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Administrative law – practice and procedure…

…application for enforcement of undertaking as to damages in administrative law proceedings

In Mohamed trading as Billan Family Day Care v Secretary, Department of Education, Skills and Employment (No.3) [2021] FCA 1537 (9 December 2021), the applicant had previously given an undertaking as to damages in support of an application to stay a decision, under s15 of the Administrative Decisions (Judicial Review) Act 1977 (Cth).

This was pending the completion of the judicial review proceeding. The applicant, an operator of a child care service, had sought judicial review of a decision cancelling his provider approval – under s195 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) – as a child care service for the purposes of the family assistance law (cancellation decision).

The court granted a stay of the cancellation decision until the final determination of the applicant’s originating application on the applicant, through her legal representative providing the usual undertaking as to damages. Subsequently the court dismissed the applicant’s originating application and made orders lifting the stay of the cancellation decision. The respondent (Secretary) then applied for damages pursuant to the applicant’s undertaking as to damages.

This case is an example of an attempt to enforce the ‘usual undertaking as to damages’, which is defined by the court’s relevant Practice Note as an undertaking to submit to such order (if any) as the court may consider to be just, for the payment of compensation. This is to be assessed by the court or as it may direct, to any person affected by the operation of the interlocutory order: see [2.2] in GPN-UNDR.

It was common ground that the effect of the stay order was to enable Billan Family Day Care to continue to operate from 28 June 2020 until 20 December 2020 (stay period). During the stay period, the Secretary paid the applicant a total net amount of $921,971.28 in child care subsidies. The applicant also received $354,682.60 in COVID-19 related payments as an approved provider of child care services. The Secretary sought orders for the applicant to pay, by way of damages, both the amount of the child care subsidy payments and the COVID-19 related payments.

The court summarised the applicable legal principles for the enforcement of the undertaking as to damages (at [28]-[29]). Based on the authorities, the purpose of requiring an undertaking as to damages is to compensate the party who has been adversely affected by the interlocutory order, and to ensure that justice is done (at [32]). The effect of an order for damages on the party that has had the benefit of the interlocutory order is not a relevant consideration (at [33]).

The court rejected the applicant’s submission that the undertaking as to damages should not be enforced, having regard to the administrative law context in which the stay order was made and the undertaking given.

O’Bryan J explained (at [34]): “ … there is ‘no hard and fast rule’ (Botany Bay at 86) in the administrative law context that a party seeking interlocutory relief should be required to give an undertaking as to damages. In exceptional instances, a court might not consider it appropriate to require an undertaking where an applicant in an administrative matter is entitled to interlocutory relief. However, it is apparent from the cited authorities that the appropriate time to consider whether an undertaking as to damages should be given is at the point that the stay application is considered, rather than the time for its enforcement. … ”

Further, there were not any special circumstances that displaced the ordinary presumption that the applicant should compensate the Secretary for damages incurred by reason of the stay order, in circumstances where the applicant was not successful in the final determination of its originating application (at [38]).

However, the Secretary failed to establish that the Commonwealth should be compensated for the child care subsidy payments made to the applicant during the stay period (at [39]-[44]). Unlike the child care subsidies, the court found that the Commonwealth would not have incurred, as an outgoing, the COVID-19 related payments made to the applicant during the stay period, if the stay order had not been made (at [45]-[49]).

The applicant was held liable to pay damages to the Commonwealth, pursuant to the undertaking as to damages for the COVID-19 related payments, totalling $354,682.60 (at [50]).

Dan Star QC is a Senior Counsel at the Victorian Bar, ph 03 9225 8757 or email danstar@vicbar.com.au. The full version of these judgments can be found at austlii.edu.au. Numbers in square brackets refer to a paragraph number in the judgment.

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