Administrative Law - unemployment benefit - eligibility for benefit - meaning of "unemployed" - whether the statement of reasons sufficiently exposed the reasoning of the Administrative Appeals Tribunal - whether mere citation of other decisions a sufficient statement of the relevant law - whether the statement of reasons included findings on material questions of fact - whether failure to give a sufficient statement of reasons requires that the decision be set aside.

Administrative Appeals Tribunal Act 1975, ss.43(2B), 44(4)

Counsel for the respondent: Mr J.J. O'Halloran Solicitor for the respondent: Australian Government Solicitor

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

This is an appeal brought pursuant to s.44 of the Administrative Appeals Tribunal Act 1975 ("the AAT Act"). The appellant received unemployment benefit for the period 12 August 1986 to 20 July 1987. By decision made on 7 December 1988 a delegate of the respondent determined that the appellant had no entitlement to benefit during this period as he was not "unemployed" within the meaning of sub.para.107(1)(c)(i) of the Social Security Act 1947 (which upon renumbering effected by the Social Security Amendment Act 1987 became sub.para.116(1)(c)(i) from 2 July 1987). The delegate further determined that pursuant to sub.s.181(1) of the Act (now renumbered sub.s.246(1) by the Social Security (Review of Decisions) Act 1988) the benefit received by the appellant of $10,265.70, in consequence of false statements or representations to the Department, is a debt due to the Commonwealth. The delegate reached the conclusion that the appellant was not unemployed as he was satisfied that he was throughout the period actively engaged in partnership with his wife in the businesses of real estate agents and building. Upon review on the application of the appellant the Administrative Appeals Tribunal affirmed the decision of the delegate.

2. In its written statement of reasons for decision the Tribunal incorrectly recited that the delegate had found that the benefit was a debt due to the Commonwealth as the appellant had failed to inform the Department that he had commenced to carry on a business whilst in receipt of benefit as required by sub.s.130A(b) (now after renumbering, sub.s.133(b)) and also purported to affirm a decision that the benefit paid to the appellant was a debt due to the Commonwealth on that additional ground. Furthermore the Tribunal referred to sub.s.251(1) of the Act (formerly sub.s.186(1)) which empowers the Secretary to waive the right of the Commonwealth to recover the whole or part of a debt arising under or as a result of the Act, and purported to determine that the discretion to waive the debt should not be exercised in favour of the appellant. These two aspects of the Tribunal's decision were the subject of grounds of appeal. Upon the appeal coming on for hearing, counsel for the respondent conceded that on both these topics the conclusions of the Tribunal could not be supported as neither topic was considered by, or formed part of the reasoning of, the delegate, (see Secretary, Department of Social Security v Salvona (1989) 18 ALD 289 per Lee J. at 299), and further, in the case of the first point the conclusion could not be supported on the evidence as the relevant businesses were commenced before not during the period in respect of which benefit was paid. In deference to the Tribunal it should be said that the Statement lodged with the Tribunal pursuant to s.37 of the AAT Act incorrectly stated that these topics formed part of the decision to be reviewed, and that error was compounded by the way in which the respondent's case was presented before the Tribunal.

3. The respondent however seeks to support the decision of the Tribunal in so far as it rests on the conclusions that during the period when benefit was paid the appellant was not unemployed, and that the benefit is a debt due to the Commonwealth as it was paid in consequence of a false statement or representation. The appellant, on the other hand, contends on the authority of Dornan v Riordan (1990) 24 FCR 564 that the decision should be set aside as the Tribunal failed to comply with the prescription contained in sub.s.43(2B) of the AAT Act which provides that:

"43(2B) Where the Tribunal gives in writing the reasons for its

decision, those reasons shall include its findings on material

questions of fact and a reference to the evidence or other material

on which those findings were based."

To consider the submissions of the appellant it is necessary to outline the material before the Tribunal, and to set out at some length its reasons. Before doing so I set out the relevant provisions of the Social Security Act. The present section numbers are adopted:

"116(1) Subject to this Part, a person (not being a person in

receipt of a pension under Part IV or V or a benefit under Part VI)

is qualified to receive an unemployment benefit in respect of a

period (in this section referred to as the 'relevant period') if,

and only if-

(a) the person attains or had attained the age of 16 years on or

before the commencement of the relevant period and, being a

man, had not attained the age of 65 years, or, being a woman,

had not attained the age of 60 years, before the end of the

relevant period;

(b) the person resided in Australia throughout the relevant period

and on the day on which he lodged his claim for the benefit and-

(i) had resided in Australia for a period of not less than

12 months immediately preceding that date; or

(ii) satisfies the Secretary that he is likely to remain

permanently in Australia; and

(c) the person satisfies the Secretary that-

(i) throughout the relevant period he was unemployed and was

capable of undertaking, and was willing to undertake,

paid work that, in the opinion of the Secretary, was

suitable to be undertaken by the person; and

(ii) he had taken, during the relevant period, reasonable

steps to obtain such work; and

(d) the person was, throughout the relevant period, registered

as being unemployed by the Commonwealth Employment Service.

...

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."

It was common ground before the Tribunal that the appellant met the requirements of paras.116(1)(a), (b) and (d). The issues in contention arose under para.116(1)(c) and sub.s.246(1).

4. The information placed before the Tribunal included extensive documents relating to the affairs of the appellant which had been relied on by the delegate (documents T1-T48 lodged pursuant to s.37 of the AAT Act), the oral evidence of the appellant, and exhibits tendered by him during his case before the Tribunal. The respondent called no evidence before the Tribunal, and relied on the T documents and the cross-examinations of the appellant. One complaint made in the notice of appeal is that the Tribunal in its reasons recorded the submission of counsel for the respondent but "nowhere did it record the submissions of the applicant...". There is no substance in this complaint. The mode of expression used by the Tribunal refers to the submissions of counsel for the respondent, and to the evidence of the appellant. This is explained by the way in which the case of each party was presented. By reference to the evidence of the appellant the Tribunal has set out the substantial issues on which the matter was contested, and has identified the important points of the appellant's case.

5. The appellant was born on 28 November 1946. He is married with two children. He was employed as a technician in Telecom for some 21 years until October 1984. He is qualified to be a real estate agent, having qualified for a Land Agent's certificate in 1981. He also holds a builder's license, obtained while employed in Telecom. He enrolled for the first year of the Bachelor of Business at the South Australian Institute of Technology while on leave without pay from Telecom, and in later years enrolled in some subjects part time but did not complete the degree course. In 1984 he took part-time employment in real estate, which lasted for two years. His earnings were low and he had to borrow money. In 1985 he purchased a city fitness centre business. This venture was not successful, causing him to incur heavy debts. He relinquished this business in mid-1986.

6. The application for unemployment benefit was made by the appellant on 12 August 1986. He declared that he was unemployed, a declaration which was repeated at interview with an officer of the Department on the following day. It will be necessary to say more about the information given to the Department by the appellant on 12 and 13 August 1986 later in this judgment.

7. The Tribunal's reasons for decision gave the following summary of the appellant's evidence about his activities during the period when he was in receipt of benefit:

"8. The applicant gave evidence that during the period from 12

August 1986 onwards, when Unemployment Benefits were paid, he

looked for work and made applications for employment to firms

specified in a list he provided. He used his real estate license

to conduct a business, 'Home Hunters', based at his residence. He

commenced operating 'Home Hunters' from 1/7/86. He stated that he

also spent some time attending to a building operation for which

he took responsibility as it was registered under his builder's

license. However, his evidence was to the effect that this was

done on behalf of a friend, to facilitate the arrangement of

finance. All the banking transactions relating to it in his

accounts were merely a means of helping this friend, who did not

hold a builder's license, while the applicant himself was not

engaging in any activity on his own behalf. In evidence, the

applicant agreed that he had recorded these business transactions

in his own tax return. In answer to a question that as far as the

Tax Commissioner is concerned he was the builder and had all the

responsibilities, the applicant agreed that this was correct.

9. He stated that, although he had reported to the Department

that he worked 12 hours per day on his businesses (and job

seeking), a correct estimate (if 12 had to be used) would have

been 12 hours per week. He submitted many tenders to the South

Australian Housing Trust ('the SAHT') for the right to build

houses for it, and in particular during March 1987. In evidence,

he stated that the submitting of tenders was something he did on a

weekly basis. In October 1986 he achieved a successful contract

(T13) and thus he had become involved in building for the SAHT by

the use of sub-contractors. He was also trying to sell houses on

a commission basis for Stirling Homes.

...

11. Mr McAuliffe had a large overdraft. His interest commitment

meant that he had a negative income for all of his enterprises,

granted his assumption that this interest was a legitimate cost to

the business. He gave evidence to the effect that the increase in

the overdraft was for personal expenses. Mr Taylor (counsel for

the respondent) submitted that this interpretation of the

situation by the applicant was incorrect and argued that such

levels of loans and interest indicated that a business activity

was involved.

12. Mr F. Taylor did not call any evidence but relied on

information in the T documents as originally submitted, together

with additional documents recording the results of enquiries by

the Department about the applicant's activities during the

relevant period from August 1986 to July 1987. This evidence

related to information provided in the application for the

applicant's builder's license, his activity as a commission agent

in real estate, detailed records of banking transactions as

recorded in his bank and credit union accounts, and his tax returns.

...

14. The Tribunal noted that the applicant established several

bank accounts, including a current business account to which

overdraft arrangements applied, a personal current account and a

credit union account, in each case held jointly with his wife. A

Trust Account was also held at the bank as required for the

applicant's real estate business. The Unemployment Benefit was

paid into the personal current account but Mr McAuliffe could not

recall telling the bank that he was on Unemployment Benefit.

...

16. From-mid 1986 onwards, the applicant was granted increased

overdraft rights of some $35,000, which he stated in evidence to

be needed for personal expenditure in order to maintain his living

standards in the difficult time he was experiencing. Under cross

examination, Mr McAuliffe said that a statement, which was noted

by the bank officer, that an extension of his overdraft was to

provide for real estate business expenses was a mistake.

17. During cross-examination the applicant was referred to

records of an interview with his bank which recorded discussions

relating to an application for a loan. These records indicate

that Mr McAuliffe stated that the business in which he was engaged

was that of a real estate builder and that he commenced as such in

September 1986. The applicant did not agree that this was an

accurate record. Furthermore, the bank record also includes a

question as to the scale on which businesses are conducted, namely

full-time or part-time. Under cross-examination the applicant

further responded as follows-

'The answer is full-time, is it not?---That is what is

written there.

Is that answer correct?---The answer in his assumption.

I am putting to you that it is very difficult to understand

where a person would get these assumptions from other than

having talked to you?---When you have been speaking to

somebody for an hour and you are telling them all your

dreams and hopes and wanting him to finance you in order for

you to achieve those things, it is natural for him to assume

that I am going to do it full-time.

So unless you misled him in a particular way, that at the

time was also the result that you wanted to achieve for the

purpose of getting a loan. Is that correct?---I certainly

wanted the loan, but I did not do anything to deliberately

mislead him.

The purpose of the loan was - - -?---I think he made the

assumptions.'"

On this evidence the respondent argued before the Tribunal that, contrary to the interpretation of events given by the appellant, his real estate activity and building business kept him employed, at least to the extent that he was not able to accept other appointments, nor make more than a token effort in search of them. It was submitted that the appellant's business and financial records established a substantial degree of business activity which was inconsistent with the appellant's assertion that he was unemployed. The conclusions of the Tribunal then follow, and are, relevantly, to be found in the following paragraphs:

"18. The Tribunal has difficulty in accepting the applicant's

explanations of these bank records, not least because of evidence

indicating that he had previously been engaged in tertiary level

studies for a Bachelor of Business.

...

20. The Tribunal, in arriving at its decision, has taken the

evidence as a whole into account, including the submissions of

both Mr McAuliffe and Mr Taylor. The principles to be applied by

the Tribunal in determining whether or not a person is eligible

for Unemployment Benefit by virtue of being 'unemployed' have been

canvassed in a number of decisions of the Tribunal. In

particular, see: Re McKenna and Director-General of Social

Services (1981) 3 ALD 219; Re McKenna and Secretary, Department

of Social Security (Decision No.1914 dated 2 May 1989); Re Te

Velde and Director-General of Social Services [1981] AATA 87; (1981) 3 ALN N111;

Re Weekes and Director-General of Social Services (1981) 3 ALN

N141; Re Malaj and Secretary, Department of Social Security

(1988) 15 ALD 333; Re Whyte and Director-General of Social

Services (Decision No.506 dated 4 August 1981); Re Martens and

Director-General of Social Security (1984) 6 ALN N339; Re

Brabenec and Director-General of Social Services (1981) 3 ALN N63;

and Re Doyle and Secretary, Department of Social Security

(Decision No.2167 dated 3 June 1985).

21. The Tribunal, in taking into account the principles

enunciated in the decisions listed above, the evidence presented,

and Mr McAuliffe's demeanour as a witness, finds that the

operation of the several bank accounts and the manner by which the

applicant used his builder's license to arrange for the

construction of units, together with the evidence relating to the

commission he eventually received for the sale of a property, and

his tenders and operations for the SAHT, all constituted a form of

business activity which made him ineligible for payment of

Unemployment Benefit during the period from 12 August 1986 to 20

July 1987. Hence payments made during this period remain a debt

to the Commonwealth."

By its term para.116(1)(c) requires that a person seeking benefit must satisfy the decision maker that throughout the relevant period he was (i) unemployed and (ii) was capable of undertaking, and (iii) was willing to undertake, suitable paid work, and (iv) had taken reasonable steps to obtain such work. These four matters are related (see Director-General of Social Services v Thomson [1981] FCA 209; (1981) 38 ALR 624 at 627, 629), but nevertheless will usually warrant separate consideration in the determination of a claim for unemployment benefit.

8. Although in para.21 of the reasons, the Tribunal has expressed its conclusion on the issues arising under para.116(1)(c) compendiously by saying that the appellant's business activity made him ineligible for benefit, this appeal has been argued on the footing that, on a reading of the reasons as a whole, it is apparent that the Tribunal decided the matter on the ground that the appellant was not "unemployed". In my view, this interpretation of the reasons is correct, and follows from the Tribunal's summary of the submissions of the respondent and from the reference in para.20 to eligibility for benefit of a person who is "unemployed". One of the criticisms then made of the reasons is that the Tribunal omitted to consider the other requirements of para.116(1)(c). But once the Tribunal concluded that the appellant was not unemployed within the meaning of para.116(1)(c), he could not qualify for benefit, and it was not necessary for the Tribunal to go further. A failure by the Tribunal to include findings on questions of fact which do not form part of its decision does not, in my view, constitute a failure to comply with sub.s.43(2B) of the AAT Act: cf. Commonwealth of Australia v Smith [1989] FCA 189; (1989) 10 AAR 277 at 283.

9. In Ansett Transport Industries (Operations) Pty Ltd and Anor v Wraith and Ors [1983] FCA 179; (1983) 48 ALR 500 at 507 Woodward J., in discussing the requirements of sub.s.13(1) of the Administrative Decisions (Judicial Review) Act 1977 which are substantially the same as those of sub.s.43(2B) of the AAT Act, said:

"...the decision-maker should set out his understanding of the

relevant law, any findings of fact on which his conclusions depend

(especially if those facts have been in dispute), and the reasoning

processes which led him to those conclusions. He should do so in

clear and unambiguous language, not in vague generalities or the

formal language of legislation."

It is submitted by counsel for the appellant that by simply referring to a number of past Tribunal decisions in para.20, the Tribunal has failed to reveal the principles of law which it applied, and that this amounts to a substantial breach of the obligations imposed by sub.s.43(2B).

10. One of the purposes of the requirement to publish reasons is to inform the person against whom the decision is made why the decision was adverse; Dornan v Riordon at 573 and Re Palmer and Minister for the Capital Territory (1978) 23 ALR 196 at 206. Particularly where a party is unrepresented, as was the case here, the mere recital of decisions by name may not, on the face of the reasons, provide a meaningful explanation. The reasons are likely to be more enlightening if the principles of law which are being applied are stated as well as the decisions which support them. However the failure to set out the relevant legal principles in the reasons does not necessarily constitute a breach of the obligations imposed by sub.s.43(2B). It will be noted that the sub-section does not expressly require the Tribunal to include, or even to make reference to, the law or legal principles material to the decision. Often the legal principles relevant to the decision will not be contentious, and the decision will turn entirely on matters of fact. In such cases the reasons for the decision are likely to be clear enough even if there is little or no reference to the relevant law. If the Tribunal reveals its findings on material questions of fact and a reference to the evidence or other material on which the findings are based, reference to legal principle may be unnecessary. In other cases however reference to the relevant law may be necessary to understand the process of reasoning of the Tribunal by which it has proceeded from the material findings of fact to the conclusion which constitutes the decision. There may also be cases where it is necessary to know which legal principles have been relied on by the Tribunal to determine whether the findings on material questions of fact support the decision. The extent to which the relevant law needs to be referred to will depend on all the circumstances of the case. Even where it is necessary to know what legal principles have been applied to understand the reasons for decision, sub.s.43(2A) lays down no particular requirement as to the way in which this is to be achieved. If the principles are not contentious a mere reference to a source of those principles, or to several sources which consistently state them, will be sufficient. In my view this is such a case.

11. The principles referred to in the decisions cited by the Tribunal were not in dispute. Re McKenna and Director-General of Social Services (1981) 3 ALD 219 concerned the entitlement to unemployment benefit of a person who had voluntarily given up salaried employment and joined a workers co-operative in which he was fully engaged, althouth receiving minimal return. The Tribunal (Morling J., the Hon. J.B.K. Williams and Dr J.G. Billings) said, at pp 221-222:

"The apparent legislative intent of the provisions of the Act

concerned with eligibility for and payment of unemployment benefit

is to provide those people who are not engaged in work of a

remunerative nature with the means of subsistence in circumstances

where, despite capacity, willingness and effort on their part,

they have been unable to find paid work to maintain themselves.

It is in this context that the word 'unemployed' is used, coupled

with the other words in sub-s (c)(1) 'and was capable of

undertaking and was willing to undertake paid work and that in the

opinion of the Director-General was suitable to be undertaken by

the person'. Sub-section (2) requires satisfaction on the part of

the Director-General that reasonable efforts have been made to

obtain paid work. When regarded in the context of the apparent

legislative intent and the other terms and expressions used in the

sub-section, it seems to us that the word 'unemployed' bears its

colloquial or popular meaning of not being engaged in work of a

remunerative nature. This meaning must, however, be modified to

some extent in that the means test provisions of the Act recognize

that some income may be earned by a grantee of an unemployment

benefit resulting in the diminution of the grant but without

destroying eligibility for it. It must also be modified to allow

for those special cases where a person is not engaged in work of a

remunerative nature but whose commitment to some activity, eg

study or domestic duties demonstrates a preference for that

activity rather than employment. Cf Re Thomson and Director-General

of Social Services (1981) 3 ALN No 51."

12. The decision in Thomson referred to in McKenna, above, was considered on appeal by the Full Court of the Federal Court: see Director-General of Social Services v Thomson [1981] FCA 209; (1981) 38 ALR 624. The Tribunal's decision was upheld. The Court said, at pp 626-627:

"The concept of 'paid work' provides a useful starting point. At

its broadest the description 'unemployed' encompasses those who

are without paid work. We appreciate that the statute itself, for

example's 107(3), (now s.116(4)) admits some limited extension of

this but, subject to that qualification, the notion of 'paid work'

as the antithesis of 'unemployment' seems to accord with common

sense and with the statutory context...

Some further limitation is, however, necessary to determine the

true meaning of 'unemployed'. Neither in ordinary parlance nor in

the context of the legislation is everyone who is without paid

work 'unemployed'; for example, neither the very young nor the

very old and infirm would usually be so described."

"But it must be kept in mind that the material part of the

legislation treats questions such as the present as matters of

fact and degree. Terms are undefined and detailed tests are not

prescribed. Matters are left to the decision of the Director-General,

subject to review by the Tribunal. Such a legislative

scheme seems to us to accept the operational burden of numerous

individual decisions, and at the same time to provide by way of

safeguard a need for the applicant for benefit to satisfy those

administering the scheme that he or she qualifies for entitlement.

For all that, the possibility must be recognized that activities

being pursued by a person without paid work may be so

fundamentally incompatible with the person's being regarded as

unemployed that no further inquiry is necessary. However, we

anticipate that such a case would be exceptional. In the usual

case, of which we think this is an example, the solution will be

arrived at by reference to all the circumstances, of which the

activities being pursued for the time being by the applicant for

benefit will be one."

As to the position of students, see also Green v Daniels [1977] HCA 18; (1977) 51 ALJR 463, Harradine v Secretary, Department of Social Security [1989] FCA 200; (1989) 25 FCR 35, and Re Martens and Director-General of Social Security (1984) 6 ALN N339.

13. In Re Te Velde and Director-General of Social Services [1981] AATA 87; (1981) 3 ALN N111, the observations of the Tribunal in McKenna were followed. In Te Velde the Tribunal said at N114:

"There may, however, be further modifications necessary to the

meaning suggested in Re McKenna, supra, in relation to self-employed

persons. Whilst the concept of 'work' normally connotes

some activity pursued as a means of earning one's livelihood, the

absence of evidence that the activity is effective in producing a

livelihood may not be critical in deciding whether the activity

qualifies as 'work': see Clear v Smith (1981) 1 WLR 399. A

self-employed person, in particular, may be engaged full-time in

activities intended to earn him a living, but which, despite his

diligent efforts, fail to do so. Thus in Re Brabenec and

Director-General of Social Services (1981) 3 ALN No 39, a self-employed

miner engaged unsuccessfully in full-time prospecting for

opals was held not to be 'unemployed' within the meaning of the Act.

As the Tribunal commented in that case, the opal miner was no more

'unemployed' than any person setting himself up on his own in a

profession, trade or business (cf s 130A of the Act (now s.133))."

In Re Weekes and Director-General of Social Services (1981) 3 ALN N141 the Tribunal followed McKenna, Te Velde and Brabenec. It added at N141-142:

"...we would agree with the view put by Mr Douglas that work of a

remunerative nature encompasses not only the normal employer-

employee relationship but also a person who is self-employed. And

we agree that a person who is self-employed need not be profitably

employed in the sense that the income from his activities exceeds

his outgoings. There are many self-employed businesses, including

professional businesses, which would not be 'profitable' in this

sense in the early stages of their establishment. But it could not

be said, in our view, that it followed that the persons involved

were 'unemployed' within the meaning of s 107. (now s.116)"

In Re Malaj and Secretary, Department of Social Security (1988) 15 ALD 333, which is the latest of the decisions referred to by the Tribunal in para.20 of its reasons, the above decisions were again followed. The Tribunal held that a self-employed upholsterer who worked varying hours each day for little return was not "unemployed". In Malaj the Tribunal referred to a number of other decisions including Re Vavaris and Director-General of Social Security (1982) 5 ALN N16 where the Tribunal posed the question whether the claimant for unemployment benefit was so "seriously engaged in economic enterprise" as to lead to the conclusion that he is not unemployed. A similar test was posed in McKenna v Secretary, Department of Social Security, (Decision No.1914, 2 May 1989) where it was said "the proper question is whether a person has so organised his affairs...that a Tribunal may conclude that he is seriously engaged in the conduct of a business...".

14. There is no need to refer specifically to the other decisions cited by the Tribunal. They are further examples of the principles expressed in the passages set out above, save for Re Whyte and Director-General of Social Services (Decision No. 506 dated 4 August 1981) which concerns the obligation of an applicant for unemployment benefit to take reasonable steps to obtain suitable employment.

15. The question whether the appellant was "unemployed" during the whole or part of the period when benefit was paid was essentially a question of fact and degree to be decided having regard to the above principles. The mere reference to relevant decisions by name was in my view sufficient in the circumstances of this case to identify the principles employed in the reasoning process of the Tribunal. In my opinion the failure to spell out those principles expressly in the reasons does not constitute a breach of the obligations imposed by sub.s.43(2B) of the AAT Act.

16. The appellant further contends that even if the relevant legal principles are sufficiently identified, the Tribunal's reasons do not indicate what part of the appellant's evidence has been accepted, and what part has been rejected, nor do the reasons indicate in what manner and why the conflicting interpretations urged by each party to be placed on entries in the appellant's business records were resolved. Findings of fact on each of the topics covered in the recital of the evidence included in the reasons for decision are material to the question whether the appellant was "unemployed", yet the Tribunal's reasons, it is submitted, fail to include such findings.

17. The reasons of the Tribunal must be read fairly as a whole, and not over-zealously. In Politis v Federal Commissioner of Taxation (1988) 88 ATC 5029 at 5032 Lockhart J. said:

"The Administrative Appeals Tribunal is required by para.43(2B) of

the Administrative Appeals Tribunal Act to include in its written

reasons for decision 'its findings on material questions of fact

and a reference to the evidence or other material on which those

findings were based'. I repeat what has been said by other

members of this Court in the cases mentioned below and by myself

on more than one occasion, that when this Court hears appeals from

administrative tribunals - which are the bodies entrusted by

Parliament with the task of reviewing decisions of a particular

administrative character - the Court should approach its task

sensibly and in a balanced way, not reading passages from the

reasons for decision in isolation from others to which they may be

related or taking particular passages out of the context of the

reasons as a whole."

In Bisley Investment Corp. Ltd and Anor. v Australian Broadcasting Tribunal and Anor. (1982) 59 FLR 132 at 157 Sheppard J., in relation to the former sub.s.43(2) of the AAT Act which was in material respects similarly worded to sub.s.43(2B), said:

"The section does not impose upon the Tribunal, which is often

composed of members who are not trained in the law, any standard

of perfection. I consider the provisions of the section to be

directory rather than mandatory. Substantial compliance is what

is required and clearly that is here present. I prefer that

approach to the question of what is required of the Tribunal by

the section to that, upon which counsel for the respondent relied,

which involves the application of the maxim 'omnia prae summuntur

rite esse acta'. On this aspect of the case I would add that I am

in complete agreement with what was said by Fisher J. in his

judgment in Blackwood Hodge (Australia) Pty. Ltd. v Collector of

Customs (N.S.W.) [1980] FCA 96; (1980) 47 FLR 131 at pp 145-146."

See also Lockhart J. at 152. In Federal Commissioner of Taxation v Cainero (1988) 88 ATC 4427 at 4431 Foster J. said:

"Quite clearly, in Bisley, the Full Court (Lockhart, Sheppard and

Morling JJ.) were of the view that sec.43(2B) imposed no requirement

upon the Tribunal in its statement of reasons to refer specifically

to all findings of fact made by it. It was obviously regarded as

sufficient if such findings could reasonably be inferred from the

Tribunal's statement of reasons in the context in which they were given."

18. Finally, I refer to the observation of Sheppard J. in Freeman v Defence Force Retirement and Death Benefits Authority (1985) 8 ALN N97 which was cited with apparent approval by Morling and Neaves JJ. in Repatriation Commission v Bushell (Federal Court, Judgment 3 May 1991) at p 6:

"...'what may appear to be a loose or unhappy way of phrasing a

thought ought not to be determinative of the outcome unless it is

apparent that the Tribunal has, by its language, been led to make an

error of law.'."

19. In my view when the reasons of the Tribunal are read as a whole, and in light of the documentary evidence as to the appellant's banking and business transactions including those which disclose receipts as a commission agent in real estate, and the applicant's taxation returns, the basis of the reasoning of the Tribunal may be inferred clearly enough.

20. In para.18 the Tribunal says it "has difficulty in accepting the applicant's explanations of these bank records", referring back to the entries in banking records referred to in paras.16 and 17 of the reasons. This is an unhappy choice of language as it does not - in plain unambiguous words - say whether the applicant's explanations are rejected, or are accepted albeit with difficulty. The brief reference to the appellant's "demeanour as a witness" in para.21 is also an unhappy way of expressing a finding as to credit. However when the reasons are read as a whole it is clear that in para.18 the Tribunal was expressing its rejection of the appellant's assertions that the banking records were inaccurate, and in para.21, by referring to the demeanour of the appellant, was intending to convey its reason for rejecting his evidence in which he sought to explain away the inference of substantial business activity which would otherwise arise from his business records. The reference to the demeanour of the appellant is, in my view, to be understood as indicating that the Tribunal was not impressed with the manner in which the appellant gave evidence, and was rejecting his evidence in so far as it was inconsistent with the import of the documentary evidence. The reasons would have been much clearer had the Tribunal said so directly, but nevertheless the intention of the language used remains clear enough.

21. Having rejected the appellant's evidence in these respects the other material pointed strongly in one direction. The documentary evidence, taken at face value, as in my view the Tribunal found it should be taken, presented an overwhelming picture of business activity that was quite inconsistent with the notion of the appellant being unemployed.

22. The banking records showed that from the commencement of the period when benefit was paid progress payment on two units being constructed for Mr L Strange, under the authority of the applicant's building licence, were being received into the bank account of the appellant's partnership, and numerous outgoings were being met from the account for sub-contractors and materials. On 30 October 1986, whilst work was still underway on Mr Strange's units, the appellant was awarded the contract to erect one detached house at Clovelly Park for the South Australian Housing Trust at a contract price of $29,134.84. Work commenced on that house in about March 1987. Again moneys were paid into and out of the partnership bank account in respect of work on this house. In the period August 1986 to June 1988 deposits totalled $147,973.82 and outgoings $213,110.00. Even allowing that some of the outgoings were for domestic expenses, and some of the income may have been unemployment benefit cheques, the inference remains one of considerable building activity. That inference is strengthened by the appellant's taxation returns for the year ended 30 June 1987. The partnership return includes a trading profit and loss account for building and construction which shows income of $78,176 and outgoings of $83,542 including-

Hire of equipment $ 487

Insurance 1,056

Materials 45,674

Sub-contractors 34,744

The partnership return also includes a trading profit and loss account of "Real Estate Agency" which shows gross income of $3,897 and outgoings of $34,795 including wages of $4,576. Elsewhere, the tax returns reveal that the wages were paid to the appellant's children. His daughter was employed throughout the year, 16 hours per week, on "office duties and cleaning", and his son was employed throughout the year, 16 hours per week, on leaflet deliveries. Other documents show that moneys were received into the real estate agency trust account for property sales in January 1987, and July 1987.

23. In addition there was information before the Tribunal from the appellant's bank, which, by rejecting the appellant's assertions of inaccuracy the Tribunal inferentially accepted, that-

- the appellant's overdraft had been increased by $30,000 in

November 1986 to provide for real estate business expenses

- the appellant had informed his bank that in September 1986 he

commenced business as a real estate builder, which business was

conducted "full time".

24. In my opinion the Tribunal sufficiently indicated the process of reasoning which lead to its conclusion that the appellant was not unemployed, and its findings on material questions of fact, with reference to the material before it on which those findings were based.

25. Finally, it was submitted on the appellant's behalf that the Tribunal, having concluded that he was not eligible for benefit, because he was unemployed, failed to sufficiently state its reasons for the further conclusion that the benefit received was a debt due to the Commonwealth under the provisions of sub.s.246(1). The Tribunal covered that topic in a single sentence at the end of para.21 of the reasons "Hence payments made during this period remain a debt to the Commonwealth". Sub-section 246(1) creates in the Commonwealth a civil right to recover overpayment of benefit where the overpayment is "in consequence of a false statement or representation, or in consequence of a failure or omission to comply with any provision of this Act". As Lee J. observed in Secretary, Department of Social Security v Salvona (1989) 18 ALD 289 at 296:

"The sub-section stops short of providing a right to recover any

overpayment that should not have been made (cf s181(2) (now

s.246(2))). The sub-section does not provide a right to recover

payments made under a mistake however caused. The right to recover

overpayments as a debt due to the Commonwealth is limited to

payments of allowances, benefits and pensions made in consequence of

specified acts on the part of the recipient. Where the right of

recovery relies upon a false statement or representation, it will be

a threshold requirement to identify the statement or representation

before the falsity of that statement or representation can be

demonstrated."

The finding that the appellant was ineligible for benefit, because he was not at the relevant time unemployed, does not result automatically in the overpayment being a debt due to the Commonwealth. The one sentence statement on this topic in the reasons of the Tribunal fails to reveal the reasoning by which it came to the conclusion that the overpayment was a debt due to the Commonwealth. The statement is capable of the interpretation that the Tribunal misunderstood the meaning of sub.s.246(1), and assumed that all benefit paid where there was no eligibility for it became a debt due to the Commonwealth. Alternatively if the Tribunal correctly understood sub.s.246(1), it has failed to include in its reasons its finding on material questions of fact. It has failed to include a finding as to the statement or representation identified by it as being false, and a further finding that the relevant benefit was paid "in consequence of" that falsehood. There has in this respect been a total failure to fulfil the obligation imposed by sub.s.43(2B). The question of recovery under sub.s.246(1) was treated as a secondary and almost consequential matter in the presentation of the case to the Tribunal by the parties, and this may explain why it received only passing mention in the reasons. Nevertheless, as the question was one which the appellant did not concede, it required the Tribunal's decision, and an expression of the Tribunal's reasons.

26. It does not follow however that the decision of the Tribunal must inevitably be set aside. Under sub.s.44(4) of the AAT Act the Court "shall hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision". If the Court is of the opinion that although error of law has been demonstrated, the decision is nevertheless clearly correct on the material which was before the Tribunal, it is open to this Court to dismiss the appeal: Austin v Deputy Secretary, Attorney-General's Department (1986) 12 FCR 22 at 26-27. In my opinion on the material before the Tribunal there was only one conclusion open to it once it reached the conclusion that the appellant was not eligible for benefit.

27. A benefit is paid "in consequence of" a false statement if the statement is a contributing factor in the decision to make payment of the benefit; it need not be a primary or dominant cause: Director-General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281. It is clear that, at the least, the information relevant to his business activities given by the appellant to the Department in his application for Unemployment Benefit on 12 August 1986, and at interview on 13 August 1986, was a contributory cause to the payment of benefit.

28. In the application the appellant answered the undermentioned questions thus:

Question Answer

What date did you last work? Went on to commission only

in June 85 (approx.)

Why did you stop work? No longer required

Were you self employed? No

What is your usual occupation Managerial/real estate

(job)? sales

At interview the applicant in answer to a question whether he (or his spouse) is a member of a partnership/business answered "no". In response to a request for details of his bank accounts, he disclosed some accounts, but failed to disclose the business cheque account conducted by the partnership between himself and his wife, or the trust account for the real estate agency "Home Hunters". In response to a further question as to the reason for the cessation of his last employment he said:

"No longer required. Surviving since then by taking loan to support

me while trying to build up in Real Estate Business (because

employed on commission basis)."

The effect of these statements was to conceal from the Department that the applicant and his wife were in partnership, and were conducting two businesses, those of a real estate agency, and of a builder. The non-disclosure of the businesses' bank accounts, the existence of which would have alerted the Department to the appellant's business activities, was conceded by the appellant in his evidence. As a matter of fact, statements and representations made by the appellant on 12 and 13 August 1986 which contributed to the making of the overpayments were untrue. For the purpose of sub.s.246(1), in my opinion a statement or representation which is untrue in fact, is "false". Liability to the Commonwealth for overpayment of benefit is not dependent on proof that the statement or representation was deliberately or intentionally untrue. I respectfully agree with the reasoning of the Tribunal in Re Pepi and Director-General of Social Security (1984) 7 ALD 155 at 158, (The Hon. J B K Williams):

"The sub-section is one directed to the recovery in a court of

competent jurisdiction of a debt by civil process. In this

respect, it is to be contrasted with s.138, which creates criminal

offences punishable by fine or imprisonment. In addition, a

person convicted under that section may be ordered to pay to the

Commonwealth an amount equal to any amount paid by way of pension,

allowance, endowment or benefit in consequence of the act, failure

or omission in respect of which he was convicted.

Criminal proceedings under s 138 would, it appears, involve the

establishment of mens rea on the part of the person charged (see

Cameron v Holt [1980] HCA 5; (1980) 28 ALR 490).

It appears to me that s 140(1) (now s.246(1)) is not confined in

its operation to those cases in which a criminal offence of making

a false or misleading statement may be established. Section

140(1) does not, in its literal terms, make reference to the

author of the false statement or representation, nor does it

connect the person to whom, or on whose account, money is paid in

consequence of the false statement or representation with the

author of that statement. The policy underlying the sub-section

appears to me to be the protection of revenue against unjustified

payments out of public funds made in consequence of false

information supplied to the administering Department."

29. For these reasons I consider the appeal should be dismissed.

30. This conclusion makes it strictly unnecessary to consider a further submission made by counsel for the respondent. However in deference to the lengthy argument of counsel I shall do so briefly. Counsel argued that a failure by the Tribunal to comply with sub.s.43(2B) constitutes an error of law only if there is no material to support the decision, and then, that the remedy for an inadequate statement of reasons is not to set aside the decision, but to order that proper reasons be given. The submission is directly opposed to the decision of the Full Court of the Federal Court in Dornan v Riordan (1990) 24 FCR 564. However counsel contended that Dornan v Riordan is inconsistent with Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 where it was said:

"A decision does not 'involve' an error of law unless the error is

material to the decision in the sense that it contributes to it so

that, but for the error, the decision would have been, or might have

been, different." (Per Mason C.J. at 353. See also Toohey and

Gaudron JJ. at 384).

31. In my view the submission is misconceived. The passages from the judgments in Bond on which it is based concern the circumstances where an error of law will constitute a ground for review under sub.s.5(1) of the Administrative Decisions (Judicial Review) Act 1977. By the express terms of para.5(1)(f) a ground for review will exist where "the decision involved an error of law". An error of law is not involved in a decision if it did not contribute to the decision. The statements of principle concerning para.5(1)(f) made by members of the High Court cannot be taken out of context and applied in the way counsel contends to sub.s.43(2B) of the AAT Act. Sub-section 43(2B) is not concerned with an error of law involved in the decision itself, but with the administrative process. I detect no conflict between Bond and Dornan v Riordan.