Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Abbott

[2012] FCA 481

FEDERAL COURT OF AUSTRALIA

Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Abbott [2012] FCA 481

Citation:	Secretary, Department of Families, Housing, Community Services and Indigenous Affairs v Abbott [2012] FCA 481
Appeal from:	Abbott; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 754
Parties:	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS v LORRAINE ABBOTT
File number:	NSD 2088 of 2011
Judge:	NICHOLAS J
Date of judgment:	10 May 2012
Catchwords:	STATUTORY INTERPRETATION – whether under s 36(5) of the A New Tax System (Family Assistance) Act 1999 (Cth) a child is entrusted to the care of an individual as part of the process for adoption of the child only where the authorised party has decided to approve the adoption by that individual – whether Tribunal misconstrued s 36(5) in finding that a child is entrusted to the care of an individual as part of the process for adoption of the child only where the authorised party has decided to approve the adoption by that individual – eligibility for “baby bonus” – whether child entrusted to care of individual as part of the process for adoption of the child – where child initially entrusted to care of individual under a long-term foster care arrangement
Legislation:	A New Tax System (Family Assistance) Act 1999 (Cth) s 36(5) A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) s 39(2) Administrative Appeals Tribunal Act 1975 (Cth) s 44 Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and other Measures) Act 2008 (Cth)
Date of hearing:	27 April 2012
Date of last submissions:	4 May 2012
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	53
Counsel for the Applicant:	Mr J Smith
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	Ms K Sant
Solicitor for the Respondent:	Legal Aid Commission of NSW

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2088 of 2011

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS Applicant
AND:	LORRAINE ABBOTT Respondent

JUDGE:	NICHOLAS J
DATE OF ORDER:	10 MAY 2012
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The appeal is dismissed.

2.The applicant is to pay the respondent’s costs of the appeal.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2088 of 2011

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS Applicant
AND:	LORRAINE ABBOTT Respondent

JUDGE:	NICHOLAS J
DATE:	10 MAY 2012
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an appeal from the decision of the Administrative Appeals Tribunal (the Tribunal) given on 26 October 2011.  The Tribunal affirmed an earlier decision of the Social Security Appeals Tribunal (the SSAT) that the respondent (Mrs Abbott) was eligible to be paid “baby bonus” in respect of two children who had been adopted by Mrs Abbott and her husband.  The applicant (the Secretary) argues that the Tribunal’s decision raises a question of law involving the proper construction of s 36(5) of the A New Tax System (Family Assistance) Act 1999 (Cth) (the Act). 

2. The appeal in this matter is brought by the Secretary under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). Section 44(1) provides that “[a] party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.”

   FACTUAL BACKGROUND

3. Mrs Abbott and her husband adopted two children in 2010.  The events leading to the adoption may be shortly stated.  The two children were born in 2003 and 2004. 

4. In November 2004 orders were made by the Children’s Court allocating parental responsibility for the children to the Minister for Community Services. 

5. Barnardos Australia (Barnardos) was authorised to manage the process of placing the children in care.  In January 2007, it placed the children with Mrs Abbott and her husband in long-term foster care. 

6. Mrs Abbott hoped and believed that this would ultimately lead to adoption, but Barnardos’ policy required children to live for two years in the care of a family before the process of adoption could start.  

7. In February 2010 Barnardos decided to allow Mrs Abbott and her husband to adopt the children.  In October 2010 adoption orders in respect of the children were made in favour of Mr and Mrs Abbott by the Supreme Court of New South Wales. 

8. Mrs Abbott applied for baby bonus in respect of the children in August 2010.  It appears that she did so on the advice of Barnardos.  Her claim was refused by Centrelink, but later allowed by the SSAT.  The decision of the SSAT was affirmed by the Tribunal. 

   RELEVANT STATUTORY PROVISIONS

9. The expression “baby bonus” is defined by s 3 of the Act to mean the payment for which an individual is eligible under Div 2 of Pt 3. This is where the relevant provisions of the Act are found. The key provision is s 36(5) but it is necessary to look at it in the context of the Act as a whole.

10. The long title of the Act is “An Act to implement A New Tax System by providing assistance to families, and for related purposes”. Part 3 of the Act is headed “Eligibility for family assistance”. Division 2 is headed “Eligibility for baby bonus.”

11. Section 36 specifies the cases in which an individual is eligible for baby bonus in respect of a child. There are four cases referred to in s 36. In each case there are various requirements that must be satisfied by a claimant for baby bonus. I shall only refer to the requirements that are relevant to the issues that arise in the appeal.

12. The first case is where the individual is the parent of the child: s 36(2). It is a requirement of s 36(2) that the individual, or the individual’s partner, is, or was, the primary carer of the child at any time within 26 weeks of the child’s birth.

13. The second case is where the child is entrusted to the care of the individual (who is not a parent of the child) or the individual’s partner: s 36(3). The child must be entrusted to the care of the individual or the individual’s partner within 26 weeks of the child’s birth, and the child must continue, or be likely to continue, in that care for not less than 26 weeks.

14. The third case concerns payment of baby bonus in respect of a stillborn child: s 36(4).

15. The fourth case is where, as part of the process for the adoption of a child by an individual, the child is entrusted to the care of the individual by an “authorised party”: s 36(5). The latter expression is defined in s 3 to mean:

    in relation to the adoption of a child, means a person or agency that, under the law of the State, Territory or foreign country whose courts have jurisdiction in respect of the adoption, is authorised to conduct negotiations or arrangements for the adoption of children.

16. It is common ground that Barnardos was at all relevant times an “authorised party” within the meaning of the definition.

17. Section 36(5) relevantly provides:

    (5)Fourth, an individual is eligible for baby bonus in respect of a child if:

    (a)as part of the process for the adoption of the child by the individual, the child is entrusted to the care of the individual by an authorised party; and

    (b)the child is aged under 16 at the time the child is entrusted to the care of the individual; and

    …

    Prior to amendment by the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and other Measures) Act 2008 (Cth) (the Amendment Act), s 36(5)(b) referred to a child under 2 years of age rather than a child under 16. The Amendment Act, which amended s 36(5)(b) with effect from 1 January 2009, also included a transitional provision which provides that the amendment to s 36(5)(b) applied “in relation to children entrusted to care on or after 1 January 2009.”

18. Sections 39(2) of A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the Administration Act) provides:

    Subject to subsections (3) and (3A), a claim for payment of baby bonus in normal circumstances is not effective if it is made later than 52 weeks after:

    (a)if the circumstances covered by the claim involve eligibility under any of subsections 36(2) to (4) of the Family Assistance Act – the birth of the child mentioned in that subsection; or

    (b)if the circumstances covered by the claim involve eligibility under subsection 36(5) of the Family Assistance Act – the time the child is entrusted to the care of the claimant. 

    The exceptions created by subs (3) and (3A) are not relevant for present purposes and nothing more need be said of them. Nor is it necessary to refer to the definition of “normal circumstances” because it is accepted by the Secretary that Mrs Abbott’s claim for payment of baby bonus was made in normal circumstances as that expression is to be understood for the purposes of the Act.

19. Section 39(2) of the Administration Act previously referred to 26 weeks instead of 52 weeks. The change from 26 weeks to 52 weeks, brought about by the Amendment Act, took effect from 1 January 2009. Hence, from 1 January 2009, a claim by a person for baby bonus to which s 36(5) applied was not effective if made more than 52 weeks after the time the child was entrusted to his or her care.

20. Both parties referred me to explanatory memoranda relating to s 36 of the Act and various amendments made to s 36(5) between 2005 and 2008. These included the Explanatory Memorandum for the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 which explained some proposed amendments to s 36(5). The particular statements referred to by Counsel included the following (at p 9):

    The fourth change will increase the age limit for baby bonus eligibility from two to 16 years where a child is adopted.  Under the new rules, an individual will be eligible for baby bonus for a child who is aged under 16 at the time that the child is entrusted to the care of the individual as part of the process of adoption … The individual will then have 52 weeks from the time that the child is entrusted to their care to claim baby bonus for the child …

    …

    This extension of eligibility rules for baby bonus recognises that, as with newborn, an adoptive parent incurs similar set-up costs and may need to spend periods of time out of the workforce to welcome and settle their child. 

    THE TRIBUNAL’S DECISION

21. The Tribunal identified the sole issue for determination as whether the children were entrusted to the care of Mrs Abbott as part of the adoption process in 2007 or 2010. It said that if they were entrusted to Mrs Abbott in 2010, she was eligible to be paid baby bonus pursuant to s 36(5)(a) of the Act. The Tribunal also observed that if, as the Secretary contended, the children were found to be entrusted to Mrs Abbott as part of the adoption process in 2007, then Mrs Abbott would be ineligible to receive baby bonus.

22. The Tribunal said that the issue it identified raised two questions.  First, when did the adoption process begin?  Second, when were the children entrusted to Mrs Abbott as part of that process?  The Tribunal observed that these dates were not necessarily the same.  Ultimately, although the Tribunal said that it was unnecessary to resolve the first of these questions, both parties were agreed that the Tribunal made a finding that the adoption process began in February 2010.  As to the second question, the Tribunal found that the children were not entrusted to the care of Mrs Abbott and her husband as part of the adoption process until Barnardos decided to approve the adoption in February 2010. 

23. During the hearing before the Tribunal the Secretary contended that the adoption process began in January 2007 when the children were first placed in the care of Mrs Abbott and her husband.  That contention is no longer pressed by the Secretary.  To understand why not, it is necessary to refer to para [18] of the Tribunal’s reasons. 

24. It is apparent from its reasons that the Tribunal wrestled with the question of when the adoption process began.  Its task was not made easy by the paucity of material before it which might assist in resolving that question. The Tribunal stated:

    [18]It is thus difficult to identify with precision when the adoption process began. On the evidence available, the Barnardo’s letter (T 10) suggests on balance that it began at about the time of the meeting on 23 February 2010, although it is conceivable that it began even before the children were placed with Mrs and Mr Abbott if an expression of interest pursuant to s 42 [of the Adoption Act 2000 (NSW)] was made before the children were placed with them. In my view, however, determining when the adoption process began is not decisive of the problem this case presents. For that I must turn to the next issue.

25. Both parties accepted that para [18] of the Tribunal’s reasons carried a finding that in Mrs Abbott’s case the adoption process did not begin until about 23 February 2010 which was about the date that Barnardos decided to approve the adoption.  Having accepted that such a finding was made, the Secretary did not contend that it was not open to the Tribunal to make it.

26. I have some reservations as to whether the finding attributed by the parties to the Tribunal in para [18] of its reasons was actually made.  Nevertheless, as both parties accept that the Tribunal made such a finding, and since they have conducted the appeal on that footing, I am satisfied that I should proceed on the same basis.  Accordingly, the appeal is to be approached on the basis that the Tribunal has made a finding (not challenged in the appeal) that the adoption process did not begin until February 2010.  

27. The Tribunal sought to determine when the children were entrusted to Mrs Abbott as part of the adoption process.  On this question, the key paragraphs in the Tribunal’s reasons are as follows:

    [23]Until Barnardos decided to approve the adoption of the children by the Abbotts, it cannot be said that it, the adoption service provider, as the “authorised party” had “entrusted” the children to them as part of the adoption process. The word “entrusted” in this context implies the establishment of a relationship of trust between the adoption agency and the prospective adoptive parents as an integral part of the adoption process. That is, it implies a decision on the part of the authorised party to proceed to adoption because the prospective parents may be trusted to care for the child or children who are entrusted to them.

    [24]The whole point of the two-year probationary period, however, was to assess whether or not the Abbotts could be trusted to care properly for the children and whether the children should be entrusted to the Abbotts for the purpose of adoption. Only once that decision was made could it be said that the children were “entrusted to the care” of the Abbotts as part of the adoption process because it was at that point that the relationship of trust had crystallised for the purposes of the adoption process.

    [25]True it is that the children had already been physically placed in the care of the Abbotts for more than three years at that stage. Once the decision was made to move to formal adoption, however, the children remained in the physical care of the Abbotts pending the Supreme Court’s orders as children who had been “entrusted to the care of” the Abbotts as part of the adoption process. It would have been entirely artificial and legally unnecessary for the children to have been taken from the Abbotts for a very short time to break the chain of physical custody only for them to have been returned physically, this time for the specific purpose of advancing the adoption process.

28. These paragraphs show that the Tribunal reasoned that, although the children were in the care of Mrs Abbott and her husband for some years prior to February 2010, it was only then that it could be said that the children were “entrusted” to them as part of the process for the adoption of the children. 

29. A central feature of the Tribunal’s reasoning is that, even though the children were physically entrusted to Mrs Abbott’s care under a long-term foster care arrangement, there did come a time, in February 2010, when the children were “entrusted” to Mrs Abbott and her husband as part of the adoption process.  This was so despite the fact that the children remained in Mr and Mrs Abbott’s care from the time they were handed over to them in January 2007 through to February 2010 and beyond. 

    THE NOTICE OF APPEAL

30. The Secretary’s amended notice of appeal postulates the following question of law which is said to arise in the appeal:

    The question of law raised on the appeal is whether, on its proper construction, s 36(5) of the A New Tax System (Family Assistance) Act 1999, means that a child is entrusted to the care of an individual only where the authorised party has decided to approve the adoption by that individual.

    There are two particular grounds of appeal relied upon by the Secretary. The first is that the Tribunal misconstrued s 36(5) of the Act in that it found that this provision meant that a child is entrusted to the care of an individual only where the authorised party has decided to approve the adoption by that individual. The second is that the Tribunal should have found that a child is entrusted to the care of an individual within the meaning of s 36(5) when that child is physically handed into the care of that individual.

    THE COMPETENCY OF THE APPEAL

31. It is well established that there must be a question of law arising out of the Tribunal’s decision in order to attract jurisdiction under s 44(1) of the AAT Act and that the question of law so arising will constitute the subject matter of the appeal. The first question to be decided in this case is whether the question of law postulated by the Secretary arises out of the Tribunal’s decision.

32. It was argued by Counsel for Mrs Abbott that the question of law postulated by the Secretary does not arise out of the Tribunal’s decision.  She submitted that the Tribunal never held that a child is entrusted to the care of an individual as part of the adoption process only where the authorised party has decided to approve the adoption of that individual, and that the question of law postulated by the Secretary is based upon a misunderstanding of the Tribunal’s reasons for decision.

33. The Tribunal’s reasoning assumes that the adoption process may have begun as early as January 2007 when the children were first placed in the care of Mrs Abbott and her husband.  But it did not necessarily follow, according to the Tribunal’s reasoning, that the children had been “entrusted” to the care of Mrs Abbott and her husband as part of that process when they were placed in Mr and Mrs Abbott’s care in January 2007 because, at that point in time, the decision to allow them to adopt the children had not been made by the authorised party.  It was not until that decision was made, according to the Tribunal, that the children were “entrusted to the care” of Mr and Mrs Abbott because it was only then “that the relationship of trust had crystallised for the purposes of the adoption process.”

1. In para [23] of its reasons the Tribunal found that the word “entrusted” implies “the establishment of a relationship of trust between the adoption agency and the prospective adoptive parents as an integral part of the adoption process” and that no such relationship was established as between Mr and Mrs Abbott and Barnardos until February 2010.

2. The Secretary did not raise any issue as to the correctness of that particular statement.  But he says that is not where the matter was left.  He argued that the problem, and with it the relevant question of law, arises when one gets to the next sentence in which the Tribunal says that the word “entrusted” implies a decision on the part of the authorised party to proceed to adoption.

3. In my opinion the Tribunal decided this case on the basis that s 36(5) requires that there be a relationship of trust between the individual and the authorised party, and that this could only arise (or “crystallise”) as part of the adoption process when the decision had been made by the authorised party to allow an adoption to proceed. It is apparent from para [23] that this is how the Tribunal interpreted s 36(5). It is equally apparent from para [24] that the Tribunal proceeded to apply that interpretation of s 36(5) to Mrs Abbott’s case.

4. I am satisfied that the Secretary’s appeal involves a question of law arising out of the Tribunal’s decision.

   THE PROPER CONSTRUCTION OF S 36(5) OF THE ACT

5. The Secretary contended that the question of law was decided by the Tribunal incorrectly. He submitted that it was incorrect to say that before a child could be entrusted to the care of an individual by an authorised party as part of the process of adoption, the authorised party must have approved of the adoption.

6. Although Counsel for Mrs Abbott maintained that the Tribunal never interpreted s 36(5)(a) in this way, she accepted that if, contrary to her submission, that is what the Tribunal did, then it followed that the Tribunal misconstrued s 36(5)(a). In particular, she accepted that a child may be entrusted to the care of an individual by an authorised party as part of the adoption process before any such decision is made.

7. I am satisfied that the entrustment of a child referred to in s 36(5) is not confined to a situation in which the authorised party has approved the child’s adoption by the individual. The process of adoption could begin well before that point depending on the facts of a given case. Indeed, in the present case, it was strongly arguable (though not accepted by the Tribunal) that the adoption process began in 2007 when the children were first placed in the care of Mrs Abbott and her husband with a view to adoption.

8. That brings me to the second of the Secretary’s grounds of appeal. It was contended by the Secretary that the Tribunal should have found that a child is entrusted to the care of an individual within the meaning of s 36(5) when the child is physically handed into the care of that individual.

9. Before addressing this contention, it is desirable that I explain in broad terms how the Secretary contends s 36(5) should be applied in Mrs Abbott’s circumstances.

10. The Secretary argued that for Mrs Abbott to come within s 36(5) it was necessary for her to satisfy the following requirements: first, the children must have been entrusted to her care; second, the children must have been entrusted to her care as part of the adoption process; and third, the children must have been entrusted to Mrs Abbott’s care prior to 1 January 2009. The latter requirement stems from the transitional provision to the amendment which raised the age specified in s 36(5)(b) from 2 years to 16 years. As I have already mentioned, the transitional provision provides that the amendment to s 36(5)(b) applies in relation to children entrusted to care on or after 1 January 2009. Mrs Abbott’s children were both more than 2 years of age at the time they were placed in her care.

11. The words appearing in para (a) of s 36(5) are referring to a case in which a child is entrusted to the care of an individual as part of the process for the adoption of that child by the individual. If there has been such an entrustment by an authorised party, then the requirements of para (a) are satisfied.

12. A child will usually be regarded as having been entrusted to the care of an individual when the child is placed in the physical care of the individual.  In the present case, though the children were placed in the care of Mrs Abbott in January 2007 pursuant to a foster care arrangement, this was not part of the adoption process.  This leads one to ask whether the children were ever entrusted to the care of Mrs Abbott as part of the adoption process.

13. I think they were.  In particular, I agree with the Tribunal that the children were entrusted to Mrs Abbott’s care as part of the adoption process when Barnardos decided to allow Mr and Mrs Abbott to adopt the children.  That is when, on the Tribunal’s findings, the process of adoption began.  And it represents the first point in time at which it could be said that the children were entrusted to Mrs Abbott and her husband as part of the process of adoption.  From that point on, the children were entrusted to Mrs Abbott and her husband as part of the adoption process.

14. I do not accept the Secretary’s argument that Mrs Abbott could never have been entrusted with the care of the children as part of the adoption process because the children were only ever entrusted to her care in January 2007.  I think the Secretary’s case takes too narrow a view of the language of the section. Mrs Abbott was entrusted with the care of the children in February 2010 as much as she was in January 2007, though it was not until February 2010 that it could be said that the children were entrusted to her care as part of the adoption process.

15. I have had regard to the language used in both s 36(5)(b) of the Act and s 39(2)(b) of the Administration Act in reaching this view. Unlike s 36(5)(a), neither of them makes express reference to the process of adoption. Nevertheless, when s 36(5) is read as a whole, I think s 36(5)(b) should be taken as referring to the same entrustment to care that is referred to in s 36(5)(a). In other words, it too is referring to entrustment to care as part of the adoption process. In my opinion the same is also true of s 39(2)(b) of the Administration Act.

16. The Secretary was critical of the notion that there could be a “transformation” in entrustment. As I have explained, it was his position that entrustment to care involved the physical handing over of the children and that, for the purposes of s 36(5), this was necessarily a once only event which, in this case, occurred in January 2007.

17. The Secretary’s view, if accepted, would lead to some rather odd results. If, as here, a young child was entrusted to the care of a person on a temporary basis, with a view to adoption, but at a time when the adoption process had not yet commenced, then that person could never be entitled to baby bonus under s 36(5). To take a specific example, if an individual entrusted with a one year old child pursuant to a foster care arrangement later wanted to adopt the child, then he or she could never be eligible for baby bonus under s 36(5), even if the adoption process commenced very soon after the child was first entrusted to his or her care, and even if the foster care arrangement was of very short duration.

18. I cannot see why, as a matter of policy, the legislature would have intended to deny baby bonus to such an individual assuming that he or she was otherwise eligible to receive it. It is true that such a person might be eligible under s 36(3). However, that would only be so if he or she was entrusted with the care of the child within the period of 26 weeks starting on the date of the child’s birth. In the example I have postulated, there could be no eligibility under either s 36(3) or s 36(5).

19. I am satisfied that the second of the Secretary’s grounds of appeal should be rejected.

20. The appeal will be dismissed.  The applicant must pay the respondent’s costs.

I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas.

Associate:
Dated:       10 May 2012