Federal Court of Australia

Secretary, Department of Social Services v Vader (by his litigation guardian) [2023] FCA 439

ORDERS

THE COURT ORDERS THAT:

1.    Subject to order 2, the appeal is dismissed.

2.    There be liberty to the respondent to apply for any further orders to give effect to these reasons as may be considered to be appropriate.

3.    The applicant do pay the respondent's costs of the proceedings to be assessed by a registrar if not agreed.

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

REASONS FOR JUDGMENT

COLVIN J:

1    Hayden Vader's application for a disability support pension was refused. He sought review of the refusal decision in the Administrative Appeals Tribunal. A member of the Social Services and Child Support Division of the Tribunal found that he was eligible for the pension. The Secretary, Department of Social Services appealed within the Tribunal. Following a further hearing in the General Administrative Division of the Tribunal, a decision was made to affirm the earlier decision of the Tribunal. The Secretary has now exercised the statutory right to appeal against the decision. At the request of the Secretary, the Tribunal has stayed its decision pending the outcome of the appeal.

2    The Secretary's appeal is brought pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). It confers a right to appeal to this Court 'on a question of law' from a decision of the Tribunal. The merits of the case are dealt with by the Tribunal and its fact finding function is not to be usurped: Repatriation Commission v O'Brien (1985) 155 CLR 422; as cited in Osland v Secretary to the Department of Justice [2010] HCA 24; (2010) 241 CLR 320 at [19] fn 43 (French CJ, Gummow and Bell JJ), and see also at [73]-[75] (Hayne and Kiefel JJ), [92] (Heydon J agreeing). The court is required to exercise original, not appellate, jurisdiction and to do so in proceedings which are in the nature of judicial review: Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) [2001] HCA 49; (2001) 207 CLR 72 at [15] (Gaudron, Gummow, Hayne and Callinan JJ).

3    Mr Vader is an Australian citizen. His father is a citizen of the United States of America who has served in the military. For the first 10 years of his life, Mr Vader lived first in Germany (where his father was on service) and then in the United States. After that, the family migrated to Australia in November 2014. Mr Vader has lived here ever since. His father now lives in the United States and Mr Vader and his mother live in Australia.

4    The residency requirement for the disability support pension is 10 years. Mr Vader has not lived in Australia long enough to qualify on that basis. Instead, he relies upon the terms of an international agreement concerning the circumstances in which qualification for social security benefits in the United States may be counted when determining whether a person meets the residency requirement. It is not in issue that Mr Vader meets all other eligibility requirements for the pension.

The international agreement as applied to Mr Vader's circumstances

5    The Governments of Australia and the United States have entered into an agreement regulating the relationship between the two countries with respect to social security benefits and coverage (Agreement). It is not a comprehensive agreement as to all types of benefits. Rather, it concerns a confined category of benefits. By its enactment as Schedule 13 to the Social Security (International Agreements) Act 1999 (Cth), the Agreement is part of Australian law. An article of the Agreement may take effect so as to override a provision of the Social Security Act 1991 (Cth): see s 6 of the Social Security (International Agreements) Act.

6    The Agreement is to be interpreted according to the principles that guide the interpretation of international agreements: Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Mahrous [2013] FCAFC 75; (2013) 213 FCR 532 at [52] (Kenny, Flick and Kerr JJ). In such cases, the rules as to the interpretation of international agreements must be applied and 'the rules generally applicable to the interpretation of domestic statutes give way': Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225 at 230-231 (Brennan CJ); as approved in Comptroller-General of Customs v Pharm-A-Care Laboratories Pty Ltd [2020] HCA 2; (2020) 270 CLR 494 at [35]. The interpretation of an international treaty is undertaken in a manner which 'is more liberal than that ordinarily adopted by a court construing exclusively domestic legislation; it is undertaken in a manner unconstrained by technical local rules or precedent, but on broad principles of general acceptation': Pilkington (Australia) Ltd v Minister of State for Justice & Customs [2002] FCAFC 423; (2002) 127 FCR 92 at [26] (Mansfield, Conti and Allsop JJ). This approach accords with the terms of Art 31(1) of the Vienna Convention on the Law of Treaties. It requires the Agreement to be interpreted in good faith in accordance with the ordinary meaning of the terms considered in context and in light of the object and purpose of the treaty: Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161 at [70] (McHugh J). Such an approach to interpretation reflects the nature of international treaties which record matters of broad and general agreement between sovereign states in terms that must apply to differing legal systems and which depend upon good faith in interpretation in order for their effective implementation.

7    Article 9(1) of the Agreement provides that:

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, for that benefit under the laws of Australia;

(b)    a period of Australian working life residence equal to or greater that the period identified in accordance with paragraph 4 for that person; and

(c)    a United States period of coverage,

then for the purposes of a claim for that Australian benefit, that United States period of coverage shall be deemed, only for the purposes of meeting any minimum qualifying periods for that benefit set out in the laws of Australia, to be a period as an Australian resident.

8    By operation of Art 9(4), there is no minimum period for the purposes of Art 9(1)(b) where a person is in Australia. Therefore, no issue arose before the Tribunal about whether that requirement was met by Mr Vader. Nevertheless, it may be observed that the concept of a 'period of Australian working life residence' has particular significance under Art 7 which deals with the circumstances in which qualifying periods may be aggregated for the purposes of a person establishing an entitlement to a benefit under United States laws. It provides in Art 7(1) as follows:

Where a person has completed at least six quarters of coverage under United States laws, but does not have sufficient periods of coverage to satisfy the requirements for entitlement to benefits under United States laws, the Agency of the United States shall take into account, for the purpose of establishing entitlement to benefits under this Article, periods of Australian working life residence which do not coincide with the periods of coverage already credited under United States laws.

9    Returning to the application of Art 9(1) to the circumstances of the present case, there was no issue before the Tribunal (or on appeal) that the Agreement applied to Mr Vader or that he had claimed an Australian benefit, namely the disability support pension. The issue was whether he was also a person who had accumulated a United States period of coverage that was sufficient (when added to his period as an Australian resident) to meet the qualification period for the disability support pension by operation of Art 9.

10    The term 'United States period of coverage' is defined by Art 1(1)(i) to mean:

a period credited as a quarter of coverage under the laws of the United States, or any equivalent period that may be used to establish the right to a benefit under the laws of the United States.

11    It is common ground that Mr Vader had not been credited with any quarters of coverage under the laws of the United States. It is also common ground that the laws of the United States were the provisions in Title II of the Social Security Act of the United States and regulations save for certain provisions specified in Art 2(1) (US Social Security Laws). Relevantly for present purposes, Art 2(1) of the Agreement provides:

For the purposes of this Agreement, the applicable laws are:

(a)    As regards the United States, the laws governing the Federal old-age, survivors, and disability insurance program:

-    Title II of the Social Security Act and regulations pertaining thereto, except sections 226, 226A and 228 of that title and regulations pertaining to those sections,

-    Chapters 2 and 21 of the Internal Revenue Code of 1986 and regulations pertaining to those chapters.

(b)    As regards Australia,

(i)    the Acts forming the social security law insofar as the law provides for, applies to or affects the following benefits:

(A)    age pension;

(B)    disability support pension for the severely disabled;

(C)    pensions payable to widowed persons; and

(D)    carer payment.

(ii)    the law concerning the superannuation guarantee …

12    It may be noted that in respect of both the United States and Australia (the Parties), the Agreement only concerns benefits payable under particular laws as specified. Further, there is no direct correspondence between the extent of benefits and the qualifications for them under the laws of the two countries. Rather, the Agreement identifies a category of benefits for each of the United States and Australia (by reference to the laws that provide for them) and then deals with the circumstances in which a particular status in respect of the laws of one Party may be relied upon as a basis to qualify for a benefit under the laws of the other Party.

13    The principal issue raised in the appeal as to the construction of the Agreement concerned the meaning of the language used in the definition of the term 'United States period of coverage', particularly as to what may constitute 'any equivalent period that may be used to establish the right to a benefit under the laws of the United States' (referred to in these reasons as a qualifying equivalent period).

14    The Agreement uses two concepts to define qualifying periods of coverage, namely 'United States period of coverage' and 'period of Australian working life residence'. Fundamental to the resolution of the principal issue in the appeal is the recognition of the distinction between qualifying periods (during which particular circumstances must exist) on the one hand and other conditions that must be met in order to be entitled to a benefit on the other hand. The Agreement allows qualifying periods under the laws of one country to be counted in meeting the qualifying periods under the laws of the other country. However, when it comes to the other conditions that must be satisfied then it is the laws of the country where the benefit is claimed that apply. In effect, the Agreement allows for ways in which a different type of qualifying period under the laws of one Party may nevertheless qualify a person for a benefit under the laws of the other Party. It maintains a distinction between what is required by way of qualifying period and what is required in order to satisfy other conditions.

The competing constructions

15    The Secretary contended that a qualifying equivalent period was a period other than a quarter of coverage that could be used to qualify a person for a benefit according to the way the laws of the United States operated (that is according to the way the US Social Security Laws operated). In short, it needed to be a qualifying period provided for in those laws as a qualifying period.

16    In the appeal, Mr Vader contended that there was a period for which he had been eligible to receive a benefit under the US Social Security Laws because his father was entitled to a benefit and he could derive a benefit as a dependent child of his father. He claimed that the period for which he was entitled to such a derived benefit was itself a qualifying equivalent period that he had accumulated because it was a period during which he was qualified to receive a benefit. The submission reflected the manner in which the US Social Security Law was said to operate in respect of children, namely a child seeking an insured benefit qualified not by earning quarters of coverage but rather by being a person who was the dependent child of a person who was entitled to a benefit. In short, Mr Vader contended that a period of entitlement under the US Social Security Law to a derived benefit as the child of a person who was entitled to a benefit was a qualifying equivalent period for the purposes of the definition in the Agreement of the term 'United States period of coverage'.

The proper construction of the equivalent period provision

17    It may be accepted that the definition of the term 'United States period of coverage' specifies two ways in which a period may come within the term. The first is where there is a quarter of coverage as that term is used in the US Social Security Laws. The second is where there is an 'equivalent period that may be used to establish the right to a benefit' under the US Social Security Laws. Given the structure of the definition, an understanding of what is meant by the second way in which a period may come within the term must be informed by the nature of a quarter of coverage and the way in which it operates under US Social Security Law. That is because, having regard to the structure of the definition provision, the second way must have a form of equivalence to the first way.

18    There is no dispute that a quarter of coverage operates as a qualifying period. That is to say, a person who accumulates the requisite quarters of coverage qualifies for a benefit on the basis of quarters of coverage. On the evidence before the Tribunal, a person could also qualify by defined periods of military service or war internment. There was no suggestion before the Tribunal or on appeal that these periods provided a basis for Mr Vader to qualify for benefit under the laws of the United States (and thereby for a disability support pension).

19    The Secretary submitted that the reference to an equivalent period was an expression that encompassed the specified periods of military service or war internment and no others. It was also submitted that the terminology relating to a qualifying equivalent period was adopted in order to allow for the possibility of changes to the US Social Security Laws concerning such qualifying periods because the Agreement applied in respect of those laws as they were expressed from time to time. However, there had been no such changes.

20    As to the term 'quarter of coverage', quarter is used in the US Social Security Laws to refer to each of the four periods of calendar months ending on 31 March, 30 June, 30 September and 31 December. The term quarter of coverage is a quarter in which a person received wages or self-employed income of at least a specified amount.

21    As a matter of ordinary language, to refer to one period as being equivalent to another period is to refer to the periods as having the same value or purpose or that they have the same function or they operate with the same effect. Therefore, in order to be an 'equivalent period' to a quarter of coverage, the period must be one which (like the quarters of coverage of person) qualifies a person for a benefit. A period during which a person may be said to have an entitlement to a benefit is not equivalent to a period that operates to qualify a person for that benefit.

22    Further, regard to context confirms that the Agreement is referring to equivalence in this usual sense. The Agreement is concerned with the circumstances in which a person may be covered for a particular category of benefits in one country based upon what has occurred in respect of the laws of another country. It deals with equality of treatment in respect of eligibility for and payment of benefits (Art 4), qualification for benefits in one country being a basis for qualification for benefits in another country (Art 5(2)), dual coverage (Art 6), the circumstances in which quarters of coverage may be added to periods of Australian working life residence to qualify for a benefit under United States laws (Art 7), residence qualifications for benefit under Australian laws (Art 8) and accumulation of qualifying periods for benefits under Australian laws (Art 9). It can be seen from the Agreement as a whole that the term 'United States period of coverage' is deployed in contexts which deal with whether a person has satisfied a requirement for a period of time to have elapsed in order to qualify for a benefit. Therefore, it would be inconsistent with the purpose of the term 'United States period of coverage' that is evident from the Agreement as a whole for the term to be construed as meaning a period when the person has been entitled to a benefit. This is especially so in relation to Art 9 which is dealing with the aggregation of periods 'for the purposes of meeting any minimum qualifying periods for that benefit set out in the laws of Australia'. This purpose is reinforced by the provision in Art 9(3) which prevent double counting of coinciding periods. Definitional provisions should be understood in the context of the way they are deployed in the operative provisions.

23    Finally, according to the relevant principles of construction a good faith reading of the references to a period that is equivalent to a quarter of coverage which equivalent period may be used to establish the right to a benefit under the laws of the United States, must require a focus upon the provisions of United States law that qualify a person for a benefit.

24    I note that the Secretary sought to rely upon the terms of Art 20 on the issue of construction of the definition of the term 'United States period of coverage'. It provides: 'Any disagreement regarding the interpretation or application of this Agreement shall be resolved by consultation between the Competent Authorities'. It was submitted that there had been such consultation and the outcome was in evidence and should be referred to in reaching a conclusion on the construction issue. In my view, Art 20 does not apply to a disagreement between a party to the agreement and a person claiming a benefit. Rather, it applies to a disagreement between the United States and Australia as parties to the Agreement. Any such disagreement must be resolved by consultation. The outcome of such a resolution would then bear upon the manner in which the Agreement was to take effect. However, there was no suggestion that there had been a resolution of a disagreement of that kind. Rather, the present case concerned a personal claim by Mr Vader based upon the terms of the Agreement operating as part of Australian law.

25    For reasons that have been given, the construction advanced by Mr Vader in the appeal should not be accepted. The construction advanced by the Secretary is to be preferred, at least to the extent that it required the identification of an equivalent qualifying period rather than a period of entitlement to a benefit.

26    However, in order to determine the relevance of that conclusion for the resolution of the appeal and the determination of any relief that should be granted it is necessary to understand the manner in which the Tribunal reached the decision that was favourable to Mr Vader.

The reasoning pathway in the Tribunal

27    The Tribunal began by describing Mr Vader's application as one that concerned whether he could avail himself of the relevant provisions in the Agreement to meet the qualifying residence requirements for the grant of a disability support pension (para 2).

28    After setting out the facts, the Tribunal described the issue for determination as being whether Mr Vader can satisfy the terms of the Agreement that refer to quarters of coverage under the laws of the United States or any equivalent period that may be used to establish the right to a benefit (para 21).

29    The Tribunal then set out relevant parts of the US Social Security Law (paras 34-38).

30    The Tribunal then referred to a part of the Social Security Act of the United States which concerns benefits that are not the subject of the Agreement (para 40). It concerns needs based benefits (or 'supplemental security income') to which a person may qualify 'on the basis of … income and resources'. It refers to benefits to which an aged, blind or disabled individual would be eligible on an income basis. In consequence, it appears that the subsequent reasoning of the Tribunal was infected to a degree by the mistaken understanding that this further provision had some relevance to the Agreement, which it did not.

31    The Tribunal then summarised the terms of the scheme in the following way (para 42):

The structure of this benefit scheme is familiar. Under Title II of the US Social Security Act, a disabled child in the United States can apply for a disability determination to obtain a disability social security supplement benefit. In order to be eligible, Title XVI of the US Social Security Act requires that the child must be disabled (for the purposes of that Act) and either be:

(a)    resident in the US or

(b)    residing with a member of the US Armed Services 'assigned to permanent duty ashore outside the United States'.

32    This statement was disputed by the Secretary based upon the terms of formal advice (in evidence before the Tribunal) that had been received by the Secretary from counterparts in the United States concerning the rights afforded under Title II. The advice was to the effect that a minor dependent child is eligible for a benefit if the parent has accumulated the required quarters of coverage (or comes within the veteran or war internment qualifying periods) and the parent has an entitlement because the parent is aged, blind or a disabled individual. Therefore, all minor children of such people are entitled to a child's benefit. It follows that a disabled minor child of a person who has met the qualifications: (a) is not directly eligible; (b) is not eligible unless the parent qualifies; and (c) is eligible irrespective of whether the child is living with a disability. In addition an unmarried adult child who is a dependent of a person who has an entitlement also qualifies for a benefit if the child is living with a disability. Title II does not deal with benefits that are available for disabled minor children. Those benefits are provided for in provisions to which the Agreement does not apply and are needs based. On the appeal, Mr Vader did not dispute these contentions by the Secretary.

33    Returning to the Tribunal's reasoning pathway, it next expressed the following summary of the manner in which the residency requirements operate with respect to a child's eligibility for disability benefits under United States social security law (para 43):

Importantly, the residency requirements under the US Social Security Act discussed above provide for child eligibility for a relevant social security benefit (including a supplementary disability benefit), either on the basis of a contributing parent (such as where an eligible parent dies before a child in that country reaches majority) or purely on the basis of the child's disability determination.

(emphasis removed)

34    Again, the Secretary submitted that the reference to a child qualifying purely on the basis of the child's disability determination was not correct. The Secretary's position was that under the US Social Security Law to which the Agreement applied, a dependent child of a qualifying parent would qualify for a child's insurance benefit that derived from the parent of the child meeting the quarters of coverage requirement (irrespective of whether that child was determined to be living with a disability) and an unmarried adult dependent child of a qualifying parent who was determined to be living with a disability would also qualify for a benefit. In either case, the entitlement of the child was a derived one that depended on the parent having the requisite quarters of coverage - that is the length of employment needed to qualify.

35    Significantly, these submissions concerned the conclusions reached by the Tribunal as to the way in which a person may qualify for coverage. The Secretary may cavil with whether those findings were correct. However, the Tribunal's reasoning at this point could not be exposed as being informed by an incorrect understanding of the Agreement when it came to the meaning of the terminology 'equivalent period that may be used to establish the right to a benefit under the laws of the United States'. The Tribunal was simply making findings as to how the United States laws operated when it came to a child living with a disability qualifying for a benefit to which the Agreement applied. The error by the Tribunal at this point (which was not disputed in the appeal) was in its conclusion that the US Social Security Laws included disability benefits that could be claimed directly by a minor child when the correct position was that a minor child could only claim a derived benefit (and the derived benefit did not depend upon demonstrating that the child was living with a disability).

36    Next, the Tribunal again identified the issue as being the calculation of Mr Vader's 10 year qualifying residence period under the Australian legislation (para 48). It had earlier identified that period as applying under s 94(1) of the Social Security Act 1991 (Cth).

37    The Tribunal set out the competing contentions of the parties (paras 49-52). It then made the following finding (para 53):

There is nothing before the Tribunal to suggest that [Mr Vader's father] is disentitled to US Social Security benefits of a type falling within the 'Totalisation' arrangements under the International Agreement Act [that is, Art 9(1) of the Agreement]. To the contrary, the evidence before the Tribunal suggests that, although unclaimed, such an entitlement does in fact accrue to [Mr Vader's father].

38    It will be necessary to refer to this and other findings concerning the manner in which Mr Vader's father may qualify for a benefit because the Secretary advances a separate ground of appeal as to the whether there was a rational or logical basis for certain aspects of those factual findings. However, at this point it is sufficient to note that the reasoning pathway of the Tribunal proceeds on the basis of a view that Mr Vader's father has an entitlement to benefits.

39    In any event, this aspect of the Tribunal's reasoning (which concerns the entitlement of Mr Vader's father) appears to be confused because if indeed Mr Vader's father was entitled to a benefit then it would follow that he has sufficient quarters of coverage under United States law to personally claim a reciprocal benefit on the basis of Art 5(2). No issue of totalisation would arise.

40    The next step taken by the Tribunal was to again pose a formulation of the issue for determination. It did so in the following terms (para 54):

The initial question then, properly, becomes what entitlement (if any) [Mr Vader] has under the relevant US laws to a benefit falling within the contemplation of the [Agreement].

41    The focus upon whether Mr Vader has an entitlement to a benefit under the relevant US laws is significant. At this point, the Tribunal recasts the question of qualification for a benefit in terms of whether Mr Vader himself was entitled to a benefit under the relevant US laws.

42    The Tribunal then set out extracts from further submissions provided by the parties in response to directions issued by the Tribunal (paras 55-57). The Tribunal then dealt with whether an earlier decision of the Tribunal in Burnside and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 1048 was relevant and found that it was to be 'materially distinguished' (paras 58-62).

43    The Tribunal then concluded that 'eligible disabled minor children in the US can establish an entitlement to a needs-based SSI benefit where they are the child of a retired, disabled or deceased insured worker' (para 63). That appears to have been an accurate statement of the position in the United States. However, as has been observed, needs-based benefits were not the subject of the Agreement and there was no issue that children may receive derived benefits under the US Social Security Law the subject of the Agreement as the dependent child of a worker who had earned coverage.

44    The Tribunal then dealt with a submission advanced by the Secretary to the effect that in order for a child to be entitled to receive benefits, the child's parent had to be in receipt of benefits (para 64). It appears that this submission was based upon the derived nature of the child's benefit under the US Social Security Law the subject of the Agreement. Whereas a person with the requisite quarters of coverage (earned on the basis of their past employment) would be entitled to benefits if aged, blind or disabled, the child of such a person would only be entitled to a child's insurance benefit if and when the parent was in receipt of benefits (and the child's benefit did not depend upon a determination of disability - save for the case of an unmarried adult dependent child).

45    The Tribunal then undertook a consideration of the evidence and made what it identified as 'factual findings'. In effect, the Tribunal found that Mr Vader's father, as a veteran, was in receipt of 'superior DVA benefits available to disabled veterans' but had accrued over 40 quarters of coverage and was thereby entitled to benefits under the US Social Security Law (paras 68-72). Those conclusions culminated in a finding that Mr Vader, at the time he lodged his application for a disability support pension in Australia, was a disabled child of a person who was eligible for benefits under the US Social Security Law (para 72(e)). The Tribunal then referred to evidence before the Tribunal in Burnside to the effect that the dependent of a worker who was entitled to a benefit under the US Social Security Law (the subject of the Agreement) may get benefits (para 73).

46    On that basis, the Tribunal concluded that Mr Vader himself met all the 'requisite elements' for eligibility for a benefit under the US Social Security Law (para 74). Implicit in this analysis was a view that a finding that a child was entitled to a benefit under US Social Security Law (to which the child was entitled as a dependent of a person who had earned coverage) may be of significance in considering whether the child had a qualifying equivalent period of coverage for the purposes of the Agreement.

47    The Tribunal then stated that the 'only remaining question for determination' concerned the relevance of 'such an entitlement to a benefit on the part of [Mr Vader] under the US Social Security Act, given that his entitlement is based on his US citizen father's eligibility for Social Security and not on any "United States period of coverage" attaching to [Mr Vader]' (original emphasis, para 75).

48    This statement is significant for two reasons. First, it shows that the Tribunal was proceeding at this point on the basis that Mr Vader had not demonstrated any United States period of coverage (whether quarters of coverage or an equivalent period). Second, it indicated that the Tribunal was focussing upon the significance, if any, of its conclusion that Mr Vader was entitled to a benefit.

49    Then the Tribunal undertook its final analysis under the heading 'Resolution'. After referring to authorities concerned with the proper construction of the text of international agreements (para 76), the Tribunal followed the following steps:

(1)    It began by saying that the parties before the Tribunal agreed that the matter falls to be determined on whether Mr Vader is entitled to accumulate any United States period of coverage for the purposes of totalising as provided in Art 9(1) (para 77).

(2)    Then it quoted Art 3 of the Agreement (para 78) which is in the following terms:

This Agreement shall apply to any person who:

(a)    is or has been an Australian resident; or

(b)    is or has been subject to the laws of Australia; or

(c)    is or has been subject to the laws of the United States

and, where applicable, to other persons in regard to the rights they derive from a person described above.

(3)    Then it quoted Art 5(1) of the Agreement (para 79) which is in the following terms:

Unless otherwise provided in this Agreement, any provision of the laws of a Party which restricts entitlement to or payment of benefits solely because the person resides outside or is absent from the territory of that Party shall not be applicable to persons who reside in the territory of the other Party.

It may be immediately observed that Art 5(1) had nothing to do with Art 9(1). It was concerned with restrictions on entitlements based upon place of residence not with accumulation of periods that qualify a person to coverage.

(4)    Next, the Tribunal quoted the definition of 'United States period of coverage' (para 80).

(5)    After quoting those provisions the Tribunal referred to the requirement to interpret the Agreement in good faith in accordance with the ordinary meaning of the text (para 81).

(6)    Then, the Tribunal stated that Mr Vader clearly falls within the class of persons to whom the Agreement applies stating in particular that he was a person who may derive his rights from his father as a person subject to the laws of the United States (para 82).

(7)    In the next three paragraphs the Tribunal expressed its reasons for finding that Mr Vader meets the residency requirements for the payment of a disability support pension (see the formulation of the conclusion in para 86). Those paragraphs were expressed in the following terms (paras 83-85):

Article 5 expresses the intention of the States to vitiate any potential restriction against the payment of a benefit to an otherwise eligible person solely on the basis of residency considerations as between the States party. In this application, it is precisely the residency restriction which prevents an otherwise eligible applicant from receiving the claimed benefit.

The best evidence before the Tribunal on the eligibility of a child applicant in the position of [Mr Vader] to disability benefits under the applicable US laws … is that such a child applicant derives an entitlement to a benefit under those laws by having an eligible parent with the requisite period of coverage.

On this basis, [Mr Vader] is entitled to rely on the period of coverage achieved by his US citizen father … which I have found above to exist as an 'equivalent period that may be used to establish the right to a benefit under the laws of the United States.'

(original emphasis)

50    It is necessary to focus with some care upon these three paragraphs because they provide the ultimate foundation for the Tribunal's decision. The Tribunal appears to be saying three things:

(1)    a child in Mr Vader's position is eligible 'to disability benefits' under the US Social Security Laws;

(2)    the eligibility derives from having an 'eligible parent' with the requisite period of coverage; and

(3)    in consequence of (1) and (2), Mr Vader is entitled to rely on the period of coverage achieved by his father because that is a qualifying equivalent period.

51    For reasons that have been given, an entitlement on the part of Mr Vader to a benefit under the US Social Security Laws is not a means by which Mr Vader may meet the requirement under the Agreement for a qualifying equivalent period. Article 9(1) is concerned with the accumulation of periods in order to qualify for a benefit. Elsewhere in the Agreement (particularly Art 7) the term 'United States period of coverage' is used to identify a period that may be aggregated with a period of Australian working life residence as a way to qualify for a benefit by operation of the Agreement.

52    Therefore, to the extent that the Tribunal reasoned from a view about whether Mr Vader was entitled to a benefit under the US Social Security Laws for the purposes of reaching a conclusion as to the application of Art 9 of the Agreement, that reasoning involved an error of law.

53    It follows that the reasons of the Tribunal depend, to that extent, upon an incorrect view as to the meaning of the Agreement because a period in which a person who is a child may have qualified to receive a benefit under US Social Security Law could not be a United States period of coverage.

54    However, the ultimate conclusion of the Tribunal was that Mr Vader was entitled to rely on the period of coverage achieved by his father because that is a qualifying equivalent period. In circumstances where it is common ground that Mr Vader's entitlement to a disability support pension turns on the scope of Art 9(1) of the Agreement, it is that final conclusion that must be demonstrated to be in error if the Tribunal's decision is to be set aside under a statutory power to review on a question of law.

55    Significantly, the Court is not concerned with review for alleged jurisdictional error. The statutory authority entrusted to this Court by s 44 of the Administrative Appeals Tribunal Act confers authority to hear and determine whether, in all the circumstances, there is a question of law the resolution of which justifies the grant of the statutory relief specified which is to make such order as the Court thinks appropriate by reason of its decision (s 44(4)) and includes an order affirming or setting aside the decision of the Tribunal. Where the question raised is one of statutory construction and the decision to be made turns upon that question then the Court has authority to hear and determine the application on that basis. Different issues arise where the Court is invited to exercise its limited power to make findings of fact.

Grounds 1, 2 and 3

56    The Secretary advanced three grounds related to the proper construction of the Agreement. For the Secretary it was accepted that all three grounds turned upon whether the contentions advanced for the Secretary as to the proper construction of the Agreement were accepted. Therefore, it is only necessary to address that point (which was the subject of Ground 1).

57    Ground 1 was to the effect that the Tribunal erred in its construction of the Agreement. The particulars to that ground were expressed in the following terms.

a.    The Tribunal erred in its interpretation of the provisions dealing with a 'United States period of coverage' in Article 1(1)(i) and Article 9(1) of the US Agreement by concluding that the question of whether a child had a 'United States period of coverage' could be determined by reference to whether the person's parent had quarters of coverage that could potentially meet that requirement: [85]. It found, (erroneously) that because the Respondent's father, who resides in the United States and is (or at least was in October 2017) in receipt of Veterans' Administration benefits, might potentially have been eligible for Social Security Disability Insurance (SSDI) benefits, the Respondent met the requirement of having a 'United States period of coverage' and thus could avail himself of the terms of Article 9(1) of the US Agreement to meet the residence requirement for DSP: [85] (and see also apparent reliance on Article 3 at [78]).

b.    The Tribunal erroneously relied on laws other than those exhaustively identified in Article 2(1)(a) of the US Agreement, i.e., those governing the 'Federal old-age, survivors, and disability insurance programs', to find that the Respondent had a relevant United States period of coverage (relevantly, 'quarters of coverage'), by relying, among other things, on his potential or hypothetical eligibility - in the United States - for a 'needs-based SSI [Supplemental Security Income] benefit' (see reasons at [63]) and see also reasons at [39]-[43]; [73].

c.    The Tribunal misinterpreted the term 'or any equivalent period that may be used to establish the right to a benefit under the laws of the United States' in Article 1(1)(i) of the US Agreement and interpreted the word 'benefit' as having some broad operation beyond the manner in which that term was defined in the US Agreement: see reasons at [80]; [85].

d.    The Tribunal misconstrued Article 5 of the US Agreement in attributing to it a statement of intention that it erroneously found guided the interpretation of the text of the US Agreement: see reasons at [83]-[84]

(original emphasis)

58    For reasons that have been given, particulars (b), (c) and (d) have been established.

59    However, something more needs to be said about the first of the particulars to Ground 1. Particular (a) is to the effect that the Tribunal erred by concluding that the question whether a child had accumulated a qualifying equivalent period for the purposes of the definition of 'United States Period of Coverage' could be determined by reference to whether the person's parent had quarters of coverage that could potentially meet the requirement. It identifies para 85 of the Tribunal's reasons as the point at which that error was apparent. Paragraph 85 is the concluding paragraph of the three paragraphs at the end of the reasons that express the operative conclusions by the Tribunal. As has been noted, the ultimate finding by the Tribunal was that Mr Vader was entitled to rely upon the period of coverage that the Tribunal found had been achieved by his father. This is a different proposition to that on which the parties were joined on the appeal which, as has been explained, concerned whether the period of an entitlement to a benefit under the US Social Security Laws on Mr Vader's part could be a qualifying equivalent period for the purposes of the 'United States period of coverage'.

60    The issue raised by particular (a) is whether quarters of coverage earned by Mr Vader's father may be a qualifying equivalent period that has been accumulated by Mr Vader. Of course, as has been explained, there could be no entitlement to such a benefit unless and until Mr Vader's father was entitled to the requisite quantity of quarters of coverage and also Mr Vader's father was aged, blind or assessed to be a disabled individual and also Mr Vader was at that time a minor child dependent on his father or an unmarried adult child with a disability dependent on his father. However, those additional qualifying conditions are not qualifying periods. Once Mr Vader's father had accumulated the requisite quarters of coverage, Mr Vader had met the qualifying period requirement under the US Social Security Laws. Further, in order to qualify for a child's insurance benefit Mr Vader did not need himself to accumulate his own quarters of coverage. The qualifying period that applied to him as a minor child was the qualifying period of the parent.

61    The ultimate conclusion reached by the Tribunal will not involve an error of law if the qualifying period that applied to Mr Vader (namely, quarters of coverage on the part of a parent) was 'an equivalent period that may be used to establish the right to a benefit under the laws of the United States'.

62    The term 'right to a benefit' is not defined, but there is a definition of benefit in the Agreement. It is defined in the following terms in Art 1(1)(b):

'benefit' means in relation to a Party, a benefit, pension or allowance for which provision is made in the laws of that Party, and includes any additional amount, increase or supplement for which a beneficiary is qualified but, for Australia, does not include any benefit, payment or entitlement under the law concerning the superannuation guarantee;

63    So, in relation to the United States, benefit includes a benefit for which provision is made in the laws of the United States. The child insurance benefit under the US Social Security Laws is such a benefit. The qualifying period that may be used to establish the right of a child to such a benefit is a period of quarters of coverage of the child's parent. Therefore, for a minor child, it is a qualifying equivalent period. That is not to say that the minor child is claiming that the parent's quarters of coverage apply to the child. Rather, it is to say that the way a child qualifies is by the parent's quarters of coverage.

64    Of course, there will be no entitlement to receive a benefit unless the child's parent meets the other qualifications (aged, blind or disabled) and the child is dependent on the parent. Further, on the evidence before the Tribunal, in addition to meeting one of those qualifications, the parent must also be receiving the benefit. However, these are conditions that are concerned with matters other than whether Mr Vader has accumulated an equivalent qualifying period.

65    As has been explained, the Agreement is concerned with qualification for coverage. One way of qualifying for a benefit under the applicable laws of Australia is to be entitled to a benefit under the applicable laws of the United States (relevantly the US Social Security Laws). However, in the present case, we are concerned with Art 9(1) which is the means by which a party may meet a qualifying period for a benefit under applicable Australian laws. It is concerned only with the qualifying period and not with whether the person might have met other conditions that apply under the applicable United States laws in order to receive a benefit. Indeed, Art 9(1) is not concerned at all as to whether a person is entitled to a benefit under United States laws. It is concerned only with whether a person has accumulated a qualifying equivalent period. It is the reciprocal of Art 7(2) by which a person who has a period of Australian working life residence may count that as a credit to quarters of coverage in the United States. Such a person must also demonstrate that they meet the conditions of the applicable United States law in order to obtain a benefit.

66    In my view, for so long as Mr Vader was a minor child of his father (or a dependent unmarried disabled adult child), his father's quarters of coverage were a qualifying equivalent period for Mr Vader for the purposes of the Agreement. Significantly, the definition of 'United States period of coverage' refers to a quarter of coverage or any equivalent period 'that may be used to establish the right to a benefit'. It does not refer to a quarter of coverage or any equivalent period credited to a person claiming a benefit that may qualify a person for a benefit. The reference to an equivalent period being used to establish a right to a benefit is dealing only with whether there is such a period in respect of a person. It encompasses a circumstance, like the present where the period in respect of another person (in this case the parent) may be used to establish a right to a benefit on the part of another person (in this case the child) in a derived manner.

67    In that regard, it is also relevant to have regard to the terms of the Agreement that identify the people to which the Agreement applies being Art 3 which provides:

This Agreement shall apply to any person who:

(a)    is or has been an Australian resident; or

(b)    is or has been subject to the laws of Australia; or

(c)    is or has been subject to the laws of the United States

and, where applicable, to other persons in regard to the rights they derive from a person described above.

68    Mr Vader is a person who, as a minor child, derived rights from his father, a person who is and has been subject to the laws of the United States. Therefore, the provisions of Art 9(1) which concern the circumstances in which there may be a 'totalisation' of benefits for the purposes of claiming an Australian benefit applied to Mr Vader when he claimed an Australian benefit. It was submitted for the Secretary that the concluding words to Art 3 only operate where the benefit sought by Mr Vader under Australian law is a derived benefit. In the present case Mr Vader seeks the benefit in his own right, not as a dependent of his father. However, there is no such limitation to be found in the terms of Art 9. It simply provides that a person who applies for an Australian benefit may accumulate 'a United States period of coverage'. The accumulation can occur in respect of any benefit under the Australian laws to which the Agreement applies. It is common ground that a disability support benefit is such a benefit. When it comes to determining whether a person is someone who has accumulated a United States period of coverage that status cannot depend upon the nature of the benefit sought under Australian law.

69    Further, Art 9(1) is not concerned with whether a person is actually entitled to a benefit. It is concerned only with the accumulation of the period that may be used to establish the right to a benefit. The fact that the right to the benefit under relevant United States laws would depend also upon other matters (such as being the dependent child of the parent receiving a benefit because the parent was aged, blind or disabled) does not bear upon whether the parent’s quarters of coverage may (depending on the circumstances of the parent) be used, to establish the right to a benefit. Indeed, having regard to the terms of Art 9(1) it may well operate at a point in time when it will depend upon future circumstances not yet known as to whether the other requirements under US Social Security Laws will be met. It is concerned only with whether there is a qualifying equivalent period not whether the person also meets other conditions that may entitle the person to a particular benefit.

70    However, it appears to me that the parent’s quarters of coverage could only be a qualifying equivalent period for a person who was a minor child or an unmarried adult child with a disability. Only such persons may use a parent’s quarters of coverage to establish the right to a benefit (depending upon the circumstances of the parent). Whether such a person otherwise qualifies under Australian law for a benefit to which the Agreement applies will depend upon any other requirements that apply under Australian law. However, such a person will have a qualifying equivalent period under the laws of the United States (being the parent’s quarters of coverage). Irrespective of whether they qualify for a benefit under the applicable United States laws.

71    For those reasons, I do not accept that particular (a) has been established.

Ground 4

72    The final ground advanced by the Secretary was to the effect that the Tribunal engaged in an illogical and irrational process of reasoning by making findings of fact that were not available to be made on the evidence before the Tribunal.

73    The particulars to Ground 4 complained about findings by the Tribunal to the effect that Mr Vader's father was eligible for, but had elected not to claim, a disability benefit under the US Social Security Laws. The relevant paragraphs were clarified in oral submissions. They were paras 51, 52, 53, 69 and 72. The particulars to Ground 4 included a claim that the Tribunal's approach on that question had been procedurally unfair but that aspect was not pressed at the hearing. Rather, the Secretary's claim was to the effect that the Tribunal's findings lacked any logically probative support in the material.

74    The material before the Tribunal took the form of a submission presented by Mr Vader's mother (quoted at para 50) which was to the effect that Mr Vader's father had retired from the US Army after paying taxes for more than 20 years as an active soldier, that he was entitled to Social Security Disability Insurance and that he was receiving a pension as a veteran which was said to be 'a 90% Disability pension'. In support of that submission, the Tribunal was provided with some documents which included a copy of a letter from the US Department of Veteran Affairs to Mr Vader's father which could be used in applying for benefits. It referred to 20 years of military service by him and stated that he had one or more service connected disabilities. It then stated 'Your combined service-connected evaluation is: 90%'. Therefore, the letter obviously did not identify a 90% disability. Rather, it identified a connection with military service of his disability of 90%. The letter went on to indicate that Mr Vader's father was not totally and permanently disabled due solely to his service-connected disabilities. It stated that he was 'in receipt of special monthly compensation due to the type and severity of your service-connected disabilities'.

75    Plainly, the letter does not address whether Mr Vader's father was eligible for a disability benefit under the US Social Security Laws or under the means based provisions for a disability benefit (which was not a law to which the Agreement applied in any event). There was no other evidence as to the nature of the disability which qualified Mr Vader's father for the special monthly compensation and no evidence about what was required to be a 'disabled individual' for the purposes of qualifying for a benefit under the US Social Security Laws.

76    Equally, the Tribunal was making an administrative decision based upon available material and it did not have to apply rules of evidence or any view as to burdens of proof in making its decision.

77    The Secretary accepted that this was not a case where it could be said that there was an error of law because the Tribunal acted where there was no evidence.

78    In my view, it could not be said to be illogical or irrational to draw inferences based upon the statements made by Mr Vader's mother and the content of the letter concerning the years of service of Mr Vader's father. Indeed, I understood so much to be accepted by the Secretary in the course of oral submissions.

79    In the view I take of the proper interpretation of the Agreement the fact that Mr Vader’s father had been in paid employment for 20 years together with Mr Vader's relationship to his father as a minor child were the only significant facts. It was those facts that meant that there was an equivalent qualifying period for the purposes of Mr Vader himself having a United States periods of coverage.

80    Any illogicality or irrationality in reasoning must be of a kind that enables the decision to be characterised in those terms. In that respect, any such error is the same as a claim of legal unreasonableness. As the only factual findings that were of significance for the decision were findings that were supported by the evidence it could not be said that the decision was illogical or irrational by reason of additional findings that had no significance for the ultimate conclusion.

81    It follows that Ground 4 has not been made out.

Relief and costs

82    The applicant has been successful to the extent of particulars (b), (c) and (d) to Ground 1. However, the applicant has not demonstrated an error of law as to the ultimate conclusion reached by the Tribunal concerning the proper construction of the Agreement. Nor has the Secretary succeeded in establishing Ground 4 in respect of factual findings that supported the ultimate conclusion of the Tribunal. It was common ground that the entitlement of Mr Vader to a disability support pension turned on whether he had accumulated a sufficient United States period of coverage. I have concluded that the Tribunal was correct in reaching the ultimate conclusion that Mr Vader had accumulated such a period.

83    By its application, the Secretary sought orders setting aside the Tribunal's decisions (both in its General Division and in its Social Services and Child Support Division) and an order by this Court affirming the decision of the review officer who had determined that Mr Vader was not entitled to a disability support pension. A declaration to the effect that Mr Vader could not resort to the Agreement to meet the residence requirement for the disability support pension was also sought.

84    Given the conclusion I have reached, the Secretary has not established a basis for any such relief and therefore it is appropriate for the appeal to be dismissed. The parties did not address whether, in the event that the Tribunal's conclusion to the effect that Mr Vader had a United States period of coverage was not demonstrated to be in error, it would be appropriate to affirm the Tribunal's decision. They also did not address whether any orders should be made in relation to the stay that has been in place. In those circumstances, I will make an order dismissing the application but reserve liberty to the respondent to apply for any further orders to give effect to these reasons as may be considered to be appropriate.

85    Quite appropriately, the Secretary proposed to pay the respondent's reasonably incurred legal costs directly associated with the appeal in circumstances where the Secretary was successful. The Secretary proposed a limit of $20,000. On that basis, Mr Vader was able to secure legal representation. In the result the Secretary has not been successful. In those circumstances, it appears to me that costs should follow the event and there should be no limit on the cost orders.

Model litigant obligations

86    In the course of its reasons, the Tribunal questioned whether counsel for the Secretary had observed the model litigant obligations. The manner in which that concern was expressed was as follows (paras 68-71):

The Applicant has repeatedly contended that 'There is no evidence before the Tribunal from which it could find that [Mr Vader's] father is qualified or eligible for a benefit under the US Social Security Act'. This emphatic and repeated contention, despite evidence to the contrary having been provided and relied upon by [Mr Vader's] mother throughout the course of proceedings, requires addressing in clear terms. A single example serves to illustrate the inappropriateness of the Applicant's contentions.

The opening lines of an email submission to the Tribunal by [Mr Vader's] mother, copied to the Applicant and dated 13 June 2022 read:

Evidence was provided (prior to the last hearing date) that [Mr Vader's] Father was employed by the US Army from 1997 until he retired in 2017. He receives VA Benefits but doesn't draw from his SSI/SSDI as far as I'm aware even though deemed 90% disabled by the US Army.

Further to this [Mr Vader's] Father paid taxes for those 20 years whilst he was employed by the US Army and gained over 80 quarters of credit during this time. Attached.

Notice was taken of this information, and the inferences that might reasonably be drawn from it about co-extensive US Social Security and Veteran's Insurance eligibility for a veteran such as [Mr Vader's] father, by counsel for the Applicant at the second hearing on 11 May 2022.

Accordingly, from the perspective of the model litigant obligations, it is of concern, that such emphatic and factually incorrect submissions should have been maintained by the Secretary in the terms used.

(original emphasis, footnote omitted)

87    That which is said to be 'factually incorrect' is the submission that there was no evidence before the Tribunal from which it could find that Mr Vader's father was qualified or eligible for a benefit under the US Social Security Act. As has been explained, Mr Vader's father would only qualify or be eligible for such a benefit if he was determined to be disabled. For reasons that have been given, there was a real and genuine issue before the Tribunal as to whether relevant disablement on the part of Mr Vader's father had been established on the material before the Tribunal. The criticism of counsel was unwarranted.

Associate:

Dated:    9 May 2023