FEDERAL COURT OF AUSTRALIA

Secretary, Department of Social Services v Sziva [2019] FCA 23

ORDERS

PURSUANT TO RULE 5.23 OF THE FEDERAL COURT RULES 2011, THE COURT ORDERS THAT:

1.    The decision of the Administrative Appeals Tribunal made on 11 July 2018 be set aside.

2.    The matter be remitted to the Administrative Appeals Tribunal, differently constituted, to be determined according to law.

3.    The respondent is to pay the applicant’s costs of the appeal as agreed or assessed.

4.    The applicant is to personally serve a copy of these orders and the reasons for judgment upon the respondent within 7 days of the date of these orders.

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

REASONS FOR JUDGMENT

PERRY J:

1.    INTRODUCTION

1    On 11 July 2018, a senior member of the Administrative Appeals Tribunal (the Tribunal) set aside a decision of the applicant, the Secretary of the Department of Social Services (the Secretary), that the respondent, Mr Sziva, was not entitled to the Disability Support Pension (the DSP) and substituted a decision that the applicant was to be granted the DSP with effect from 28 October 2015. In so deciding, the Tribunal found that the respondent’s condition gave rise to an impairment of 20 points on the Social Security (Tables for the Assessment of Work-Related Impairment for Disability Support Pension) Determination 2011 (the Impairment Tables) made under the Social Security Act 1991 (Cth) (the Social Security Act).

2    The Secretary by an amended notice of appeal on a question of law under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act), contends that the Tribunal’s decision should be set aside and the matter remitted to the Tribunal, differently constituted, to be determined according to law on the grounds that the Tribunal:

(1)    failed to ask itself the right questions, including by failing to ask the correct questions to determine whether the respondent’s condition of depression was permanent on, or within 13 weeks of, 29 July 2015;

(2)    made a jurisdictional error by finding that the respondent’s condition of depression had been fully treated despite there being no evidence to support that finding;

(3)    failed to provide adequate reasons for many of its findings and conclusions on the basis of which it should be inferred that its decision-making power had not been exercised in accordance with law; and

(4)    in breach of the rules of procedural fairness, failed to deal with several substantial, clearly articulated arguments made by the Secretary.

3    The Secretary seeks judgment in default under sub-rule 5.23(2) of the Federal Court Rules 2011 (the FCR) for the relief claimed and relied in support of that application upon the affidavit of Steven Thompson sworn on 15 November 2018. The Secretary also relied upon the affidavit of service by a licensed process server sworn on 5 October 2018 deposing as to the service of correspondence, attached orders and other documents which are detailed below.

4    For the reasons set out below, I am satisfied that summary judgment should be given in favour of the applicant under rule 5.23 of the FCR.

2.    PRINCIPLES GOVERNING DEFAULT JUDGMENTS

5    Sub-rule 5.23(2)(c) of the FCR provides that:

If a respondent is in default, an applicant may apply to the Court for:

…

(c)    if the proceeding was started by an originating application supported by a statement of claim,… - an order giving judgment against the respondent for the relief claimed in the statement of claim to which the Court is satisfied that the applicant is entitled;

(d)    an order giving judgment against the respondent for damages to be assessed, or any other order: …

6    A notation to the rule explains that the Court may make any order that the Court considers appropriate in the interests of justice, and refers to rule 1.32 of the FCR, where that position is set out.

7    Under rule 5.22, a party is in default if relevantly the party fails to do an act required to be done by the FCR, fails to comply with an order of the Court, fails to attend a hearing in the proceeding, or fails to defend the proceeding with due diligence.

8    As to the proper approach generally to be taken on an application for default judgment, at least under sub-rule 5.23(2)(c), I explained in Titan Support Systems Inc v Nguyen [2014] FCA 884 that:

4. The requirement in r 5.23 that the Court be satisfied that the applicant is entitled to the relief claimed does not require proof by way of evidence. Rather, it is necessary to demonstrate that, on the face of the statement of claim there is a claim for the relief sought. Thus, the Court must be satisfied that it has jurisdiction to grant the relief and each element of the relevant civil wrong must be properly and discreetly pleaded.

5. The reason why in general it is not appropriate to lead evidence on a default judgment is that the allegations contained in the statement of claim are taken to be admitted. Therefore considerations of fairness require that the admission of evidence to supplement the statement of claim be, in general, refused: ACCC v Dataline (2006) 236 ALR 665 at 678 [48] Kiefel J.

6. This does not however, preclude any evidence being adduced. Evidence should be led, as here, of service of the originating application and statement of claim, and the amended originating application and amended statement of claim. Evidence was also led to prove service of the notice that the matter had been set down for hearing. There is also some support in the authorities for the view that evidence might be permitted concerning matters which would not ordinarily be the subject of pleading concerning the appropriateness of granting the relief sought where the grant of that relief is discretionary: Dataline at [49]. However, in no case would it be proper to allow reliance upon evidence that would alter the pleaded case or supplement it where the matters which are the subject of evidence ought properly to have been pleaded.

7. Due to the seriousness of the consequences of a judgment in default, the rules providing for judgment in default must be strictly construed and the discretion exercised cautiously.

9    This is not a case which proceeded on a statement of claim but on a notice of appeal against the Tribunal’s decision and is in substance an application for judicial review of that decision. Despite the application therefore referring to sub-rule 5.23(2)(c), it effectively seeks judgment in default under sub-rule 5.23(2)(d).

10    In the context of an application for judicial review including under s 44 of the AAT Act, in my view it is appropriate for the Court to receive in evidence the decision and reasons of the Tribunal notwithstanding that this is a judgment in default. This is because such litigation does not merely concern private rights but is an action in public law which seeks to set aside a decision by the Executive on the ground that it is invalid or tainted by error of law. As such, in my view the Court must be satisfied having regard (relevantly) to the Tribunal’s reasons that it is appropriate to make the orders sought and to remit the matter for redetermination according to law. However, even if that approach is wrong, I would have reached the conclusion that on the face of the notice of appeal under s 44 of the AAT Act, there is a claim for the relief sought. In this regard I note that the amended notice of appeal sets out the background to the Tribunal’s decision and the particulars of the grounds of review of the Tribunal’s decision in some detail.

3.    THE RESPONDENT IS IN DEFAULT

11    The first question is whether the power under sub-rule 5.23(2)(d) has been engaged in the circumstances of this case by an act of default by the respondent.

12    On this issue, as the Secretary submits, I am satisfied that the respondent is in default for the purposes of rule 5.23. He has taken no part in the proceedings as at the date of this judgment. In particular the respondent:

(1)    has not filed an appearance or notice of address for service despite an order made on 31 October 2018 requiring that he do so on or before 14 November 2018;

(2)    did not file and serve any evidence and written submissions with respect to the Secretary’s interlocutory application dated 17 September 2018 for a partial stay of the Tribunal’s decision, despite order 2 of the orders made on 19 September 2018 requiring him to do so on or before 12 October 2018; and

(3)    did not appear at the interlocutory hearing on 31 October 2018.

13    In this regard, a notation on the orders made on 31 October 2018 foreshadowed that in the absence of any appearance or address for service having been filed by the respondent in compliance with the order requiring this step be taken, the Court may make orders finally disposing of the matter, and that the applicant had indicated she would seek those orders in that eventuality. Furthermore, the notations to the orders made on 31 October 2018 urged the respondent to seek urgent legal advice before 14 November 2018.

14    I also note that a notation to the orders made earlier on 19 September 2018 explained among other things that, in the absence of any appearance or address for service having been filed, the Court may make orders finally disposing of the matter. In addition, the notation to these orders indicated that this may be a matter in which it is appropriate for a pro bono referral to be made if the respondent appears and wishes the Court to adopt that course.

15    The evidence establishes that the respondent was served with a copy of the court orders made on 19 September 2018, by a process server on 21 September 2018 under cover of a letter from the applicant’s solicitors. Enclosed also were a Justice Connect brochure, the amended notice of appeal, the interlocutory application for a partial stay of the Tribunal’s decision, and the affidavit in support of that application, as well as a previous affidavit of service. In the covering letter, the solicitors also advised that the Secretary’s interlocutory application for a stay was listed on 31 October 2018 at 9:30 am and that, if the respondent wished to object to that application or to participate in the hearing, he should file an address for service. The letter further stated that:

We also draw your attention to the “Justice Connect” brochure if you are interested in seeking legal advice or representation. Alternatively, legal advice or representation might be available if the court was to make an order for a pro bono legal aid certificate (mentioned in paragraph 11 of the attached orders dated 19 September 2018), but you would need to file a notice of address for service if you are interested in such an order.

16    The evidence further establishes that on 1 November 2018, the Secretary’s solicitors wrote to the respondent by registered post and email enclosing among other things a copy of the orders made on 31 October 2018. The letter advised that “[t]he Secretary intends to file an application for summary judgement on 15 November 2018 in the event you do not take the action mentioned in paragraph 1 of the Orders dated 31 October 2018”, that is, if he did not file an appearance or address for service by 14 November 2018.

17    In the circumstances, I am satisfied that the respondent is in default in that he failed to comply with an order of the Court, he failed to attend a hearing in the proceeding and he failed to defend the proceeding with due diligence. I am also satisfied that the respondent has had an ample opportunity notwithstanding his mental health issues, to file a notice of address for service and to participate in the proceedings, but has not done so despite being aware of the potential consequences.

4.    ORDERS SHOULD BE MADE GRANTING JUDGMENT IN DEFAULT AS SOUGHT BY THE SECRETARY

4.1    The criteria for the grant of the DSP

18    Section 94 of the Social Security Act relevantly provides:

(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…

19    By subs 23(1) of the Social Security Act, “Impairment Tables” means the tables determined by an instrument made under subs 26(1) of the Social Security Act.

20    Section 26 in turn provides:

(1)    The Minister may, by legislative instrument, determine tables relating to the assessment of work related impairment for disability support pension.

(2)    An instrument under subsection (1) may contain such ancillary or incidental provisions relating to those tables as the Minister considers appropriate.

Rules for applying Impairment Tables

(3)    The Minister may, in an instrument under subsection (1), determine rules that are to be complied with in applying the tables referred to in subsection (1) and the provisions referred to in subsection (2).

(4)    An instrument under subsection (1) may contain such ancillary or incidental provisions relating to those rules as the Minister considers appropriate.

21    Relevantly, the Minister made the Impairment Tables under subs 26(1). Section 3 of the Impairment Tables defines “impairment” to mean “a loss of functional capacity affecting a person’s ability to work that results from the person’s condition.” Condition is defined to mean “a medical condition”.

22    Under subs 6(3) of the Impairment Tables, an impairment rating can be assigned to an impairment only if:

(1)    the person’s condition causing that impairment is permanent; and

(2)    the impairment that results from that condition is more likely than not, in light of available evidence, to persist for more than 2 years.

23    The term “permanent” is defined in subss 6(4) to 6(7) of the Impairment Tables by reference to whether the condition has been fully diagnosed and fully treated and whether it has fully stabilised, namely:

Permanency of conditions

(4)    For the purposes of paragraph 6(3)(a) a condition is permanent if:

(a)    the condition has been fully diagnosed by an appropriately qualified medical practitioner; and

  (b)    the condition has been fully treated; and

  Note:    For fully diagnosed and fully treated see subsection 6(5).

  (c)    the condition has been fully stabilised; and

  Note:    For fully stabilised see subsection 6(6).

(d)    the condition is more likely than not, in light of available evidence, to persist for more than 2 years.

24    As the notes to subs (4) state, subs (5) and (6) define when a condition is fully diagnosed, fully treated and fully stabilised for the purposes of the definition of “permanent” as follows:

Fully diagnosed and fully treated

(5)    In determining whether a condition has been fully diagnosed by an appropriately qualified medical practitioner and whether it has been fully treated for the purposes of paragraphs 6(4)(a) and (b), the following is to be considered:

  (a)    whether there is corroborating evidence of the condition; and

(b)    what treatment or rehabilitation has occurred in relation to the condition; and

  (c)    whether treatment is continuing or is planned in the next 2 years.

Fully stabilised

(6)    For the purposes of paragraph 6(4)(c) and subsection 11(4) a condition is fully stabilised if:

(a)    either the person has undertaken reasonable treatment for the condition and any further reasonable treatment is unlikely to result in significant functional improvement to a level enabling the person to undertake work in the next 2 years; or

(b)    the person has not undertaken reasonable treatment for the condition and:

(i)    significant functional improvement to a level enabling the person to undertake work in the next 2 years is not expected to result, even if the person undertakes reasonable treatment; or

(ii)    there is a medical or other compelling reason for the person not to undertake reasonable treatment.

Note:    For reasonable treatment see subsection 6(7).

Reasonable treatment

(7)    For the purposes of subsection 6(6), reasonable treatment is treatment that:

  (a)    is available at a location reasonably accessible to the person; and

  (b)    is at a reasonable cost; and

(c)    can reliably be expected to result in a substantial improvement in functional capacity; and

  (d)    is regularly undertaken or performed; and

  (e)    has a high success rate; and

  (f)    carries a low risk to the person.

25    The Social Security (Administration) Act 1999 (Cth) (the Administration Act) provides for the determination of social security claims, including for the DSP, and the commencement of those payments. A social security payment ordinarily becomes payable to a person on the person’s start day (subs 41(1)), which is generally the day on which the claim is made (s 42 and sch 2, cl 3(1), Administration Act). However, as the Secretary submits, if the person is not qualified for the payment on that day but becomes qualified within 13 weeks of that date, the claim is taken to have been made on the first day on which the person is qualified for the social security payment (s 42 and sch 2, cl 4(1), Administration Act).

26    It follows that the respondent’s entitlement to the DSP must be considered as at the date of his claim and in the 13 weeks thereafter, and that any change in the respondent’s health after that 13 week period is irrelevant save insofar as it may cast light on the position at the relevant time: see Harris v Secretary, Department of Employment and Workplace Relations [2007] FCA 404; (2007) 158 FCR 252 at [1] (Gyles J) (upheld on appeal in Secretary, Department of Employment and Workplace Relations v Harris [2007] FCAFC 130; (2007) 97 ALD 534) and Gallacher v Secretary, Department Of Social Services [2015] FCA 1123 at [25]-[29] (Besanko J).

4.2    The Tribunal fell into jurisdictional error

27    Applying the provisions above, the Tribunal was required to consider (among other things) whether the respondent’s condition of depression causing his impairment was “permanent” within the meaning of the Impairment Tables on 29 July 2015 when he lodged his claim for the DSP or within 13 weeks of that date, that is, by 28 October 2015 (the claim period). This required the Tribunal to consider whether the respondent’s mental health condition was “fully treated” in relation to the claim period for the purposes of the definition of “permanent”. In turn, in deciding that question, the Tribunal was required among other things to consider under subs 6(5)(b) and (c) of the Impairment Tables:

(1)    what treatment or rehabilitation had occurred in relation to the condition; and

(2)    whether treatment was continuing or planned in the next two years.

28    However the Tribunal concluded at [67] of its reasons that the respondent’s condition had been fully treated despite failing to address either of these questions. As such the Tribunal failed to take into account a relevant consideration in a jurisdictional sense and its decision is invalid: Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 39 (Mason J); Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323 at [82] (McHugh, Gummow and Hayne JJ).

29    That being so and having regard to the caution with which an exercise of the power under rule 5.23 must be approached, I am satisfied that it is appropriate to grant summary judgment under sub-rule 5.23(2)(d) setting aside the Tribunal’s decision and remitting the matter to the Tribunal, differently constituted. While it is unnecessary to consider the further grounds relied upon by the Secretary, I would indicate that I consider that there is considerable force in the Secretary’s submissions that the Tribunal fell into error in the other respects pleaded. The respondent is to pay the Secretary’s costs as agreed or assessed.

Associate:

Dated:    21 January 2019