Piotto v Secretary, Department of Education, Employment and Workplace Relations

Federal Court of Australia|2009-10-08|Before: Marshall J

REASONS FOR JUDGMENT 1 The applicant, Mr Piotto, is a long term recipient of a Newstart allowance. In 2007 and 2008, Mr Piotto received job search and other assistance from MatchWorks. MatchWorks provided these services to Mr Piotto and others on behalf of Centrelink. Centrelink administers the Social Security Act 1991 (Cth) ("the Act") on behalf of the respondent and other Commonwealth Government departments. The Act, together with the Social Security (Administration) Act 1999 (Cth) ("the Administration Act") and other relevant Acts, forms the "social security law"; see s 23(18) of the Act. 2 The proceeding arises from decisions in 2007 by Centrelink to impose "Newstart participation failures" upon Mr Piotto for Mr Piotto's alleged failures to enter into Newstart Activity Agreements without a reasonable excuse. Mr Piotto sought review of Centrelink's decisions by the Social Security Appeals Tribunal ("the SSAT") and subsequently by the Administrative Appeals Tribunal ("the Tribunal"). Mr Piotto now appeals to this Court pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") to have the Tribunal's decision quashed. 3 The proceeding was heard concurrently with another proceeding, VID 349 of 2009 which also concerned an appeal by Mr Piotto from a decision of the Tribunal to affirm a participation failure imposed by Centrelink in 2008; see Piotto v Secretary, Department of Education, Employment and Workplace Relations [2009] FCA 1116. These reasons should be read in conjunction with the reasons for judgment in that proceeding, particularly in respect of the relevant legislative background. 4 The respondent initially applied to the Court for summary judgment in its contentions of fact and law filed on 10 March 2009. For reasons which were unexplained, counsel for the respondent did not press the application at the trial of the proceedings and the proceedings were heard on a final basis on 14 September 2009.

BACKGROUND 5 This proceeding concerns an appeal by Mr Piotto from a decision of Senior Member Friedman of the Tribunal delivered on 1 May 2008. Senior Member Friedman affirmed the decision of the SSAT to uphold Centrelink's decisions to impose Newstart participation failures on Mr Piotto in respect of Mr Piotto's conduct on 14 August 2007, 6 September 2007 and 5 October 2007 ("the 2007 Participation Failures"). 6 The 2007 Participation Failures stem from Mr Piotto's failure on each occasion to enter into a Newstart Activity Agreement without reasonable excuse; see s 624 of the Act. As a result of the 2007 Participation Failures, payment of Mr Piotto's Newstart allowance was suspended for eight weeks. 7 The respondent, in its submissions, acknowledged that Tribunal's decision in respect of the Newstart Activity Agreement proposed on 5 October 2007 was arguably affected by an error of law. The respondent indicated that this concession was made because the Newstart Activity Agreement contained a term requiring Mr Piotto to participate in a work program in excess of 30 hours per fortnight, in contravention of s 28(2)(b) of the Act.

RELIEF SOUGHT 8 Mr Piotto seeks orders quashing the decisions of Centrelink to impose the 2007 Participation Failures and payment in respect of the eight week suspension period. Mr Piotto also seeks an order that "the Secretary, Department of [Education,] Employment and Workplace Relations be required to seek the courts permission to institute punitive actions against Mr Piotto". It is not necessary, at present, to say anything further about that request. 9 The respondent seeks a declaration that the Tribunal's decision in respect of the 14 August 2007 and 6 September 2007 participation failures was not affected by an error of law. The respondent also seeks orders setting aside the Tribunal's decision in respect of the 5 October 2007 participation failure and remitting the matter to the Tribunal in respect of that participation failure only. In addition, the respondent seeks that the matter otherwise be dismissed and that the "applicant pay the respondent's costs of the appeal incurred on and from 5 May 2009".

LEGISLATIVE BACKGROUND 10 To be eligible for the receipt of a Newstart allowance, a person may be required to enter into a Newstart Activity Agreement or to be prepared to enter such an agreement; see s 593(1)(c)-(d) of the Act. The requirement for a Newstart allowance recipient to enter into a Newstart Activity Agreement is contained in s 605 of the Act. 11 Section 605 relevantly states that: (1) Subject to this section, the Secretary may require a person who is not a party to a Newstart Activity Agreement to enter into such an agreement if: (a) the person is receiving, or has made a claim for, a newstart allowance; or (b) the Department is contacted by or on behalf of the person in relation to a claim for a newstart allowance. (2) Subject to this section, the Secretary may require a person who has entered into a Newstart Activity Agreement to enter into another such agreement instead of the existing one. […] (3) The Secretary is to give a person who is required to enter into a Newstart Activity Agreement notice of: (a) the requirement; and (b) the places and times at which the agreement is to be negotiated. (4) A Newstart Activity Agreement is a written agreement in a form approved by the Secretary. The agreement is between the person and the Secretary. 12 The terms on which a Newstart Activity Agreement may be concluded are detailed in s 606 of the Act. The regulations in force at the relevant time also proscribed terms from inclusion in Newstart Activity Agreements, however these limitations are not relevant for present purposes; see Social Security (Activity Agreement Requirements) (DEWR) Determination 2006 (Cth). 13 Failure to enter into a Newstart Activity Agreement may lead to a "Newstart participation failure" being committed by a Newstart allowance recipient. The consequences of committing a Newstart participation failure are prescribed by the legislation and include a reduction in the rate of payment of a Newstart allowance or the suspension of payments; see ss 626-630 of the Act. 14 At all material times s 624 of the Act relevantly provided that: (1) A person commits a newstart participation failure if the person:

(b) fails to satisfy the activity test; or (c) fails to comply with a requirement to enter into a Newstart Activity Agreement; or (d) fails to comply with a term of a Newstart Activity Agreement between the Secretary and the person; or […] (j) fails to comply with a requirement included in a Newstart Activity Agreement between the Secretary and the person to: (i) undertake a certain number of job searches per fortnight; and (ii) keep a record of the person's job searches in a document referred to in the agreement as a job seeker diary; and (iii) return the job seeker diary to the Department at the end of the period specified in the agreement; or […] (2) Despite subsection (1), a failure of a kind referred to in that subsection is not a newstart participation failure if the person satisfies the Secretary that the person had a reasonable excuse for the failure. (2A) The Secretary must, by legislative instrument, determine matters that the Secretary must take into account in deciding whether, for the purposes of subsection (2), a person had a reasonable excuse for committing a newstart participation failure. (2B) To avoid doubt, a determination under subsection (2A) does not limit the matters that the Secretary may take into account in deciding whether, for the purposes of subsection (2), a person had a reasonable excuse for committing the newstart participation failure referred to in subsection (1). 15 The matters which are to be taken into account in assessing if a person had a reasonable excuse for the purposes of s 624(2)-(2B) of the Act are set out in the Social Security (Reasonable Excuse) (DEWR) Determination 2006 (Cth) ("the Determination"). Matters which may constitute a reasonable excuse include drug or alcohol dependency, psychiatric or psychological impairment, recent release from gaol and the death of an immediate family member; see cl 4(2) of the Determination.

THE TRIBUNAL'S DECISION 16 The Tribunal found that there was no evidence to show that MatchWorks had acted illegally in its dealings with the respondent. In particular, the Tribunal held that there was no evidence to show that MatchWorks was not acting with the legal authority of Centrelink. 17 In addition, the Tribunal held that the Newstart Activity Agreements proposed to Mr Piotto by MatchWorks were not unreasonable. Rather, the Tribunal found that Mr Piotto's refusal to sign the agreements was itself unreasonable and that Mr Piotto did not have a reasonable excuse for his failure to enter into the Newstart Activity Agreements for the purposes of s 624 of the Act. In particular, the Tribunal found that Mr Piotto's insertion of additional terms into the Newstart Activity Agreements proposed in August and September 2007 was evidence of Mr Piotto's unwillingness to enter into a Newstart Activity Agreement. 18 The Tribunal also held that Mr Piotto's ability to negotiate the Newstart Activity Agreements was limited. In particular, the Tribunal stated that Newstart Activity Agreements: are not documents form which negotiation is able to take place to the extent that a job seeker can just say, "Well, I do not agree with that condition," and therefore, refuse to sign it. The Tribunal considered that attempts by Mr Piotto to insert clauses into the agreement which he knew would be unacceptable to MatchWorks was evidence of an unreasonable refusal by Mr Piotto to enter into the Newstart Activity Agreements. 19 Ultimately, the Tribunal affirmed the decision under review on the basis that Mr Piotto had not shown that he had a reasonable excuse for refusing to enter in to the relevant Newstart Activity Agreements.

THE GROUNDS OF APPEAL 20 In his submissions on 14 September 2009, Mr Piotto relied on three grounds of appeal in support of his application. They can be briefly summarised as allegations that: · there was no evidence on which the Tribunal could find that there was a valid delegation in place at the time of the 2007 Participation Failures to MatchWorks; · the Tribunal erred in finding Mr Piotto had no reasonable excuse for delaying entry into the Newstart Activity Agreements as the proposed agreements were "unconscionable"; and · the Tribunal erred in holding that Mr Piotto was required to sign the Newstart Activity Agreements.

No evidence to show a valid delegation 21 The first question of law raised by Mr Piotto is that there was no evidence on which the Tribunal could find a valid delegation from the respondent to MatchWorks was in place at the time of the 2007 Participation Failures. 22 As the respondents conceded at the trial, the document relied upon by the respondent to establish a valid delegation to MatchWorks was not before the Tribunal. Rather the document presented to the Tribunal, Instrument SSL 15/2006, related only to the period from 1 July 2006 and was superseded by a further delegation on 26 June 2007, which commenced on 1 July 2007; see Instrument SSL 9/2007 ("the 2007 Delegation"). It is the 2007 Delegation which relates to the period of the 2007 Participation Failures. Consequently, there was no document before the Tribunal which demonstrated that there was a valid delegation to MatchWorks in place at the time of the 2007 Participation Failures. 23 A copy of the 2007 Delegation was provided to the Court at the trial of the application on 14 September 2009. No issue was taken as to the authenticity of this copy, and I am satisfied that a delegation by the respondent in the following terms was in place from 1 July 2007: I, delegate, to each person engaged by an Employment Services Provider to perform functions or to provide services under a relevant arrangement, each of my powers under or referred to in a provision of the Social Security Act 1991 or the Social Security (Administration) Act 1999 contained in Schedule 1 of this instrument, subject to the limitations in Schedule 1. The powers listed in Sch 1 to the delegation include the powers conferred on the respondent by ss 605 and 606 of the Act. 24 An "Employment Services Provider" is defined by the delegation, at cl 3, in the following terms: Employment Services Provider means an organisation that performs functions or provides services for the purposes of the social security law under one or more of the following arrangements with the Commonwealth ('relevant arrangement'):

(a) Community Work Co-ordinator Services Contract 2002; (b) Employment Services Contract 2006-2009; (c) Employment Services Funding Deed 2006-2009; (d) Remote Services Deed 2006-2009; (e) Memorandum of understanding between Department of Employment and Workplace Relations and Department of Human Services as represented by CRS Australia 2007-2008[.] 25 Section 234(1) of the Administration Act also provides that the respondent may delegate his powers to an "officer". The definition of "officer" is contained in s 23(1) of the Act and "means a person performing duties, or exercising powers or functions, under or in relation to the social security law or the Farm Household Support Act 1992". The respondent may also delegate his powers to "an organisation that performs services for the Commonwealth"; see s 234(7) of the Administration Act. As noted above, the social security law includes the Act; see s 23(18) of the Act. 26 The Tribunal in considering the delegation issue stated "It is claims [sic] that there was not an instrument of authority or something that gave them [MatchWorks] the legal authority to act for Centrelink. I am not persuaded that this is the case at all". However, there was no evidence before the Tribunal to support this finding. In contrast to the circumstances considered by Bennett J in Lim v Secretary, Department of Education, Employment and Workplace Relations (No 2) [2008] FCA 1752 at [19], the respondent did not adduce any evidence before the Tribunal to demonstrate which of the arrangements referred to in cl 3 applies to MatchWorks's activities on behalf of the respondent; see also Piotto at [17]-[20]. Also the respondent has not adduced evidence to demonstrate that the relevant employees of MatchWorks were officers of an Employment Services Provider for the purposes of s 23(1) of the Act; see Lim at [19] and Piotto at [19]-[20]. 27 A valid delegation to Matchworks may ultimately be a simple matter for the respondent to establish. Nevertheless, I am not satisfied that there was any evidence before the Tribunal on which it could conclude that there was a valid delegation from the respondent to MatchWorks at the time of the 2007 Participation Failures. In finding otherwise, the Tribunal erred in law. 28 The matter must be remitted back to the Tribunal for reconsideration. Although it is not strictly necessary to do so, the Court will now deal with the other matters raised in argument before it.

The unreasonableness of the proposed agreements 29 The second ground of appeal agitated by Mr Piotto concerns the alleged "unconscionability" or unreasonableness of the Newstart Activity Agreements proposed at the time of the 2007 Participation Failures. Mr Piotto contends that the unconscionable nature of the agreements provided him with a reasonable excuse pursuant to s 624(2)-(2B) of the Act. 30 In particular, Mr Piotto seeks to impugn MatchWorks's alleged failure to negotiate each of the proposed Newstart Activity Agreements and the inclusion in those agreements of dates which he claims MatchWorks indicated it was prepared to unilaterally alter. Mr Piotto also relies on MatchWorks's refusal to consent to him tape recording their discussions. 31 Counsel for the respondent submitted that the Act empowers the respondent to impose the terms of a Newstart Activity Agreement rather than requiring a true process of negotiation. In doing so, counsel for the respondent relied on the Tribunal's decision in Dunn v Secretary, Department of Employment and Workplace Relations [2007] AATA 1031. Similarly, counsel for the respondent contended that as the respondent is empowered to require attendance at interviews or other appointments, this permits the respondent to alter the dates in a Newstart Activity Agreement. Counsel for the respondent also submitted that the matters identified by Mr Piotto did not constitute a reasonable excuse for the purposes of s 624 of the Act. 32 The decision in Dunn considered the refusal by Mr Dunn to enter into a Newstart Activity Agreement, including whether Centrelink was permitted to present the terms of an agreement as a fait accompli. In doing so, the Tribunal examined what was then known as s 604 of the Act. The Tribunal at [17] concluded that: Section 604 of the Act clearly has the effect of empowering the Secretary to impose terms. It is something of a misnomer to suggest that the agreed plan is the product of negotiations. The provisions of s 604 considered by the Tribunal in Dunn were contained in s 605 of the Act as it was at the time of the 2007 Participation Failures. 33 Although this Court is not bound by the Tribunal's decision in Dunn, I see no reason in the present circumstances to depart from the Tribunal's observations regarding the extent of 'negotiation' required by Act. The language of s 605 of the Act, in place at the time of the 2007 Participation Failures, did not require the parties to a Newstart Activity Agreement to engage in the same process of negotiation that may be expected of parties to other types of contracts. The respondent is placed in the stronger negotiation position by the Act and is able, to a very real extent to dictate the terms of a Newstart Activity Agreement. 34 Accordingly, the Newstart Activity Agreements proposed at the time of the 2007 Participation Failures are not unconscionable or unreasonable as a result of the failure of Mr Piotto and MatchWorks to engage in a negotiation process. The Tribunal's findings in this respect were correct. 35 In addition, whether or not Mr Piotto was permitted to engage in negotiation of the agreements is not a matter for this Court to review. As French J observed in Despot v Department of Family and Community Services [2004] FCA 140 at [40] in relation to the alleged denial of a right to negotiate a Newstart Activity Agreement, "This is not a ground which raises any question of law upon which a review of the AAT decision could be based". As French J observed, whether negotiation occurred is a question of law and no appeal can lie to this Court under s 44(1) of the AAT Act. The Tribunal's findings in respect of the negotiation of the Newstart Activity Agreements cannot be disturbed. 36 Mr Piotto also relies on MatchWorks's refusal to consent to Mr Piotto tape recording the negotiation of the Newstart Activity Agreement on 14 August 2007 in support of his claim that the agreement was unreasonable. The Tribunal made no finding in respect of Mr Piotto's entitlement to use a tape recorder. Rather Senior Member Friedman found that Mr Piotto's refusal to negotiate the activity agreement without a tape recording being made was evidence of Mr Piotto's unwillingness to enter into a Newstart Activity Agreement. That is a finding which was open to the Tribunal. 37 I do not consider that any of the matters identified by Mr Piotto constitute a reasonable excuse for refusing to enter into a Newstart Activity agreement for the purposes of s 624(2)-(2B) of the Act. 38 The matters listed at cl 4(2) of the Determination which may constitute a reasonable excuse include: · drug or alcohol dependency; · psychiatric or psychological impairment; · cognitive or neurological impairment · a significant lack of literacy or language skills; · recent release from gaol; and · the death of an immediate family member. The matters outlined in the Determination are not exhaustive, but nevertheless indicate topics which the respondent must take into account in assessing whether Mr Piotto had a reasonable excuse for the purposes of s 624 of the Act; see s 624(2B) of the Act. In addition, cl 4(3) of the Determination provides that these matters do not constitute a reasonable excuse for the purposes of the Act "unless the Secretary is satisfied that the matter had a significant effect on the person's capacity to comply with the requirement or the provision of the Act to which the failure or refusal relates". 39 Mr Piotto's complaints in relation to the alleged "unconscionability" of the proposed Newstart Activity Agreements are not capable of constituting a reasonable excuse for the purposes of the Act. That finding was open to the Tribunal. Mr Piotto has not shown that the Tribunal erred in finding he had no reasonable excuse for refusing to enter into the Newstart Activity Agreements. The second ground of appeal fails.

The requirement to sign the newstart activity agreements 40 Mr Piotto also placed considerable emphasis on what he considered as the inability of the respondent to require him to sign a Newstart Activity Agreement. Mr Piotto's understanding of the Act in this respect is mistaken for the reasons discussed in Piotto at [25]-[28]. The relevant question is whether Mr Piotto was prepared to enter into a Newstart Activity Agreement; see s 624(1)(c) of the Act. As indicated by s 605(4) of the Act, a Newstart Activity Agreement must be in writing between the Newstart recipient and the respondent. The respondent was entitled to ask Mr Piotto to indicate his acceptance of the written agreement through his signature. 41 Mr Piotto has not shown that he was prepared to enter in to the Newstart Activity Agreements and to conclude that agreement in writing. Mr Piotto has not shown that he has a reasonable excuse for so refusing. Mr Piotto has not shown that the Tribunal's decision on this point was effected by any error of law. This ground of appeal also fails.

CONCLUSION 42 The matter must be remitted back to the Tribunal for reconsideration. In the circumstances it is appropriate to make no order as to costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

Newstart Activity Agreements Administrative Appeals Tribunal Act 1975(Cth)s 44(1)

Social Security Act 1991(Cth)ss 23, 28(2), 593(1), 605, 606, 624

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