Editors --- "Baby bonus: whether child 'entrusted to the care' of an individual" [2012] SocSecRpr 19; (2012) 14(2) Social Security Reporter, Article 10

• SECRETARY TO THE DFHCSIA v ABBOTT
• Background
• The law
• Formal decision

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Baby bonus: whether child ‘entrusted to the care’ of an individual

SECRETARY TO THE DFHCSIA v ABBOTT

Federal Court of Australia

Decided: 10th May 2012 by Nicholas J

Background

This was an appeal from the decision of the Administrative Appeals Tribunal (AAT) on the proper construction of s.36(5) of the A New Tax System (Family Assistance) Act 1999 (the Act). Abbott had been successful in both appeals before the Social Security Appeals Tribunal and the AAT. This was the Secretary’s application to the Federal Court.

Abbott and her partner adopted two children who were born in 2003 and 2004. Both children were removed and placed into the care of the Minister for Community Services in 2004. In 2007, the children were placed with the Abbotts in long-term foster care by an adoption service provider (the provider). It was accepted that before the process for adoption could start, the children were required to live for two years in the care of the family to assess the foster parents’ suitability as adoptive parents. In February 2010, the provider’s adoption panel approved the commencement of adoption proceedings. In October 2010, the adoption orders were made by the Supreme Court.

In August 2011, Abbott applied for baby bonus in respect of the children. This was rejected by Centrelink on the basis that the children had not been placed in the care of the Abbotts as part of the adoption process in 2007.

Abbott successfully argued at the relevant tribunals that the placement in 2007 was not part of the adoption process, but that the children were ‘fostered’ to the Abbotts at that time. Until such time as the provider as the authorised party, approved the adoption of the children by the Abbotts in 2010, it could not be said that the children had been ‘entrusted’ to them. The Tribunal said at [24]: ‘Only once that decision (on whether the Abbotts could be trusted to care properly for the children) 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.’

The Secretary relied on two grounds of appeal, both on the construction of s.36(5) of the Act, as to when ‘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’. The first issue was whether it was correct that the entrustment of the child referred to in s.36(5) had to coincide with the authorised party’s approval of the adoption. The second issue was whether the Tribunal had erred in not finding that the child had been entrusted to the care of an individual within the meaning of s.36(5) when the child was physically handed into the care of that individual.

The law

Prior to amendment by the Budget and other Measures Act 2008, s.36(5)(b) of the Act referred to a child under 2 years of age. The amending Act, which has effect from 1 January 2009, increased the age limit for baby bonus eligibility from 2 to 16 years and included a transitional provision which provided that it applied ‘in relation to children entrusted to care on or after 1 January 2009.’

Discussions

The Secretary contended 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. Counsel for Abbott maintained that this was not how the Tribunal had construed s.36(5)(a). The Court found that indeed it was strongly arguable that the adoption process began in 2007 when the children were first placed in the care of the Abbotts with a view to adoption.

However, on the second grounds of appeal, on the question of whether the children had been ‘entrusted to the care’ of the Abbotts when the children were physically handed to them, the Court found two conclusions: (1) though the children were placed in the care of the Abbotts in January 2007 pursuant to a foster care arrangement, this was not part of the adoption process, and (2) however, when the provider decided to allow the Abbotts to adopt the children, then it could be said that the children were entrusted to them as part of the adoption process. It was decided that the Abbotts were entrusted with the care of the children in February 2010 as much as they were in January 2007. The crucial question was when were the children entrusted to the individual’s care as part of the adoption process. This occurred in February 2010.

Formal decision

The Court rejected the second of the Secretary’s grounds of appeal and dismissed the appeal. It further ordered that the Secretary pay the Respondent’s costs. [C.W ]

Court:

Federal Court of Australia