[1993] FCA 261; (1993) 17 AAR 340

[1993] FCA 261; (1993) 42 FCR 443

[1993] FCA 261; (1993) 30 ALD 31

Administrative Law - Social Security - Overpayment of supporting parent's benefit - Application that recovery of overpayment be waived because of extreme financial hardship - Discretionary power to waive right of recovery conferred by statute on designated official - Statutory requirement that official, in exercising the power, act in accordance with directions determined in writing by Minister - Determination made by Minister - Textual difficulties in construing determination - Evident purpose and effect of determination to limit discretion conferred on official - Whether determination a valid exercise of power to give directions.

Administrative Appeals Tribunal Act 1975 (Cth), s.44(1)

Social Security Act 1991 (Cth), s.1237

Beadle v Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670

Secretary, Department of Social Security v Hodgson [1992] FCA 338; (1992) 108 ALR 322

British Oxygen Co. Ltd v Minister of Technology [1970] UKHL 4; (1971) AC 610

Howells v Nagrad Nominees Pty Ltd (1982) 43 ALR 283

Solicitors for the applicant: Legal Aid Office (ACT)

Solicitor for the respondent: Australian Government Solicitor

1. Declares that the determination made by the Minister of

State for Social Security on 8 July 1991 was not authorised

by s.1237(3) of the Social Security Act 1991 (Cth).

2. Orders that the decision of the Administrative Appeals

Tribunal given on 24 April 1992 be set aside.

3. Orders that the matter be remitted to the Administrative

Appeals Tribunal for the determination of the question

whether the circumstances of the case are such that the

power conferred by s.1237(1) of the said Act should be

exercised.

4. Orders that the respondent pay the applicant's costs of and

incidental to the application to this Court.

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

NEAVES, BURCHETT AND O'LOUGHLIN JJ This is an application by Gail Riddell ("the applicant") by way of appeal pursuant to s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Administrative Appeals Tribunal given on 24 April 1992. The application was heard by a Full Court of this Court pursuant to s.44(3)(b)(ii) of that Act.

2. The Administrative Appeals Tribunal set aside a decision of the Social Security Appeals Tribunal given on 6 February 1991. That Tribunal had set aside a decision made by a delegate of the Secretary to the Department of Social Security and conveyed to the applicant by letter dated 13 November 1990 and had remitted the matter to the Secretary "with directions that the debt outstanding to the Commonwealth at the date of the Tribunal's hearing on 25 January 1991 be waived pursuant to s.251(1)(b)(i)" of the Social Security Act 1947 (Cth). The delegate of the Secretary had decided not to waive recovery of the debt that was owing by the applicant as a result of the applicant having received payment of a supporting parent's benefit between 4 October 1984 and 5 September 1985 to which she was not entitled. The delegate's decision had been confirmed by an Authorised Review Officer prior to the matter being determined by the Social Security Appeals Tribunal.

3. It was common ground that, pursuant to s.246 of the Social Security Act 1947, the applicant was indebted to the Commonwealth in an amount of $8,163 and that, in October 1985, she commenced making regular payments in reduction of that indebtedness by way of deduction from the family allowance to which she was entitled under that Act. When the debt had been reduced to $4,250.85, she asked that recovery be waived because of extreme financial hardship. It may be noted that s.246 was, prior to 1 November 1988, numbered s.181 and, prior to 2 July 1987, numbered s.140.

4. At the time when the matter was determined by the Social Security Appeals Tribunal, the relevant legislative provision authorising the waiver of the right of the Commonwealth to recover a debt payable under the Social Security Act 1947 was s.251 of that Act. That section, so far as material, then provided:

"251(1) The Secretary may, on behalf of the Commonwealth,

decide to -

(a) ....

(b) waive the right of the Commonwealth -

(i) to recover from a person the whole or a part of

a debt that is payable by the person under or as

a result of this Act; or

(ii) to recover debts under or as a result of this

Act included in a class of debts specified by

the Minister by notice in writing published in

the Gazette; or

(c) ....

(1A) In exercising the power under subsection (1) to waive

the right of the Commonwealth to recover the whole or a part of a

debt that is not referred to in subparagraph (1)(b)(ii), the

Secretary shall act in accordance with directions from time to

time in force under subsection (1B).

(1B) The Minister, by determination in writing:

(a) may give directions relating to the exercise of the

Secretary's power under subsection (1) to waive the

right of the Commonwealth to recover debts or parts of

debts; and

(b) may revoke or vary those directions.

(1C) The Minister shall cause a copy of a determination

under subsection (1B) setting, revoking or varying directions to

be laid before each House of the Parliament within 15 sitting days

of that House after the making of the determination.

....

(5) A determination made under sub-section (1) takes effect-

(a) on the day specified in the determination, being the

day on which the determination was made or any other

day before or after that day; or

(b) if no day is so specified, on the day on which the

determination was made."

5. It may be convenient, before proceeding further, to refer to the legislative history of s.251. Prior to 1 November 1988 the section was numbered s.186. Prior to 2 July 1987 it was numbered s.146. Section 146 was inserted in the Social Security Act 1947 with effect from 1 November 1985 by s.73 of the Social Security and Repatriation (Budget Measures) Amendment Act 1985 (Cth). Relevantly, s.146 contained a provision having similar effect to subs.(1) of s.251 set out above but contained no provisions similar to the other subsections of s.251 there set out. A provision in identical terms to subs.(5) of s.251 as set out above was inserted in s.146 with effect from 1 July 1986 by s.42 of the Social Security Legislation Amendment Act 1986 (Cth). A further amendment, not material for present purposes, was made to s.146 by s.45 of the Social Security Amendment Act 1987 (Cth).

6. Subsections (1A), (1B) and (1C) of s.251 were inserted with effect from 22 December 1988 by s.57 of the Social Security Legislation Amendment Act 1988 (Cth). So far as appears from the material before the Court, at the time when the matter was determined by the Social Security Appeals Tribunal, no directions had been given by the Minister under s.251(1B).

7. Before the matter was heard by the Administrative Appeals Tribunal, the Social Security Act 1947 had been repealed by s.3 of the Social Security (Rewrite) Transition Act 1991 (Cth). That Act (see s.2) came into operation immediately after the commencement of the Social Security Act 1991 (Cth). The latter Act commenced on 1 July 1991 (s.2).

8. The Administrative Appeals Tribunal proceeded upon the basis that the issue before it, namely whether recovery of the outstanding balance of the debt should be waived, was to be decided by the application of the provisions of the Social Security Act 1991. On the hearing of the present application no challenge was made to the correctness of that approach.

9. Section 1237 of the Social Security Act 1991, as enacted by Act No.46 of 1991, was in the following terms:

"(1) The Secretary may, on behalf of the Commonwealth,

decide to waive the Commonwealth's right to recover from a person

the whole or a part of an overpayment or a debt.

(2) In exercising the power under subsection (1), the

Secretary must act in accordance with directions from time to time

in force under subsection (3).

(3) The Minister may, by determination in writing:

(a) give directions relating to the exercise of the

Secretary's power under subsection (1); and

(b) revoke or vary those directions.

(4) The Minister is to cause a copy of a determination

under subsection (3) to be laid before each House of the

Parliament within 15 sitting days of that House after the making

of the determination.

(5) A decision of the Secretary under subsection (1) takes

effect:

(a) if no day is specified in the decision - on the day on

which the decision is made; or

(b) if a day is specified in the decision - on the day so

specified (whether that day is before, after or on the

day on which the decision is made)."

10. Before Act No.46 of 1991 and, in particular, s.1237 thereof came into operation on 1 July 1991, s.1237 was amended. The words "an overpayment or" in subs.(1) were deleted by the Social Security (Rewrite) Amendment Act 1991 (Cth) (see s.3 and Schedule 1) and subs.(4) was omitted and a new subsection substituted by s.20 of the Social Security Legislation Amendment Act (No.2) 1991 (Cth). The substituted subsection read:

"(4) A determination made under subsection (3) giving, revoking

or varying directions is a disallowable instrument for the

purposes of section 46A of the Acts Interpretation Act 1901."

Section 46A of the Acts Interpretation Act 1901 makes applicable to a disallowable instrument, except so far as the law otherwise provides, ss48, 48A, 48B, 49 and 50 of that Act. Section 48, as so made applicable, provides for the disallowable instrument to be notified in the Commonwealth of Australia Gazette, for it to be laid before each House of the Parliament within 15 sitting days of that House after the making of the instrument and for the disallowance of the instrument by resolution of either House in pursuance of a motion of which notice has been given within 15 sitting days after the instrument has been laid before that House. It may also be noted that, prior to 1 July 1991, s.1235 as enacted by Act No.46 of 1991 was omitted and a new section substituted by the Social Security (Rewrite) Amendment Act 1991 (see s.4 and Schedule 2). By virtue of the substituted section, "debt" where appearing in Part 5.4 of the Social Security Act 1991 - a Part which included s.1237 - was to include a debt under the Social Security Act 1947.

11. In purported exercise of the power conferred by s.1237(3), the Minister of State for Social Security on 8 July 1991 made a determination in the following terms:

"COMMONWEALTH OF AUSTRALIA

Social Security Act 1991

NOTICE UNDER SUBSECTION 1237(3)

Having regard to the importance of recovering public moneys paid

in excess of the entitlements authorised by Parliament, the

longstanding approach under the Commonwealth Audit Act 1901 to the

recovery of debts, the obligations placed on social security

recipients by the Social Security Act 1991 (the Act) to notify

changes in their circumstances and the importance of deterring

fraudulent activity, and having regard to subsections 1237(2) and

(3) of the Act which require the Secretary of the Department of

Social Security (the Secretary) to act in accordance with

directions issued by me from time to time, I hereby direct that

the power of the Secretary in section 1237 to waive the right of

the Commonwealth to recover from a person the whole or a part of a

debt must, subject to the attached schedule, be exercised in the

following circumstances only:

(a) Where the debt was caused solely by administrative error on

the part of the Commonwealth, and was received by the person

in good faith, and recovery would cause financial hardship

to the person.

(b) In respect of the remainder of a debt where it is

cost-effective for the Commonwealth to accept a lump sum of money

immediately, being a proportion of the debt that is not less

than 80 per cent, and the person does not have the capacity

to repay a greater proportion.

(c) Where a debt has been written off on the ground of lack of

means on the part of the person to repay, or inability to

locate the person, and these circumstances still pertain

after six years.

(d) Where a Court has indicated that it imposed a longer

custodial sentence because of the person's inability or

unwillingness to repay a debt.

(e) Where the Department of Social Security has settled a civil

action for less than the full amount of the overpayment

claimed, the difference.

(f) Where qualification for Family Allowance is accepted as

existing (though not actually paid) in a period in respect

of which a pension, benefit or allowance has been overpaid -

the amount of Family Allowance that would have been payable

in that period is to be deducted from the overpayment. Any

such amount is limited to Family Allowance for a period of

three years prior to the end of the period in respect of

which pension, benefit or allowance had been overpaid.

(g) Where in the opinion of the Secretary special circumstances

apply such that the circumstances are extremely unusual,

uncommon or exceptional (as discussed by the Federal Court

of Australia in Beadle v Director-General of Social Security

[1984] AATA 176; (1985) 7 ALD 670)."

12. The schedule to the determination provided as follows:

"The following debts must be waived:

(1) A debt which is, or is likely to be, less than $200, not

being:

(a) a debt due by a person in respect of the payment of

unemployment benefit, job search allowance or newstart

allowance which could be deducted under subsection

1223(1) of the Act from an instalment of job search

allowance or newstart allowance payable to the person;

(b) a debt due by a person in respect of the payment of a

family allowance, a child disability allowance or a

double orphan pension which could be deducted under

subsection 1223(1) of the Act from an amount of family

allowance, child disability allowance or double orphan

pension, or from a combination of any of those

amounts.

(2) A debt due by a person whose annual rate of pension, benefit

or allowance is calculated under the assets test provisions

of the Act where:

(a) the debt arose because the person or, if the person is

a member of a couple, the person's partner,

underestimated in good faith the value of particular

property of the person or the person's partner; and

(b) the value of that particular property was not readily

ascertainable."

13. The first thing to notice concerning the instrument of 8 July 1991 is that it exhibits a number of textual difficulties. The instrument is structured so as to identify the only circumstances in which the power of the Secretary under s.1237(1) to waive the Commonwealth's right to recover the whole or part of a debt is to be exercised. The power is expressed to be capable of exercise only if the particular case under consideration falls within one or other of the lettered paras (a) to (g) inclusive. For example, under par.(a), the power may be exercised if and only if, objectively considered, three criteria are shown to exist namely -

(i) that the debt was caused solely by administrative error on

the part of the Commonwealth;

(ii) the debt (sic) was received by the person in good faith; and

(iii) recovery would cause financial hardship to the person.

Paragraph (d) refers to the debtor's inability or unwillingness to pay "a debt" whereas what appears to have been intended was that he be unable to pay the particular debt in relation to which the question of waiver arises. Paragraph (e) has the difficulty that it appears to assume that a civil action for debt may be settled for an amount less than the full amount claimed without the settlement necessarily having the effect of extinguishing the balance of the debt. Paragraph (f) appears to have been included in error or at least to have been drafted without regard either to the nature of the power to be exercised by the Secretary, or to its consistency with the opening portion of the determination or with the other paragraphs. This must follow from the circumstance that it stands alone in being expressed, not in terms of waiver, but as a direction to make a deduction. Paragraph (g) is expressed in such a way as to be confusing, if not meaningless. Apart from any difficulty to which the collocation of the words used in the expression "extremely unusual, uncommon or exceptional" gives rise, it is not clear whether, in order to satisfy the requirements of the paragraph, it is necessary to show special circumstances or circumstances that are extremely unusual, uncommon or exceptional. The paragraph seems to proceed on the footing that the two expressions, which are, in truth, quite different, express identical concepts. Further, the paragraph postulates that the judgment of this Court in Beadle v. Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670 discussed the concept of "extremely unusual, uncommon or exceptional" circumstances. This, however, involves a misunderstanding of the issues that arose in that case.

14. The provision of the Social Security Act 1947 with which that case was concerned was a provision under which a family allowance granted to a person was to be payable from the commencement of the next family allowance period after the date on which the claimant became eligible to claim the allowance provided the claim was lodged within 6 months after that date or, in special circumstances, within such longer period as the Director-General of Social Security allowed. The Court was not required to consider, and did not discuss, what might be involved in the concept of "extremely unusual, uncommon or exceptional" circumstances. As Hill J pointed out in Secretary, Department of Social Security v. Hodgson [1992] FCA 338; (1992) 108 ALR 322 at p 332, nowhere in the judgment did the Court use those words. Its consideration was confined to the expression "special circumstances" in the context in which it appeared in the provision then before it. Even in relation to that expression, the Court expressly declined to lay down precise limits or precise rules, each case depending on its own circumstances.

15. The language of the instrument is also curious in its use of the word "must" in the operative clause. The instrument is open to the construction that, while the Secretary is precluded from exercising the power conferred upon him by s.1237(1) unless the circumstances of the particular case satisfy the requirements, objectively considered, of the lettered pars (a) to (f) inclusive or unless he forms the requisite opinion under par.(g), he is bound to exercise the power of waiver in every case in which those requirements are satisfied. The extraordinary inconsistency between the drafting of par.(f) and the drafting of the rest of the determination would at least be reduced somewhat by this construction - for, in providing that an amount "is to be deducted from the overpayment", par.(f) would be in conformity in its effect with the other paragraphs. Furthermore, most of the paragraphs describe situations where refusal of a waiver would be very hard to justify, or even where waiver might not be actually necessary (cf. par.(e)).

16. The instrument also provides that it is to operate "subject to the attached schedule". According to the ordinary meaning of those words, one would expect to find in the schedule provisions qualifying what would otherwise be the operative effect of the instrument. The schedule, however, has a different operation. It provides that the power conferred by s.1237(1) must be exercised so as to waive the Commonwealth's right to recover debts that are identified in the schedule. In so providing, the schedule does not qualify the other provisions of the instrument but appears to have been intended to operate as a separate substantive provision. It clearly deals with some classes of debts that do not fall within the lettered pars (a) to (g) inclusive.

17. The question for determination is whether the instrument of 8 July 1991 was a valid exercise by the Minister of the power conferred upon him by s.1237(3) of the Social Security Act 1991. Putting aside the textual difficulties to some of which reference has been made, the evident purpose and effect of the instrument, if valid, was to limit the very wide discretion conferred on the Secretary by s.1237(1) so that, on the one hand, it might only be exercised in the restricted classes of case identified in the lettered paragraphs and, on the other, to require the discretion to be exercised so as to waive the debt in the cases falling within the schedule or, perhaps, in all the cases specified. The instrument will be valid only if the language of s.1237(1) will support an instrument having that effect.

18. In our opinion, the language of s.1237(3), when considered in its context and having regard to its legislative history, is not apt to have authorised the Minister to make the instrument of 8 July 1991. Section 1237(3) is not expressed in terms which authorise the Minister to circumscribe the wide discretion vested in the Secretary by s.1237(1). The language used is more apt to describe a power in the Minister to give general guidance to the Secretary, whether by way of statements of policy or otherwise, in the exercise by him of the discretion vested in him but guidance which will leave the Secretary free, in any particular case, to depart from the guidance provided by the Minister's directions if the circumstances of the individual case warrant such a departure: see, for example, British Oxygen Co. Ltd v. Minister of Technology [1970] UKHL 4; (1971) AC 610 and Howells v Nagrad Nominees Pty Ltd (1982) 43 ALR 283 per Fox and Franki JJ at p 307.

19. Section 1237(3) refers to "the Secretary's power", and authorizes a determination which will affect the manner of its exercise but will leave the power itself intact. This point is confirmed by a consideration of the terms of subss.(1) and (2). Subs.(1) confers upon the Secretary a power of decision - "(t)he Secretary may ... decide" - and subs.(2) then requires the Secretary, "(i)n exercising the power" (i.e., of decision), to comply with directions. It is important to note that subs.(2) still regards the Secretary as exercising the power. When the determination purports to lay down quite precise rules dictating the result of all, or nearly all, applications, it departs radically from the statutory scheme because it is not giving guidance in the exercise of the power, but attempting to deny the existence of the power.

20. That s.1237(3) does not authorise the Minister to circumscribe the discretion conferred on the Secretary by s.1237(1) is reinforced by the legislative history. The wide discretion which is now conferred by s.1237(1) first appeared as s.146(1). There was, at that time, no provision similar to s.1237(3). Provisions providing for the giving of directions by the Minister were first inserted in 1988 when subss(1A), (1B) and (1C) were inserted into what had by then become s.251. If, by enacting those subsections, the Parliament had intended to make such a significant change as would be involved in reading the language of those subsections as operating to enable the Minister to circumscribe the power which had, since 1985, resided in the Secretary, one would have expected that language more appropriate to achieving that result - language addressed to the ambit of the power itself and not simply to its exercise - would have been used. This view of the provisions is not, in our opinion, affected by the requirement - a requirement inserted at an even later stage - that any direction by the Minister be "a disallowable instrument". Nor is the circumstance that the word "directions" is used to describe the Minister's intervention of overriding significance. It is a word of varying import deriving much from the context in which it appears. It will, in appropriate circumstances, signify authoritative or binding instructions but, in other circumstances, will signify nothing more than guidelines.

21. It follows that the instrument of 8 July 1991 was not authorised by s.1237(3) of the Social Security Act. As the decision of the Administrative Appeals Tribunal proceeded on the basis that, in determining the issue before it, that instrument was valid and binding upon it, its decision involves an error of law and must be set aside. The matter is remitted to the Tribunal for the determination of the question whether the circumstances of the case are such that the power conferred by s.1237(1) should be exercised. The respondent must pay the applicant's costs of and incidental to the application to this Court.

22. The Court was informed that the instrument of 8 July 1991 had been revoked and replaced by an instrument dated 5 May 1992. Although that instrument meets some, but not all of the textual difficulties of the earlier instrument - indeed, it may have introduced additional difficulties of a textual nature - the considerations which have led us to conclude that the instrument of 8 July 1991 was not authorised by s.1237(3) are equally applicable to the later instrument.

23. The Court was invited to give general guidance to the Administrative Appeals Tribunal as to the circumstances relevant to be taken into account in exercising the discretion conferred by s.1237(1). However, we do not think it is appropriate for the Court to accept that invitation. Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.