FEDERAL COURT OF AUSTRALIA

Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Mahrous [2012] FCA 912

THE COURT ORDERS THAT:

1.    The interlocutory application filed 19 July 2012 is dismissed.

2.    By 31 August 2012 the applicant is to submit a draft of the index to Part A of the appeal book together with a draft of the Part B Comprehensive Reference Index for consideration by a Registrar.

3.    The applicant is to file Part A of the appeal book, including all documents, indexed and ordered according to unique tab numbers, and to file the Part B Comprehensive Reference Index within the time frame prescribed by subr 33.24(4) of the Federal Court Rules 2011.

4.    The applicant is to file Part C of the appeal book not later than 5 business days before the hearing of the appeal.

5.    The appeal book is to be compiled pursuant to r 33.26 of the Federal Court Rules 2011.

6.    Two copies of the appeal book are to be filed with the Court and an additional two copies are to be provided to the respondent.

7.    In accordance with r 33.27(2)(a) of the Federal Court Rules 2011, the applicant is to file his submissions and chronology not later than 20 business days before the hearing of the appeal.

8.    In accordance with r 33.27(2)(b) of the Federal Court Rules 2011, the respondent is to file his submissions and chronology not later than 15 business days before the hearing of the appeal.

9.    In accordance with r 33.27(2)(c) of the Federal Court Rules 2011, the applicant is to file his submissions in reply, if any, not later than 10 business days before the hearing of the appeal.

10.    In accordance with r 33.27(4)(a) of the Federal Court Rules 2011, the applicant is to file his list of authorities and list of legislation not later than 5 business days before the hearing of the appeal.

11.    In accordance with r 33.27(4)(b) of the Federal Court Rules 2011, the applicant is to file his list of authorities and list of legislation not later than 4 business days before the hearing of the appeal.

12.    The appeal be listed for hearing before Logan J for half a day on a date to be fixed.

13.    The parties are granted liberty to apply on 3 days written notice to the other party.

14.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    This is an interlocutory application brought by the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (“the Department”) to stay the operation of a decision of the Administrative Appeals Tribunal (“the Tribunal”). In Mahrous v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs [2012] AATA 355 the Tribunal found that the respondent, Mr Andro Mahrous, satisfies the requirements of s 94(1)(e)(ii) of the Social Security Act 1991 (Cth) (“Social Security Act”) relating to eligibility for the disability support pension under the Social Security Act. While not specifically stated in the interlocutory application, it appears that the application is to stay the operation of the decision of the Tribunal pending the hearing of an appeal against the decision of the Tribunal in [2012] AATA 355.

2    The application is brought pursuant to s 44A(2)(a) of the Administrative Appeals Tribunal Act 1975 (Cth), which empowers the Court in the following terms:

(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;

…

Background

3    On 14 June 2012 in Mahrous v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs the Tribunal found that the applicant satisfied the residence requirements of s 94(1)(e)(ii) of the Social Security Act 1991 (Cth). In doing so, the Tribunal set aside a decision of the Social Security Appeals Tribunal (“SSAT”) which had found to the contrary.

4    The application was made by Mr Raif Mahrous, the father of Mr Andro Mahrous who is the respondent to the case before me. Mr Andro Mahrous is a minor, who suffers from disabilities. On 2 March 2011 his parents applied for a disability support pension for him. The Department rejected the application for a pension on the basis that Mr Andro Mahrous did not meet relevant residency requirements.

5    It appears that Mr Raif Mahrous and his son Andro emigrated from Egypt to New Zealand in 1998 when Mr Andro Mahrous was 3 years old. The family became New Zealand citizens, and subsequently moved to Australia on 6 November 2003.

6    The evidence before the Tribunal was that although Mr Andro Mahrous had been born a healthy baby, at the age of around 4 years he began experiencing epileptic seizures, as a result of which he may have suffered brain damage. He has confirmed intellectual impairment of some magnitude.

7    Before the Tribunal the Secretary conceded that Mr Andro Mahrous was severely disabled but said that he cannot satisfy the residency requirements. Section 94(1)(e) of the Social Security Act requires that an applicant for a disability pension satisfies one of three criteria, as follows:

(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…

8    The Tribunal found that Mr Andro Mahrous could only meet the requirements of the section under para 94(1)(e)(ii). The Tribunal had regard to provisions of the Social Security Act and Art 12 cl 4 of Sch 3 to the Social Security (International Agreements) Act 1999 (Cth) (“Social Security (International Agreements) Act”), as well as relevant authorities. So far as relevant, Art 12 reads as follows:

Totalisation for Australia

1. Where a person to whom this Agreement applies has claimed an Australian benefit under this Agreement and has accumulated:

(a) a period as an Australian resident that is less than the period required to qualify that person, on that ground, under the social security law of Australia for a benefit;

(b) a period of working age residence in Australia equal to or greater than the period identified in accordance with paragraph 3; and

(c) a period of working age residence in New Zealand.

then:

That period of working age residence in New Zealand shall be deemed to be a period in which that person was an Australian resident only for the purposes of meeting any minimum qualifying periods for that benefit set out in the social security law of Australia.

2. Where a person’s period of working age residence in Australia and a period of working age residence in New Zealand coincide, the period of coincidence shall be taken into account once only by Australia for the purposes of this Article as a period as an Australian resident.

3. The minimum period of working age residence in Australia to be taken into account for the purposes of subparagraph 1(b) shall be 12 months, of which at least 6 months must be continuous.

4. No person shall be entitled to claim a disability support pension under this Agreement unless he or she has accumulated an aggregate of more than 10 years of residence in Australia and/or New Zealand.

9    After consideration, the Tribunal found, contrary to the submissions of the Department, that Art 12 cl 4 of Sch 3 should not be read subject to cll 1, 2 and 3 of Art 12. Accordingly, the Tribunal concluded at [37] that:

    Mr Andro Mahrous must be regarded as having more than 10 years residence in Australia and/or New Zealand as he has been a resident of either country continuously since 1998;

    he therefore satisfied cl 4; and

    he therefore satisfied s 94(1)(e)(ii) of the Social Security Act.

Notice of Appeal

10    On 12 July 2012 the Department filed a notice of appeal from the Tribunal’s decision. The questions of law raised in the notice of appeal are:

1.    whether the Tribunal misinterpreted the phrase “10 years qualifying Australian residence” in s 94(1)(e)(ii) of the Social Security Act; and

2.    whether the Tribunal misinterpreted the effect of Art 12 of Sch 3 of the Social Security (International Agreements) Act.

11    In support of the notice of appeal the Department has filed an affidavit of Ms Donna Smith, a Senior Lawyer with the Department of Human Services, affirmed 19 July 2012. In that affidavit Ms Smith deposed, in summary:

    that as a result of the Tribunal decision:

(i)    Mr Andro Mahrous is entitled to receive payments of a disability support pension from 2 March 2011;

(ii)    Mr Andro Mahrous would be entitled to payments in arrears for the period 2 March 2011 to 10 July 2012 in the amount of $11,245.12; and

(iii)    Mr Andro Mahrous will receive fortnightly payments of disability support pension in the amount of $334.40.

    If the appeal is heard and a decision is delivered in or about December 2012, Mr Andro Mahrous will have received disability support pension payments totalling approximately $15,750 for the period 2 March 2012 to 10 December 2012.

    Pursuant to s 94(1)(e)(ii) of the Social Security Act and Sch 3 of the Social Security (International Agreements) Act, Mr Andro Mahrous is likely to become entitled as an Australian resident to receive payments of disability support pension from 6 November 2013 irrespective of the decision of the Tribunal.

    No payments had been made as of 12 July 2012, and the decision to make payments was ready to be implemented into the Centrelink system once the 28 day appeal period had expired.

    The Department would be entitled to recover overpayments of benefits if its appeal is successful, and its policy is to recover overpayments of benefits by withholding 15% of future benefit payments or by commencing civil recovery proceedings.

Application for stay

12    As a general proposition a successful party in litigation is entitled to the fruits of its judgment, and decisions at first instance are not to be treated as merely provisional: Alexander v Cambridge Credit Corp Ltd (1985) 2 NSWLR 685 at 694–5; Cook’s Construction Pty Ltd v Stork Food Systems Australia Pty Ltd [2008] 2 Qd R 453 per Keane JA at [12]. However it is also clear that the Court is empowered with a broad discretion to grant a stay of a decision of the Tribunal pending appeal in appropriate circumstances.

13    That Courts tend to exercise this discretion carefully is demonstrated by reference to relevant authorities. So, as was observed by Greenwood J in Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd [2008] FCA 1867 at [39] the starting point is to recognise that the discretion, although importantly broad, is a true exception, conditioned by demonstrated circumstances, to the general proposition that an appeal does not operate as a stay. His Honour continued at [39]:

However, consistent with Powerflex and Alexander v Cambridge Credit Corp Ltd (receivers apptd) [1985] 2 NSWLR 685 per Kirby P, Hope and McHugh JJ at 694, it is sufficient but also necessary that the applicant for a stay demonstrate “a reason” or an “appropriate case” to warrant the exercise of discretion in the applicant’s favour. Otherwise, Judgments of the Court in its original jurisdiction might be treated as merely provisional. A reason tipping the balance in favour of an applicant in an appropriate case will take account of whether the applicant has discharged an onus of demonstrating that a stay order, in the terms proposed, is “fair to all parties” (Alexander v Cambridge Credit at 694F) having regard to the balance of convenience (ie the balance of risks and irremediable harm) and the competing rights of the parties (Alexander v Cambridge Credit at 694G).

14    Further, at [40], his Honour observed:

Weighed in the balance is a preliminary non-speculative assessment of whether the appellant by the grounds of appeal has raised an arguable case. Such an assessment however is designed to be “protective” of the judgment creditor in the sense of being undertaken to test whether the appeal has “been lodged without any real prospect of success and simply in the hope of granting a respite against immediate execution upon the judgment” (Alexander v Cambridge Credit at 695F). These principles have been applied in Powerflex v Data Access Corporation; Starborne Holdings Pty Ltd v Radferry Pty Ltd & Ors [1998] FCA 548; Henderson v Amadio Pty Ltd (No 3); (1996) 65 FCR 66 and other cases in this Court. The assessment of the prospects of success of the appeal by reference to such a test reflects a low threshold of arguability. In Sevenhill Holdings Pty Ltd v Musovic [1992] FCA 372, French J put the notion of an appeal reflecting an arguable prospect of success in these terms:

In saying so, I accept that the very findings which underpin [it] are under challenge in an appeal which is not frivolous, that is to say, an appeal which has an arguable prospect of success.

15    I am not satisfied that this is an appropriate case to warrant the exercise of the Court’s discretion in favour of the applicant to grant a stay. I take this view for the following reasons.

16    First, I am not satisfied that a stay of the decision of the Tribunal is either necessary or appropriate for the purpose of securing the effectiveness of the hearing and determination of the Department’s appeal (cf comments of Cooper J in Theo v Secretary, Department of Family Services [2004] FCA 1748 at [5]-[8]). While Mr Black for the Department submitted strongly, by particular reference to Ms Smith’s affidavit, that the Department would be effectively “out of pocket” should the appeal be successful, it is not in dispute that such moneys paid by the Department would be ultimately recoverable from Mr Andro Mahrous. Indeed, as Mr Black conceded in Court this morning, Mr Andro Mahrous would be entitled, in any event, to payment of the disability support pension as from 6 November 2013, and the Department would anticipate gradual recovery of moneys already paid by Centrelink, as against pension moneys paid in the future, in the event of success of the current appeal against the Tribunal’s decision. In this respect, this case is completely distinguishable from the situation adverted to by Dawson J in Federal Commissioner of Taxation v Myer Emporium Ltd (No 1) (1986) 160 CLR 220 at p 224 and by French J in Australian Telecommunications Corporation v Moffat [1992] FCA 30 at [16].

17    In so finding I note, as relevant, similar statements of principle in Atkins v Great Western Railway (1886) 2 TLR 400; Australian Trade Commission v WA Meat Exports Pty Ltd [1987] FCA 413; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Mouratidis [2010] FCA 880.

18    Second, I note that hardship to the pension recipient is a relevant factor to take into account so far as concerns the balance of convenience in making the order currently sought by the Department (cf comments of Gyles J in Celentano v Secretary, Department of Family and Community Services [2005] FCA 1302 at [2]). Notwithstanding the laudable approach of the Department to the issue of costs, in this case it appears to be accepted by the Department that the disability support pension the subject of this proceeding would be the sole source of income of Mr Andro Mahrous. It follows that a stay on his receipt of such pension would invariably cause him some financial hardship.

19    Third, at its highest, the Department appears to have reasonable prospects in respect of its appeal. However for the purposes of this judgment I note that the Tribunal gave careful and detailed consideration to the statutory framework. I am not satisfied at this stage as to the likelihood of the Department’s prospects of success in its appeal against the Tribunal’s decision.

20    The appropriate order is to dismiss the interlocutory application for a stay pending hearing of the appeal. I will also make timetabling directions taking this proceeding to hearing.

Associate:

Dated:    24 August 2012