Federal Court of Australia|1993-12-22|Before: Beazley J

Michael Franciscus Kalwy v the Secretary of the Department of Social Security [1993] FCA 644; (1993) 32 ALD 451 (22 December 1993)

MICHAEL FRANCISCUS KALWY v. THE SECRETARY OF THE DEPARTMENT OF SOCIAL

Administrative Law - conspiracy to defraud Department of Social Security - recovery of moneys paid as pensions as debt due to the Commonwealth - alleged errors of law in Tribunal's determination - construction of s246(1) Social Security Act 1947 - whether sufficient evidence before the Tribunal that applicant had received the moneys - whether findings unreasonable or perverse - whether Tribunal failed to consider submissions worthy of consideration - extent of Tribunal's obligation to give reasons for its decision

Kalwy v Secretary, Department of Social Security [1992] FCA 489; (1992) 110 ALR 38

Waterford v The Commonwealth of Australia [1987] HCA 25; (1987) 163 CLR 54

R v The District Court; Ex parte White [1966] HCA 69; (1966) 116 CLR 644

Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321

Attorney-General (NSW) v Quin (1990) 170 CLR 1

Western Television Ltd v Australian Broadcasting Tribunal (1986) 12 FCR 414

Dennis Willcox Pty Limited v Federal Commissioner of Taxation (1988) 79 ALR 267

Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167

Bisley Investment Corporation v Australian Broadcasting Tribunal (1982) 40 ALR 233

Federal Commissioner of Taxation v Cainero (1988) 19 ATR 1301

Solicitors for the Respondent: Australian Government Solicitor

2. The matter be remitted for redetermination by a Tribunal,

constituted by persons different to those who made the

decision to which the appeal relates, according to law with

or without further evidence.

3. The respondent pay the applicant's costs.

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

BEAZLEY J This is an appeal from a decision of the Administrative Appeals Tribunal given on 16 April 1993, setting aside a decision of the Social Security Appeals Tribunal made 2 August 1990, which set aside the decision of a delegate of the Secretary to issue notices pursuant to the provisions of s162 of the Social Security Act 1947 (the Act).

2. The matter arises out of a number of conspiracies whereby the Commonwealth was defrauded by means of a scheme in which the Department of Social Security was caused to pay unemployment benefits into bank accounts in the names of fictitious persons. The applicant was, during the period of the conspiracy, an employee of the Department at its Bankstown office. The respondent alleged that the applicant was involved in one of the conspiracies with a Mr Gaudiello, an employee of the Commonwealth Employment Service, through which false claims in the fictitious names of Bliss, Conti, Ibrahim and Sevino were processed (the Gaudiello/Kalwy conspiracy). A separate conspiracy was alleged amongst Mr Shaloub, Mr Gaudiello and another employee of the Department, a Mr Gebran. That conspiracy involved the use of different fictitious names to those used in the Gaudiello/Kalwy conspiracy. The applicant, Mr Shaloub and Mr Gebran were charged with conspiring to defraud the Department of Social Security. Mr Gaudiello was given immunity from prosecution in return for giving evidence for the Commonwealth. At some stage, and it was the recollection of both counsel that it was before the committal proceedings, Mr Gebran pleaded guilty. Mr Kalwy was discharged at the conclusion of the committal proceedings under the provisions of s41(6) of the Justices Act 1902 (NSW). Mr Shaloub was subsequently found guilty at trial.

3. Notwithstanding the applicant's discharge under s41(6) of the Justices Act, the Secretary subsequently sought to recover from him approximately half of the moneys in respect of which it had been defrauded in the names of Bliss, Conti, Ibrahim and Sevino, by issuing notices under the provisions of s162 of the Act to a number of financial institutions which held moneys on behalf of the applicant. Although the delegate's decision was to issue the s162 notices, the central issue in the appeal involves the application of s246(1) of the Act. It is convenient at this point to set out the relevant legislation:

"162(1): Where a person (in this subsection called the "pensioner")

is indebted to the Commonwealth under or as a result of this

(A)ct, the Secretary may, by notice in writing given to a person:

...

(b) who holds or may subsequently hold money for or on account

of the pensioner;

...

require the person to whom the notice is given to pay to the

Commonwealth;

(e) an amount specified in the notice, not exceeding the amount

of the debt due by the pensioner under or as a result of

this Act or the amount of the money referred to in the

preceding paragraph that is applicable; ...

..."

"246(1): Where, in consequence of a false statement or

representation, or in consequence of a failure or omission

to comply with any provision of this Act, an amount has been

paid by way of pension, allowance or benefit under this Act

which would not have been paid but for the false statement

or representation, failure or omission, the amount so paid

is a debt due to the Commonwealth."

4. This is the second appeal to this court from the Tribunal in relation to the matter. The matter was first heard by the Tribunal constituted by Senior Member, Mr M D Allen who determined, on 13 March 1992, that the applicant was a party to the conspiracy alleged by the Commonwealth. Mr Kalwy appealed and the appeal was heard by the Full Court of the Federal Court: see Kalwy v Secretary, Department of Social Security [1992] FCA 489; (1992) 110 ALR 38. The Full Court held that, upon its proper construction, s246(1) meant that the debt referred to in the section: "was due by the person or persons to whom the benefit was paid" and further stated at 43 that:

"...it was an essential ingredient of the operation of s246(1) in

the present case that the Secretary demonstrate that the amounts

in question were paid to Mr Kalwy. Only by identifying the

recipient of the payments in question was it possible to have the

statutory debt to the Commonwealth created in any effective

sense."

5. The Full Court held that the Tribunal had failed to address this question. Accordingly, the decision of the Tribunal was set aside and the matter remitted for further decision, with or without the hearing of further evidence. The matter was reheard by the Tribunal, this time constituted by the Senior Member, Mr M D Allen, and Members Ms Kalowski and Mr Stanford. Neither party called any new evidence on the rehearing, and the matter was conducted on the basis of the materials in the appeal books in the Federal Court appeal. The applicant contends in this appeal that the Tribunal's decision again involves errors of law, in that the Tribunal failed to apply the Full Court's construction of s246(1) to the facts of the case, the decision was manifestly unreasonable and perverse and the Tribunal failed to address a number of submissions which were made in respect of the evidence of the witness Shaloub which evidence, it was alleged, was incapable of forming the basis of any decision in the circumstances in which it was given. Unless otherwise stated, the references to the Tribunal's findings hereafter shall be a reference to the findings in the second proceedings, being the matter subject of the present appeal.

6. The Tribunal held that there was nothing in the material which would justify it in coming to a different conclusion to that which it had come in its first decision as to the receipt by the applicant of moneys from the Department. It held therefore that the applicant had fraudulently received moneys from the Department of Social Security and that he had received an amount of at least $27,099.99.

7. The Tribunal's finding in the first hearing was set out in par43 of the Reasons for Decision as follows:

"When the whole of the evidence before me is considered I am

satisfied that its cumulative effect is to persuade me, on the

balance of probabilities, that the Respondent did conspire with

Gaudiello to fraudulently obtain benefits from the Department of

Social Security to which he was not entitled. That fraud being

committed by making and processing false claims in the fictitious

names of Bliss, Conti, Ibrahim and Sevino.

8. This finding was based, in large measure, upon certain evidence of Shaloub, which the Tribunal stated implicated the applicant in the conspiracy. The first was evidence that the applicant had handed Shaloub unemployment benefit forms which were known to be false and requested Shaloub to "put these through". There was independent evidence that the applicant's fingerprints had been found on these claim forms in false names. The second matter was a statement made by the applicant to Shaloub after Shaloub's house had been searched by Federal Police. Shaloub said that on this occasion the applicant said "well, I'd better get rid of this", and produced a key to a post office box. The applicant denied there had been such a conversation. The relevance of the post office box key was that Shaloub alleged that the applicant had previously asked him to collect documents that had been left in that post office box by Gaudiello. The third piece of evidence involved certain conversations between the applicant and Shaloub which, it was alleged, constituted admissions. The first was a statement by the applicant that he said to Shaloub that if he (the applicant) went to gaol for the conspiracy crime he would make sure Gaudiello went as well. The other was an allegation that at the Police Centre the applicant had said to Mr Shaloub:

"The only evidence that Social Security have got against him or

the police have got against him he said was bank statements found

in his desk at work where all his money was banked into that

account and he said he was going to tell them that he'd won all

that money at the races. He also told me, because I was recorded

by Gaudiello and I mentioned his name when I was taped...When you

mention my name just tell them that's what Gaudiello told you."

It should be noted that Shaloub was uncertain as to when these alleged admissions were made.

9. The Tribunal stated in its first decision that up to this point, Shaloub's evidence, on its own, would not have been sufficient to persuade it of the applicant's guilt. However, it found "one other piece of evidence...compelling". This evidence was of a tape recording of a conversation between Gaudiello and Shaloub on 26 April 1989, at a time when Gaudiello, having offered to co-operate with the prosecuting authorities, had been fitted with a listening device for the purposes of having the conversation recorded. In the course of the conversation Shaloub said: "where did that go...Bliss and all that. You went halves with Kalwy. There's a lot of money there." Other evidence before the Tribunal was that during the period of the conspiracy the applicant's bank accounts had increased from "a modest balance of some $3,600" to $26,000. The applicant attributed this increase to successful punting. He called evidence from a Mr Starling to support this assertion. However, the Tribunal considered that the force of Mr Starling's evidence "was somewhat diluted" when it was ascertained that he dropped out of the applicant's circle of Saturday punters in 1987. There was also evidence that during the period of the conspiracy the applicant held a 1/6 share of a race horse, which raced successfully and also, because of his association with the horse's trainer, enabled him to get betting tips. However, the Tribunal noted that there was no evidence that the applicant "increased the scale or amount of his betting after June 1987". The Tribunal considered it remarkable that the balance in the bank accounts in mid-1987 was modest yet had grown so rapidly during the period of the conspiracy. The Tribunal also considered it significant that the applicant had not adduced evidence of his bank accounts or other documents to show that his prowess as a punter continued after the period of the conspiracy. The Tribunal considered that this evidence as to bank accounts and financial details was "not of itself persuasive until it is placed alongside the transcript of the Shaloub/Gaudiello conversation and Shaloub's evidence".

10. In its Reasons for Decision the Tribunal stated in par13 that:

"...although the finding of the Tribunal was set aside, we

consider that there is nothing in the material raised before us

which would justify this Tribunal coming to a conclusion contrary

to the original finding as to the Respondent's receipt of monies

from the Department of Social Securities. We are strengthened in

this view by the fact that the original Tribunal had the advantage

of seeing and hearing the witnesses - cf Abalos v Australian

Postal Commission [1990] HCA 47; 96 ALR 354, especially at page 362".

11. The Tribunal rejected the submission of counsel for the applicant that the evidence relied upon in the first hearing did not establish that any amount of money was paid to the applicant. The Tribunal said that this question had been raised in the appeal from the first decision, and the Full Federal Court had declined to interfere with the finding. Whilst I do not agree that this question was raised in these terms in the appeal to the Full Court, I do not consider anything flows from this statement of the Tribunal, as it appears from par13 of its Reasons that it reconsidered the matter generally. The Tribunal next considered whether the amount received by the applicant could be ascertained. It stated that an examination of the applicant's bank accounts did not prove the actual amount received, although it was strong probative evidence enabling the Tribunal to find the applicant was involved in the conspiracy to defraud. There was nothing in the respondent's evidence, nor in the evidence of Mr Cheshire, the investigating officer from the Department, which enabled the Tribunal to ascertain the amount received. The Tribunal referred again to the tape recorded conversation between Shaloub and Gaudiello. It noted that Gaudiello did not acknowledge what was said by Shaloub and noted that Gaudiello, in his evidence at the committal proceedings, said he had only received initially $30 and then $40 per form for the false names operated by Kalwy. The Tribunal then stated:

"21. The Tribunal therefore finds itself in a position that

whereas it is satisfied that the Respondent did fraudulently

receive monies from the Department of Social Security, it

cannot say what amount he did in fact receive.

22. The decision of the Federal Court makes it clear that it is

not enough to allege a general deficiency but, as the Court

pointed out at 110 ALR 43:

"...it does not follow that it was not open to the

Secretary to seek to trace the proceeds, or part of

the proceeds, into the hands of Mr Kalwy, if that be

the fact."

and at p44 the Court again said:

"This necessary tracing exercise was not undertaken by

the Tribunal in the findings it made..."

24. At no time has the Respondent conceded that he has received

any monies, indeed even at the resumed proceedings his case

was directed to attempting to persuade the Tribunal that he

had no part in any conspiracy. In this he has failed,

consequently he cannot be heard to complain that the

Tribunal has acted on the only material available to it.

25. ...However, the evidence of Shaloub, combined with the tape

recorded conversation between Shaloub and Gaudiello, makes

it clear that there was a conspiracy between Gaudiello and

Kalwy. The fact of that conspiracy is corroborated by the

increase in the Respondent's bank accounts at the relevant

time. Whereas Gaudiello claimed in the committal

proceedings he only received what can be regarded as a

handling fee no doubt he was seeking to downplay his role

and his receipts. The secretly recorded conversation no

doubt forms the more accurate account of how the monies were

divided. (emphasis added)

26. The Applicant has calculated that one half of the amounts

paid to the fictitious names of Bliss, Conti, Ibrahim and

Sevino is the sum of $27,099.99. The Tribunal is satisfied

that this sum, at least, was received by Kalwy and thus sets

aside the decision of the Social Security Tribunal of 2

August 1990 and remits this matter to the Applicant in order

he might take such action as he deems meet to recover the

sum of $27,099.00 from the Respondent, Michael Kalwy (also

known as Michael Kalal)."

12. Counsel submitted that the Tribunal's finding that the applicant had received at least one half of the moneys in the bank accounts in the four fictitious names did not satisfy the test for s246(1) propounded by the Full Court. Counsel submitted that the test was that it was necessary that there be a "tracing exercise" in order for a finding to be made that a person involved in the conspiracy had received any specified amount of money. This submission was based upon the rejection by the Full Court of an internal government submission of a calculation of the amount allegedly received by the applicant as being insufficient to establish that the applicant had "in fact actually received the moneys in the bank account or some of those moneys". The Full Court had said earlier at 43:

"It is true that the tribunal found that the bank accounts into

which the amounts were paid were held in the names of fictitious

persons. But it does not follow that it was not open to the

Secretary to seek to trace the proceeds, or part of the proceeds,

into the hands of Mr Kalwy, if that be the fact."

The court then said at 44, after rejecting the internal submission as evidence that Mr Kalwy had received the moneys, or some of them, which were in these bank accounts:

"This necessary tracing exercise was not undertaken by the

tribunal in the findings it made. In our view, it was an error of

law not to address this question which s.246(1), properly

construed, required."

The "question" referred to in this passage is the question of the actual receipt of the moneys. Counsel for the applicant alleged that by its reference to the "necessary tracing exercise" the Full Court meant that there had to be clear evidence of receipt. He said this evidence could include evidence of an admission by the applicant or the evidence of some other person who had actual knowledge of the receipt of the moneys. However, the evidence of Shaloub relied upon by the Tribunal did not satisfy this test as Shaloub had no direct knowledge, Shaloub's information had come from Gebran, and there was no evidence whatsoever as to the source, if any, of Gebran's knowledge. Counsel said that Gebran had never accused Kalwy in any way and had said he, Gebran, had no knowledge of the four names involved in the Gaudiello/Kalwy conspiracy. It must be remembered that the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate: s33(1)(c) of the Administrative Appeals Tribunal Act 1975. In my opinion, there does not have to be direct evidence of the kind indicated as necessary by counsel for the applicant to enable the Tribunal to have relevantly "traced" the proceeds into the hands of the applicant. In my opinion, when the Full Court stated that the moneys had to be traced into the applicant's hands, it meant that there had to be evidence sufficient to satisfy the Tribunal that the applicant had received the moneys. It was not enough for the purposes of s246(1), as had been asserted by the respondent in the Full Court, that the applicant, having been found party to the conspiracy, was thereby liable to the Commonwealth for the amount of which it had been defrauded. There was evidence before the Tribunal upon which it could find that the applicant had received the moneys in question. That evidence included the evidence of the tape recorded conversation in which it was alleged that the applicant had received half the moneys and the evidence of a rapid increase in the applicant's bank accounts. Accordingly, I reject the submission that the Tribunal wrongly applied s246(1) of the Act.

13. The applicant submitted that the Tribunal's finding in par26, that it was satisfied the applicant had received at least the sum of $27,099.99, was inconsistent with par21, and that the decision was therefore unreasonable. I do not agree. In my opinion, the submission fails to have regard to the findings of the Tribunal in par25 and in particular to the last sentence of the paragraph. The Tribunal's finding in par21 was that it could not determine the precise dollar amount which the applicant received. The effect of par25, in the context of the whole of the Reasons, is that the Tribunal inferred from the tape recorded conversation between Shaloub and Gaudiello that the applicant received at least half of the moneys and this was the finding it made in par26. The applicant may have received more than one half of the moneys. However, on the Tribunal's finding, he received at least one half. There is nothing inconsistent in these two statements.

14. Counsel for the applicant next submitted that the finding of the Tribunal that the applicant had received at least one half of the moneys was itself unreasonable. He submitted that Shaloub's evidence was that he, Shaloub, had no knowledge in relation to the receipt of moneys by the applicant, but had made this statement on the basis of what he had been told by Gebran, who was involved in a different conspiracy. He said that consideration of Gebran's evidence, which was before the Tribunal by way of transcript of his evidence given in the committal proceedings, revealed that there was nothing which implicated the applicant in any conspiracy and that Gebran did not know anything about the four fictitious names in the Kalwy conspiracy. There was no evidence as to the source (if any) of Gebran's information allegedly given to Shaloub. Gebran was not called to give oral evidence in the Tribunal and so was not questioned as to whether he had made such a statement to Shaloub. It was further submitted that in any event Shaloub's comment to Gaudiello referred only to Bliss by name, and there was no evidence to link the reference to "Bliss and all that" to the other three names identified in the Gaudiello/Kalwy conspiracy. Accordingly, it was submitted that this finding was perverse.

15. An appeal to this court under s44 of the Administrative Appeals Tribunal Act 1975 is in respect of an error of law only. There is no appeal as to the facts. A wrong finding of fact does not constitute an error of law: Waterford v The Commonwealth of Australia [1987] HCA 25; (1987) 163 CLR 54 at 77 per Brennan J. Nor does a want of logic in the drawing of inferences constitute an error of law (R v The District Court; Ex parte White [1966] HCA 69; (1966) 116 CLR 644 at 654: see also Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 356 per Mason CJ. However, a finding of fact will be reviewable if it is perverse, that is, if there is no probative evidence to support it, and an inference will be reviewable if it was not reasonably open on the facts. (Australian Broadcasting Tribunal v Bond (supra) at 359-360). In Attorney-General (NSW) v Quin (1990) 170 CLR 1 Brennan J said at 36-7:

"Properly applied, Wednesbury unreasonableness leaves the merits

of a decision or action unaffected unless the decision or action

is such as to amount to an abuse of power: Nottinghamshire County

Council v Secretary of State for the Environment [1985] UKHL 8; (1986) AC 240, at

p249...As Professor Wade explains (Administrative Law, 6th ed.

(1988), p407) in a passage cited with approval in Reg v Boundary

Commission; Ex parte Foot [1983] EWCA Civ 10; (1983) QB 600, at p626:

"The doctrine that powers must be exercised reasonably has

to be reconciled with the no less important doctrine that

the court must not usurp the discretion of the public

authority which Parliament appointed to take the decision."

16. In my opinion, the Tribunal's finding that it was satisfied that Kalwy had received at least the amount of $27,099.99 was supported by the evidence, notwithstanding that a differently constituted Tribunal may have found that there was insufficient evidence to make such a finding. As Pincus J held in Western Television Ltd v Australian Broadcasting Tribunal (1986) 12 FCR 414 at 429, an error of law in respect of a finding of fact does not include a mere lack of evidence as distinct from a complete absence of evidence.

17. Counsel for the applicant submitted that the Tribunal failed to consider two submissions made on behalf of the applicant, namely, the submission as to the unreliability of Shaloub's evidence and the submission as to the applicant's savings pattern after the period of the conspiracy. A failure to consider a submission worthy of serious consideration constitutes an error of law: Dennis Willcox Pty Limited v Federal Commissioner of Taxation (1988) 79 ALR 267 at 276-7.

18. Counsel for the applicant had submitted to the Tribunal that Shaloub's evidence was unreliable on a number of bases. First, it was argued that Shaloub's evidence as to the applicant's involvement in the conspiracy was misconceived because the source of his information was allegedly Gebran. Secondly, it was submitted that Cheshire's evidence that he was not aware of any allegations by Gebran that Kalwy had been involved in the fraud was not taken into account, nor was Gebran's evidence that he had no knowledge of the names Bliss, Conti, Ibrahim and Sevino nor of who operated the accounts in those names. Thirdly, it was submitted that the Tribunal had failed to properly assess Shaloub's evidence in relation to the clearance of the Australia Post post office box, nor had it dealt with the submission that there was nothing in Mr Shaloub's evidence which revealed any discussion with the applicant which hinted at the applicant's receipt of moneys. It is necessary to deal with each of these matters in turn.

19. The first matter to note is that the Tribunal did not deal at all with the evidence upon which it made its finding that the applicant had been involved in a conspiracy. Rather, it relied upon its finding in the first decision in that regard. The applicant did not make any submission to the effect that this was an impermissible course. Therefore, in order to deal with the submission as to Mr Shaloub's evidence it is necessary to have regard to the Reasons for Decision in the first hearing as well as in the second. The Tribunal did not, in either of its reasons, expressly deal with the source of Shaloub's information in support of his statement to Gaudiello in the tape recorded conversation, nor make reference to any submission in relation to that matter. However, the mere fact that there is no direct reference to a particular matter does not necessarily mean that the Tribunal did not have regard to it, nor is there a requirement that every portion of the evidence be referred to or that all submissions be directly canvassed. The Tribunal's statutory obligation is to make findings on the material questions of fact, to refer to the material upon which those findings are based and to provide reasons for its decision: s43(2B) of the Administrative Appeals Tribunal Act. This obligation does not impose a standard of perfection, but rather calls for substantial compliance: see Bisley Investment Corporation v Australian Broadcasting Tribunal (1982) 40 ALR 233; Henry v Australian and Overseas Telecommunications Corporation (Beazley J, 8 April 1993, unreported). As was said by Foster J in Federal Commissioner of Taxation v Cainero (1988) 19 ATR 1301 at 1306:

"It could not be suggested that the tribunal was under any

obligation to isolate in its reasons every issue of fact and

record a specific finding in respect of each of them. It is

obviously sufficient, in light of the cases referred to above, and

as a matter of commonsense, that a sufficient compliance with the

requirement of considering all issues of fact and giving adequate

reasons occurs when the reasons themselves provide a sufficient

indication that the ultimate facts to be decided have been fully

kept in mind and that no significant area of primary fact has been

ignored."

20. In my opinion, the failure of the Tribunal to refer to the source of Shaloub's information does not mean that it failed to take that consideration into account. Rather, the Tribunal appears to have obeyed its statutory mandate to refer to the material facts upon which it relied to reach its finding.

21. The same can be said of Cheshire's evidence. There was a direct reference to Cheshire's evidence in the first decision although no detail was given. In particular, the Tribunal stated that there was nothing of assistance in his evidence. As I have indicated, when dealing with a submission that the Tribunal failed to deal with a submission worthy of consideration, it is necessary to constantly keep in mind the extent of the Tribunal's obligation to give reasons. In my opinion, given the Tribunal's finding in respect of Cheshire's evidence, the failure to treat his evidence in detail does not indicate that the Tribunal failed to deal with the submission. It seems to me that the applicant's real complaint in this regard is as to a lack of detailed analysis rather than a failure to deal with the applicant's submission. I am of a similar view in relation to Gebran's evidence that he had no knowledge of the relevant four names or of who operated the accounts in those names. It is to be remembered that Gebran's evidence comprised his committal depositions. He was not asked in the committal whether he had ever told Shaloub that the applicant was involved in the conspiracy. However, it is also important to keep in mind the Tribunal's finding. The Tribunal did not find that the applicant operated those accounts. Its finding was that the applicant had received half of the moneys which had been paid into those accounts. Having regard to the extent of the Tribunal's obligation to give reasons, I am of the opinion that it cannot be said that the Tribunal failed to have regard to the submissions in relation to these matters.

22. The Tribunal referred in some detail in its first Reasons to Shaloub's evidence as to the post office box. It is therefore difficult to know what the complaint is, let alone the error of law which the Tribunal is alleged to have made in this regard. In my opinion, the submission, at its highest, can only be a complaint that the Tribunal failed to properly assess Shaloub's evidence on this issue. That is a complaint as to the conclusion which the Tribunal drew. That conclusion was one which was open to the Tribunal and therefore does not involve any error of law.

23. It is correct to say that the Tribunal did not refer to the absence, in Shaloub's evidence, of a reference to any particular conversations with Kalwy concerning the four fictitious names. However, the Tribunal dealt with Shaloub's credibility in some detail. It noted that he had a motive for giving evidence against Kalwy, namely, that if the validity of the s162 notices was upheld, his liability to pay moneys to the Commonwealth would be reduced. The Tribunal was particularly impressed with the fact that the tape recorded conversation was had at a time prior to there having been any arrests in the matter, and without Shaloub at that point having a motive to wrongly implicate the applicant. In my opinion, having regard to the findings of the Tribunal, including as to Shaloub's credit, considered in light of the principles which govern its statutory obligation to give reasons, the failure of the Tribunal to refer to the fact that Shaloub had not given any evidence of conversations with the applicant about the four bank accounts, does not enable me to conclude that the Tribunal failed to have regard to counsel's submissions on this aspect. I should say also that all of the applicant's submissions up to this point, not only those related to the post office box, are really no more than a complaint that the Tribunal acted upon certain aspects of Mr. Shaloub's evidence, notwithstanding counsel's submission that his evidence was not credible. In my opinion, the submission does not reveal any error of law.

24. However, the position is different in relation to counsel's contention that the Tribunal did not deal with the submission in relation to the applicant's savings history after the conclusion of the conspiracy. In its first decision the Tribunal referred briefly to the applicant's savings of only $3,500 before the conspiracy, to the increase in his savings of approximately $22,500 during the period of the conspiracy and to his explanation of that increase, namely successful punting and a frugal lifestyle. The Tribunal then stated at par39:

"Having elected to give evidence the Respondent did not adduce any

material in the form of bank statements or other documents to show

that his prowess as a punter continued. I would have been more

convinced of his gambling skills had he been able to demonstrate a

consistent pattern of winning to the date of hearing."

25. The Tribunal made no reference to the applicant's savings pattern after the period of the conspiracy save to observe that the applicant had not produced any evidence by way of bank accounts or other documents "to show that his prowess as a punter continued." During the second hearing, counsel for the applicant again relied upon the applicant's savings history, and in particular, the evidence that after the period of the conspiracy, over a like period of time, he had been able to accumulate a sum slightly in excess of $18,000, an amount not significantly less than that saved during the period of the conspiracy. It was submitted that this savings pattern was consistent with the savings pattern during the period of the conspiracy. Counsel had also submitted to the Tribunal in the second hearing that the low savings balance in the period prior to the conspiracy was explained by the fact that the applicant had only worked for a period of about twelve months on a low weekly wage of about $120 and had been twice engaged during that time. Notwithstanding this he had still been able to save over $3,500. In its Reasons for Decision in the second proceedings, the only express reference the Tribunal made to the applicant's bank account was in par16 in these terms:

"For the Applicant the increases in the bank accounts of the

Respondent were traversed and the Tribunal asked to draw the

inference that that growth in the accounts was as a result of the

proceeds of fraud. This examination of the Respondent's bank

accounts did not prove the actual amount received as opposed to

raising strong probative material enabling the Tribunal to find

that the Respondent was involved in the conspiracy to defraud."

26. Counsel for the applicant submitted that in the second decision the Tribunal ignored the submissions in relation to the applicant's savings pattern after the conspiracy. He said the Tribunal "made no reference to them and did not address them... and we say that amounts to an error of law because that is perverse and manifestly unreasonable." Two errors of law appear to be alleged here, a failure to have regard to a submission seriously made and manifest unreasonableness. As the Tribunal said in par13 that it saw no reason to alter its conclusion in relation to the finding of Kalwy's involvement in the conspiracy, the reasons in the first hearing must also be included in a consideration of this submission.

27. In my opinion, the Tribunal failed to consider the submission made as to the applicant's financial position after the period of the conspiracy. The only reference to the applicant's activities after the period of the conspiracy was to the absence of evidence of a continued successful betting pattern. The context in which this was said indicates that the Tribunal would have considered some such evidence corroborative of the applicant's explanation of the increase in his bank accounts during the period of the conspiracy. This reference did not, in my opinion, involve a consideration of the submission that the applicant had been able to save an almost equivalent amount subsequent to the conspiracy. It was an important matter. It may have influenced the Tribunal in its determination. However, it is not necessary to demonstrate that a consideration of the material would have resulted in a different finding to that which was made to establish this ground. It is the failure to consider the submission, being a submission worthy of consideration, which constitutes the error of law.

28. Having regard to the conclusion to which I have come in relation to this submission it is not necessary to deal with the alternative submission that the Tribunal's failure to deal with this submission was perverse and unreasonable. I should say in passing however that I doubt whether this is the proper basis for challenging this aspect of the matter. In my opinion, it follows from what I have said that the appeal should be allowed and the matter remitted to the Tribunal for redetermination.

29. Counsel for the applicant submitted that the matter should not be returned to the Tribunal constituted by the same persons. No allegation of bias was made, nor was there any basis upon which such submission could be made. However, it seems to me that there is force in the submission that the Senior Member has now had to deal with the matter twice and might be perceived to have a preconceived idea about it, such that justice may not be seen to be done. In those circumstances, I am of the opinion that it is appropriate that the matter be heard by a differently constituted Tribunal. Counsel for the respondent made no submission that this was not a proper course. Accordingly the orders which I make are that:

1. The appeal be allowed.

2. The matter be remitted for redetermination by a Tribunal,

constituted by persons different to those who made the decision to

which the appeal relates, according to law with or without further

evidence.

3. The respondent pay the applicant's costs.

Appeals Tribunal Act 1975

Social Security Act 1947

Michael Franciscus Kalwy v the Secretary of the Department of Social Security [1993] FCA 644;

At a glance

Court

Decision date

Before

Source

Judgment (65 paragraphs)

Michael Franciscus Kalwy v the Secretary of the Department of Social Security [1993] FCA 644; (1993) 32 ALD 451 (22 December 1993)

Parties

Legislation Cited (2)

Cases Cited (9)