Administrative Appeals Tribunal Act 1975, s.41 (1) and (2)

Repatriation Act 1920

Social Security and Repatriation Legislation Amendment Act 1985, s.93

Re McPherson and Repatriation Commission, No. Q85/20 - decision handed down on 14 May 1985

J.C. Scott Constructions v Mermaid Waters Tavern Pty Ltd (1983) 2 QdR 243

Kioa v West (1984) 6 ALN N21

Re Dart and Director-General of Social Services (1982) 4 ALD 553

Re Dekanic and Tax Agents' Board of New South Wales (1982) 6 ALD 240

Re RC and Director-General of Social Services (1981) 3 ALD 334

McBride v Sandland (No 2) [1918] HCA 59; (1918) 25 CLR 369

Thornton v Repatriation Commission [1981] FCA 76; (1981) 35 ALR 485

Re Buhagiar and Director-General of Social Services (1981) 4 ALD 113

Auckland Harbour Board v R (1924) AC 318

Atkins v Great Western Railway (1886) 2 TLR 400

Pursuant to s.41 (2) of the Administrative Appeals Tribunal Act 1975, the Tribunal orders that the decision of the Veterans' Review Board dated 6 May 1985, in so far as it decides that the respondent is entitled to ongoing pension payments at the Special Rate, be stayed with effect from the next pension pay-day after the date hereof.

The Tribunal dismisses the application for orders under s.41 (2) of the Act in other respects.

Liberty is reserved to the parties to apply generally.

On 23 December 1982 the former Repatriation Board determined that the rate of disability pension payable to Mr. T.P. Delkou in respect of his accepted incapacity from chronic anxiety state should be assessed at 20% of the General Rate provided for in Schedule 1 to the Repatriation Act 1920. On 6 May 1985, the Veterans' Review Board ("VRP") decided to set aside that decision and in substitution for it decided that Mr. Delkou was entitled to the Special Rate of Pension (the "TPI Rate") provided for in Schedule 2 to the Act, with effect from 28 December 1976.

The Repatriation Commission has applied to this Tribunal for review of the VRB decision on the following grounds:-

"1. As a matter of fact, the medical and other material does not support the decision of the Veterans' Review Board that Mr Delkou is entitled to pension at the Special Rate in accordance with Schedule 2 of the Repatriation Act 1920 (the Act).

2. (i) As a matter of law, Mr Delkou does not satisfy, for the reasons set out below, the requirements of Schedule 2 of the Repatriation Act 1920, as amended by section 34 of the Repatriation Legislation Amendment Act 1985, which applies to decisions taken by the AAT after 6 June 1985 by virtue of section 68 of that ACT:

(a) Mr Delkou is not eligible in fact or in law to receive general rate pension at the rate specified in column 3 of the table in Schedule 1 of the Repatriation Act 1920.

(b) Mr Delkou's incapacity from injuries or diseases that have been accepted as related to his relevant war service is not of such a nature that it, of itself alone, renders him incapable of undertaking remunerative work for periods aggregating more than 8 hours per week.

(c) Mr Delkou is not, by reason of incapacity from accepted disabilities alone, prevented from continuing to undertake remunerative work that he was undertaking and is not, by reason thereof, suffering a loss of salary or wages or of earnings on his own account that he would not be suffering if he were free of that incapacity; AND/OR

(ii) As a matter of law, Mr Delkou did not satisfy the requirements of Schedule 2 of the Repatriation Act applicable prior to 8 June 1985, for the reason that he was not 'totally and permanently incapacitated' within the meaning of the Schedule."

I am satisfied that the application is within the review jurisdiction of this Tribunal (see s.55 (8) of the Repatriation Act 1984 inserted by s.93 of the Social Security and Repatriation Legislation Amendment Act 1985; cf. Re McPherson and Repatriation Commission - decision handed down on 14 May 1985).

Pursuant to s.41 (2) of the Administrative Appeals Tribunal Act 1975 ("AAT Act"), the Commission has applied for an order staying or otherwise affecting the operation or implementation of the VRB decision. Section 41, so far as presently relevant, provides as follows:-

"41. (1) Subject to this section, the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.

(2) The Tribunal or a presidential member may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the "relevant proceeding"), if the Tribunal or presidential member is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal or presidential member considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review."

The decision made by the VRB is substitution for that of the former Repatriation Board has two aspects:-

(i) it creates an entitlement for Mr. Delkou to receive a lump sum payment of the accumulated arrears of pension at the Special Rate as from 28 December 1976 amounting to $46,040.00; and

(ii) it gives him an ongoing entitlement to fortnightly payments of pension at the Special Rate of $351.50 per fortnight.

Before lodging the application for review and the stay application with the Tribunal, the Commission paid Mr. Delkou the arrears of pension in the sum of $46,040. When the stay application was first listed for hearing before the Tribunal on 10 September 1985, the hearing was adjourned at the request of Counsel for the respondent on Mr. Delkou's undertaking not to deal with the lump sum payment pending the final resolution of the stay application. At a resumed hearing on 8 October 1985, the undertaking was continued on the same basis pending my decision on that application.

Notwithstanding that the Commission, by paying the arrears, has implemented that aspect of the VRB's decision, Mr. Wilde, who appeared for the Commission, submitted that it was still open to this Tribunal to make an order staying or otherwise affecting the operation or implementation of that aspect of the VRB decision. The Commission asked that the following orders be made:-

(i) that the decision of the Veterans' Review Board described above be stayed under the provisions of sub-section 41 (2) of the Administrative Appeals Tribunal Act 1975;

(ii) that the Tribunal make such orders under the provisions of sub-section 41 (2) of the Administrative Appeals Tribunal Act 1975 as it sees fit restraining Mr Delkou from dealing with or disposing in any way of the monies already paid by way of arrears abovementioned;

(iii) that the Tribunal make such orders under the provisions of sub-section 41 (2) of the Administrative Appeals Tribunal Act 1975 as it sees fit ordering or directing any person real or corporate or any financial institution to refrain from dealing with or disposing in any way of the monies already paid by way of arrears abovementioned; and

(iv) that the Tribunal make any other order or orders as it sees fit in the circumstances."

In a detailed written submission in support of the Commission's application, Mr. Wilde argued that, pursuant to s.41 (2) of the Act, the Tribunal has power to make the requested orders in order "to secure the effectiveness of the hearing and determination of the application for review". Mr. Beltrami, who appeared for the respondent, submitted that the Tribunal had no power under s.41 (2) to make any of the orders sought by the applicant in relation to the lump sum payment made available to Mr. Delkou.

The power conferred by s.41 (2) of the Act is a power to make an order "staying or otherwise affecting the operation or implementation of the decision or a part of the decision" sought to be reviewed. It is a power that enables the Tribunal to preserve the status quo pending the hearing and determination of the application for review where the "effectiveness" of the review may be jeopardised if the decision, in the meantime, is carried into operation. Thus the power may be exercised when it is appropriate to do so to ensure that the application for review, if successful, is not rendered nugatory (cf. Polini v Gray (1879) 12 ChD. 438 at 446 per Colton L.J.; cf. J.C. Scott Constructions v Mermaid Waters Tavern Pty Ltd (1983) 2 QdR 243).

The Tribunal commonly grants a stay in respect of ceportation orders. Otherwise the effectiveness of the review would almost certainly be jeopardised because the applicant would be unable to attend the hearing and to enjoy the benefits of his application for review, if successful (cf. Kioa v West (1984) 6 ALN N21). On occasions, the Tribunal has stayed the operation of decisions cancelling social welfare benefits where, deprived of that support, the applicant faces serious hardship. Notwithstanding the possibility that, if the application for review is unsuccessful, benefits may be paid in the meantime to which the applicant was not entitled and which may be irrecoverable, the Tribunal has recognised that, in a very practical sense, the review may be rendered nugatory unless the applicant is provided with the means of sustenance pending the hearing (cf. Re Dart and Director-General of Social Services (1982) 4 ALD 553).

However, the Tribunal has also recognised that the power conferred by s.41 (2) needs to be construed broadly and that it must be capable of adaptation to the wide variety of situations that arise in its diverse administrative review jurisdictions. Thus in Re Dekanic and Tax Agents' Board of New South Wales (1982) 6 ALD 240 at 241, the President said:-

"In applying s 41, the principles which are adopted in other places for other purposes have no direct relevance. Moreover, the jurisdiction of the Tribunal is wide and diverse and it is not practicable to lay down a principle or a set of specific principles applicable to every type of case in respect of which there may be an application for a stay."

A stay order may therefore be appropriate to ensure that the hearing takes place at a suitable time after there has been adequate preparation for the hearing by both parties (see Re RC and Director-General of Social Services (1981) 3 ALD 334 at 341; cf. Re Dart at 556).

The present application poses rather different questions from those previously encountered in relation to stay applications before this Tribunal. In Repatriation Act matters, as in matters arising under the Student Assistance Act 1973 where there is now an intermediate review body with power to change the decision of the primary decision-maker, an application for review may be lodged not only by an unsuccessful claimant for benefits under the Act, but also by the primary decision-maker. One might expect that the questions now arising before the Tribunal, where the Commission seeks to stay what it regards as an incorrect decision of the intermediate review tribunal, ought to have arisen in the past in relation to appeals to the Federal Court against decisions of the former Repatriation Review Tribunal on a question of law. However, if the question of a stay of execution has arisen in that context, I have been unable to find any reported decisions on any such applications. If the Commission is aware of any such cases, it may be of assistance in any future application to have any relevant Federal Court decisions brought to the Tribunal's attention.

It is appropriate to recall at the outset that the primary rule established by s.41 (1) of the Act is that the making of an application to the Tribunal does not affect the operation of the decision or prevent the taking of action to implement it. Furthermore, the making of an order under s.41 (2) is predicated upon the premise that the decision, or the aspect of the decision, sought to be stayed has not been implemented. The whole purpose of an order under s.41 (2) is to suspend, or otherwise affect, the legal consequences that flow from the VRB decision (cf. McBride v Sandland (No 2) [1918] HCA 59; (1918) 25 CLR 369 at 374). Where, as in the present case, the Commission has paid the arrears of pension in accordance with the VRB decision, the legal consequences of the VRB decision, in that respect, have been given full effect. On that ground alone, it would, in my view, be inappropriate for this Tribunal to make any order purporting to stay or otherwise affect that aspect of the decision under review. There is nothing left to "stay".

With respect to the further orders sought by the Commission (orders (ii) to (iv)), Mr. Wilde submitted that s.41 (2) was intended to give the Tribunal the maximum flexibility in framing orders necessary to avoid the right of review being rendered nugatory. The power so conferred extended, he submitted, to making an order in respect of a decision that has actually been implemented and is operational.

I do not doubt that s.41 (2) was intended to confer a broad discretionary power on this Tribunal. However, unless and until an order under s.41 (2) is made, the decision has effect (see s.41 (1)). Where payments have been made in accordance with the decision sought to be reviewed, no order made by the Tribunal staying or otherwise affecting the operation of the decision can alter that fact.

It follows, in my view, that the orders sought by the Commission, relating as they do to moneys already paid to Mr. Delkou pursuant to the VRB decision, are not orders staying or otherwise affecting the operation or implementation of the decision sought to be reviewed. The terms in which the proposed orders are couched makes this fact abundantly plain. I can see nothing in the language of s.41 (2) to justify the conclusion that the powers of the Tribunal extend to the making of such orders. I propose, therefore, to dismiss this aspect of the application for a stay.

The Tribunal's power to make an order under s.41 (2) in respect of the respondent's ongoing entitlement to disability pension at the Special (or TPI) Rate is not in doubt. The question is whether, as a matter of discretion, the Tribunal should do so.

In exercising its discretion, the Tribunal is required by s.41 (2) to "take into account the interests of any persons who may be affected by the review". Mr. Delkou's interests are certainly affected by the application for review. By reason of the VRB decision his disability pension has increased from $28.14 per fortnight to $351.50 per fortnight. Thus apart from the substantial arrears backdated to 28 December 1976 (totalling $46,040), the increase in his ongoing entitlement is significant ($323.36 per fortnight). The application for review calls that entitlement into question. The making of a stay order would deprive him (temporarily at least) of some of the fruits of his success before the VRB. The question posed by s.41 (2) is whether it is appropriate to do so "for the purpose of securing the effectiveness of the hearing and determination of the application for review".

The Commission contends that it is appropriate. In its written submissions, the Commission expressed its concern at the need to protect Consolidated Revenue against payments being made that, if the application for review is successful, would not have been justified and that may be found to be irrecoverable at law.

The Commission referred to the "uncertain state" of the Repatriation legislation, the complex questions that the legislation raised, and the need for the Tribunal to give "definitive guidance" as to the interpretation of the recent amendments. It was nevertheless the Commission's submission that the VRB decision was wrong both in fact and in law; that there was "considerable uncertainty" whether the money paid to Mr. Delkou in accordance with the VRB decision would be recoverable at law if the Tribunal were to uphold the Commission's appeal; and that there was no evidence that any hardship would be caused to Mr. Delkou if the stay order was granted. In response, Mr. Beltrami submitted that there were no proper grounds for the making of a stay order. The effectiveness of the hearing and determination of the application for review would not be impaired, in his submission, if a stay order were not made.

With respect to the merits of the application for review, Mr. Beltrami submitted that the primary contention raised by the Commission was that the Repatriation Legislation Amendment Act 1985, which came into operation on 6 June 1985 (some three weeks after the date of the VRB decision) and which materially altered the previous law as to the circumstances in which the Special Rate of pension could be granted, should be construed as applying retrospectively to a person such as Mr. Delkou. This argument, he indicated, would be strongly disputed at the substantive hearing.

Mr. Beltrami further submitted that the fact that pension paid during the currency of the stay order would not be recoverable was irrelevant (He cited Dart at 556.) Moreover, the uncertain state of the Repatriation legislation was not, in his submission, a valid basis for granting a stay.

Finally, Mr. Beltrami submitted that the payments sought to be stayed are payments to which Mr. Delkou is presently legally entitled. They were moneys of which he had been deprived since 1976, to Mr. Delkou's overall financial detriment. Mr. Beltrami told me that pending the resolution of the stay application, Mr. Delkou had simply deposited the $46,040 lump sum in a non-interest-bearing bank account. However, if the stay order was refused in respect of the lump sum, Mr. Delkou would wish to invest the amount so as to earn interest. Even at a modest 10% return, the income generated, together with other non-pension income available to Mr. Delkou, would disqualify him from fringe benefits. In this regard, Mr. Delkou's particular concern was the cost of specialist medical treatment for his wife and daughter. Mr. Beltrami submitted that Mr. Delkou would need the additional income from the Special Rate of pension if it became necessary to arrange private health insurance for his family.

The question was also adverted to whether, in any event, the capital sum of $46,040 would disqualify Mr. Delkou from receipt of fringe benefits having regard to the assets test. However, the issue was pursued inconclusively and I do not have sufficient evidence as to Mr. Delkou's financial position to be able to form any opinion on the matter. I therefore leave that consideration aside.

The doubts expressed by the Commission with respect to the recoverability at law of payments of pension made pursuant to the VRB decision (in the event that this Tribunal ultimately sets that decision aside) are based on dicta of Fisher J. in Thornton v Repatriation Commission [1981] FCA 76; (1981) 35 ALR 485 at 492-3 and upon observations that I made, in a somewhat different context, in Re Buhagiar and Director-General of Social Services (1981) 4 ALD 113 at 121-2 regarding the recovery of moneys under the principle of Auckland Harbour Board v R (1924) AC 318. In essence, the Commission's concern, as I understand it, is that any moneys paid to Mr. Delkou are, in legal theory, paid to him pursuant to a valid decision that has been imposed upon the Commission by the VRB. In so deciding the Board was exercising, for that purpose, the powers and discretions of the Commission (see s.107VG(4)). Even if the decision of the VRB is ultimately set aside, and the Commission's original decision assessing Mr. Delkou's disability pension at 20% of the General Rate is restored by this Tribunal, the Commission is concerned that the moneys paid in the meantime may be irrecoverable because, at the time they were paid, Mr. Delkou was legally entitled to them.

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

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

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

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

In the present case, the unchallenged evidence is that, prior to the VRB decision, the gross income available to Mr. Delkou and his wife from service and disability pension entitlements was $350.84 per fortnight plus $68.28 per fortnight from other sources. There is no evidence to indicate that with that level of income, plus attendant fringe benefits, Mr. Delkou was in any position of financial hardship.

In addition, of course, Mr. Delkou now has access to the arrears totalling $46,040. On the one hand, if Mr. Delkou leaves the money where it is pending the resolution of his appeal, he will not lose his fringe benefits, and will have the funds available for his use in the meantime or for repayment in the event that he is required to repay the money if the Commission succeeds in its appeal. On the other hand, if the lump sum is invested even at a modest 10% it will generate sufficient income to disentitle Mr. Delkou to fringe benefits, affecting especially his wife and daughter's medical benefits. This possible detriment will flow whether or not payment of the disability pension at the Special Rate is made pending the hearing.

In the final analysis, therefore, it is up to Mr. Delkou whether he deals with the lump sum payment in such a way as to affect his fringe benefits. The Tribunal has no way of knowing or controlling what he does with the money. There may, in fact, be various options available to him. In the circumstances of this case I think it is improbable that, pending the resolution of this application for review, Mr. Delkou will use that money in a way that will preclude his entitlement to fringe benefits. I approach my decision on this application on that basis.

Finally, there is the question raised by the Commission as to its prospects of success in the application for review. In Dart the President said, and I respectfully agree, that it is neither convenient nor appropriate that on a stay application there should be a "preliminary trial of the issues that will ultimately have to be considered by the Tribunal" (see at 555). It is nevertheless relevant for the Tribunal to consider whether there exist facts and circumstances which, if established at the hearing, provide a basis for the applicant's success in the application or whether there are points of law raised by the Commission, which, if sustained, will lead to that conclusion. In the present case the factual circumstances have not been sufficiently elaborated upon for me to form any opinion. I am satisfied, however, that there are questions of law raised by the Commission which, if sustained, may lead to the decision under review being set aside. I propose to take that consideration into account in this case.

Whatever the appropriate order may have been if the Commission had not already paid the arrears to Mr. Delkou, I have concluded that, in the present case, I should take into account the fact that Mr. Delkou has available to him a substantial sum of money upon which he may draw if his income from all other sources is insufficient to meet the financial needs of himself and his family pending the hearing and determination of the pending application for review. I also take into account that there is a possibility that those moneys may be irrecoverable even if the Commission's application succeeds. In the circumstances, I see no justification for allowing the ongoing entitlement to continue pending the hearing, thereby possibly increasing the extent of the irrecoverable overpayment.

In summary, having regard to the interests of the parties to which I have referred, to the absence of any evidence of financial hardship on the part of Mr. Delkou and having regard to the need to secure so far as practicable the effectiveness of the hearing and determination of the application for review in the sense of ensuring that it is not rendered nugatory should the Commission succeed, it is my view that that aspect of the decision of the VRB by which it was decided that Mr. Delkou is entitled to ongoing payment of pension at the Special Rate should be stayed with effect from the next pension pay-day following this decision. In other respects the application for a stay will be dismissed. Liberty to apply will be reserved.