Re Secretary, Department of Social Security v Bill Thomas Dellis [1990] FCA 349 (7 September 1990)

FEDERAL COURT OF AUSTRALIA

Re: SECRETARY, DEPARTMENT OF SOCIAL SECURITY
And: BILL THOMAS DELLIS
No. S G56 of 1990
FED No. 483
Social Services

COURT

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Neaves J.(1)

CATCHWORDS

Social Services: Unemployment benefit - Decision to recover alleged overpayment - Recipient working as a disc jockey in return for certain weekly payments - Moneys expended on purchasing musical records - Whether recipient in receipt of "income" as defined - Belief of recipient that moneys not "income" irrelevant.

Social Security Act 1947 (Cth), s.181(2)

HEARING

CANBERRA
7:9:1990

Counsel for the applicant : Ms C.M. Branson

Solicitor for the applicant : Australian Government Solicitor

Counsel for the respondent : Mr Niarchos

Solicitors for the respondent : Niarchos and Co.

ORDER

The decision of the Administrative Appeals Tribunal given on 7 June 1990 be set aside.

There be no order as to the costs of this application.

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

DECISION

The Secretary to the Department of Social Security ("the applicant") has applied to the Court by way of appeal pursuant to sub-s.44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Administrative Appeals Tribunal ("the Tribunal") constituted by a Senior Member given on 7 June 1990. By that decision the Tribunal set aside a decision made by a delegate of the applicant on 20 August 1987 that, in consequence of false statements made by Bill Thomas Dellis ("the respondent"), amounts by way of unemployment benefit had been paid to the respondent in respect of the period from 17 October 1985 to 18 February 1986 (both dates inclusive) which would not have been paid but for the false statements and that those amounts should be recovered pursuant to what had become, by virtue of the re-numbering effected on 2 July 1987 by s.50 of the Social Security Amendment Act 1987 (Cth), sub-s.181(1) of the Social Security Act 1947 (Cth). The amount involved is said to be $607.64. It appears that, prior to the matter being determined by the Tribunal, that amount had, pursuant to sub-s.181(2) of the Act, been recovered by deduction from amounts otherwise due to the respondent by way of unemployment benefit in respect of subsequent periods. In the light of this, the Tribunal indicated in its reasons for decision that, in view the conclusion to which it had come, the amount so deducted should be paid to the respondent.

2. When the application came on for hearing, the Court was informed by counsel for the applicant that the applicant did not now seek to recover the amount of $607.64 from the respondent. Notwithstanding this, counsel pressed the Court to continue with the hearing of the application as it was said to involve an important principle of law, a definitive opinion on which would be of relevance to other matters before, or likely to come before, the Tribunal. The Court was also informed that the applicant had agreed not to seek an order for costs against the respondent in the event of the application being successful and had agreed to pay the respondent's costs of the application in any event.

3. Before proceeding further, reference should be made to other relevant provisions of the Social Security Act. I shall refer to those provisions by the numbers, and in the form in which they stood, at the time the amounts in question were paid by way of unemployment benefit.

4. Part VII of the Act provided for the payment of unemployment benefits, that Part comprising ss.106-133B inclusive. Section 107 provided, inter alia, that a person was qualified to receive an unemployment benefit in respect of a period only if he satisfied the Secretary to the Department of Social Security that throughout that period he was unemployed (s.107(1)(c)). The rate of unemployment benefit was prescribed by s.112. Section 114 provided, so far as material, that where an unemployment benefit was payable to a person whose income exceeded $20 per week, the rate per week of that benefit was to be reduced -

(a) where the income of the person did not exceed
$70 per week - by one-half of the amount by which that
income exceeded $20 per week; or
(b) in any other case - by an amount equal to the sum
of $25 and the amount by which that income exceeded $70
per week.

"Income", in relation to a person, was relevantly defined in s.6 to mean personal earnings, moneys, valuable consideration or profits earned, derived or received by that person for the person's own use or benefit by any means from any source whatsoever, within or outside Australia.

5. Section 135TE, so far as material, provided:

"135TE. (1) ...
(2) The Secretary may give, personally or by post, to any person to
whom or on behalf of whom a pension, benefit or allowance is being
paid under this Act a notice requiring that person to furnish to the
Department or to the officer specified in the notice, within the period
specified in the notice, a statement, in accordance with a form approved
by the Secretary, relating to any matter that might affect the payment to
that person of the pension, benefit or allowance.
(3) An event or change of circumstances shall not be specified in a
notice in pursuance of sub-section (1) unless the occurrence of that
event or change of circumstances might effect the payment of a pension,
benefit or allowance.
...
(5) A person shall not -
(a) refuse or fail to comply with a notice under sub-section
(1) or (2) to the extent that the person is capable of
complying with it; or
(b) in purported compliance with such a notice,
knowingly furnish information that is false or misleading
in a material particular.
Penalty for any contravention of this sub-section: $500."

6. Sub-section 181(1), formerly sub-s.140(1), provided:

"(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."

7. It is common ground between the parties that in respect of the period from 17 October 1985 to 18 February 1986 (both dates inclusive) the respondent received amounts by way of unemployment benefit. It is also common ground that in respect of each fortnightly period beginning with the period that began on 10 October 1985 and ending with the period that ended on 26 February 1986, the respondent was required to, and did complete and sign a form headed "Application for Continuation of Unemployment Benefit", declaring in each case that the information supplied was true and correct. On each of those forms the respondent answered "No" to the question, identified as part of Question 5: "Did you ... do any work for which you ... have been or will be paid?" On each occasion the respondent also answered "No" to that part of Question 6 which asked: "Did you ... get any other income?" Having answered those parts of Questions 5 and 6 in the negative, the respondent did not answer other questions (part of Question 5) designed to elicit information as to the name of the employer, the type of work, the date of employment and the total gross payments received or other questions (part of Question 6) designed to elicit details of any other income which might have been disclosed.

8. It is not in dispute that between 18 October 1985 and 15 February 1986 the respondent "was working as a disc jockey at Rio International", a hotel business being carried on at premises known as 111 Hindley Street, Adelaide and managed by a Mr Tony Tropeano, and that the arrangement made between the respondent and Mr Tropeano was that, while he would have the use of the equipment installed at the premises in Hindley Street, the respondent would be responsible for providing the musical recordings to be played in the course of his duties. It is also not in dispute that, in respect of the period he was working at Rio International, the respondent received certain sums of money, sometimes by cheque and sometimes by cash.

9. The material before the Tribunal was largely documentary, consisting of various documents from the departmental file, a judgment given in the Adelaide Magistrates Court on 12 July 1988 dismissing certain criminal proceedings against the respondent and a statutory declaration by Mr Tropeano which was supported by copies of material extracted from the records of Rio International.

10. The essential elements prescribed by sub-s.181(1) of the Social Security Act for the recovery of an alleged overpayment of unemployment benefit in a case such as this are -

(a) that a false statement or representation has been made; and
(b) that an amount has been paid by way of unemployment
benefit which would not have been paid but for the false
statement or representation.

To establish the second of those elements, it is necessary to show -

(c) that during the period in respect of which unemployment benefit
was paid, the person received "income" as defined in the Act; and
(d) that the rate of that income per week was
such that its receipt would have operated to reduce the rate of
unemployment benefit otherwise payable.

11. The Tribunal, in par.10 of its reasons, identified the issue which it needed to consider as being "whether or not (the respondent) received 'income' within the meaning of the Act during the period he was receiving Unemployment Benefit, which he failed to disclose". That was the only issue which it considered, no conclusions being expressed in relation to any of the other matters referred to above.

12. Apart from certain introductory material, the reasons given by the Tribunal for its decision consist almost entirely of a recitation of some of the oral evidence given by the respondent. Little is recorded by way of findings of fact. In particular, the Tribunal made no findings as to the terms of the arrangement between Mr Tropeano and the respondent, as to the amount of the remuneration agreed to be paid to the respondent or the amount in fact paid to him, or as to the amounts which the respondent expended on the purchase of musical recordings for use in carrying out his duties at Rio International. It is to be noted that, although the respondent's oral evidence, which was unsupported by any records, as to the amounts he received conflicted with what was shown in the records kept by Rio International, those records showing that the respondent received sums in excess of those which he acknowledged, the Tribunal did not resolve that conflict. A reading of the transcript record of the respondent's oral evidence also discloses internal inconsistencies between some of his answers but the Tribunal did not make any findings in relation thereto. It must be said, however, that the Tribunal's task was not made easier by the way in which the hearing was conducted. Mr Tropeano was not called to give oral evidence and he was not required to attend for cross-examination upon his statutory declaration, a circumstance perhaps explicable by the fact that the present respondent was not legally represented before the Tribunal.

13. The conclusion reached by the Tribunal on the question which it had identified as being the issue which it needed to consider and the reasons given for reaching that conclusion are set out in pars.11-13 of the reasons for its decision in the following terms:

"11. The Tribunal has been favourably impressed by the
applicant's evidence, and feels that the applicant, in his enthusiasm
to become established as a disc jockey, really did consider that the
payment he received was to be used to provide the records he
needed for the job. The Tribunal accepts the explanation of the
applicant. In addition, D.H. Peek, Esq., Acting Stipendiary
Magistrate, when handing down his judgment in the Magistrates
Court (Exhibit A1), stated that he was favourably impressed by the
defendant's demeanour and credibility in the witness box, and
considered it to be a reasonable possibility that he honestly believed
that the answers he gave were correct, and, as such, acquitted him
of all ten counts alleging breaches of s.138(1)(d) of the Act.
12. The Tribunal in arriving at its decision has taken into account
the evidence as a whole. In so doing it has considered and applied
the principle set out in a number of decisions of the Federal Court
and the Administrative Appeals Tribunal. In particular see: Re
Ward and Secretary, Department of Social Security (1984) 7 ALN
N66 and Director-General of Social Services v Hales [1983] FCA 81; (1981) 47
ALR 281.
13. In these circumstances the Tribunal believes and so finds
that the applicant did not receive 'income' within the meaning of the
Act. He therefore cannot be said to have failed to disclose this
income pursuant to s.163(2) of the Act, and, hence an overpayment
cannot be said to have occurred and be recoverable pursuant to sub-
section 181(1) of the Act."

The references to the applicant and the defendant are, of course, references to the respondent to the present application. The reference to s.163(2) is a reference to the re-numbered s.135TE(2).

14. The Tribunal clearly applied an inappropriate test by which to determine the question which it had posed for itself, namely whether the respondent had received income within the meaning of that expression in the Act during the relevant period in respect of which he had admittedly received unemployment benefit. The question whether certain payments answer the description of "income" as defined is to be answered by making findings of fact as to the circumstances in which the payments were received and the consideration for them and objectively assessing those facts against the requirements of the statutory definition. It cannot be correct to determine the question, as the Tribunal did in this case, by reference to the belief of the recipient that the payments are properly to be characterised as falling outside the statutory definition.

15. Counsel for the respondent valiantly sought to support the Tribunal's decision on the basis that the Tribunal, independently of its finding that the respondent did not receive "income" within the meaning of the Act, had found that the respondent had made no false statement within the meaning of sub-s.181(1). I am unable so to regard the Tribunal's decision for at least two reasons. Firstly, the Tribunal's conclusion that the respondent could not be said to have failed to disclose his income was said to follow from the conclusion that he did not receive "income" within the meaning of the Act, a conclusion arrived at by a process of reasoning which cannot be supported. Secondly, and more significantly, the Tribunal did not expressly deal with the question whether the answer which the respondent gave to that part of Question 5 on each form which asked whether in the relevant period he did any work for which he had been or would be paid was false. On a reading of the respondent's oral evidence, the falsity of the answers given on each occasion to that part of the question can hardly be denied.

16. The decision of the Tribunal must, therefore, be set aside. In the ordinary course a consequential order would be made remitting the matter for re-hearing and determination according to law. However, in view of the applicant's statement that recovery of the amount in question is no longer sought, such an order is unnecessary. As the applicant has not sought an order for costs against the respondent, the Court makes no order in that regard.