2006, Mr Burgess wrote to Centrelink requesting that he be paid a lump sum payment of disability support pension entitlements in an amount of $31,500.  That amount arises out of a proposition that because Mr Burgess is currently 38 years of age and contends that he expects to live until a life age of 103 years, he has a remaining life expectancy of 63 years.  He seeks an acceleration or advance of disability support pension payments of $500 per year multiplied by 63 years, thus deriving the lump sum amount of $31,500.  Mr Burgess says that he seeks the acceleration because he wishes to invest the accelerated amount in income producing assets, so that he can get back on his feet.  Because of his circumstances, he is not in a position to otherwise raise a loan from a banker in the conventional way.

6                     The social security legislation which comprises the Social Security Act (1991) and the Social Security (Administration) Act 1999, contemplates that an application by a person, relevantly qualified, might be made for an advance payment of a social security pension entitlement.  The legislation provides, however, that there is to be a cap on the maximum amount that might be accelerated pursuant to such an application and s 1061ED of the Social Security Act (1991) sets that cap at $500 in any one year.  Plainly enough, there are good social policy reasons why such a cap might exist in respect of accelerations or advance payments and they, no doubt, are that limited amounts of acceleration would not place a recipient at great danger of continuing insecurity should the accelerated amount be dissipated.  The continuity of support in the payment of pension entitlements to the applicant is a critical matter.

7                     Because the amount is capped at $500 in any one year, the original application made by Mr Burgess was rejected on the footing that there was no statutory foundation for a decision to accelerate pension entitlements by 63 years in a present day lump sum amount of $31,500.  On 10 February 2006, an authorised review officer determined that Mr Burgess could not be paid the lump sum advance under the provisions of the Social Security legislation.  On 13 March 2006, the Social Security Appeals Tribunal (‘SSAT’) reviewed, on application by Mr Burgess, the decision and affirmed the authorised review officer’s decision.  Mr Burgess sought a review of the decision of the SSAT and on 6 September 2006 the Administrative Appeals Tribunal affirmed the decision.

8                     The appellant then appealed from the decision of the Administrative Appeals Tribunal to the Federal Court of Australia.  That matter was remitted to the Federal Magistrates Court and on 18 December 2006, Federal Magistrate Wilson dismissed the application for leave to appeal and ordered the present appellant to pay the respondents’ costs of the proceedings.  On 22 January 2007, Mr Burgess filed an application for leave to appeal and a notice of appeal in this court.  Pursuant to the order of Federal Magistrate Wilson, a bill of costs incurred in those proceedings has been prepared and the short-form bill reflects an amount of costs of those proceedings of $3,984.

9                     There are some contextual circumstances in relation to the litigation which should be mentioned and they are these. 

10                  In 2004, Mr Burgess requested Centrelink to pay him his lifetime entitlement to rent assistance in a lump sum payment in advance to enable him to build a house.  On 14 September 2005, an authorised review officer determined that the appellant could not be paid the lump sum payment in advance under the provisions of the social security legislation.  On 7 October 2005, the SSAT reviewed and affirmed the authorised review officer’s decision.  Mr Burgess sought a review of the Tribunal’s decision and on 16 January 2006, the Administrative Appeals Tribunal affirmed the decision.  Mr Burgess appealed from the decision of the Administrative Appeals Tribunal to the Federal Court of Australia.

11                  On 27 April 2006, the Federal Court dismissed the appeal (P)NSD105/2006, per Stone J.  On 23 May 2006, the Federal Court ordered the appellant, Mr Burgess, to pay the costs of the respondent to those proceedings in an amount of $1,200.  On 29 June 2006, the appellant applied to the court for an extension of time in which to appeal from the decision of Stone J.  The application for an extension of time was dismissed by the court, per Tamberlin J, on 22 November 2006 (Burgess v Secretary, Employment and Workplace Relations [2006] FCA 1725).  Mr Burgess was ordered to pay the respondent’s costs, fixed in an amount of $250.  At the date of swearing the affidavit by Mr Richard McQuinlan in support of this motion on 5 April 2007, the costs ordered to be paid by Mr Burgess by Stone J and Tamberlin J in respect of decisions I have mentioned, have not been paid.

12                  The principles to be applied in considering an application for security for costs derive at the outset, from a discretion conferred by the legislation.  Section 56 of the Federal Court of Australia Act (1976) provides that the court or a judge may order an applicant in a proceeding in the court, or an appellant in an appeal to the court, to give security for the payment of costs that might be awarded against such a party.  Order 28 of the Federal Court Rules also makes provision for security for costs and in general terms, provides that the court may order that the proceeding be stayed until security is provided.

13                  Order 52, rule 20 expressly deals with the question of security for costs in an appeal, and provides:

Unless the court or a judge otherwise directs, no security for costs of an appeal to the court shall be required.

14                  The Federal Court of Australia Act and Order 52, rule 20 of the Federal Court Rules provides for what has been described as an ‘undeniably broad discretionary judgment’ (Carey-Hazell v Getz Brothers & Co (Aust) Pty Ltd [2004] FCA 1334 per French J [32]), which is consistent with other expressions of view:  note, Cooper v Universal Music Australia Pty Ltd [2006] FCA 642 per Tamberlin J [11].  In the decision in Carey-Hazell v Getz, French J noted a number of considerations to be taken into account in the exercise of the discretion and those discretionary considerations derive, in large part, from the observations of Hill J in Equity Access v Westpac Banking Corporation (1989) ATPR 40-972 at 50,635, and the observations of Beazley J in KP Cable Investments Pty Ltd v Melt Glow Pty Ltd (1995) 56 FCR 189.

15                  The considerations include whether the application for security for costs has been brought promptly; an assessment of the strength of the merits of the appeal and the bona fides of the appellant in bringing the appeal; whether the impecuniosity of the appellant was caused and, I might add, contributed to by the conduct of the respondents; whether the application for security for costs, in all the circumstances, is oppressive having regard to the circumstances of the appellant; whether there are persons who otherwise have an interest in the outcome of the proceedings; and other general discretionary questions going to the public interest. 

16                  One additional matter which seems to me to be important in such an application is the particular circumstances that arise when the controversy before the court is one between a citizen and the executive.  It seems to me that the court should be particularly conscious of the disequilibrium between the executive and the citizen and, in exercising a judgment as to whether the discretion should fall in favour of making a security for costs order, the merits of the underlying appeal should be considered very carefully; the particular or special detriment which might arise in the appellant should an order for security be made, should be scrutinised carefully; so too the circumstances of the appellant; and the question of whether the appeal turns upon questions which might go to assessments of evidence rather than a question of construction of legislation, should be considered. 

17                  Mr Burgess in his observations, makes the comment that the costs of the respondents ultimately come from revenue derived by the respondents from the receipt of taxes, although Mr Burgess did not quite put it that way.  I think the point is that because the respondents are supported by the community, then one should be careful in weighing the discretionary factors against Mr Burgess in making an order for security for costs. 

18                  Some of the circumstances which warrant attention in this matter are these.  Firstly, Wilson FM had to consider the question of whether an application for an extension of time to file and serve a notice of appeal from a decision of the Administrative Appeals Tribunal ought to be summarily dismissed.  There is no doubt that in considering the reasons of Wilson FM, the correct test, as a matter of law, has been applied for determining that application.  In the course of dealing with the application, Wilson FM made these observations. 

11.       As I have said, there are no issues of fact, which have to be determined in this case.  It is one which turns upon the construction of legislation.  The relevant legislation is that contained in the Social Security Act 1991.  Section 1061A(1) deals with the qualification of a person for an advanced payment of a social security entitlement.  Section 1061A(4) provides for exclusions to an entitlement to advance payment.  Section 1061EA(1) provides that the Secretary of the Department must determine the application in accordance with the Act. 

12.       Therefore, if there is no statutory provision, which permits the commutation of a pension to a lump sum, the Department simply cannot allow an application in that regard.  Section 1061ED(1) provides that the amount of an advance payment is calculated according to that section, and section 1061ED(2) provides for calculation of the amount of the advance payment.  Here, the amount in question would be $500.

…

14.       In the present case, the Tribunal considered the correct legislation.  No error of law is apparent from the reasons of the Tribunal.  The dispute was in relation to the amount which could be advanced.  The Tribunal member was, in my view, correct in saying that the effect of the legislation is beyond a doubt.  The Secretary is not authorised to accumulate advances into a lump sum greater than $500.  The member correctly held that the Secretary had properly refused Mr Burgess’ application.  No error of law is demonstrated, either from the reasons for decision or from the applicant’s own material. 

15.       In those circumstances, I am satisfied that the applicant has no reasonable prospect of successfully prosecuting an appeal in this case. 

19                  In reliance upon those observations, Federal Magistrate Wilson summarily dismissed the application, pursuant to Federal Magistrates Court rule 13.10.  The application before me, of course, is not to determine the question of the merits of the appeal.  However, in determining the application for security for costs and in weighing the exercise of the discretion, the substance and merits of the appeal are particularly relevant.

20                  It seems to me that in a contest between the citizen and the executive, the strength of the arguable case is particularly important.  If the appeal raises an arguable question, or an arguable matter of statutory construction, although minds might legitimately differ on the strengths and weaknesses of the arguable question, it seems to me that the citizen should rarely be prevented from progressing his or her appeal by force of a security for costs order.  In other words, in cases where an arguable question is raised, an order ought not to be made for security for costs against a citizen in a controversy between the citizen and the executive except in very unusual circumstances. 

21                  In this case, the appeal does not concern anything other than a question of construction of the provisions of the legislation.  The legislation makes it plain that any entitlement to an acceleration or advance payment is capped at $500.  In those circumstances, the proper conclusion to be made is that an appeal from the decision and orders of Federal Magistrate Wilson has no reasonable prospects of success.  Although I am reluctant to say that such an appeal has no prospects of success at all, the extent to which an appeal, in this case, is unmeritorious having regard to the hypothecated lifespan and formulation for the calculation of the lump sum, seems to me to virtually reach the position where Mr Burgess has no prospects of success in the appeal.

22                  A second factor is the question of whether there is a prospect that Mr Burgess will be in a position to meet a costs order should he be unsuccessful.  Having regard to the history of the litigation I have previously described and the costs orders which remain unsatisfied, it is clear on the material that Mr Burgess is not likely to be in a position to pay an order for costs.  Mr Burgess has placed emphasis upon his particular circumstances and his inability to raise an amount to provide security for costs.  Those conditions derive from his present circumstances as a recipient of a disability support pension.  Although those circumstances explain the source of Mr Burgess’s inability, it is nevertheless clear that Mr Burgess will not be in a position to meet a costs order made against him in the event that the appeal is dismissed. 

23                  A third consideration is whether the application for security for costs is made in circumstances where the respondents are seeking to be oppressive in the conduct of the appeal.  Having regard to the circumstance that Mr Burgess has exercised a right of review before the SSAT; has exercised a right of review before the Administrative Appeals Tribunal; and has had the benefit of a determination of issues before Federal Magistrate Wilson, it cannot be properly said that Mr Burgess has been deprived of an opportunity to ventilate each and every basis upon which the rejection of the acceleration payment was made.  Thus, no question of oppressive conduct arises. 

24                  A further consideration is the question of the contribution of the respondents to the impecuniosity of the appellant, and I have addressed that briefly in the context of other remarks.  The respondents have not caused or contributed to the impecuniosity of the appellant. 

25                  An additional factor to be addressed is the consideration of the public interest and other discretionary factors at large.  Although I take the view that a controversy between the citizen and the executive requires very special consideration, it seems to me that the point of principle remains that in circumstances where there is such a demonstrated lack of merit in the appeal; a history of access to review in various fora and a demonstrated inability on the part of the appellant to meet an order for costs, the progression of the appeal without an order for security for costs is, as a matter of discretion, inappropriate.

26                  A consideration that ought not to be overlooked is that the particular character of the decision under challenge is one to accelerate or advance payments at the maximum of $500 per year over a period of 63 years, thus generating a present amount of $31,500.  The present circumstances of Mr Burgess are not altered or prejudiced by a rejection of that decision.  Mr Burgess has an entitlement to a disability support pension; has had the benefit of those entitlements since 16 April 2002; and continues to receive those entitlements unchallenged.  Had special considerations of detriment arisen, by reason of the exercise of a discretion on the part of the respondents resulting in a refusal to maintain present entitlements, the question would be a different one.

27                  For all of these reasons, it seems to me appropriate to make an order for security for the costs of the appeal.  I have been provided with an estimate of the costs of responding to the appeal, which is divided into two categories.  The first category is the costs incurred in addressing the question of the appeal to date which amounts to $1,526.  The second category of costs goes to those costs to be incurred from today forward, addressing such matters as preparation of the appeal books, development of submissions, retaining counsel and related matters.  The total amount of costs in connection with Mr Burgess’s appeal are said to amount to $3,439, although some categories of costs may not have been included in the schedule.

28                  I propose to make an order for security for costs which is a discounted amount from the proposed schedule.  The amount I propose to impose is a security of $2,000. 

29                  Accordingly, the orders I propose to make are these.  First, that the appellant, Darren John Burgess, is to provide security for the costs of the respondents to the appeal in an amount of $2,000.  Secondly, the appeal is to be stayed until security in that amount has been provided, or until further order. 

30                  I give liberty to the appellant and the respondents to make further application to the court on seven days’ notice. 

31                  I further order that Mr Burgess is to pay the costs of the respondents of and incidental to the notice of motion filed 5 April 2007.

Associate:

Dated:         24 April 2007