FEDERAL COURT OF AUSTRALIA

Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Mouratidis [2010] FCA 880

THE COURT ORDERS THAT:

1.                  The application made by notice of motion dated 5 August 2010 is refused, with costs.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

Introduction

1                     By notice of motion dated 5 August 2010, the applicant, the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (“Secretary”), seeks pursuant to s 44A of the Administrative Appeals Tribunal Act 1975 (“AAT Act”) a partial stay of the decision of the Administrative Appeals Tribunal (“Tribunal”) made on 30 April 2010 affirming the decision of the Social Security Appeals Tribunal (“SSAT”) that the respondent, Michael Mouratidis, is entitled to a continuation of the payment of his disability support pension from 29 March 2009.  The partial stay is sought until 2 December 2009, pending the hearing and determination of the Secretary’s appeal from the Tribunal’s decision.

2                     The application is supported by the affidavit of Emily Jane Nance, an employee of the solicitors for the Secretary, affirmed on 5 August 2010.

3                     The application is opposed.  The affidavit of Gavan Blau, an employee of the solicitors for the respondent, was sworn on 13 August 2010 in opposition.

4                     The Secretary’s appeal brought by notice of appeal dated 28 May 2010 is fixed for hearing on 11 October 2010.

5                     The partial stay sought in this application relates to a “back payment” of arrears of the respondent’s disability support pension for the period 29 March 2009 to 2 December 2009, in the sum of about $11,500.

Background

6                     As appears from the affidavit of Ms Nance and related material, the respondent, who migrated to Australia as a child with his family from Greece in about 1965, suffered an injury in about 1990, from which time he received a disability support pension.

7                     In around May 2008, the respondent travelled to Greece with his mother, who was then aged 90 and suffering from Alzheimer’s disease.  Centrelink, prior to the respondent’s departure, advised him of the 13 week maximum portability period during which, under ss 1216 and 1217 of the Social Security Act 1991 (Cth), he could remain out of Australia before his disability support pension would be suspended.

8                     On 22 August 2008 the respondent returned to Australia within the portability period, but returned to Greece on 12 September 2008.  Subsequently, the health of his mother (who had remained in Greece) deteriorated to the extent that she was unable to travel and required two carers.

9                     The respondent again returned to Australia on 9 December 2008 in conformity with the 13 week portability period.  While he was in Australia, his mother fell and broke her right hip.

10                  On 28 December 2008, the respondent returned to Greece, where he remained.

11                  On 14 January 2009, the respondent’s mother was discharged from hospital, but her condition was such as to require two carers.  The respondent thereafter stayed in Greece to provide care to his mother.

12                  Centrelink, on 30 March 2009, advised the respondent that his disability support pension had been suspended, as the maximum portability period had been exceeded.

13                  On 24 June 2009, the respondent applied for an extension of the portability period, which Centrelink refused.

14                  The respondent requested a review of that decision which, on 14 September 2009, was affirmed by an authorised review officer.  The respondent requested a further review of the decision, upon which the decision was again affirmed.

15                  The respondent applied for review of the decision to the SSAT which, on 3 December 2009, determined that his pension remained payable while he was overseas.  The payment of the respondent’s pension resumed on 3 December 2009. The Secretary sought review of the SSAT decision and on 30 April 2010 the Tribunal affirmed the SSAT’s decision.

16                  The Tribunal’s decision is the subject of the appeal to be heard on 11 October 2010.  The principal issue on appeal is whether there was an event within terms of s 1218C(1)(b) of the Social Security Act (“a serious illness of [the respondent] or a family member of [the respondent]”) which “occurred or began during [the respondent’s] period of absence” within the meaning of s 1218C(2)(a) of the Social Security Act, thereby permitting the Secretary to extend the portability period for the respondent’s disability support pension beyond the maximum portability period specified in s 1217.

17                  The Secretary submits that there was no event satisfying the requirements for an extension, because the respondent was in Australia when his mother broke her hip and was hospitalised.

18                  The respondent seeks to uphold the decisions of the Tribunal, submitting that the relevant events were the deterioration in his mother’s health to the point that she was unable to travel and, or alternatively, her discharge from hospital, both of which took place while he was in Greece.

Relevant legislation and case law

19                  Section 44A of the AAT Act provides:

44A Operation and implementation of a decision that is subject to appeal

Appeal does not affect operation of Tribunal’s decision

(1) Subject to this section, the institution of an appeal to the Federal Court of Australia from a decision of the Tribunal does not affect the operation of the decision or prevent the taking of action to implement the decision.

Stay orders

(2) Where an appeal is instituted in the Federal Court of Australia from a decision of the Tribunal, that Court or a Judge of that Court may make such order or orders staying or otherwise affecting the operation or implementation of either or both of the following:

(a) the decision of the Tribunal or a part of that decision; and

(b) the decision to which the proceeding before the Tribunal related or a part of that decision;

as that Court or Judge considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the appeal.

20                  The discretion conferred by s 44A(2) of the AAT Act should be exercised only where special circumstances justify departure from the rule that a successful litigant is entitled to the fruits of judgment pending the appeal, because the appeal, although successful, may otherwise be rendered nugatory.  See Broadbent v Civil Aviation Safety Authority [1999] FCA 1871 at [5]–[6]; Hartnett v Migration Agents Registration Authority [2003] FCA 998 at [4]; Theo v Secretary, Department of Family Services [2004] FCA 1748 at [5].

21                  Such special circumstances have held to exist typically, but not exclusively, where the respondent’s financial state is such that there is no reasonable prospect of recovering the moneys paid pursuant to the judgment under appeal.

22                  In Australian Telecommunications Corporation v Moffat [1992] FCA 30 (“Moffat”), French J considered the authorities on s 44A of the AAT Act and related stay provisions.

23                  His Honour stated (at pages 14 to 16):

In The Commissioner of Taxation of the Commonwealth of Australia v The Myer Emporium Ltd (No 1) (1986) 160 CLR 220, Dawson J dealt with an application for a stay under O 70 r 12 of the High Court Rules. The rule provides that unless the court or a judge otherwise orders, neither an application for special leave nor an appeal shall operate as a stay of proceedings. His Honour there said of the rule at p.222:

“It is well established by authority that the discretion which it confers to order a stay of proceedings is only to be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal: … Special circumstances justifying a stay will exist where it is necessary to prevent the appeal, if successful, from being nugatory … Generally that will occur when, because of the respondent's financial state, there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will, I think, exist where for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed.”

In Commissioner for Superannuation v Hastings (1986) 5 AAR 197, Northrop J applied those views to s 44A of the Administrative Appeals Tribunal Act notwithstanding its slightly different wording when he said, at 199:

“For present purposes, the relevant provision is that the Court may make an order staying or otherwise affecting the operation of the decision of the Tribunal as the Court or a Judge considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the appeal.

In that respect, the Court considers that prima facie, and I use that expression intentionally, a stay order should not be made, but that in an appropriate case, the Court will make an order. Under similar but differently worded provisions applicable in Supreme Court proceedings, the Supreme Court of Victoria constituted by Adam J in Scarborough v Lew's Junction Stores Pty Ltd (1963) VR 129, at 130, set out considerations which are relevant in considering whether to grant a stay of an appeal in that Court.

Those views were supported by Dawson J in the case of Commissioner of Taxation v Myer Emporium (1986) 60 ALJR 300, at 301. One of the special circumstances which is relevant is that if the appeal were to be successful, whether the successful appellant would be deprived of the fruits of his appeal if a stay of execution were not granted.”

24                  In Moffat, an employer sought to stay a decision holding it liable to pay compensation to an employee who suffered a disease to which his employment materially contributed.  There was evidence of the impecuniosity of the employee, who was receiving a disability pension.  French J acknowledged “some risk of non-recovery in these circumstances” of the compensation (assessed to be between $20,000 and $50,000) if the appeal succeeded.

25                  Having balanced the interests of the parties as best he could, French J stayed the decision in relation to payment of a sum in excess of $15,000. His Honour stated (at 16):

In the present case, the Court is empowered to make such order as to a stay for the purpose of securing the effectiveness of the hearing and determination of the appeal. In my opinion, if there is evidence supporting the view that if the appeal is successful, the successful applicant would not be in a position to recover the money paid to the respondent, the Court should, in the exercise of its discretion, grant an order staying the operation of the decision under appeal or part of that decision. This depends also on the question of whether the Court is satisfied that the appeal is not merely a sham.

26                  In Australian Trade Commission v WA Meat Exports Pty Ltd [1987] FCA 413, however, French J refused a stay under s 44A of the Act, as there had been no suggestion that “in the event of the appeal being successful any money paid over to the appellant pending the hearing of the appeal, would be irrecoverable” (the applicant had undertaken to the court to repay the total amount in such circumstances) and no “other bases had been suggested upon which it can be argued that the purpose of securing the effectiveness of the hearing and determination of the appeal would be advanced by making a stay order” (at pages 6-7).  French J further stated (at 6):

It is difficult to see why [the respondent] should be prejudiced and kept out of funds to which it would otherwise be entitled, by reason of internal difficulties [referred to by the applicant]  …

[T]he power to order a stay under Administrative Appeals Tribunal Act is conditioned by the purpose of “securing the effectiveness of the hearing and the determination of the appeal”.

27                  In Re Repatriation Commission and Delkou (1985) 8 ALD 454 (“Delkou”), Deputy President Hall considered the following factors in determining whether to exercise the discretion to grant a stay under s 41(2) of the AAT Act:

(a)        any hardship which might be suffered by reason of the grant or refusal of a stay (at [22] and [29]);

(b)        the likelihood of recovery by the Commonwealth of moneys to be paid under the determination sought to be stayed (at [24]-[25]);

(c)        the prospect of success of the application for review (at [32]).

28                  In Delkou, Deputy President Hall considered an application to stay a decision entitling the respondent to receive both a pension at a special rate and a substantial lump sum payment for arrears.  The lump sum had already been paid to the respondent.

29                  There were doubts as to whether the money paid to the respondent would lawfully be recoverable in the absence of a relevant statutory power.

30                  Deputy President Hall stated:

(24) The doubts expressed by the Commission with respect to the recoverability at law of payments of pension made pursuant to the VRB decision (in the event that this Tribunal ultimately sets that decision aside) are based on dicta of Fisher J in Thornton v Repatriation Commission (1981) 35 ALR 485 at 492–3 and upon observations that I made, in a somewhat different context, in Re Buhagiar and Director-General of Social Services (1981) 4 ALD 113 at 121–2 regarding the recovery of moneys under the principle of Auckland Harbour Board v R [1924] AC 318. In essence, the Commission's concern, as I understand it, is that any moneys paid to Mr Delkou are, in legal theory, paid to him pursuant to a valid decision that has been imposed upon the Commission by the VRB. In so deciding the Board was exercising, for that purpose, the powers and discretions of the Commission: see s 107 vg (4). Even if the decision of the VRB is ultimately set aside, and the Commission's original decision assessing Mr Delkou's disability pension at 20 per cent of the general rate is restored by this Tribunal, the Commission is concerned that the moneys paid in the meantime may be irrecoverable because, at the time they were paid, Mr Delkou was legally entitled to them.

(25) I am satisfied that there is, at present, no statutory power under which moneys so paid may be recovered. In Thornton (at 492–3), Fisher J concluded that there was no statutory right vested in the Commission enabling it to recover moneys paid by way of disability pension pursuant to a valid decision of the Commission in circumstances where, in the light of a subsequent High Court decision in a similar case, the Commission concluded that the original grant of a pension had been in error and proceeded to cancel it. In Buhagiar at 121–2, the Tribunal expressed doubts with respect to the recoverability under the Auckland Harbour Board principle of pension moneys that, at the time they were paid, were paid pursuant to a valid and subsisting determination. However, as Buhagiar made clear, that is only one possible common law remedy that may be available to facilitate recovery of moneys had and received.

(26) In judicial proceedings where the judgment of a lower court is set aside on appeal, there appears to be no doubt that moneys paid in the meantime in satisfaction of the judgment are recoverable (see, for example The Annot Lyle (1886) 11 PD 114 at 116 JC Scott Constructions at 246–9; cf Halsbury's Laws of England 4th ed, vol 9, pp 451–3). Were the position otherwise, a stay of execution could hardly be denied to any appellant. Whether the same principles apply in the context of administrative review may be open to argument. In terms of basic principle, the circumstances of the present case seem indistinguishable. However, for the purpose of reviewing a decision of the Commission, both the VRB and this Tribunal are invested with all the powers and discretions that are conferred on the Commission: see s 107 vg (4) of the Repatriation Act; cf s 43(1) of the AAT Act. Although at each level of review those powers and discretions are exercised independently of the Commission, a decision made in substitution for a decision of the Commission depends for its efficacy in law upon the powers and discretions conferred on the Commission itself. Payments made thereafter are payments made pursuant to a lawful exercise of the powers of the Commission.

(27) I do not consider it appropriate that, in the context of a stay application, I should endeavour to resolve these questions. It suffices to say that, in the circumstances, I am not prepared to treat the doubts expressed by the Commission as completely unfounded. Particularly in respect of a substantial lump sum payment for arrears, the possible doubts as to recoverability may, I think, properly be weighed in the discretionary balance on the question of whether or not to grant a stay. In addition, of course, it will always be a relevant consideration whether, even if recoverable at law, moneys paid pending completion of the review will be recoverable, in fact, in the event that the Commission succeeds: cf Atkins v Great Western Railway (1886) 2 TLR 400.

31                  In relation to the on‑going payments, Deputy President Hall stated:

(28) With respect to on-going payments, the same doubts as to recoverability apply. Notwithstanding that the moneys paid may possibly be irrecoverable, it is in my view necessary to balance that consideration against the hardship that may be imposed on the pensioner by denying to him or her the full pension entitlement as found by the VRB: cf Dart at 556.

32                  The Deputy President concluded that (as the respondent had received a substantial sum of money to draw on for the financial needs of his family pending the hearing and determination of the review, and both the lump sum and the ongoing payments were possibly irrecoverable) the ongoing payment should be stayed to prevent, as far as practicable, the application for review from being rendered nugatory (at [34]).

33                  In Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 (“Myer”), Dawson J stayed an order of the Supreme Court of Victoria that the Commissioner of Taxation issue an amended assessment in favour of a taxpayer.

34                  His Honour referred, inter alia, to the parties’ conflicting submissions on whether the High Court had power to order the repayment of interest, should the Commissioner succeed on appeal.

35                  Dawson J stated:

Whilst I was initially inclined to accept the taxpayer's submission, upon reflection I think that there is sufficient force in the argument advanced by the Commissioner to cast doubt upon the power of this court to grant relief upon appeal as the taxpayer contends. I do not think that in these proceedings I have to go further than that; I do not have to conclude the issue. It is sufficient to say that in my view there is a real risk that if the judgment made by the Supreme Court is not stayed, the Commissioner may be prejudiced by the payment, pursuant to a statutory obligation, of a substantial amount of money which will prove to be irrecoverable notwithstanding the conclusion of the appeal in his favour. That is, in my view, a sufficiently exceptional circumstance to justify my granting the stay sought.

Relevant evidence

36                  In her affidavit in support of the application, Ms Nance deposed that:

11.  As a result of the AAT decision which affirmed the SSAT decision, the period of arrears the subject of the stay application is 29 March 2009 to 2 December 2009.  I am instructed that the sum of arrears referable to this period is approximately $11,500.00.

12.  I am instructed that on and from the decision of the SSAT made 3 December 2009, payment of the Respondent’s DSP resumed and continues to be paid to the present day.  The current fortnightly payment received by the Respondent is $664.10.

13.  The Applicant seeks a partial stay of the operation of the decision of the AAT dated 30 April 2010 pending the final determination of this appeal on the basis that that there is no mechanism available under the Act to recover any lump sum paid to the Respondent pursuant to the AAT decision.

37                  In his affidavit in opposition to the application, Mr. Blau deposed to his communications with the respondent, who informed him that:

6.  The respondent lives in a small flat (“Flat”) with his mother, Sofia and brother, Lambos.  Together, Lambos and the respondent care full time for their ill mother (together “Family”).

7.  The flat is located on the first floor of the apartment building.  The apartment is also cramped.  It is therefore difficult for the respondent and Lambos to transport Sofia in her wheelchair.

8.  At present the entirety of their household income is directed at ongoing living expenses.  Major expenses include:

(a)        approximately 400 Euro per month for Sofia’s medication;

(b)        approximately 100 Euro per month for nappies required by Sofia;

(c)        food;

(d)        loan repayments;

(e)        car expenses: and

(f)        other household expenses.

9.  Nevertheless, the respondent, Lambos and Sofia regularly struggle to fund an adequate standard of living.  On occasions the Family have had to go without nappies for Sofia and on occasions the Family have had to go without air conditioning.  The Family also wish to be able to afford additional medicine for Sofia that they cannot currently afford to buy.

10.  The Family are also struggling to maintain the roadworthiness of their car which often breaks down.  The Family is extremely reliant on their car as it ensures that Sofia can be taken out of the home on occasions which greatly assists her mental health.  When Sofia is forced to stay in the house for extended periods she often becomes very anxious.

11.  Sofia is 92 years old and suffering a terminal state of Alzheimer’s disease.  It is the desire of the respondent that Sofia can be cared for adequately and with dignity in this final stage of her life.  He will use the funds he receives by way of the Lump Sum to assist in his and Sofia’s standard of living.

12.  I am instructed that in the event the appeal was successful, the respondent would repay the Lump Sum to the applicant.

The parties’ submissions

38                  Before me, the principles relevant to the grant of stay were not disputed.

39                  The Secretary submitted that:

(a)        The Secretary had reasonable prospects of success on appeal in relation to the proper construction of s 1218C(2)(a) of the Social Security Act.

(b)        There was doubt as to the existence of any statutory mechanism for recovery of the moneys paid pursuant to the decision under appeal, as s 1222A of the Social Security Act might not apply and the other avenues identified by the respondent were merely speculative.

(c)        Based on the Nance affidavit, there was little or no prospect of, or sufficient doubt as to, recovery of the $11,500 in the event that the Secretary succeeded on appeal. Therefore, if paid, it might represent a windfall to the respondent.  Although the respondent asserted that he would repay any relevant amount, he furnished no precise details of his assets and liabilities, his financial resources or his expenses, (which were matters peculiarly within his knowledge), thereby precluding an assessment of his capacity to repay.

(d)        There was no evidence that a partial stay would result in hardship to the respondent, who continued to receive a fortnightly pension of $644.10.  The respondent had made no demand for the arrears.  The respondent’s solicitor’s affidavit was unduly vague about the matters relied on to establish hardship and did not satisfy the criteria or concepts enunciated in authorities such as In the Marriage of Whitford (1978)24 ALR 424, where the Full Family Court stated (at 430-431):

The next question which arises is what the word “hardship” in s 44(4) means.

In our view the meaning of “hardship” in sub-s 44(4) is akin to such concepts as hardness, severity, privation, that which is hard to bear or a substantial detriment.  Of the meanings assigned to “hardship” in the Shorter Oxford Dictionary and in Webster’s New International Dictionary. See also In the Marriage of McKenzie [1978] FLC 90‑496; 4 Fam LR 374.

…

In ordinary parlance, hardship means something more burdensome than “any appreciable detriment”.  We consider that in sub‑s 44(4) the word should have its usual, though not necessarily its most stringent, connotations.  It is impossible to lay down in advance what particular facts may or may not amount to hardship in the relevant sense. …

40                  The respondent submitted that:

(a)        if the Secretary succeeded on appeal, the “back payment” would be recoverable as a debt due to the Commonwealth pursuant to ss 1222A and 1223 of the Social Security Act, as a cumulation of regular payments under the Act which were later found not to be due, or alternatively, under principles of undue enrichment or monies paid under a mistake of fact.

(b)        Accordingly, the Commonwealth could recover the back payment sum through, inter alia, the following means:

(i)         Deductions from debtor’s pension, benefit or allowance (s1231);

(ii)        Legal proceedings (s1232); and

(iii)       Arrangements made by agreement between the parties (s1234).

(c)        The respondent, who was living in difficult circumstances, would be peculiarly benefited by the immediate receipt of the payment, which, under the decision subject to appeal, he was entitled to receive between March and December 2009.  The potential delay in access to the moneys occasioned by a stay would coincide with a time of unique need due to the illness of the respondent’s mother.  The mere potential for difficulty in recovering the payment was not a proper basis to stay the decision in the respondent’s favour.

Discussion

41                  Prima facie, the respondent is immediately entitled to the fruits of his judgment, despite the institution of an appeal.  The Court’s jurisdiction to grant a stay is discretionary.  The Secretary, who bears the onus of displacing that entitlement by establishing special circumstances, alleges that the appeal would be rendered nugatory because there are no reasonable prospects of recovering the sum paid pursuant to the judgment subject to appeal, or a real risk that the Secretary could not be restored to his former position.

42                  In the present case, it was conceded that the Secretary has reasonable prospects of success on the construction point the subject of the appeal.  In my opinion, however, the Secretary has not discharged the burden of establishing the existence of special circumstances.

43                  In the present case, in contrast to Myer and Delkou, the Secretary, as I understood it, did not submit that there was no power to order repayment of the sum in issue or that the sum would or might not be recoverable as a matter of law should the appeal succeed.  Rather, he submitted that there was no (or doubt as to the existence of a) statutory mechanism to facilitate or ensure the reclamation of the payment should the Secretary’s appeal succeed.

44                  While counsel for the Secretary questioned whether s 1222A of the Social Security Act would apply, no detailed or developed submissions on the issue were advanced.  It is unnecessary to determine in the present context whether s 1222A or any other statutory avenue for recovery would apply.  The absence of a special statutory mechanism for repayment of a successful appellant is unexceptional, and does not preclude recovery, for which a number of possible avenues have been identified.  Possible doubts about the availability of lawful recovery are, in any event, but one matter to be weighed in the discretionary balance.

45                  Further, the respondent’s material makes clear, to a sufficient degree, that he is not affluent and requires extra money to satisfy the current needs of himself and his seriously ill mother.  While the respondent’s statement that the payment would “greatly assist” tended to minimise his need for it, the matters to which he deposed, including the inability to provide personal items necessary for the care of his mother, in my view demonstrated hardship in the relevant sense.  It was unnecessary that the respondent make a formal demand for the amount in order to demonstrate hardship.  There was no evidence of the respondent’s total assets, potential resources, financial position or prospects.  It was not clear whether such information was available to the Secretary, who bears the onus in the stay application.  Nevertheless, although the respondent is in receipt of a disability pension, it cannot be inferred from that circumstance that he would not, in the future, command the wherewithal to repay the sum of $11,500.  The respondent has asserted that he would repay the relevant amount should the Secretary’s appeal succeed.  There is no evidence to suggest that the respondent would not comply with orders of the court or fail to fulfil any lawful obligation to repay the money.  There is no evidence that he intends permanently to absent himself from Australia or to sever his ties with the jurisdiction.

46                  The evidence suggests that the respondent’s immediate cash requirements are greater and more urgent at present, due to particular needs associated with his mother’s advanced illness.  The respondent’s account of his mother’s illness and his explanation for his failure to return to Australia within the portability period were unchallenged.  The denial of access for the period pending the hearing and determination of the appeal to the amount to which, under the Tribunal’s decision, the respondent is lawfully entitled may impose particular hardship out of proportion to the time involved.

47                  In all the circumstances, I am not satisfied, on the evidence, that there are no reasonable prospects of recovering the amount of the arrears should the Secretary’s appeal succeed.  The hardship posed to the respondent by a partial stay likewise militates against it.

48                  In my opinion, the application for a partial stay should be refused.

Associate:

Dated:         17 August 2010