Detya v Smith - - [2001] FMCA 36

FEDERAL MAGISTRATES COURT OF AUSTRALIA

SECRETARY, DEPARTMENT OF EDUCATION, TRAINING AND YOUTH AFFAIRS [2001] FMCA 36

ADMINISTRATIVE LAW – Appeal from AAT – Declaration – – whether error of law – Appeal allowed – Declaration granted
COSTS – Applicant to pay unsuccessful Respondent’s costs – Discretion where issue on appeal raised by Tribunal at first instance and not by Respondent

Secretary Department of Social Security v Murphy (1998) 52 ALD 268 Secretary Department of Social Security v Lowe (1999) 92 FCR 26
Baxter Healthcare Pty Ltd v Comptroller-General of Customs (1997) 72 FCR 467 at 483, 491, 499
Administrative Appeals Tribunal Act 1975 s 44
Student and Youth Assistance Act 1973 s 40(2)(b), 40(5)
Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1988 s 2, 2(1)
Student Act 1973
Acts Interpretation Act 1901 s 13(2)

Applicant:

SECRETARY, DEPARTMENT OF EDUCATION, TRAINING AND YOUTH AFFAIRS

Respondent:

MATTHEW CONRAD SMITH

File No:

MZ 250 of 2000

Delivered on:

7 June 2001

Delivered at:

Melbourne

Hearing Date:

25 January 2001

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:	Mr Reilly
Solicitors for the Applicant:	Australian Government Solicitor

The Respondent:

In Person

ORDERS

The appeal be allowed.
IT IS DECLARED THAT interest could be imposed upon the debt and the debt need not be recalculated to remove provision for interest.
The Applicant pay the Respondent’s costs fixed at $90.00.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MZ250 of 2001

SECRETARY, DEPARTMENT OF EDUCATION, TRAINING AND YOUTH AFFAIRS

Applicant

And

MATTHEW CONRAD SMITH

Respondent

REASONS FOR JUDGMENT

This is an appeal pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Commonwealth) (the AAT Act) from a Decision of the Administrative Appeals Tribunal (the AAT) delivered on 4 August 2000 (the AAT Decision).
The AAT constituted by Mr J Handley Senior Member and Dr C Re, an expert medical member, affirmed a Decision by the Social Security Appeals Tribunal (SSAT) made on 23 December 1999 (the SSAT Decision).
The SSAT Decision dealt with a Decision by Centrelink which concerned the raising and recovery of an Austudy debt for the 1997 calendar year. It had been determined by the SSAT that there was a debt that could not be waived and the matter was remitted to the Appellant with directions as to the manner in which the debt should be calculated.
The Austudy payments had been made to the Respondent after he lodged an “AUSTUDY Continuing Application 1997” form on the basis of his enrolment in a Certificate of Engineering course at the Institute of TAFE in Wangaratta New South Wales.
It is not necessary to refer in any detail to the calculation of the debt that was raised as the only issue before this Court on appeal is the question of whether interest could be lawfully imposed on the debt had been raised. It is sufficient to note that the Appellant had provisionally assessed the Respondent as eligible for Austudy for 1997. In September 1997 a review of the eligibility was undertaken and on review a notice of assessment was issued claiming an overpayment of $4,597.98. A further assessment was made on 16 October 1997 which resulted in an overpayment being raised of $3,158.25. On 24 December 1997 a further reassessment occurred finding the Applicant eligible for $1,381.89 of Austudy for the year and on the basis of that assessment the Appellant raised an overpayment of 43,508.14. That Decision was affirmed on review by review officer on 6 June 1998 and it was from that Decision that the Respondent lodged an appeal to the SSAT on 22^nd April 1999. The SSAT set aside the review officer’s decision and remitted the matter to the Appellant for recalculation of the overpayment in accordance with its directions. Nevertheless the Respondent applied to review the SSAT Decision and as indicated the AAT affirmed the SSAT Decision on 4 August 2000. The existence of the debt was not in dispute before the AAT and the Respondent does not appeal from the AAT Decision.
The AAT heard the matter at Wodonga. Unfortunately no transcript was available of the hearing.
Although the AAT affirmed the SSAT Decision it then, on its own initiative decided to alter the amount of the debt by finding that the imposition of interest had been made illegally.
It is useful to set out the questions of law, orders sought and grounds of appeal relied upon by the Appellant in its Notice of Appeal dated 4 September 2000 as follows:
“THE QUESTION OF LAW raised in the appeal is whether the Tribunal erred in law in deciding that interest could not be imposed on the debt.
ORDERS SOUGHT:
(1)The appeal be allowed.
(2)A declaration be made that interest could be imposed upon the debt and the debt need not be recalculated to remove provision for interest.
(3)Costs
GROUNDS:
The grounds of the appeal are that the Tribunal erred in holding at paras 7 to 10 of its reasons that interest had been illegally imposed on the debt. Section 40(2)(b) of the Act permits the imposition of interest on the debt in the circumstances of this case.”
The hearing in this appeal was conducted by video link pursuant to s 68 of the Federal Magistrates Act 1999. During the course of that video link submissions were made for and on behalf of the Applicant by Mr Reilly of Counsel from Sydney whilst the Respondent Mr Matthew Smith assisted by his father attended Court facilities at Albury.
The Court received the Appeal Book and a document entitled “Applicant’s Submissions” together with attachment entitled “Applicant’s bundle of relevant legislation”. The bundle of relevant legislation included extracts from the Student and Youth Assistance Act 1973 (Reprint No.5), extracts from Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998 and extracts from the Student Act 1973 (Reprint No.6) (as in force from 29 November 2000).
The Applicant also relied upon two Decisions of the Federal Court of Australia namely Secretary Department of Social Security v Murphy (1998) 52 ALD 268 and Secretary Department of Social Security v Lowe (1999) 92 FCR 26.
All of the documents to which I have referred were made available to the Respondent prior to the hearing. The submissions had been filed and served on 22^nd December 2000 pursuant to an Order made by the Court on 11 December 2000.
The Court was concerned to ensure that the unrepresented Respondent had received all the relevant material prior to the hearing of this application which occurred on 25 January 2001.
During the course of the hearing I was informed by Counsel for the Appellant that the issue of interest was raised by the Tribunal and had not been raised by the Respondent. When given an opportunity to address the Court the Respondent though critical of the process and procedure in terms of the volume of material generated in this appeal simply confirmed that he was opposed to the appeal. Understandably, as this was a matter of statutory interpretation, he did not offer any further submissions.
Hence the task of the Court as a result of the lack of representation of the Respondent is made more difficult in circumstances where the issue raised was not one which was ever contemplated by the Respondent but rather initiated by the Tribunal.
It is appropriate in circumstances of this kind that the submissions made for and on behalf of the Applicant be carefully scrutinised along with the Reasons for Decision provided by the Tribunal which are relevant to this application. The paragraphs in the AAT Decision which are relevant to the issue of interest in this appeal are:

“5.Mr Smith and his father indicated that they would not dispute the existence of an overpayment and that their principle reason for appearing at the Tribunal was to reassure us that they had not acted dishonestly or had given incorrect information to the respondent.
…..

7.Mr Pearson notified us that despite repayments of the debt being voluntarily made by the applicant’s mother at $20 per fortnight, and monies paid by Matthew in 1999 from tax refund, the current amount outstanding was the sum of $3651.60. This amount is greater than the amount reassessed by the respondent (despite the repayments by Mrs Smith) because the respondent had imposed a penalty of $100 and a continuing interest rate of 10% on the outstanding amount. This caused us much concern. Following some discussion Mr Pearson drew to our attention amendments to the Social Security Act in 1998. The effects of these amendments indicate to us that the imposition of interest had been made illegally.

8.The Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998 (No.45 of 1998) (the Amending Act) received its Assent on 17 June 1998. The relevant parts, so far as imposition of interest is concerned, is to be found at Schedule 11. Section 2 of the Amending Act does not record when Schedule 11 is to commence its operation. S132 provides that if an application is outstanding at the commencing date and the application was not dealt with by the AAT before the commencement of the Amending Act it is to have operation as if it was in force before the application commenced.”

The significant issue to be determined by this Court is the finding by the Tribunal after considering the amendments to the Social Security Act in 1998 that “the effects of these amendments indicate to us that the imposition of interest been made illegally.”
It is useful to provide a brief analysis of the relevant legislation and the amendments which the Tribunal relied upon to find that the imposition of interest had been made illegally.
In the submissions made on behalf of the Applicant a brief analysis was provided of the legislation. I accept the analysis as being accurate having reviewed the legislation. It was submitted that the Tribunal was reviewing a Decision of the SSAT pursuant to s 324 of the Student Assistance Act (1973) (the Act). Section 3(1) of the Act defines “student assistance overpayment” to be an amount paid under the Austudy scheme that should not have been paid.
The Act was extensively amended by Schedule 11 to the Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1988 (the Amending Act) which commenced on 1^st July 1998. In reference to those amendments the Tribunal held that “The effects of these amendments indicate to us that the imposition of interest had been made illegally”.
It was submitted on behalf of the Applicant that both before and after the amendments to the Act there was specific legislative provision for the imposition of interest and this is found in s 40(2)(b) of the Act which provides:-
“If the whole of a part of the recoverable amount is still due to the Commonwealth at the end of three months after the notice is given, the person is liable:-
(a)to pay to the Commonwealth an additional amount of $100; and
(b)to pay interest to the Commonwealth;
(i)from the date when the notice was given until the date when the recoverable amount is repaid; and
(ii)at the rate ascertained under the regulations;
on so much of the recoverable amount as, from time to time, remains due.”
Despite the existence of s 40(2)(b) of the Act which I find provides a clear legislative basis for the imposition of interest the Tribunal made no mention of that section. I was informed that reliance had been placed by the Applicant in oral submissions to the Tribunal. It is clear from the Tribunal’s reasons that those submissions having been made were not the subject of any consideration by the Tribunal.
Accordingly I find that there has been an error of law in the failure of the Tribunal to correctly interpret and apply the legislation namely s 40(2) (b) of the Act. To that extent the application succeeds.
For the sake of completeness, however, I should also mention that the Applicant has submitted that the Tribunal’s reference in its reasons that s 2 of the Amending Act “does not record when Schedule 11 is to commence its operation” is erroneous. It is submitted and I accept that Schedule 11 falls within the general commencement provision in s 2(1) of the Amending Act as the Schedule is part of the Amending Act. (See Acts Interpretation Act 1901 s 13(2)).
It was submitted that the Tribunal incorrectly referred to Item 132 of the Schedule 11 as being relevant to its Decision. It was submitted and I accept that Item 133 is the relevant provision. Item 132 is among the transitional provisions in Part 2 (Items 130 to 135) of Schedule 11. It deals with continuing applicability of provisions of the Act as in force immediately prior to 1 July 1998 in respect of applications for (inter alia) Austudy under the Act. The Applicant submits and I accept that it does not deal with the review of Decisions concerning Austudy which was the matter before the Tribunal.
Accordingly the relevant item is Item 133(2) which deals with persons who might have applied for review of Decisions by the SSAT before the commencement day. The Respondent in the present case could have applied to the SSAT for review of Decision of the authorised review officer on 6 June 1998 before 1^st July 1998.
Although the incorrect application of Item 132 is noted it does not seem to me to be particularly relevant and nor is it sufficient to constitute an error of law which would justify allowing this application.
Other criticisms were made of the Tribunal’s reasoning and in particular the manner in which it applied the amended form of s 40(5) of the Act. It was submitted that the Tribunal was incorrect in concluding that the unamended form of s 40(5) “purported to give a lawful entitlement to impose a debt”. The Applicant submitted that this is incorrect as the unamended as well as the amended form of 40(5) deal with circumstances where interest is not payable. This is clearly correct and again there would appear to be an error on the part of the Tribunal. Further submissions were made in relation to the way in which the Tribunal referred to the provisos to the amended form of s 40(5) and it is correctly submitted that those provisos only apply where there has been a Decision under s 39A which it is said includes a Decision under s 284 enforced immediately before 1 July 1998 (see s 39A (3)) to allow a person to pay an amount of debt by instalments. No such claim was before the Tribunal and nor was there any Decision before the Tribunal which would entitle it to consider the matter.
In any event the substantive issue raised by the Applicant which I accept is that s 40(5) has no application and the matter is governed by s 40(2)(b) and as indicated I find that provision does permit the imposition of interest upon the debt.
In the circumstances having allowed the appeal the question raised is whether it is appropriate to make a declaration.
I was referred to the Decision of Secretary DSS v Lowe (1999) 92 FCR 26. In that case the Full Court of the Federal Court was considering eligibility for sole parent pension and I do not need to refer to the factual details of the Decision. It is relevant however to refer to the Full Court’s reasons when it had to determine whether it is appropriate to make a declaration which can be effectively added to the Tribunal’s Decision where it is found that it may be left open in the light of the Tribunal’s reasons for erroneous conclusions of law to be reached despite the fact that the order made by the Tribunal is not in issue. It is relevant to set out the following passage from the Full Court Decision:-
“The appeal poses one remaining difficulty. The order made at first instance simply dismissed an appeal, so-called, from the decision of the Administrative Appeals Tribunal. That appeal was brought by Mr Lowe against the denial of any payment of sale parent pension to him, the Tribunal having decided under s 251 that it should be paid solely to Miss Schembri. But she was not a party to the proceeding brought in this Court. (We observe, in passing, that she should have been joined, as Mr Lowe’s appeal could have affected her rights). The difficulty is that, although the appellant Secretary of the Department has persuaded us the learned judge was wrong in holding neither parent eligible to receive a sole parent pension, we are satisfied he was correct in dismissing Mr Lowe’s appeal, since no error of law was shown to vitiate the decision of the Administrative Appeals Tribunal. Courts of appeal have repeatedly held that a right of appeal relates a court’s orders, and not to its reasons. Can we, then, correct the error we perceive in the reasons given for the making of an order which we consider should stand? That answer is to be found in a series of cases, which are cited and applied in Baxter Healthcare Pty Ltd v Comptroller-General of Customs (1997) 72 FCR 467 at 483, 491, 499. An order, read in the light of the reasons justifying it, may leave open to be implemented conclusions which a full court holds to be erroneous. Had those conclusions been expressed in a declaration, it would have been set aside or varied. In such a case, Baxter Healthcare affirms the power of the Court on appeal to vary the order made below by the addition of an appropriate declaration, as was actually done in that case (at 501).”
In the circumstances of the present application, applying the principles set out by the Full Court in Secretary Department of Social Security and Lowe it is appropriate to make the declaration sought by the Applicant.
There remains to be considered the issue of costs. In this matter it was made clear that the error has occurred as a consequence of the Tribunal embarking upon a process where it concluded erroneously that there was no power to impose interest. It was not a matter raised by or considered in any submission by the parties prior to the hearing. It was not a matter pursued by the Respondent. Although the Respondent is unrepresented I was told at the hearing of the matter that his travel and loss of wages expenses amounted to $90.00 as a result of attending the appeal which as I have indicated was arranged in part for his convenience by videolink from Albury. During the course of the hearing I invited Counsel for the Applicant to seek instructions concerning the appropriateness of an award of costs in favour of the Respondent even though the Applicant may succeed in the appeal. It was made clear that the Applicant did not consent to such a course and indeed opposed any order for costs in favour of the Respondent and indeed I note costs are sought in its Notice of Appeal.
In my view it is inappropriate to award costs to the successful appellant in this matter as the issue was a matter of concern to it in the same manner as a “test case”. There are ample authorities to suggest that in those circumstances a successful Applicant should not receive costs. The more difficult question is the issue of whether I have a discretion to award costs against the successful Applicant in favour of a respondent.
I am satisfied that the broad discretion to award costs includes a discretion to award costs in a case of this kind. I am mindful of the extraordinary and unusual circumstance of this application where as I have indicated the issue which is the subject of the appeal namely the imposition of interest was not a matter raised by the unsuccessful Respondent but rather arose upon the initiative of the Tribunal which as I have found erred in law. I do not believe in those circumstances that a Respondent should suffer the financial consequences of proceedings which have arisen in this manner.
Accordingly I believe it is appropriate in the exercise of my discretion to order the Applicant to pay the Respondent’s costs fixed at $90.00.
The orders of the Court are:-
(1)The appeal be allowed.
(2)IT IS DECLARED THAT interest could be imposed upon the debt and the debt need not be recalculated to remove provision for interest.
(3)The Applicant pay the Respondent’s costs fixed at $90.00.

I certify that the preceding thirty seven (37) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 7 June 2001