Secretary, Department of Social Security v Ferlat, Iolanda

[1997] FCA 683

FEDERAL COURT OF AUSTRALIA

SOCIAL WELFARE - age pension - Recripocity Agreement with Republic of Italy - period of credited contributions in Italy - whether amount or period of contributions relevant

Social Security Act 1991 (Cth) s 43(1), Sch 3, Pt III Art 7(1)

Secretary, Department of Social Security v Iolanda Ferlat
No. VG 53 of 1997

JUDGE:         HEEREY J
PLACE:         MELBOURNE
DATED:        21 JULY 1997

IN THE FEDERAL COURT OF AUSTRALIA	)
)
VICTORIA  DISTRICT REGISTRY	)          VG 53 of 1997
)
GENERAL DIVISION	)

BETWEEN:	SECRETARY, DEPARTMENT OF  SOCIAL SECURITY Applicant
AND:	IOLANDA FERLAT Respondent

JUDGE:	HEEREY J
PLACE:	MELBOURNE
DATED:	21 JULY 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

The application is dismissed with costs, including reserved costs.

NOTE:            Settlement and entry of orders is dealt with in Order 36 of the Federal Court                Rules

IN THE FEDERAL COURT OF AUSTRALIA	)
)
VICTORIA  DISTRICT REGISTRY	)           VG 53 of 1997
)
GENERAL DIVISION	)

BETWEEN:	SECRETARY, DEPARTMENT OF  SOCIAL SECURITY Applicant
AND:	IOLANDA FERLAT Respondent

JUDGE(S):	HEEREY J
PLACE:	MELBOURNE
DATED:	21 JULY 1997

REASONS FOR JUDGMENT

This appeal from the Administrative Appeals Tribunal concerns the eligibility for an age pension of the respondent, who spent some years in Australia but now lives in Italy.

The respondent was born in Italy in 1934 and lived in Australia from 25 May 1960 to April 1969.  In 1964 she became an Australian citizen.  After returning to Italy in 1969, she worked and made contributions to an Italian pension fund known as INPS between October 1974 and May 1980.  In June 1980 she commenced employment with the Commune de Trieste and during this employment made contributions to another pension fund known as CDPEL.  She continued to make contributions to that fund until her retirement in 1992.  Upon retirement her contributions to the INPS fund were transferred to CDPEL.  She is currently in receipt of a pension from the latter fund.  On 7 July 1995 she lodged a claim for an Australian age pension.

The Legislation

The general requirement for eligibility for an Australian age pension is reaching the pension age and having ten years Australian residence:  Social Security Act 1991 (Cth) (the Act), s 43(1).

However the legislation provides for reciprocity of entitlement to pensions as between Australia and certain other countries.  Section 1208(1) provides for a “scheduled international social security agreement” to have effect despite anything in the Act.  One such agreement is the “Agreement between Australia and the Republic of Italy Providing for Reciprocity in Matters Relating to Society Security” (the Agreement) which appears in Sch 3 of the Act.  In Pt III Article 7(1) of the Agreement it is provided as follows:

Totalisation of Periods of Residence and Periods of Contribution

1.        Where a person to whom this Agreement applies has accumulated:

(a)      a period of residence in Australia that is:

:

(i)        less than the period required to qualify him or her, in respect of residence, under the social security laws of Australia for an Australian benefit; and

(ii)       equal to or greater than the minimum period identified in accordance with paragraph 4 for that person; or

(b)      a period of credited contributions that is:

(i)        less than the period required to qualify him or her, in respect of contributions, under the society security laws of Italy for an Italian benefit; and

(ii)       equal to or greater than the minimum period identified in accordance with paragraph 5 for that benefit,

and, on the other hand, has accumulated both a period of Australian residence during working life and a period of credited contributions in Italy which, when added together, are equal to or in excess of the required minimum period specified for that benefit by the legislation that is within the scope of this Agreement in relation to the Contracting Party by whom the benefit may be payable, then:

(c)       for the purposes of a claim for that Australian benefit, the last-mentioned period of credited contributions shall be deemed to be a period in which that person was residing in Australia; and

(d)      for the purposes of a claim for that Italian benefit, that period of Australian residence during working life shall be deemed to be a period of credited contributions in Italy.

Article 7(3) prescribes the minimum period of Australian residence and the minimum period of credited contributions in Italy.  The respondent satisfied each requirement. 

The Issue

The respondent had just under nine years Australian residence and thus did not qualify under s 43 of the Act.  The question was whether she could add to that period the period in which she contributed to INSP, a period of five and a half years.  The Tribunal proceeded on the basis that contributions to the CDPEL were not contributions used to acquire a benefit under the society security laws of Italy, as defined in Article 2(1)(b).  In an alternative argument counsel for the respondent sought to challenge this assumption, but in the view I take the question does not arise because I am satisfied the Tribunal was correct in holding that the period of the respondent’s contributions to the INPS fund should be added to her period of Australian residence for the purpose of eligibility for an Australian age pension. 

Conclusion

The Agreement had to provide a mechanism for reciprocity of entitlement to pensions and other benefits between two countries which have fundamentally different systems.  In Australia entitlement depends on residence for the prescribed period, in Italy on contributions to a particular kind of fund.  What Article 7(1) does in that context is to provide for accumulations of periods of time, on the one hand a period of residence (Australia) and on the other a period of credited contributions (Italy). 

The applicant’s contention was that at the time of the respondent’s application for an Australian pension there was “no period of credited contributions” in respect of INPS because her contributions had been transferred to CDPEL in 1992. 

I do not accept this submission.  The Agreement is not concerned with the amounts of contribution, but rather the historical period during which contributions were credited.  The commodity with which Article 7 deals is periods of time.  It is those which are to be accumulated.

In my opinion the words of the agreement are clear and unambiguous.  Strictly speaking resort to extrinsic materials is not necessary, but I note that counsel for the respondent produced the explanatory memorandum published at the time of the amendment which introduced the Agreement into the Act.  It was said:

Australia recognises a person’s periods of contributions to the Italian system as periods of residence in Australia to determine whether or not the claimant satisfies the minimum requirements for periods of residence set out in the Social Security Act.

This is consistent with the construction for which the respondent contends.  I should add that no question of “double dipping” arises here.  There is a formula in the Agreement (Article 8) for apportioning the amount of Australian pension the respondent is to receive having regard to her Italian pension.  As was said in the second reading speech, the idea of the reciprocity arrangements is that persons who have spent part of their life in more than one country will receive a “package of pensions consisting of part pension from each country”:.  Hansard, 8 May 1985, at 1845.

The application will be dismissed with costs, including reserved costs.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey

Associate:

Dated:             21 July 1997

Counsel for the Applicant:	Mr P Hanks
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	Mr W Friend
Solicitor for the Respondent:	Maurice Blackburn & Co
Date of Hearing:	7 July 1997
Date of Judgment:	21 July 1997