Re Secretary, Department of Community Services and Health v Andrew Theologidis [1991] FCA 667 (31 December 1991)

FEDERAL COURT OF AUSTRALIA

Re: SECRETARY, DEPARTMENT OF COMMUNITY SERVICES AND HEALTH
And: ANDREW THEOLOGIDIS
No. Q G164 of 1990
FED No. 909
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Spender J.(1)

CATCHWORDS

Administrative Law - First Home Owners Act 1983 - AAT's finding that recipient of assistance had never resided and did not intend to reside within a reasonable time in dwelling - whether such person can be deemed to be "prescribed person" under s.5 - recovery of past assistance under s.37(6A) - whether to be remitted to AAT or primary decision affirmed.

First Home Owners Act 1983, ss.3, 5, 14(2), 27(2), 37

Administrative Appeals Tribunal Act 1975, s.44

HEARING

BRISBANE
31:12:1991

Counsel for the Appellant: Mrs H. Hoare

Solicitors for the Appellant: Australian Government Solicitor
The Respondent appeared in person

ORDER

The decision of the Administrative Appeals Tribunal of 7 December 1990 be set aside, and the decision of the delegate of the Secretary, Department of Community Services and Health of 19 January 1989 be affirmed.

The respondent pay the costs of the appeal.

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

DECISION

This is an appeal by the Secretary, Department of Community Services and Health from a decision of the Administrative Appeals Tribunal ("the Tribunal") given on 7 December 1990 whereby the Tribunal set aside a decision made by a delegate of the Secretary on 19 January 1989 which affirmed a decision made on 20 May 1987 that Mr Andrew Theologidis' application for assistance under the First Home Owners Act 1983 (the "Act") was rejected.

2. The basis for the rejection was that Mr Theologidis had never resided in the house to which the assistance related as his principal place of residence, nor did he intend to reside in that house within a reasonable time. As a consequence of that decision, a delegate of the Secretary had advised Mr Theologidis that all assistance that had been paid to him under the Act, totalling $3,125, was required to be repaid.

3. On 30 April 1984 Mr Theologidis applied for assistance under the Act. Three days earlier, on 27 April 1984, Mr Theologidis had entered into a contract for the purchase of a dwelling house and land at 60 Longland Street, Redcliffe. The vendors were Solon and Athina Theo, Mr Theologidis' parents. Mr Theologidis was registered as the proprietor of the land on 6 August 1984 after the transfer was produced on 25 July 1984. A deposit of $10,000 was acknowledged by the vendors and the balance of the purchase price, namely $45,000, was paid by way of funds advanced by the National Australia Bank, Margate Branch. On 1 May 1984, the National Australia Bank formally approved a personal loan of $20,000 for a term of seven years and an instalment loan of $25,000 for a term of ten years. Repayments on both loans totalled $792.43 per calendar month. Security was to be provided by way of a registered first mortgage over the subject property and a guarantee from Mr Theologidis' parents supported by a mortgage over their property at Kipparing Street, Caboolture.

4. A budget had been prepared in connection with the loan application by Mr Theologidis and that budget contained an item for $434 per month on account of rent from the house at Longland Street. In the absence of that rental income, Mr Theologidis' capacity to service the loan might be questioned as his net monthly income was disclosed in the budget as $866, which was merely $74 per month greater than the monthly loan repayments.

5. In respect of the income tax year 1984/85, Mr Andrew Theologidis declared 60 Longland Street, Redcliffe as a rental property, it first becoming income producing on 7 July 1984. That date is twelve days after the conveyance settled. On that tax return, Mr Theologidis' residential address is shown as 59 Bristol Street, West End, 4101.

6. On 6 September 1984, Mr Theologidis was granted assistance under the Act.

7. On 20 May 1987, Andrew Theologidis was advised by a delegate of the Secretary that his file had been examined, resulting in a review of the decision to pay him assistance with respect to the dwelling at 60 Longland Street, Redcliffe. The letter communicating this advice read, in part:

"Section 5 of the Act provides that where the Secretary is
satisfied that a person who has purchased or built a home has not
resided in the home as his or her principal place of residence and
does not intend to reside within a reasonable time, the Secretary
may direct that person is not a 'prescribed person'. Assistance
may not be paid to a person who is not a prescribed person.
I have considered all the information on file and it is felt that
you have never resided in the dwelling as your principal place of
residence and that your intention to reside in the dwelling does
not comply with the requirements to reside 'within a reasonable
time' for the purposes of the Act. I must now reject your
application for assistance.
As a result of this rejection, I must inform you that all
assistance paid to you must now be repaid to this Department.
As shown on the enclosed copy of your payment history, the amount
to be repaid is $3,125 comprising:
1. Lump Sum payment $2,500
2. Monthly Subsidy Payment $ 625
paid to your A/c No. _____
TOTAL $3,125
_____ "

8. On 25 May 1987, Mr Theologidis wrote to the Secretary saying, inter alia, "I categorically repudiate your 'findings' and formally appeal accordingly."

9. On 19 January 1989, a delegate of the Secretary wrote to Mr Theologidis, referring to the representations that had been made by Mr Theologidis concerning his application for assistance under the Act and advising that the representations had been treated as a request under s.27(2) of the Act for a reconsideration of the original decision. The delegate also advised that "I am completely satisfied that I should affirm the original decision".

10. That letter attached comprehensive reasons for that decision also dated 19 January 1989. After extensively setting out the history of the matter and the evidence, the delegate of the Secretary stated:

"... I am satisfied, beyond any shadow of a doubt that Mr
Theologidis has never resided in, at the time he purchased, and
even now, does not intend within a reasonable time to reside in,
the dwelling at 60 Longland Street, Redcliffe as his principal
place of residence.
I therefore, in accordance with the discretion vested in me
pursuant to s.5, direct that for the purposes of the Act Andrew
Theologidis is deemed not to be a prescribed person in relation to
the dwelling at 60 Longland Street, Redcliffe."

In the letter accompanying the reasons, the delegate indicated that he had determined that:

"iii) as a consequence of being a person against whom a direction
under section 5 is in force, you are not a person to whom
section 14(1) of the Act applies;
iv) because section 14(1) does not apply to you, you are not a
'prescribed person' for the purposes of the Act, and you are
not, therefore, a person who may make application for
assistance under section 15 of the Act;
v) because you are not entitled to apply for assistance, but
have in fact been paid assistance, the assistance so paid to
you is, pursuant to section 37, an amount overpaid;
vi) the circumstances surrounding the overpayment are such that
I have declined to exercise my discretions under sections 37
of (sic) 37A, thereby rendering the overpayment recoverable
in full and payable forthwith."

11. On 10 February 1989, Mr Theologidis lodged an application for a review of the decision with the Tribunal, seeking review of the decision made on 19 January 1989 which affirmed the decision of 20 May 1987. The appeal was heard by the Tribunal over several days in September 1989. There were serious factual disputes requiring resolution, including whether Mr Andrew Theologidis had ever resided in the house at 60 Longland Street, Redcliffe as his principal place of residence, and if he had not, whether he had had any intention to reside in that house within the meaning of the Act.

12. After a detailed recital of the factual evidence before the Tribunal, the Tribunal made a number of findings. On the question of whether the applicant moved into the house shortly after settlement, the Tribunal concluded that the applicant "did not reside in the house after he purchased it". On the question of whether or not Mr Theologidis lived in the house prior to 1989, the Tribunal preferred the evidence of two witnesses to that of the applicant and concluded that "the applicant did not live in the house from the time he purchased it in 1984 until 1989". The Tribunal further expressed crucial findings of fact, in paragraph 38 of its reasons, in the following terms:

"We are satisfied that he lived in it from June or July 1989 until
the date of the hearing. Although presented with an electricity
account and electoral roll showing that the applicant had given
the address of the dwelling as his address, we prefer the evidence
of Mr and Mrs Hobbin that they occupied the house until sometime
towards the end of June 1989. On the applicant's evidence as to
his lifestyle as a 'single bloke', we are also satisfied that he
had not 'settled down' and, even though he was living in the house
at the date of the hearing, contemplated moving out of it to go,
perhaps, to Mt Isa. Our view that he was unlikely to stay in the
house was also underlined by the fact that he was still working at
Albion and had, for the time of his apprenticeship found it too
inconvenient to commute between Albion and Redcliffe. Equally, we
are satisfied that, at some stage, presumably when he married, he
did intend to live in the house permanently."

13. Notwithstanding these findings, the Tribunal concluded that the decision under review should be set aside because of the view it took of s.5 of the Act.

14. The Act is designed to assist people to acquire their first home (ss.3, 14(2)). The Full Court of the Federal Court (Gummow, Einfeld and Heerey JJ.) in Secretary, Department of Community Services and Health v Paul Theologidis (unreported, 13 December 1991) said, at page 1 of its reasons:

"As might have been expected, the legislative scheme includes
provisions to guard against the obvious potential for abuse of
such a scheme by persons who might seek to use its financial
benefits for investment in income producing residential property."

Section 5 of the Act provides:

"Where a person is a prescribed person in relation to a dwelling,
and the Secretary is satisfied that the person has not resided in
the dwelling as his principal place of residence and does not
intend so to reside within a reasonable time, the Secretary shall
direct that, for the purposes of this Act, the person is to be
deemed not to be a prescribed person in relation to the dwelling."

Section 5 was amended with effect from 26 December 1988 by s.4 of the Community Services and Health Legislation Amendment Act (No.2) 1988 ("the amending Act"). This amendment substituted "shall" for "may in his discretion".

15. Section 37 provides for adjustments of amounts of assistance and for recovery of moneys which have been overpaid. Subsection (1) provides:

"Where an amount of assistance has been paid to an applicant or
applicants and the whole or part of the amount should not have
been paid, the whole, or that part, as the case may be, of the
amount is referred to in this section as an amount overpaid, and
the succeeding provisions of this section apply."

Subsection (2) provides for the deduction of the amount overpaid from any further assistance which is payable. Subsection (3) provides that so much of the amount overpaid as exceeds the total amount (if any) of further assistance payable is a debt due to the Commonwealth, recoverable in a court of competent jurisdiction. Subsections(4) - (9) deal with circumstances not presently relevant.

16. The amending Act introduced, also with effect from 26 December 1988, a new subsection (6A) of s.37 in the following terms:

"Without limiting the generality of subsection (1), where:
(a) an amount of assistance has been paid to a person or persons
in respect of a dwelling; and
(b) that person, or at least one of those persons, as the case
may be, ceases to be a prescribed person in relation to the
dwelling because of a direction under section 5;
then, for the purposes of this section, the amount of assistance
(whether paid before or after the commencement of this subsection)
shall be treated as if it should not have been paid to that person
or those persons, as the case may be."

The Tribunal, in Paul Theologidis' case, had applied the same interpretation of s.5 as was applied by the Tribunal in the present case. In particular, the Tribunal said in both cases:

"The words of section 5 do not give any indication that a
direction may be given after an application has been granted to
give assistance. The scheme of assistance under the Act clearly
contemplates that assistance may be paid to persons who do not
reside in the dwelling and who do not have the necessary intention
but provides for the termination of payment by providing that they
are no longer eligible persons. Once a person becomes a
prescribed person, he or she is entitled to make an application.
It would take clear legislative expression before we could form
the view that Parliament intended to take away that entitlement
retrospectively. There is no clear expression here and the scheme
of the legislation militates against any such interpretation. It
seems to us that a direction may only be made at the time the
application for assistance is made and the person's entitlement to
make that application is determined." (My emphasis)

The Full Court in the case of Paul Theologidis concluded that this construction of the legislation was erroneous. The Court said at p 7 of its reasons:

"The ordinary language of section 5 seems to us to contemplate
that the Secretary may come to a state of satisfaction about a
prior state of affairs, viz that the 'prescribed person' has not
resided in the dwelling. If a further matter, a question of
present fact, is then established to the Secretary's satisfaction,
viz that the person does not intend to so reside within a
reasonable time, the Secretary may (or, after the 1988 amendment,
shall) give the relevant direction. This is the ordinary meaning
which the use of the present tense ('is satisfied') and the
perfect tense ('has not resided') would indicate. So viewed,
section 5 is not confined in its operation to the time when
application for assistance is made and granted."

The Court later said at pp 8 - 9 of its reasons:

"This legislative scheme makes money available to persons for the
purpose of acquiring homes to live in. To assist their purchase
or construction, the money is made available before the dwellings
are acquired. It will not be until after acquisition has occurred
that it can be seen, in the light of the actual occupation of the
dwelling, whether the relevant intention of the recipient of the
money remains, or ever existed. A mechanism such as section 5
seems to be an essential element of any such scheme. Its purpose
enables those administering the scheme to see whether subsequent
events correspond with the previously stated intention of
beneficiaries of the scheme. Once section 5 operates, section
37(6A) applies so as to enable the recovery of 'the amount of
assistance' in appropriate circumstances. In its terms, section
37(6A) applies to amounts paid before it came into operation."

I had earlier reached a similar conclusion in Tania Theologidis v The Secretary, Department of Community Services and Health (unreported, 12 July 1991).

17. It therefore follows that the decision by the Tribunal in the present case involves an error of law. The appeal must be allowed and the decision of the Tribunal of 7 December 1990 set aside.

18. A further question to be determined is whether the matter should be remitted to the Tribunal to be determined according to law, or whether, in accordance with the powers of the Court under s.44 of the Administrative Appeals Tribunal Act 1975, the Court should make an order affirming the decision under review by the Tribunal, namely that of 19 January 1989, which in turn affirmed the decision of the 20 May 1987. Whether the latter course be followed depends on whether, consistent with the reasons given by the Tribunal, it would have affirmed the decision under review if it had applied the correct construction of s.5 and s.37, as pronounced by the Full Court in Paul Theologidis' case.

19. In the reasons of the Tribunal, there was some confusion by it as to the relevant decision of which review was sought. The Tribunal said, for instance, at paragraph 68:

"On the evidence before us and in view of our findings of fact on
that evidence, it was some five years before the applicant
actually lived in the house after he purchased it. At the time
the decision under review was made, it was still in fact some two
years before he lived in it." (My emphasis)

20. However, having regard to the findings of fact expressed in paragraph 38, which has earlier been set out, in my opinion the Tribunal concluded that even at the date of the hearing in September 1989 there was not an intention in Mr Andrew Theologidis to live in the house as his permanent place of residence within a reasonable time. Also implicit in those findings is the conclusion that at the date of the s.5 determination by the delegate of the Secretary on 19 January 1989, the factual position was that Mr Andrew Theologidis had not resided in the dwelling as his principal place of residence and did not intend so to reside within a reasonable time. On that basis, the proper application of the Act would have led to only one conclusion, namely to affirm the decision under review.

21. In those circumstances, I would also order that the decision under review by the Tribunal be affirmed.

22. I order that the respondent, Mr Theologidis, pay the costs of the appeal.