Error of law/making a decision without evidence
18 Mr Yao submitted that the Senior Member erred by selectively quoting from Re Williams and Australian Electoral Commission (1995) 38 ALD 366 ("Williams"). He also argued that the AAT erred because it refused to follow a judgment of this Court to which he and the Secretary drew the Senior Member's attention. That was Croker v Secretary, Department of Education, Employment and Workplace Relations (No 3) [2008] FCA 1473. He complained, too, that the Senior Member made his decision without evidence, specifically, that he had no evidence that the applicant had been paid during the eight-week preclusion period and that there no longer exists any mechanism by which the eight-week period payments can be recovered from him.
19 In Williams the AAT held at 374:
[38] It is difficult to categorise this case into any of the accepted heads of vexatiousness. Even the collateral purpose'' head does not sit easily with a situation where the applicant genuinely believes in the legitimacy of the collateral object which he is seeking. Perhaps this provides a good reason for not stultifying the situations in which proceedings will be found to be vexatious by requiring that they fall within pre-ordained categories. At the same time, it is important to re-affirm that the power to dismiss under this head must be exercised cautiously and sparingly. [39] In this case the outcome of the proceedings, whether successful to the applicant or otherwise will be devoid of any practical effect. Nor is there any reputation at stake or face'' to be saved. The interest which gave the applicant standing to commence the proceedings has long since ceased to exist. He has no legitimate interest in pursuing them further. Accordingly, in our opinion, while the proceedings were not instituted vexatiously, they have become vexatious. They have been thus ever since 22 December 1992, when the only interest of the applicant which could possibly have been affected by the disputed decision, ceased to exist. It would impose unnecessary expense and hardship upon the respondent and the Greens if the case were to proceed further. Accordingly, we consider that the application should be dismissed as requested.
(Emphasis added)
20 Mr Yao pointed to the AAT's failure to quote these passages in their entirety and, in particular, to cite or otherwise refer to the sentences emboldened above. Alternatively, he claims the passages were "chunked by Auscript", which I took to mean removed by Auscript from the transcript.
21 There is no question that the proceeding was not brought frivolously or vexatiously. At the time the applicant applied for review to the AAT he had a legitimate interest to pursue. He identified that interest in his written submissions in this way (without alteration):
Those legitimate interests included set aside the decisions of SSAT applying three participation failures and applying eight week non-payment period to the applicant.
22 But s 42B of the AAT Act empowers the AAT to dismiss an application at any stage of the proceedings if it is satisfied that the application is frivolous or vexatious. In Williams the AAT held that it was permissible for it to take into account matters that had arisen since the application for review had been made. The question is not whether the proceeding has been instituted frivolously or vexatiously but whether it is in fact frivolous or vexatious. In Fearnley v Australian Fisheries Management Authority [2006] FCAFC 3 ("Fearnley") the Full Court approved Williams. Emmett J held at [97]:
Where an interest that gives an applicant standing to commence a proceeding in the Tribunal ceases to exist, that applicant has no interest in pursuing the proceeding further. Although such a proceeding might not be vexatious when instituted, it becomes vexatious when no legitimate purpose can be achieved by continuing with the proceeding (see Re Williams and Australian Electoral Commission (1995) 38 ALD 366).
23 Williams is not authority for the narrower proposition (as Mr Yao seemed to think) that a proceeding will not be frivolous or vexatious if a party's reputation is at stake or "face to be saved". Even if it were, the principle I am required to apply is the principle set out in Fearnley.
24 Mr Yao relies on Croker, not for anything established by the judgment, but for an observation of the AAT (made by the same senior member) that was extracted in the judgment:
The difficulty in this matter is that the tribunal can only review decisions of the Social Security Appeals Tribunal. As set out in that Decision, the question before the Social Security Appeals Tribunal was the decision on 8 November 2007 to require the Applicant to enter into the Newstart Agreement. The question regarding the terms of that agreement, and whether it was a suitable agreement for the Applicant, have never been considered either by an Authorised Review Officer or by the Social Security Appeals Tribunal, and, consequently, are not before me today. The only question before me is whether the Applicant could be required to enter into the Newstart Activity Agreement, and what is abundantly clear from subsection (6) [of] section 605 of the Social Security Act 1991 is that he could be so required. In these circumstances, therefore, the decision under Review is affirmed.
25 Mr Yao submitted that the question whether the eight-week non-payment period cannot be deducted from the applicant's Austudy was never considered by an authorised review officer or by the SSAT and therefore could not be considered by the AAT. The submission, however, is misconceived. The AAT was considering the utility of the appeal in the context of its jurisdiction to dismiss proceedings under s 42B(1) of the AAT Act. It was relevant to that issue to consider whether the debt could be recovered through a deduction from the applicant's Austudy because that, in turn, was relevant to whether Mr Yao had a legitimate interest in pursuing the proceeding. Nothing said in Croker bears upon this point.
26 The alternative submission can be quickly disposed of. There are two answers to it. First, there is no evidence that Auscript removed passages from the transcript and there is no reason why it would do so. Mr Yao filed an affidavit affirmed by him on 13 September 2010 to which he referred in his written submissions but which he did not read on the hearing. In it he referred to two alleged omissions and mistakes he claims were made in another case (in the Federal Magistrates Court) in which he was a party. But he did not there suggest that the absence of the references to the extended passages in Williams was an omission or mistake on the part of Auscript. Secondly, Mr Yao (and the Secretary's solicitor) signed a certificate of correctness, which appears in the appeal book, certifying that he (and the solicitor) had examined the appeal papers (which include the transcript of the reasons) and they are correct.
27 The second aspect of this ground is the complaint that the AAT made two factual findings without evidence. One was that the applicant had been paid during the eight-week non-payment period. As the Secretary accepted in this Court, Mr Yao's complaint is well made. Not only was there no evidence, but Mr Yao disputed the submission that the Secretary's solicitor made. In those circumstances the AAT should not have made the finding. The Secretary recognised the problem and tendered evidence on the appeal to prove what its advocate had submitted and what the AAT accepted as fact.
28 Section 44 of the AAT Act relevantly provides:
Federal Court may make findings of fact
(7) If a party to a proceeding before the Tribunal appeals to the Federal Court of Australia under subsection (1), the Court may make findings of fact if:
(a) the findings of fact are not inconsistent with findings of fact made by the Tribunal (other than findings made by the Tribunal as the result of an error of law); and
(b) it appears to the Court that it is convenient for the Court to make the findings of fact, having regard to:
(i) the extent (if any) to which it is necessary for facts to be found; and
(ii) the means by which those facts might be established; and
(iii) the expeditious and efficient resolution of the whole of the matter to which the proceeding before the Tribunal relates; and
(iv) the relative expense to the parties of the Court, rather than the Tribunal, making the findings of fact; and
(v) the relative delay to the parties of the Court, rather than the Tribunal, making the findings of fact; and
(vi) whether any of the parties considers that it is appropriate for the Court, rather than the Tribunal, to make the findings of fact; and
(vii) such other matters (if any) as the Court considers relevant.
(8) For the purposes of making findings of fact under subsection (7), the Federal Court of Australia may:
(a) have regard to the evidence given in the proceeding before the Tribunal; and
(b) receive further evidence.
29 The evidence consisted of an affidavit from Andrew Wingrave, a policy officer with the Compliance Framework Team of Centrelink. Mr Wingrave testified that he had accessed the Centrelink database that records details of entitlements and payments to Centrelink customers. Annexed to the affidavit were computerised payment records relating to Mr Yao showing, amongst other things, that at no time since Centrelink made its decision to impose the eight-week non-payment period was Mr Yao in fact not paid his allowance each fortnight. The records also disclosed some earlier payments of arrears relating to earlier periods in which he had apparently not been paid. Mr Yao ultimately accepted that the records produced by Mr Wingrave accurately recorded the payments made to him. That evidence established that at all material times Mr Yao had been paid the newstart allowance to which he was entitled. It is unquestionably convenient to make a finding of fact to this effect, which would certainly not be inconsistent with the finding made by the AAT. The Secretary submitted that it was appropriate for the Court to do so. To require the matter to return to the AAT for it to make the same factual findings would be an unjustifiable burden on both parties. For this Court to make the relevant factual findings is an expeditious and efficient means of resolving the matter. Having regard to the evidence of Mr Wingrave I therefore find that the Secretary has not in fact imposed any penalty on Mr Yao and, in particular, has not withheld from him any payment of newstart allowance for eight weeks, the subject of the original Centrelink decision.
30 The second factual finding about which Mr Yao complained was that "there was apparently a fortnight period where some deductions were made, but they have been reimbursed". This finding is strictly irrelevant because the only decision properly before the AAT was the 11 August 2008 decision to impose the eight-week penalty. It only became an issue because Mr Yao raised it in response to the Secretary's assertion that he had always been paid. Nevertheless, I note that the evidence of Mr Wingrave also establishes that there was a payment of arrears in the sum of $437.10 made to Mr Yao for the payment of an allowance for the period from 14 June 2008 to 27 June 2008, which appears to be the "fortnight period" in question.
31 After Mr Yao applied to the AAT for a review of the SSAT's decision and before the AAT hearing, the Social Security Act was amended: Social Security Legislation Amendment (Employment Services Reform) Act 2009 (Cth) ("the amending Act"). The amending Act consolidated the compliance provisions for a number of payments for which there are participation requirements, such as newstart. It repealed subdivisions F and FA of Division 1 of Part 2.12 of the Social Security Act (see Sch 1 Pt 2 cl 23) which contained the provision permitting the imposition of an eight-week non-payment period for repeated newstart participation failures. Schedule 1 Pt 3 cl 56(1) provides that the amendments made by the Schedule only apply to failures, voluntary acts or misconduct committed after the Schedule commences. The Schedule commenced on 1 July 2009. Schedule 1 Pt 3 cl 56(2) provides (in effect and amongst other things) that in cases where a newstart allowance is not payable to a person under s 629 immediately before the commencement of the Schedule, the Social Security Act in force immediately before the commencement continues to apply. Ms Watson, who appeared for the Secretary, relied upon the amendments to show that the eight-week non-payment period could not be applied against any future newstart payment, a concern voiced by Mr Yao. It is apparent that, if Mr Yao were to receive a newstart allowance at some point in the future, the new provisions would apply. Ms Watson also tried to exclude the transitional provisions by submitting that Mr Yao's newstart allowance was payable immediately before 1 July 2009; indeed it was paid, so that the effect of the legislative changes is that the provisions permitting the imposition of an eight-week non-payment period could not be applied. There is, however, a problem with the submission. The fact that the allowance was paid does not necessarily mean that it was payable.
32 Once the SSAT determined that the original decision to impose the eight-week non-payment penalty was the correct one, it should have been applied to Mr Yao's payment unless a stay of that decision was sought. As I said, Mr Yao did not seek a stay of that decision but the evidence shows that he continued to be paid. This means that, for an eight week period beginning more or less from the date of the SSAT decision, Mr Yao was paid when he was not in fact entitled to be paid. As the SSAT decision was delivered on 2 March 2009, this eight week period would have expired in May 2009. At that point, assuming Mr Yao did not commit any more participation failures, his newstart allowance would have become payable again and would therefore have been payable immediately before 1 July 2009 when the amending legislation came into force. I therefore accept Ms Watson's submission that the transitional provisions were inapplicable.
33 However, as Ms Watson pointed out, it also means that the payments made for the eight-week period after the SSAT decision qualified as a debt due to the Commonwealth according to s 1223 of the Social Security Act, which provides that, if a social security payment is made and the person is not entitled to that payment, the amount of payment is a debt due to the Commonwealth. Still, the position the Secretary took was that the debt would be waived.
34 Ms Watson told the Court that the payments were made on the basis of a mistaken belief that Mr Yao had obtained a stay of the SSAT decision. Section 1237A of the Social Security Act provides:
1237A Waiver of debt arising from error
Administrative error
(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
(1A) Subsection (1) only applies if:
(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
35 Ms Watson said she was instructed to concede that both of the conditions in subs (1A) are satisfied. She also conceded that the amount was paid solely due to an administrative error and that Mr Yao received the payments in good faith. In the circumstances, the Secretary is obliged to waive the debt.
36 Mr Yao was concerned that the Social Security Act might be amended in the future and he had no guarantee that the Secretary would not at a later stage try to recover the debt. That concern would not affect the exercise of the power under s 42B(1). A similar submission was made and rejected in the AAT in Fearnley and the AAT's decision was not disturbed on appeal.
37 The AAT's other "finding" that the eight-week non-payment period cannot be deducted from Austudy was not a finding of fact. It was a restatement of what Ms Sharma, the Secretary's advocate, had told the tribunal. Still, it appears that the AAT accepted it and my attention was not drawn to any provision of the current legislation that would permit the eight-week non-payment period of the newstart allowance to be taken into account in the payment of Austudy. In fact, as Ms Watson submitted, under the new legislation Austudy is not a "participation payment" to which the new compliance provisions apply. See Schedule 1, cl 1 of the Social Security Administration Act.
38 In the result, I am satisfied that the proceeding before the AAT would have been devoid of any practical effect.
39 Making factual findings without evidence does not constitute a breach of natural justice. But Mr Yao submitted orally that there was a breach of natural justice for a different reason in that his attention was not drawn to the decision in Williams and he was denied an opportunity to be heard on whether it should be applied in his case. A perusal of the transcript tends to bear out his submission. Nevertheless, the Senior Member did raise directly with Mr Yao his concern that the disposition of the application would be futile. The transcript records the following exchange:
MR ALLEN: ...It seems to me that whatever happens in this matter it's just - it doesn't advance your situation one way or the other.
MS SHARMA: What to do---
MR ALLEN: Would you mind, please, miss - thank you. You see, it comes down to this. If I set aside the decision under review you gain nothing because the money has never been taken from you. No please don't interrupt. Please don't interrupt me. If I affirm the decision under review you lose nothing because Centrelink can't recover the money.
40 Unfortunately, Mr Yao's response to the Senior Member's observation is unintelligible. It was in these terms:
MR YAO: Well, I haven't seen legal quantity to what Ms Sharma have the potentially why the Centrelink the payment out, recover that and - actually, actually that's - they're already outside the two weeks of payment.
41 The transcript then records the following exchanges.
MR ALLEN: Yes, you've got the money back Ms Sharma tells me. It's been refunded to you.
MS SHARMA: Yes, Senior Member.
MR ALLEN: Yes.
MR YAO: No, I haven't seen it, I haven't got it. And -
MR ALLEN: Well, you'll get. Ms Sharma said that she's been able to trace the money and show you that it has in fact been paid into your bank account. Now, Mr Yao -
MR YAO: Yes.
MR ALLEN: --there are certain matters of law that apply to this.
42 The Senior Member did not proceed to inform Mr Yao what those matters of law were.
43 I am satisfied that Mr Yao's attention was not drawn to the decision in Williams or to the terms of s 42B(1) of the AAT Act (and it would have been preferable for the AAT to have done so). But I am also satisfied he was given an opportunity to be heard on the matter that troubled the Senior Member and the critical issue or factor on which the decision turned, namely, the utility of proceeding with the application. For this reason I am not satisfied that Mr Yao was denied natural justice. See Kioa v West (1985) 159 CLR 550 at 587.