[1992] FCA 642; (1992) 39 FCR 420

[1992] FCA 642; (1992) 29 ALD 442 (extract)

Defence Forces - Veterans - Pensions, Allowances and other Benefits - date from which veterans' pension payable - s177(2) Veterans' Entitlements Act - When application "made" - Whether s177 directory or mandatory - whether Department of Veterans Affairs an agent of AAT for purpose of receiving applications for review.

Administrative Law - estoppel - whether available to establish fact upon which power to order payment depends.

Veterans' Entitlements Act 1986: ss175, 177.

Formosa v Secretary, Department of Social Security [1988] FCA 291; (1988) 81 ALR 687.

Attorney-General (NSW) v Quin (1990) 170 CLR 1.

Solicitors for the Applicant : John W Ball and Sons

Solicitors for the Respondent: Australian Government Solicitor

BLACK C.J., GRAY AND RYAN JJ. This is an application by way of appeal under s44 of the Administrative Appeals Tribunal Act 1975 from a decision of the Administrative Appeals Tribunal ("the Tribunal") constituted by the President, O'Connor J. That decision was given on 4 March 1992 on an application for review of a decision of the Veterans' Review Board ("the Board"). The Board had earlier, on 9 August 1989, affirmed a decision of the Repatriation Commission refusing the applicant's claim for treatment and pension for diverticulitis of the colon and hiatus hernia.

2. The applicant, on 16 October 1989, signed an application for review of the Board's decision but sent it, not to the Tribunal, but to the Department of Veterans' Affairs where it was received on 23 October 1989. For some reason which does not appear, the Department did not, until 21 December 1989, forward the application for review to the Tribunal, where it was received on 28 December 1989. When it came to hear the application, the Tribunal was informed that the Repatriation Commission accepted that the conditions of which the applicant complained were war-related and that a pension was accordingly payable to him.

3. The only dispute which thus remained to be resolved by the Tribunal was the date from which the pension should be payable. That was governed by s177 of the Veterans' Entitlements Act 1986 which, so far as relevant, provides:

substitution for, any of the provisions of section 43 of the

Administrative Appeals Tribunal Act 1975 in their

application to proceedings for a review by the

Administrative Appeals Tribunal of a reviewable decision.

(2) Where the Administrative Appeals Tribunal, upon

application made under subsection 175(1) for a review of a

decision of the Commission that has been affirmed or varied

by a decision of the Board or a decision of the Board made

in substitution for a decision of the Commission, grants a

pension (not being a service pension) or attendant

allowance, or increases the rate at which a pension (not

being a service pension) is to be paid, the Tribunal may

approve payment of the pension or of attendant allowance, or

payment of the pension at the increased rate, as the case

may be:

(a) if the application is made within 3 months after

service on the applicant of a document setting out the

terms of that decision of the Board - from a date not

earlier than the earliest date as from which the Board

could, if it had granted a pension or attendant

allowance or increased the rate of the pension, have

approved payment of the pension or attendant

allowance, or payment of the pension at an increased

rate, as the case may be; or

(b) in any other case:

(i) if the review relates to a claim in

accordance with section 14 - from a date

not more than 6 months before the date on

which the application under sub section

175(1) was made; or

(ii) if the review relates to an application in

accordance with section 15, or to an

application for attendant allowance - from

the date on which the application under

subsection 175(1) was made."

4. The learned President constituting the Tribunal succinctly described the application of these provisions to the present case, saying at paragraph 7 of her decision:

"The effect of section 177(2)(a) of the Veterans'

Entitlements Act 1986 is that where an application is made

to the Tribunal for review of a decision of the Veterans'

Review Board within three months after service on the

applicant of a document setting out the terms of that

decision of the Board, the earliest date from which the

Tribunal may approve that pension be paid is three months

before the date on which the claim for pension was made.

However, if the application is made more than three months

(but less than 12 months) after the document was served on

the applicant, s 177(2)(b) provides that the earliest date

from which the Tribunal can approve the payment of pension

is not more than six months before the date on which the

application to the Tribunal itself was made. Mr Roberts'

claim for pension was made on 12 November 1985, some four

years prior to his application to the Tribunal. There is

thus some considerable difference in entitlement if s

177(2)(b) applies to this application rather than s

177(2)(a)."

5. The Tribunal resolved the remaining issue before it by deciding that a pension was payable to the applicant in accordance with Part II of the Veterans' Entitlements Act with effect from 28 June 1989. In other words, it fixed the effective date by applying the maximum allowable period of six months before the date on which it found the application to the Tribunal itself to have been made, namely 28 December 1989.

6. It was first submitted, both before the Tribunal and before this Court, that an application should be regarded as having been "made" for the purposes of s177(2)(a) (but not for the purposes of s175(1) which enlivens the Tribunal's jurisdiction) when notice of it has been given to the respondent. In our view, the proper construction of s177 does not reveal a dichotomy of that kind. The phrase "if the application is made" in paragraph (a) of s177(2) is clearly a reference back to the application contemplated by the introductory words of the sub-section which predicate the discretion of the Tribunal to specify a date from which a pension is payable "upon application made under sub-section 175(1)". We accept that a benevolent construction should be accorded to legislation of this kind. However, to attribute different meanings to two references to an application being "made" which occur in such close proximity and contextual inter-relationship to each other would be to strain benevolence beyond tolerable limits. We therefore reject the first argument advanced on behalf of the applicant.

7. It was next contended that the requirement in s177(2) to make an application within three months after service on the applicant of a document setting out the terms of the decision of the Board is directory and not mandatory. Accordingly, so the argument went, strict compliance with the time limit was not necessary, but the requirement could be satisfied by substantial compliance, which the present applicant achieved. The short answer to this contention is that s177 does not, in terms, impose on an applicant any requirement, whether mandatory or directory. The section is facultative, conferring on the Tribunal, as an adjunct to its jurisdiction to entertain applications for review of decisions of the Board, a discretion, within specified limits, to give retrospective effect to a decision by it to grant a pension or attendant allowance, or to increase the rate at which a pension is to be paid. Whether a given case comes within those limits depends on a neutral examination of the facts surrounding the making of the application, without preconceptions imported by the classification as mandatory or directory of requirements imposed elsewhere, and specifically in s29 of the Administrative Appeals Tribunal Act, as modified by s176(4) of the Veterans' Entitlements Act.

8. The third argument on behalf of the applicant invoked the doctrine of estoppel. The statement by the learned President of the facts from which an estoppel was said to arise is very brief. It appears at para.33 of the Tribunal's reasons for decision:

"If the doctrine applies Mr Roberts should succeed, as there

is no doubt that by its omission to act the respondent

induced an assumption on the part of Mr Roberts which was

relied upon by him and departure from that assumption would

cause detriment to Mr Roberts."

(a) that the Department had induced Mr Roberts to assume that his

application had been lodged with the Tribunal at or about the end

of October 1989;

(b) that in reliance on that assumption, Mr Roberts did not lodge

another application before the expiration of three months from the

service on him of a copy of the decision of the Board;

(c) that Mr Roberts would suffer a detriment if the assumption imputed

to him were not accepted by the Tribunal and its power to approve

a retrospective payment of pension were confined to that conferred

by s177(2)(b)(i).

9. In our view, this case is governed, as the learned President concluded, by the decision of the Full Court in Formosa v Secretary, Department of Social Security [1988] FCA 291; (1988) 81 ALR 687. In that case an estoppel was said to arise to preclude the respondent from denying that, on a given date, the applicant had lodged a claim for an age pension. In their joint judgment, Davies and Gummow JJ. observed at 695:

"A collection of the authorities revealing the somewhat

uncertain state of the law as to the fettering by estoppels

of the proper exercise of statutory discretions may be found

in Re Bundy (1980) 2 ALD 735 at 750. However, in Brickworks

Ltd v Warringah Corporation [1963] HCA 18; (1963) 108 CLR 568 at 577,

Windeyer J. said that there was no doubt about the principle

that estoppel by representation cannot prevent the

performance of a statutory duty or the exercise of a

statutory discretion.

Where the issue is one of statutory discretion, the

operation of an estoppel may cut across the proper exercise

of the discretion reposed by legislation in a specified

decision-maker and thus be at odds with what is mandated by

the legislation. Hence, the observation by Professor David

Williams ((1981) CLJ 198), in commenting upon Rootkin v Kent

County Council (1981) 1 WLR 1186, that estoppel appears to

operate only at the periphery of judicial review of

administration, and, more recently, the view that the

foundation for the protection of "legitimate expectations"

lies elsewhere than in estoppel: Forsyth, "The Provenance

And Protection of Legitimate Expectations" (1988) CLJ 238 at

257-8.

The present is a case of right and obligation rather than

discretion. If a claimant to an age pension satisfies the

criteria specified in s25 of the Social Security Act for

qualification and if a claim is made in accordance with

s159, then, in the ordinary course, the claim should be

determined in favour of the claimant and, subject to the

determination of the rate of the pension (ss 33-36), there is

no area for the exercise of discretion by the decision-maker.

But if there has been no claim for that pension which

complied with s159, then the grant or payment of the pension

shall not be made: s158(1). The effect of the estoppel

sought to be established in the present case would be, as we

have said, to lift the prohibition imposed by s158(1) and

extend the authority of the decision-maker beyond that given

by the statute. This cannot be achieved by an estoppel:

Sutherland Shire Council v James (1962) 63 SR(NSW) 273 at

278-9, per Sugerman, Manning JJ.; Re Callaghan (1978) 1 ALD

227 at 230-1.

Further, any payment of an age pension to Mrs Formosa in

respect of the period in dispute would conflict with the

related principle that estoppel does not operate so as to

sanction the appropriation of public moneys without the

authority of the Parliament: Howell v Falmouth Boat

Construction Co Ltd (1951) AC 837; Victoria v Commonwealth

[1975] HCA 52; (1975) 134 CLR 338 at 353, 370-1, 392, 410-11, 421-3; 7 ALR

1; Attorney-General (NSW) v Gray (1977) 1 NSWLR 406 at 410-12,

413; cf Commonwealth v Crothall Hospital Services (Aust)

Ltd [1981] FCA 117; (1981) 36 ALR 567 at 581; [1981] FCA 117; 54 FLR 439 at 453."

See also S.S.Constructions Pty Ltd v Ventura Motors Pty Ltd [1964] VicRp 32; (1964) VR 229 at 245-6; Glass v. Defence Force Retirement and Death Benefits Authority (Full Court of the Federal Court, unreported, 20 November 1992), and Minister for Immigration and Ethnic Affairs v Kurtovic [1990] FCA 22; (1990) 21 FCR 193 esp at 208.

10. The representation said to ground the estoppel in this case was not one as to the way in which a statutory discretion was to be exercised, as it was claimed to be in Kurtovic. Rather, it was as to a fact of a temporal nature, which was a prerequisite to the exercise of the discretion conferred by s177(2)(a). Unless the application had been made within the three month period referred to in s177(2)(a) the Tribunal simply had no authority under that provision to order payment of the pension from an earlier date.

11. Counsel for the applicant contended that in some circumstances an estoppel may be available against the Executive in relation to the exercise of a discretionary power and that there is not, and should not be any absolute principle against the availability of estoppel in relation to non-discretionary powers. He relied upon the observations of Mason C.J. in Attorney-General (NSW) v Quinn (1990) 170 CLR 1 at 18 where his Honour said :

"What I have just said does not deny the availability of

estoppel against the Executive, arising from conduct

amounting to a representation, when holding the Executive to

its representation does not significantly hinder the

exercise of the relevant discretion in the public interest.

And, as the public interest necessarily comprehends an

element of justice to the individual, one cannot exclude the

possibility that the courts might in some situations grant

relief on the basis that a refusal to hold the Executive to

a representation by means of estoppel will occasion greater

harm to the public interest by causing grave injustice to

the individual who acted on the representation than any

detriment to that interest that will arise from holding the

Executive to its representation and thus narrowing the

exercise of the discretion: see the observations of Lord

Denning M.R. in Laker Airways v Department of Trade (1977)

QB 643, at p 707; but see also the criticism of this

approach by Gummow J. in Kurtovic."

12. It is clear however that Mason C.J. was confining his observations to a particular class of case involving the exercise of a discretion and that his Honour was speaking in the context of his earlier statement of general principle (at 17):

"The Executive cannot by representation or promise disable

itself from, or hinder itself in, performing a statutory

duty or exercising a statutory discretion to be performed or

exercised in the public interest, by binding itself not to

perform the duty or exercise the discretion in a particular

way in advance of the actual performance of the duty or the

exercise of the power...".

13. It is not open to this Court to erect, on the foundation suggested by counsel for the applicant, a general principle, of uncertain application, based upon a balancing of elements of the public interest, by which the Executive could, by being bound to a representation it had itself made, act beyond the power conferred upon it by the Parliament and also appropriate public money without the authority of the Parliament.

14. Counsel for the applicant also relied upon Robertson v Minister of Pensions (1949) 1 KB 227. Robertson, however, concerned the exercise of authority conferred upon the Minister for Pensions by Royal Warrant, a prerogative instrument. There, the Minister was required to administer the warrant so as to "honour all assurances given by or on behalf of the Crown" (at 232). As Gummow J. concluded in Kurtovic, at 214, Robertson was not concerned with statutory duties or discretions.

15. For these reasons, we conclude that the Tribunal could not have exercised the discretion conferred by s177(2)(a) on the basis of an assumption which denied the true date on which the application had been lodged with it.

16. We note that the President proposed to refer this case and similar cases existing in other District Registries of the Tribunal to the Ombudsman for his investigation and that she described the case as one that had fallen through the safety net, a net erected by the Department. It may have been the known existence of this net that underlay the finding of reliance. In any event, where there has been a failure of administrative procedures designed to avoid detriment such as was suffered in this case and elements sufficient to ground an estoppel in private law exist, the case may be one for the application of s34A of the Audit Act 1901; and see the observations of Burchett J. in Formosa at 700. By that section the Parliament confers authority to make payments that would not otherwise be authorised, but not, of course, so as to create a right to payment and so as to leave it to the discretion of the Executive to determine in which cases payment will be made.

17. Finally, we agree with the learned President that there is no evidence in the present case of facts which are capable of constituting the Department of Veterans' Affairs the actual or ostensible agent of the Tribunal for receiving applications under s175. Like O'Connor J., we sympathise with the concern which led Deputy President Thompson in Re Davidson and Repatriation Commission [1991] AATA 68; (1991) 13 AAR 195 at 198 to regard the Department as "the Tribunal's de facto agent." However, that sympathy cannot overcome the evidentiary deficiency to which we have just referred.

18. Accordingly, we would dismiss the application.

19. The respondent submitted that if the appeal were to be dismissed its costs should be paid by the applicant. Although the Court was told that there are several similar cases awaiting the resolution of the issues canvassed here, the respondent has not agreed to the present application being conducted as a test case. The respondent would contend that the test, to the extent that there was one, was completed by the decision of the learned President. Nevertheless, this application will have effect as a test case especially because the matter has come before a Full Court by operation of s44(3) of the Administrative Appeals Tribunal Act 1975.

20. Mr Roberts, an elderly veteran, made his claim for a pension as long ago as November 1985. His application for review of the decision of the Board was received by the Tribunal on 28 December 1989, having been sent (incorrectly and on the wrong form) to the Department of Veterans' Affairs on 16 October 1989 where it remained until 21 December 1989. The Tribunal made findings that the respondent induced the applicant in the manner we have set out and counsel for the respondent did not challenge those findings, only their legal effect.

21. When the matter came before the Tribunal in January 1992 the respondent accepted that conditions from which the applicant was suffering were war caused and so, over six years after the claim was first made, and nearly a year and a half after the Board gave its decision rejecting the claim, the pension that the applicant sought was to be paid. As a result, it would seem, of the failure to follow a procedure put in place in the Department to rectify mistakes such as those made by the applicant - mistakes that are quite understandable in the circumstances despite the efforts of the Department to give guidance to veterans - the applicant suffered detriment, and the potential liability of the respondent to pay the pension from an earlier date has been reduced.

22. In these circumstances, we think that the interests of justice are best served if we exercise our discretion by making no order for costs against the applicant. We note that the same course was adopted by the Full Court in Glass where the litigation derived from concededly erroneous advice given many years before and for which the respondent in that case was responsible.

23. The appeal must be dismissed, but there should be no order as to costs.