Upton v Centrelink - [2009] WADC 116

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: UPTON -v- CENTRELINK [2009] WADC 116

CORAM: SLEIGHT DCJ

HEARD: 15 JULY 2009

DELIVERED : 11 AUGUST 2009

FILE NO/S: CIV 1322 of 2009

BETWEEN: RYAN MICHAEL UPTON
Plaintiff
AND
CENTRELINK
Defendant

Catchwords:

Negligence - Duty of care - Claim for damages for nervous shock suffered as a result of delay in reviewing plaintiff's claim for Newstart Allowance - Application for summary judgment by plaintiff and defendant - Whether duty of care exists to process plaintiff's request for review promptly - Whether law sufficiently clear to enable summary judgment to be given to defendant

Legislation:

Social Security Act 1991
Social Security (Administration) Act 1999

Result:

Applications for summary judgment dismissed

Representation:

Counsel:

Plaintiff: In person
Defendant: Ms S J Oliver

Solicitors:

Plaintiff: Not applicable
Defendant: Australian Government Solicitor

Case(s) referred to in judgment(s):

Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
East Suffolk River Catchment Board v Kent [1941] AC 74
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54, (2002) 194 ALR 337
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Jones v Department of Employment [1989] Qb 1
Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251
Northern Territory of Australia v Mengel (1995) 185 CLR 307
Pickering v Centrelink [2008] FCA 561
Rowley v Secretary of State for Work and Pensions [2007] 1 WLR 2861
Scott v Pedler [2003] FCA 650
Scott v Secretary, Department of Social Security [2000] FCA 1241
Smith v Oakenfull [2004] FCA 4
Stuart v Kirkland-Veenstra [2009] HCA 15
Sullivan v Moody [2001] HCA 59, (2001) 207 CLR 562
Tame v State of New South Wales; Annetts v Australian Station Pty Ltd [2002] HCA 35; (2002) 211 CLR 317

SLEIGHT DCJ: This decision concerns an application by the plaintiff Mr Upton for summary judgment and a cross‑application by the defendant Centrelink for summary judgment. Centrelink's application for summary judgment was one business day out of time under the provisions of O 20 r 1 of the Rules of the Supreme Court 1971. At the hearing of the applications before me on 15 July 2009 I made an order extending the period of time for Centrelink to file its application for summary judgment so as to hear the application on its merits. Centrelink's solicitors had attempted to file the application on the last date of the period prescribed by O 20 r 1 but the documents were rejected at the Registry of the District Court of Western Australia because a cheque made payable to the District Court for the relevant fees was in excess of the correct filing fee. In those circumstances I concluded it would be unjust not to allow the extension sought.

Background to the applications

Mr Upton is an electrical and electronic engineer. He was employed by Applicon Australia Pty Ltd as an engineer pursuant to a Contract of Employment (Permanent Employee) Agreement dated 22 September 2008. This contract provided that Mr Upton was employed "to work on Applicon jobs for BHP Ravensthorpe site only". The contract further provided that continuous and long term work at the Ravensthorpe site was not guaranteed and Mr Upton would only be paid when work was carried out at the Ravensthorpe site on behalf of Applicon.
On 21 January 2009 BHP‑Billiton closed the Ravensthorpe mine site. As a result of the closure of the mine, Mr Upton's employment was terminated as at 21 January 2009.
On 12 February 2009 Mr Upton lodged a claim for Newstart Allowance at the Victoria Park Centrelink office. On 19 February 2009 Centrelink received an employment separation certificate completed by Applicon confirming that Mr Upton's employment ceased as at 21 January 2009.
On 19 February 2009 an officer of Centrelink decided to apply "a seasonal preclusion period", pursuant to s 16A of the Social Security Act. The effect of this preclusion period was that Mr Upton was not entitled to receive Newstart Allowance until 25 June 2009.
On 20 February 2009 Mr Upton requested the officer review the decision. On 26 February 2009 the Centrelink officer who had made the decision, reconsidered the matter and confirmed the decision (this was pursuant to Pt IV of the Social Security (Administration) Act 1999). Mr Upton was advised of the decision by letter dated 26 February 2009.
On 26 February 2009 Mr Upton says he found himself suffering from nervous shock and was put in contact with a Dr Florence Van Schie and Dr Patsy.
There is a factual dispute as to what occurred in relation to Mr Upton's application for Newstart Allowance after he was informed of the review decision of 26 February 2009. Mr Upton in the statement of claim and his affidavit in support of his application for summary judgment does not provide any details as to when he says that he sought a review by an authorised review officer. However he says that every week or so he contacted Centrelink enquiring as to whether the review had been completed. On 14 April 2009 he says he again contacted Centrelink and Centrelink refused to transfer the file as requested by him to the Social Security Tribunal. Centrelink contends that its records of contact after the decision of 26 February 2009 indicate contact on 19 March 2009 by a social worker on behalf of Mr Upton and a direct contact by Mr Upton on 7 April 2009. The note from Centrelink records on 7 April 2009 as follows:
"CUS has requested that his appeal be forwarded to ARO, can you please call CUS to confirm this has been done as CUS was on the understanding that appeal was with ARO. I can't see anything on CUS record to confirm the appeal has been forwarded on to ARO."
The note goes on to further state:
"… called customer to advise that file has been recalled from RMU and that it will be forwarded on to ARO. Customer unhappy with this as he was of the understanding this had already gone to ARO and now wants SSAT. Customer has stated that he will be serving a summons based on all information and fraud was mentioned (?) … have advised customer this is his right."
Accordingly, the records of Centrelink indicate that at least by 7 April 2009 Mr Upton requested the decision be referred to an authorised review officer.
On 17 April 2009 Centrelink received a letter from Mr Upton notifying as follows:
"I am seeking restitution for the tort of negligence and nervous shock of $212,000. I claim that Centrelink has a high duty of care to its clients of which I am one. I claim that Centrelink has breached its duty of care by incorrectly assessing the work I performed as seasonal when it is clearly not. I claim I have suffered both an economic loss, no income since 21 January 2009, and injury nervous shock, as per Dr Florence Van Schie and Dr Patsy, due to this breach. If you do not respond to this letter of demand within seven days then I shall proceed with legal action."
On 23 April 2009 the decision was referred to the authorised review officer.
On 29 April 2009 Mr Upton commenced these proceedings in the District Court of Western Australia.
On 8 May 2009 the authorised review officer reviewed the decision to impose a seasonal work preclusion period in relation to the plaintiff's claim for Newstart Allowance. The authorised review officer decided to set aside the decision and ruled that the plaintiff was entitled to be paid Newstart Allowance from 12 February 2009. The authorised review officer wrote to the plaintiff on the same day advising him that his appeal was successful.
The decision of the authorised review officer, which was sent to Mr Upton, states that the authorised review officer had spoken to an officer of Applicon and had been convinced that the nature of Mr Upton's employment was such that it could not be considered seasonal or intermittent.

Social Security legislation

Centrelink is a government service delivery agency which is responsible for administration of the Social Security Act 1991 and the Social Security (Administration) Act 1999.
When Centrelink makes an administrative decision regarding the payment or non-payment of a social security benefit, including a decision to impose a non-payment or preclusion period, that decision is subject to the review procedures in Pt IV of the Social Security (Administration) Act 1999. Under Pt IV a person can seek:
(a)an internal review of the decision by the original decision maker (under Pt IV, Div 2);
(b)an independent internal review of the decision by an authorised review officer (under Pt IV, Div 2);
(c)an external review of the decision by the Social Security Appeals Tribunal (under Pt IV, Div 3); and
(d)an external review of the decision by the Administrative Appeals Tribunal (Pt IV, Div 4).
Section 8 of the Social Security (Administration) Act 1999 relevantly states that in administering the Social Security law the Secretary is to have regard to:
"(a)the desirability of achieving the following results:
(iii)the delivery of services under the law in a fair, courteous, prompt and cost‑efficient manner;
(b)the special needs of disadvantaged groups in the community."
Under s 16A of the Social Security Act a person who claims Newstart Allowance and was engaged in seasonal work is subject to a seasonal work preclusion period. Seasonal work is defined in the section as follows:
"16A Seasonal work definitions
Definitions
(1)In this Act, unless the contrary intention appears:
…
seasonal work means:
(a)work that, because of its nature or of factors peculiar to the industry in which it is performed, is available, at approximately the same time or times every year, for part or parts only of the year; or
(aa)work:
(i)that is intermittent; and
(ii)that is to be performed for a period of less than 12 months; and
(iii)that is to be performed for a specified period or a period that can reasonably be calculated by reference to the completion of a specified task; and
(iv)for which the person performing the work does not accrue leave entitlements; or
(b)work that is intermittent and is determined, under subsection (2), to be seasonal work for the purposes of this Act."

Mr Upton's claim

Mr Upton's statement of claim pleads as follows:
"12.The Plaintiff claims that Centrelink has an onerous Duty of Care as Centrelink clients are often in a weakened state due to financial hardship. The Plaintiff claims that the duty of care presumably exists, by way of a special relationship, and little further proof on issue need be brought forward by the Plaintiff as the defendant had a voluntarily, or under a mandate of statute, assumed responsibility for the welfare of the Plaintiff or the class of persons that includes the Plaintiff (Nagle v Rottnest Island Authority (1993) 177 CLR 423).
13.The Plaintiff claims that Centrelink has breached the Duty of Care by incorrect assessment of the Plaintiff, delay on that assessment and requests to see the file Centrelink has on the Plaintiff and for Centrelink to confirm that the file is in good order (Pyrnees Shire Council v Day (1998) 151 ALR 147).
14.The Plaintiff has suffered damage both in injury and economic loss due to Centrelink's breach of its duty of care. The injury is nervous shock. The surprise closure of the Ravensthorpe Mine, and loss of the job for the life, in such difficult economic times has been harrowing for the Plaintiff. Centrelink is meant to soften the blow in such times and assist in finding the Plaintiff new employment. Instead Centrelink has added a heavy load to an already heavy burden forcing the Plaintiff into starvation, bad health, bad debts and possibly homelessness.
15.The economic loss of no Newstart, AusStudy or Rent Assistance for approximately 3 months has meant time and effort that could have better been spent on finding new employment has been wasted. This has caused permanent and lasting damage to the Plaintiff's career.
16.An example needs to be made of Centrelink for the sake of others who may also be in a weakened, vulnerable state.
17.The Plaintiff is a self-represented litigant and requests that the court provide special treatment to this end.
18.The Plaintiff does not limit the claim to these facts and reserves the right to present more facts in the advent of a trial.
19.The Plaintiff is seeking damages and restitution for the tort of negligence, namely economic loss and nervous shock of $702,000."
There are a number of objectionable features of the statement of claim which is more in the form of a submission. However, putting aside these drafting issues, Mr Upton's claim as pleaded in par 13, contains two alleged breaches of a duty of care:
(i)An incorrect assessment of the plaintiff's claim.
(ii)A delay in the assessment.

Principles on applications for summary judgment

1.Mr Upton's application for summary judgment is pursuant to O 14 r 1 of the Rules of the Supreme Court. This provides that a plaintiff may apply for summary judgment after serving a statement of claim on the defendant and the defendant has entered an appearance "on the grounds that the defendant has no defence to a claim or part thereof" or "no defence to such a claim or part thereof except as to the amount of any damages".
2.The application for summary judgment is to be made by summons supported by an affidavit verifying the facts on which the claim is based and stating the plaintiff's belief that there is no defence (O 14 r 2).
3.A defendant may show cause against an application by affidavit or otherwise to the satisfaction of the court (O 14 r 4(1)).
4.The defendant's application for summary judgment is pursuant to O 16 r 1 of the Rules of the Supreme Court. This provides that a defendant may within 21 days after appearance or at a later time by leave of the court, apply for summary judgment, and the court, is satisfied that ‑
•The action is frivolous or vexatious;
•The defendant has a good defence on the merits; or
•That the action should be disposed of summarily or without pleading,
may order that judgment be entered for the defendant with or without costs.
Like an application for summary judgment by the plaintiff, the application is to be made by summons, supported by an affidavit verifying the facts upon which the application is made.

5.The applicant for summary judgment assumes the burden of persuading the court, in the case of the application of the plaintiff, that the claim is a good one or that there is no defence to it; and in the case of an application by the defendant that for one of the grounds contained in O 16 r 1 that judgment should be entered for the defendant.
6.The power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried (Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87).
7.The need to exercise great care has been elaborated on in a number of ways by various authorities.
In Dey v Victorian Railways Commissioners (1949) 78 CLR 62 Dixon J said, at 91:
"A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury ... Once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous or vexatious and an abuse of process."
In Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251 at 256 Kirby J held it is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests:
"An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment; ... If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts."
In General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, Barwick CJ summarised the principles applicable to a court's power to terminate an action summarily. At p 129 he said:
"... The plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; 'so obviously untenable that it cannot possibly succeed'; 'manifestly groundless'; 'so manifestly faulty that it does not admit of argument'; 'discloses a case which the court is satisfied cannot succeed'; 'under no possibility can there be a good cause of action'; 'be manifest that to allow them' (the pleadings) 'to stand would involve useless expense'. At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or 'so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument'; 'so to speak apparent at a glance'."

8.The Court should be astute to the risk of stifling the development of the law by summarily disposing of an action. In Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 at 375, Master Allen of the Supreme Court of New South Wales stated as follows at p 373:
"It is not by any means rare in the history of the development of the common law that a high appellant court, enunciating a novel development in the law, albeit one avowedly based on a miscellany of old cases, has chosen to use general words of imprecise limits in meaning to facilitate the arrival, in later cases, of the final form of the development without the need to overrule what earlier had been stated. That being so I am of the opinion that a court at first instance should be particularly astute not to be stifling the development of the law by summarily throwing out of court actions in respect to which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that a cause of action does lie. The risk of injustice to the plaintiff, which summary termination of his claim would entail, is real. One cannot predict, with firm assurance, what the future holds as the final formulation of the new development."

1. Mr Upton's application for summary judgment

Mr Upton's application was supported by an affidavit sworn by him on 5 January 2009. The affidavit was a mixture of legal submissions and factual statements.
Paragraph 70 of Mr Upton's affidavit states:
"The Plaintiff claims that the Defendant lacks a valid defence. There is no defence to the claim. There is no need for a trial."
In my opinion this paragraph is a sufficient compliance with O 14 r 2 as a statement of the deponent's belief there is no defence to the action.

Centrelink did not file a affidavit in response, but instead filed a cross-application for summary judgment supported by an affidavit of Mr Paul Maishman, a public servant employed by Centrelink. As the applications of Mr Upton and Centrelink were heard together I consider I should treat the affidavit filed by Centrelink as also relevant to Mr Upton's application (just as I should treat Mr Upton's affidavit in support of his application for summary judgment, as relevant to Centrelink's application for summary judgment).
In any event it is clear to me that even on the basis of Mr Upton's affidavit, there is insufficient material for me to be satisfied that summary judgment should be granted to Mr Upton. There are very clearly triable issues as to the following:
1.Whether Centrelink owed a common law duty of care to Mr Upton (this is an issue which I will deal with later in this decision).
2.If such a duty of care does exist, what is the scope of the duty of care and has it been breached. I note that insofar as Mr Upton's claim is based on delay, the delay was arguably not significant, being a delay from when Mr Upton requested a review of the authorised review officer (according to the records of Centrelink being on 7 April 2009) and when the matter was reviewed by the authorised review officer on 8 May 2009.
3.If there was a breach of duty whether it caused harm to the plaintiff of a nature that the plaintiff is entitled to recover damages for injuries. In relation to the claim for damages for nervous shock, Mr Upton states in his affidavit, that he suffered a nervous shock as from 26 February 2009, which is before there is any delay in having the decision reviewed by an authorised review officer. Further, there is an argument on causation as to whether any nervous shock suffered by Mr Upton was caused by his termination of employment or as a result of his dealings with Centrelink.
Accordingly, I dismiss Mr Upton's application for summary judgment.

Centrelink's application for summary judgment

Centrelink's application is on the ground that there is no duty of care in the circumstances of this case and therefore there is no serious question to be tried in the action. Accordingly, the action should be disposed of summarily without pleading.
The question of whether there is any duty of care requires a close examination of the existing law, taking into account that the Court must be convinced that there is no arguable case at law and that there is no risk that such a ruling of summary judgment might stifle the development of the law.

Common law duty of care

It is clear on the authorities that a common law of duty of care may arise in the performance of statutory functions, including the manner in which a statutory duty is performed. This has been recognised both in England (see East Suffolk River Catchment Board v Kent [1941] AC 74 at 88 – 89 Lord Atkin) and in Australia (Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 200 CLR 1, Sullivan v Moody [2001] HCA 59, (2001) 207 CLR 562 and Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54, (2002) 194 ALR 337).
In East Suffolk River's case Lord Atkin said as follows:
"But apart from the existence of a public duty to the public, every person whether discharging a public duty or not is under a common law obligation to some persons in some circumstances to conduct himself with reasonable care so as not to injure those persons likely to be affected by his want of care. This duty exists whether a person is performing a public duty, or merely exercising a power which he possesses under statutory authority or in pursuance of his ordinary rights as a citizen."
Critical to the question of whether a duty of care exists is the nature of the relationship between the parties. In Graham Barclay Oysters' case at [145 ‑ 147] Gummow and Hayne JJ with whom Gaudron J agreed stated as follows:
"The existence or otherwise of a common law duty of care allegedly owed by a statutory authority turns on a close examination of the terms, scope and purpose of the relevant statutory regime. The question is whether that regime erects or facilitates a relationship between the authority and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for the intervention by the tort of negligence.
Where the question posed above is answered in the affirmative, the common law poses a duty in tort which operates alongside the rights, duties and liabilities created by statute. In some instances, a statutory regime may itself, in express terms or by necessary implication, exclude the concurrent operation of a duty of common law."
The importance of looking at the nature of the relationship is consistent with the common law principles of negligence. In the case of Tame v State of New South Wales; Annetts v Australian Station Pty Ltd [2002] HCA 35; (2002) 211 CLR 317, the majority of Gleeson CJ, Gaudron, Gummow and Kirby JJ ruled that the common law of Australia did not limit liability for damages for nervous shock to situations where the injury is caused by a sudden shock or whether a person directly perceives a distressing phenomenon and its immediate effect. The majority held that the relationship between the plaintiff and the defendant was critical to whether a duty of care arose on the basis that the nature of the relationship was relevant as to whether harm to the plaintiff was reasonably foreseeable in the sense that it was reasonable to require a person to have a contemplation of the risk of injury that eventuated (Gleeson CJ at [12] and [37], Gaudron J [55] and [65], McHugh J [89] and [144], Gummow and Kirby JJ [232] and [237], Hayne J [298] and [304]).
In the English case of Jones v Department of Employment [1989] QB 1, the Court of Appeal dealt with an appeal against a refusal to strike out a claim. The plaintiff had made a claim for unemployment benefits which was refused. He appealed to the Social Security Tribunal and the Tribunal reversed the decision granting him unemployment benefits backdated. He then made a claim for damages for negligence seeking legal costs incurred in conducting the appeal and aggravated damages for worry and distress. On appeal all three appeal Judges allowed the appeal, struck out the claim on grounds which included that no duty of care existed. Slade LJ at p 25 stated as follows:
"In more general terms, I would agree with Glidewell LJ that ordinarily, and subject of course to the particular provisions of the relevant statute, a government officer or department who or which is charged by statute with deciding whether certain payments should be made out of public funds and is subject to a statutory right of appeal against such decisions, will owe no duty of care to potential recipients in private law. Misfeasance apart, I would agree that ordinarily it or he will only be susceptible [in public law] to judicial review and also to the relevant rights of appeal."
Jones' case (supra) was followed in the more recent English case of Rowley v Secretary of State for Work and Pensions [2007] 1 WLR 2861. The case concerned a claim for economic loss and psychological harm caused by a delay in processing recovery action for maintenance for a disabled child. However the decision was influenced by the legislative framework which led to the conclusion that a duty of care would be inconsistent with the statutory scheme. In my opinion the statutory scheme considered in Rowley's case (supra) had some important differences to the Social Security scheme in Australia, including an alternative private means of recovery for maintenance. Further, in my opinion it is necessary to be guarded against relying on English authorities given the divergence that has occurred in the law of negligence between Australia and England [see commentary in "The Needle in the Haystack: Principle in the Duty of Care in Negligence" [2000] UNSWLawJ 25; (2000) 23(2) UNSWLawJ 35].
Cases against public officers at common law draw a distinction between claims based upon misfeasance and non‑feasance. The tort of misfeasance in public office is committed where damage is suffered as the result of an act done by a public officer with intention of causing harm to the plaintiff or which he knows is or ought to know beyond power and involves a foreseeable risk (Northern Territory of Australia v Mengel (1995) 185 CLR 307).
The issue of liability for misfeasance (as opposed to non‑feasance) was considered in the case of Scott v Secretary, Department of Social Security [2000] FCA 1241. The factual situations of Scott's case are quite complex but essentially the plaintiffs' claims were on the basis that the Department failed to advise and grant pension entitlements which arose out of changes in the legislative provisions. The plaintiffs, who were husband and wife, claimed intentional wrongdoing including malice, bad faith and other intentional wrongdoing.
The majority of Beaumont and French JJ (with whom Finkelstein J agreed on this point) stressed that liability for a public official for misfeasance was limited to ones involving a deliberate misuse of power with an intention to cause harm. Such an intention can arise by a reckless disregard.
Scott's case was principally argued on the basis of a claim for misfeasance but in relation to an alternative claim presented for liability for non‑feasance in the form of a negligence claim based upon delay, Beaumont and French JJ stated as follows at [24]:
"For completeness, we should mention one matter raised by the appellants in the course of their argument. They suggested that they could claim damages in negligence for failure to process their claims for pension with due expedition. We see no basis for such a claim on the facts. But, in any event, our view is that such a claim, that is, for damages for alleged negligence of that kind, is not sustainable. It is true that mandamus or a similar form of judicial review will be ordered where a public duty has not been performed within a reasonable time, compelling the specific performance of that function forthwith (see Re Federal Commissioner of Taxation: Ex parte Australena Investments Pty Ltd & Ors (1983) 50 ALR 577 and Thornton v Repatriation Commission (1981) 35 ALR 485). But, absent a claim for misfeasance (see above), common law damages cannot be claimed merely for failure to act with due expedition …"
Finkelstein J in dissent on this point held that a duty of care did exist for non‑feasance. At [31 – 32] after referring to Australian authorities he stated as follows:
"In my opinion, decisions of the High Court, such as Sutherland Shire Council v Heyman [1985] HCA 41; (1985) 157 CLR 424, Pyrenees Shire Council v Day [1998] HCA 3; (1998) 192 CLR 330, Romeo v Conservation Commission of the Northern Territory [1998] HCA 5; (1998) 192 CLR 431 and Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999) 167 ALR 1, while not establishing a clear principle by which the common law liability of the repository of a statutory power or duty is to be determined, suggest that a duty of care would exist in the present case, both as to the manner in which a claim for a benefit is processed and for the failure to process a claim with due expedition.
In this regard the following matters would be important. The respondent's functions are not inconsistent with the existence of a duty of care. The respondent is responsible for the general administration of the Social Security Act: s 1295. He must consider each application for a claim and if an applicant satisfies the necessary criteria, he must ensure that the benefit is paid. Applicants who are entitled to benefits of the kind payable under the Social Security Act are generally in a vulnerable position. A duty to consider a claim for a benefit and the obligation to process the claim are not legislative in character. There is no reason in policy why a duty of care should not be owed. It is reasonably foreseeable that a person who is wrongly deprived of a benefit to which he or she is entitled, or who endures unreasonable delay in the receipt of a benefit, may suffer physical harm."
The issue of non‑feasance was also considered in the Federal Court decision of Scott v Pedler [2003] FCA 650. The plaintiffs in that case were the same plaintiffs as in the earlier decision of Scott v Secretary, Department of Social Security. In Pedler's case they sought declarations as to entitlements and damages including aggravated and exemplary damages. In a detailed judgment Gray ACJ examined the legislative nature of the function of the Department of Social Security in relation to dealing with claims for social security. In dismissing the plaintiffs' claim for declaratory relief for entitlement he stated as follows at [44]:
"The adoption of an administrative decision-making process carries with it the assumption that there will be occasions when minds might differ as to whether the requisite state of satisfaction has been reached. The legislature may decide to make provision for merits review, so that another mind, or other minds, can be applied to the same issues, and a claimant may have the benefit of a more favourable outcome if another decision-maker is satisfied as required. The Social Security Act makes available three successive levels of merits review, by way of an Authorised Review Officer, the SSAT and the AAT. I know of no other area of administrative decision-making in Australia in which so many levels of merits review are available. There might also be occasions when the failure of an administrative decision‑maker to reach the requisite state of satisfaction arises from demonstrable legal or jurisdictional error on the part of the decision‑maker. In such cases, review by means of the Administrative Decisions (Judicial Review) act 1977 (Cth) ("the ADJR Act") is available. In the light of the scheme of administrative decision-making adopted under the Social Security Act, there are also powerful reasons for holding that there is a legislative intention that the scheme should not be bypassed by the use of remedies such as declarations and injunctions."
In relation to the issue of the common law duty of care after referring to passages in Scott v Secretary, Department of Social Security (passages of which I have quoted earlier in this decision) he stated as follows at [63 – 66]:
"The view of the majority in that case is binding on me. I am therefore obliged to hold, at least, that the respondents in the present case did not owe to the applicants any common law duty of care either to advise them that benefits might be available, or to deal with their applications at or by any particular time or times. It may be that I am also bound to hold that no common law duty of care can coexist with the statutory functions exercised by the respondents under the Social Security Act. For several reasons, however, I propose to discuss that issue in greater detail. First, it is unclear how far the principle enunciated in Scott extends in relation to duties of officers under the Social Security Act generally. Second, there is a clear divergence of views between the majority on the one hand and Finkelstein J on the other. Third, it may be that the exercise needs to be undertaken separately in relation to each alleged duty of care, because different considerations may arise. Whilst there might not be a duty to advise, or to deal expeditiously with a claim, there might be a common law duty of care, with which the Social Security Act is consistent, in relation to other matters. The applicants in the present case plead broader duties than those rejected in their earlier proceeding.
It is relatively easy to see that the relationship between officers of the DSS and persons making claims for pensions or benefits under the Social Security Act could give rise to a common law duty of care. Officers of the DSS would ordinarily be aware that a person claiming a pension or benefit under the Social Security Act will be likely to lack financial resources, usually to the point of being dependent upon receiving some form of assistance from government, charity or private philanthropy in order to subsist for any significant period. In many cases, it will be apparent that such a person will need guidance, and even assistance, just to make the claim. In other words, social security claimants can be seen as vulnerable, in the sense in which that term was used of stevedoring employees in Crimmins. At least those who deal directly with social security claimants can be classed as having a relationship with them of a kind that would ground a duty to take reasonable care in the performance of the statutory functions so that, if there be an entitlement, it be afforded to the claimant.
The analysis of the statutory provisions is not easy. Some significance must be attached to the absence of any provision giving protection and immunity to primary decision‑makers and authorised review officers, when compared with s 1338(1) of the Social Security Act, which provides such protection and immunity to members of the SSAT (and the similar protection given to members of the AAT by s 60(1) of the AAT Act in relation to applications for review of decisions, including decisions under the Social Security Act). This absence might tend to point to a legislative intention that suits for negligence should be capable of being brought against officers of the DSS in relation to the exercise of their functions. Other provisions of the Social Security Act point in the other direction, however. The range of considerations mandated by s 1296, to which the Secretary is to have regard in the administration of the Social Security Act is one. No mention is made of due care in the making of decisions. Rather, the emphasis is on 'the delivery of services ... in a fair, courteous, prompt and cost‑efficient manner'. The existence of a duty of care might be inconsistent in some circumstances with the establishment of procedures to ensure that abuses of the social security system are minimised. This suggests that officers of the DSS need to be aware that they are responsible for the disbursement of public funds and are not at liberty to disburse them otherwise than in accordance with authority contained in the Social Security Act. This responsibility is emphasised by s 1296(e). Finally, there is the reference in s 1296(d) to the importance of the systems of review of decisions under the Social Security Act. I have mentioned this system of administrative decision‑making, with three levels of merits review, earlier in these reasons for judgment. It is a powerful indication that the legislature did not intend that the correctness of a particular decision should be challenged collaterally in proceedings in a court, such as proceedings for damages for negligence in the exercise of the statutory function. Coupled with the adoption of the satisfaction of the decision‑maker as the foundation for a decision to make payments of pensions or other benefits, the system of administrative decision‑making with merits review appears to be fatal to the notion that there should be a duty of care. The scheme of the Social Security Act is fundamentally inconsistent with the notion that an unsuccessful claimant for a pension or benefit should be entitled to sue for damages on the basis that the decision to deny the pension or benefit was the result of negligence on the part of the decision‑maker. As I have already pointed out, such a claim would require that the court place itself in the shoes of the decision‑maker and decide that he or she ought to have been satisfied. It would make the satisfaction of the court, rather than of the Secretary or the delegate, the effective determinant of entitlement.
I note that, in Scott at [32], Finkelstein J referred to s 1295 of the Social Security Act, which makes the Secretary responsible for the general administration of the Social Security Act. His Honour did not refer to s 1296 which, as I have said, sets out the considerations to which the Secretary is to have regard in the administration of the Act. In the following sentence, his Honour suggested that the Secretary had a duty to ensure that the benefit was paid if an applicant satisfied the necessary criteria. This is not an accurate representation of the scheme of the legislation. If objective satisfaction of the criteria gave rise to an entitlement to payment, there would be a stronger case for saying that a court could determine it. As I have said, it is the satisfaction of the Secretary or the delegate that is the essential requirement before a payment can be made. I consider this to be fundamentally inconsistent with the notion that a court can decide that a claimant ought to have been granted a pension or benefit, so that damages for negligently failing to grant that pension or benefit can be awarded."

However, whilst the decision in Pedler's case deals specifically with the issue of non‑feasance for failing to grant a pension or benefit, it does not directly address the issue of delay. One of the statutory mandates mentioned by Gray ACJ and is now contained in the Social Security (Administration) Act 1999 as quoted earlier by me, involves a mandate to deliver services "in a fair, courteous, prompt and cost efficient manner" (my emphasis). That raises the issue of whether a common law claim might arise for delay in processing a claim.
In the decision of Pickering v Centrelink [2008] FCA 561 McKerracher J struck out an action by a disgruntled claimant against Centrelink. The claim alleged that Centrelink failed to allow him to speak to an authorised officer and that he had been arguing with Centrelink about their duties and obligations. It was claimed this failure caused a mental illness. McKerracher J understandably held that there was no recognised cause of action. No duty of care or negligence was pleaded. At par [15] he stated as follows:
"Even if the application could be amended so as to reveal some cause of action for damages, there is no private right for damages arising from the exercise of administrative powers when there is a statutory right of review of such exercise."
His Honour then went on to refer to the decision of Jones v Department of Employment (supra) and a number of other authorities. He then stated at [16] as follows:
"The theory behind this principle is that even if some 'negligence' has been proved, it can be cured by an appeal process. The existence of the appeal process is sufficient to remove reliance on breach of any duty of care."
However, although there is an appeal process within the Social Security legislation and there is also administrative writs available to provide relief, none of these procedures are capable of providing compensation for physical harm in the form of nervous shock due to delay as claimed by Mr Upton.
It was submitted on behalf of Centrelink that there is a form of compensation available under a scheme known as the Compensation for Detriment Caused By Defective Administration (the CDDA scheme). The nature of this scheme was discussed in the decision of Smith v Oakenfull [2004] FCA 4. The scheme is an exercise of executive power that is not pursuant to any legislation of the Commonwealth Parliament. A payment pursuant to the scheme cannot be compelled as it is not expressly authorised by statute or regulation giving an entitlement. In Smith v Oakenfull Dowsett J described the scheme in these terms at [20]:
"It is perhaps not unduly cynical to say that the CDDA scheme is designed to avoid public-relations problems involving public bodies and the political consequences of such problems."
It is clear that the scheme is in the nature of a gratuitous payment and does not provide any legal form of compensation entitlement. As such, in my opinion it is not a material consideration in deciding whether a duty of care might arise for neglect in relation to the exercise of powers by officials under the Social Security Act 1991 and the Social Security (Administration) Act 1999.
There is no High Court authority which deals directly with the issue of liability of Centrelink for common law negligence arising out of a delay in processing a claim or a review of a decision. The most recent High Court authority on the broader issue of liability for failing to act under statutory powers is the case of Stuart v Kirkland-Veenstra [2009] HCA 15 which concerned a claim by a widow arising from the failure of police officers to apprehend a male person sitting in a car with a hose leading to an exhaust pipe and the person subsequently committing suicide. At [112 ‑ 113] Gummow, Hayne and Heydon JJ stated as follows:
"There can be no duty to act in a particular way unless there is authority to do so. Power is therefore a necessary condition of liability but it is not a sufficient condition. Statutory power to act in a particular way, coupled with the fact that, if action is not taken, it is reasonably foreseeable that harm will ensue, is not sufficient to establish a duty to take that action. Rather, as was pointed out in Graham Barclay Oysters Pty Ltd v Ryan, the existence or otherwise of a common law duty of care owed by a statutory authority (or in this case the holder of statutory power) 'turns on a close examination of the terms, scope and purpose of the relevant statutory regime'. Does that regime erect or facilitate "a relationship between the authority [here the holder of statutory power] and a class of persons that, in all the circumstances, displays sufficient characteristics answering the criteria for intervention by the tort of negligence?
Evaluation of the relationship between the holder of the power and the person or persons to whom it is said that a duty of care is owed will require examination of the degree and nature of control exercised over the risk of harm that has eventuated, the degree of vulnerability of those who depend on the proper exercise of the relevant power, and the consistency or otherwise of the asserted duty of care with the terms, scope and purpose of the relevant statute. Other considerations may be relevant."

Conclusion

In my opinion it is clear that Mr Upton has no claim at common law for a breach of a duty of care based upon the original decision to refuse him social security payment. There is a statutory review procedure in place and based upon the authorities referred to earlier in this decision I am satisfied that the law is clear there is no duty of care on the part of officials to make the correct decision in the absence of misfeasance and therefore a common law claim for negligence does not exist. To impose such a duty of care would enable claimants to side step the appeal procedures of the statutory scheme and remove finality.
However, the position in relation to a claim for negligence for delay in reviewing a decision as claimed by Mr Upton is less clear. I conclude that there is an arguable case that a duty of care arises to deal with review decisions promptly. In reaching this conclusion I am mindful that the majority in Scott's case stated that no such duty existed. Considerable weight must be given to this authority given the standing of the court. However, it seems to me that the court did not fully address the issue. The decision more directly dealt with the issue of an alleged intentional wrongdoing. The issue was considered more fully in Pedler's case (supra) by Gray ACJ but this decision was focussed upon the issue as to whether a common law duty of care arose in circumstance where damages are claimed for failing to grant a benefit. In my opinion the decision did not isolate the issue of whether a common law duty of care arises to process claims or reviews promptly so that a failure to do so gives rise to a claim in negligence. I think it is at least arguable that such a delay can give rise to a claim as recognised in the dissenting judgment of Finkelstein J in Scott's (supra) case. In reaching this conclusion I am influenced by the following factors:
1.Firstly, s 8 of the Social Security (Administration) Act 1999 provides that the Secretary is to have regard to the desirability of the delivery of services under the law in a prompt manner.
2.Secondly, there is no statutory or other legal remedy available to a claimant for harm suffered as a result of a negligent delay in processing a claim.
3.Thirdly, the Social Security legislation provides no express immunity.
4.Fourthly, the vulnerability of claimants needing social security benefits and the foreseeability that harm may be caused if a claim is not dealt with promptly.
Accordingly, for the above reasons I dismiss Centrelink's application for summary judgment based upon the submission that there was no duty of care. However, as stated above I conclude that Mr Upton has no claim at common law for a breach of a duty of care based upon the original decision to refuse him social security entitlements. Accordingly, insofar as this is pleaded [see par 13 of the statement of claim] there will need to be a partial striking out of the statement of claim and an amended statement of claim filed.
There are a number of obvious difficulties that Mr Upton will face in his claim. Firstly, whether he is entitled to claim pure economic loss arising from the alleged delay when the legislative scheme provides for the backdating of payments after a favourable review, which in fact occurred in Mr Upton's case. Secondly, whether he can establish causation of his alleged nervous shock. The delay upon which his claim depends would appear to run at the earliest from 26 February 2009. This is the same date that Mr Upton says he became aware he suffered a nervous shock. Accordingly, it is difficulty to ascertain how Mr Upton can established the delay caused the nervous shock as it appears from Mr Upton's affidavit it pre‑existed any alleged delay. Establishing causation is a fundamental requirement of any entitlement for damages in negligence. Neither of these issues I have identified were argued before me on the application by Centrelink for summary judgment and accordingly do not require any ruling by me.
I will hear from Mr Upton and counsel for Centrelink before deciding what final orders should be made.