Lababidi v D.E.W.R.
[2006] FMCA 1567
•23 October 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LABABIDI & ANOR v D.E.W.R. | [2006] FMCA 1567 |
| ADMINISTRATIVE LAW – Appeal from Administrative Appeals Tribunal – whether question of law – Social Security payments – cancellation of Newstart allowance – refusal to pay rent assistance – cancellation of parental assistance – assets and income threshold – director and sole shareholder – controlled private company – whether attributable stakeholder – appeal dismissed. PRACTICE AND PROCEDURE – Whether Applicants should be permitted to rely on additional affidavit evidence – whether relevant – whether unusual circumstances. |
| Administrative Appeals Tribunal Act 1975, ss.43, 44 |
| Committee of Direction of Fruit Marketing v Australian Postal Commission (1979) 25 ALR 221 Repatriation Commission v Hill [2002] FCAFC 192 Minister for Immigration and Ethnic Affairs v Gungor (1982) 42 ALR 209 Re Secretary, Department of Social Security and Williams and Another (1995) 52 ALD 418 |
| Applicants: | MOHAMMED MOHSEN LABABIDI AND LINA ZEINO LABABIDI |
| Respondent: | SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS |
| File number: | MLG 1604 of 2005 |
| Judgment of: | McInnis FM |
| Hearing date: | 1 September 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 23 October 2006 |
REPRESENTATION
| First Applicant: | In person and for and on behalf of Second Applicant |
| Counsel for the Respondent: | Mr R Knowles |
| Solicitors for the Respondent: | Australian Government Solicitor |
ORDERS
The appeal be dismissed.
The Applicants shall pay the Respondent’s costs pursuant to Schedule 1 of the Federal Magistrates Court Rules 2001.
Liberty to apply is granted to the parties in relation to the issue of costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1604 of 2005
| MOHAMMED MOHSEN LABABIDI AND LINA ZEINO LABABIDI |
Applicants
And
| SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS |
Respondent
REASONS FOR JUDGMENT
The Applicants, by notice of appeal filed 31 October 2005, appeal from a decision of the Administrative Appeals Tribunal (the AAT) dated 7 October 2005. The appeal is filed pursuant to s.44 of the Administrative Appeals Tribunal Act 1975 (the AAT Act) which provides that a party to a proceeding before the Tribunal may appeal to the court on a question of law.
The proceedings were transferred to the Federal Magistrates Court by order of the Federal Court dated 2 December 2005. It should be noted that in support of the application, the Applicants had sought to rely upon affidavit material annexing documents.
As a result of orders made in this court, two volumes of Appeal Books have been filed and written submissions have been filed by the parties. It is further noted that at the hearing the First Applicant sought to appear on his own behalf and to make submissions for and on behalf of the Second Applicant, who is the wife of the First Applicant. The First Applicant sought to rely upon a document entitled "Answering Respondent’s Submissions" dated 31 August 2006.
The Respondent did not object to that material being relied upon by the Applicants but did object to documents annexed both to the Applicants' submissions and affidavit material on the grounds that the Applicants were seeking to rely effectively upon what should be described as fresh evidence in the appeal. For present purposes it is sufficient to note that I have formed the view that it would not be appropriate to permit the Applicants to rely upon the documentary material which I regard as fresh evidence in the appeal.
It is noted that in general, where a question of law arises after a determination of the facts by the Tribunal, then the nature of that question of law will normally depend on the facts as determined. I cannot see any unusual circumstances in the present case, having regard to the material sought to be relied upon, which would permit the court to allow the Applicants to rely upon the additional documentary evidence, some of which may be regarded as indeed fresh evidence, or certainly evidence which had already been determined in any event by the Tribunal.
It is not necessary for me to analyse in detail that evidence, save to rule that I am not prepared to permit the Applicants to rely upon evidence attached to the submissions and affidavits as I am not satisfied that in considering the question of law the documents are in any event relevant or that there are unusual circumstances which would justify admitting fresh evidence (see Committee of Direction of Fruit Marketing v Australian Postal Commission (1979) 25 ALR 221 at 227).
Background
To understand the application, it is useful to set out the brief background in this matter which I am satisfied is accurately incorporated in the Respondent’s submissions as follows:
“4. The Tribunal’s decision dated 7 October 2005 (‘Tribunal’s decision”) dealt with two applications, one brought by the first appellant and the other brought by his wife, the second appellant.
5. The first appellant sought that the Tribunal review the SSAT decisions dated 15 April 2005 (“SSAT decisions”). The SSAT had relevantly affirmed:
(a) a decision made by a Centrelink officer on 22 September 2004 to cancel his newstart allowance; and
(b) a decision made by a Centrelink officer on 19 September 2002 to refuse to pay rent assistance arrears to him from July 2001.
6. The second appellant also sought that the Tribunal review the SSAT decisions. In her case, the SSAT had relevantly affirmed:
(a) a decision made by a Centrelink officer on 22 September 2004 to cancel her parenting payment; and
(b) a decision made by a Centrelink officer on 13 June 2002 to cease payment of rent assistance to her!.
7. The basis for the decisions made by Centrelink and the SSAT was a finding that, for the purposes of assessing the first appellant’s eligibility to receive newstart allowance and rent assistance, the assets of the company, Lababidi Pty Ltd, were to be regarded as the first appellant’s assets. It was also found that the first appellant’s assets were relevant to the assessment of the second appellant’s entitlement to social security payments.”
Relevant Legislation
Likewise, I am satisfied that the relevant legislation has been set out in the Respondent’s submissions as follows:
“8. Section 1070B of the Social Security Act 1991 (“the Act”) relevantly provides that a person qualifies for rent assistance if he or she satisfies the “common requirements” set out in section 1070G.
9. One of the common requirements is that a person is not an “ineligible homeowner”.
10. Section 13 of the Act provides that, subject to particular exceptions, the term “ineligible homeowner” is defined to mean a “homeowner”.
11. Paragraph 11(4)(b) of the Act relevantly states that a person who is a member of a couple is a “homeowner if:
(i) the person, or the person’s partner, has a right or interest in one residence that is:
(A) the person’s principal home; or
(B) the partner’s principal home; or
(C) the principal home of both of them; and
(ii) the person’s right or interest, or the partner’s right or interest, in the home gives the person, or the person’s partner, reasonable security of tenure in the home;
Parenting payment and newstart allowance
12. Neither the parenting payment nor the newstart allowance is payable to a person if the value of his or her assets exceeds the applicable “assets value limit”. The value of a person’s assets generally includes the value of assets of his or her partner.
13 Part 318 of the Act relevantly sets out principles governing the attribution of assets and income of private companies to individuals.
14. A private company’s assets and income will be attributed to an individual where the following three criteria are met:
(a) the company is a “designated private company”;
(b) the company is a “controlled private company” in relation to the individual; and
(c) the individual is an “attributable stakeholder” in the company.
15. Subsection 1207N(1) of the Act relevantly provides that a company is a “designated private company” at a particular time if:
(a) the company satisfies at least 2 of the following conditions in relation to the last financial year that ended before that time:
(i) the consolidated gross operating revenue for the financial year of the company and its subsidiaries is less than $10 million;
(ii) the value of the consolidated gross assets at the end of the financial year of the company and its subsidiaries is less than $5 million;
(iii) the company and its subsidiaries have fewer than 50 employees at the end of the financial year; or
16. A company will be a “controlled private company” in relation to an individual if the individual passes the “control test’ or the “source test”.
17. Subsection 1207Q(2) provides that, among other things, an individual passes the control test in relation to a company if the direct voting interests in the company that the individual holds are 50% or more.
18. Subsection 1207X(1) provides that, if a company is a controlled private company in relation to an individual, the individual is an attributable stakeholder of the company unless the respondent otherwise determines. Each of the individual’s “asset attribution percentage” and the individual’s “income attribution percentage” is, unless determined otherwise by the respondent, 100%.”
The Notice of Appeal
The notice of appeal, under the heading "THE QUESTIONS OF LAW", simply sets out the following:
“Decision made by Administrative Appeal Tribunal V2005/395.”
Under the heading "GROUNDS" the following appears:
“- Lababidi Pty Ltd has shareholders 7 I have only 2 shares.
- Lababidi Pty Ltd is different than M.M. Lababidi.
- M.M. Lababidi renting house from Lababidi Pty Ltd.
- Some document liability.
Magistrates Court order, $42,000.
VCAT, $15,000.
County Court, $15,000.
To understand the notice of appeal, it would appear from submissions made by the First Applicant that judgments were apparently entered against the company Lababidi Pty Ltd in the Magistrates Court on 9 December 2004 for an amount of $40,000 and in the County Court in or about 2003 for $15,000 and a further judgment in the Victorian Civil and Administrative Tribunal (VCAT) on 9 December 2004 for $15,000.
It will be evident from the questions of law and grounds identified in the notice of appeal that the Applicants seek to assert facts rather than identify a question of law or grounds in support of the appeal. It should also be noted that the orders sought in the notice of appeal are as follows:
“1. Back-payment rent assessment.
2. Back-payment job search allowance and parenting allowance and family allowance.”
The Respondent, in submissions relating to jurisdiction arising out of the notice of appeal, correctly submitted that s.44 of the AAT Act provides for a party to a proceeding before the Tribunal to appeal to the Federal Court on a question of law. It was correctly submitted that a decision of the AAT is not reviewable by this court unless in making its decision, the AAT fell into an error of law (see Repatriation Commission v Hill [2002] FCAFC 192 at [59]).
Further, it was submitted that the power of the court in an appeal is set out in sub-ss.44(4) and (5) of the AAT Act which provide as follows:
“(4)The Federal Court of Australia shall hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision.
(5)Without limiting by implication the generality of subsection (4), the orders that may be made by the Federal Court of Australia on an appeal include an order affirming or setting aside the decision of the Tribunal and an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the Tribunal in accordance with the directions of the Court.”
It is noted that sub-s.44AA(9) provides the Federal Magistrates Court with the same powers as the Federal Court upon transfer of that court to this court of an application of this kind.
It was submitted, and I accept, that sub-s.44(4) of the AAT Act does not give this court wide powers to make such orders as it thinks fit.
Given that the appeal is limited to an error of law, that error provides the subject matter of any order made consequent upon the appeal (see Minister for Immigration and Ethnic Affairs v Gungor (1982) 42 ALR 209 at 220).
It was submitted by the Respondent that the orders sought by the Applicants, which effectively seek payment to them of various social security payments, are not orders which the court can make as the court, unlike the AAT, does not "stand in the shoes" of the original decision-maker (see s.43, AAT Act).
It was further submitted that the grounds of appeal do not disclose any question of law. Instead, the Applicants make various complaints regarding the merits of the Tribunal's findings of fact and otherwise seek to reagitate the case which had been put to the Tribunal.
In my view, this preliminary and threshold issue ought properly be determined at the outset. It is clear on the material before me that the Respondent’s submissions are correct. Having heard the argument from the First Applicant and considered further the written submissions including the "Answering Respondent’s Submissions", I am satisfied that there is no question of law raised on the appeal identified in any of the material and specifically no question of law raised in the notice of appeal. The grounds set out in the notice of appeal do no more than recite factual matters which no doubt the Applicants wish to reagitate.
The Tribunal's Decision
It is useful to set out the contentions advanced by the Applicants before the Tribunal, which I note appear in paragraph 7 of the Tribunal's decision as follows:
“7. At the hearing of this matter Dr Lababidi handed up a document setting out some of his submissions. In essence, they are as follows:
(a) the Company has had four shareholders since it was incorporated;
(b) Dr Lababidi has only a 51 per cent interest in the Company;
(c) the Company owns the property situated at 39 Gaffney Street, Coburg (“the Gaffney Street Property”) but it is mortgaged to the extent of $349,450;
(d) the Company has an investment account with the ANZ bank which has a balance of $200,000;
(e) Dr Lababidi has an ANZ bank account in the sum of $5,034 and an Arab Bank account which holds a balance of $183;
(f) Dr Lababidi and his wife have five children and he has significant living expenses; and
(g) Dr Lababidi is presently unable to work because of chronic back pain.”
Relevantly, under the heading "Considerations" (Appeal Book p.655), the Tribunal then analysed the claims made by the applicant in relation to the relevant company. It is in my view relevant and helpful to set out the following paragraphs from the Tribunal decision:
“10. A company extract obtained from the Australian Securities and Investments Commission (“ASIC”) on 18 August 2004 indicates that Dr Lababidi is the sole director and Secretary of the Company. A more recent company extract obtained on 30 September 2005 discloses that there has been no change to that position.
11. Australian Taxation Office records dated 28 September 2004 reveal that the Company sold a property at 17 Norris Drive, Lilydale for $400,000, settlement taking place on 20 September 2004. There was no mortgage on this property. The Company had also sold a property at 861 Sydney Road, Brunswick and received $425,000. The net proceeds of that sale amounted to $238,581.
12. An extract obtained from ASIC on 30 September 2005 discloses that only two shares are currently issued by the Company and they are both held by Dr Lababidi. It also appears that one share had previously been issued to each of Lina Zeino Lababidi, Emad Al Din Lababidi and Philip Zaiden. Lina Lababidi and Philip Zaiden ceased to be shareholders in about 1990 and Emad Lababidi ceased to be a shareholder in 1997.
13. At the hearing Dr Lababidi said that Dr Mustafa Kamal Lababidi, Dr Mahmaud Sabri Lababidi and Dr Faten Lababidi were to be listed as shareholders in respect of 49 per cent of the shares in the Company. He also said that these persons had always been shareholders of the Company although they had not been listed as such with ASIC. That cannot be correct. ASIC records disclose that other persons were previously shareholders in the Company and that currently the only shareholder is Dr Lababidi. Dr Lababidi admitted that he is the sole director of the Company.”
In specifically considering the rent assistance claim, the Tribunal relevantly stated the following:
“14. Mrs Lababidi was paid an amount additional to her parenting payment by way of rent assistance until it was cancelled on 13 June 2002. Rent assistance is only payable if a person is not an ineligible homeowner and the person pays or is liable to pay rent in respect of a period for premises in Australia and that person’s fortnightly rent is more than the rent threshold amount (s 1070C of the Act). A homeowner for the purposes of the Act, is defined as:
11(4)...
(b) a person who is a member of a couple is a homeowner if:
(i) the person, or the person’s partner, has a right or interest in one residence that is:
(A) the person’s principal home; or
(B) the partner’s principal home; or
(C) the principal home of both of them; and
(ii) the person’s right or interest, or the partner’s right or interest, in the home gives the person, or the person’s partner, reasonable security of tenure in the home...
15. The meaning of ineligible homeowner is not relevant to this matter, although it is plain that neither Dr Lababidi nor Mrs Lababidi fall within that definition. There also seems to be no dispute between the parties that the Gaffney Street Property is the principal home of both Dr and Mrs Lababidi. The only question which arises is whether Dr and Mrs Lababidi have a right or interest in the principal home as a consequence of the Company being the owner of that property and Dr Lababidi being the sole director and shareholder in the Company at the relevant time.
16. In Re Secretary, Department of Social Security and Williams and Another (1995) 52 ALD 418, Senior Member Hallowes refused a claim for rent assistance in similar circumstances. The Tribunal held that it was unlikely that Mr and Mrs Williams, who were the majority shareholders in a company, would not take into account their own circumstances when making decisions in relation to the company. In other words, it was reasonable to expect that as the controllers and major interest holders in the company, Mr and Mrs Williams were unlikely to terminate the company’s leasing arrangements with themselves and therefore it could be said that they had reasonable security of tenure in their home. The Tribunal found that the respondents; as homeowners within the meaning of s 11 (4)(b) of the Act, were not eligible for rent assistance.
17. The same reasoning can be applied to Dr and Mrs Lababidi. Mrs Lababidi leases the Gaffney Street Property from the Company and Dr Lababidi is its sole director and shareholder. There is no question that Dr Lababidi’s right or interest in the home gives Mrs Lababidi reasonable security of tenure in the home. I am therefore of the view that Mrs Lababidi, who is a member of a couple, is a homeowner for the purposes of the Act. She is therefore not entitled to rent assistance.
18. As to the decision made on 12 June 2002 not to pay arrears of rent assistance to Dr Lababidi from July 2001, the same considerations apply as for Mrs Lababidi. Therefore, he is also not entitled to rent assistance.’
(Court Book pp.656‑658)
The Tribunal then proceeded to consider the Newstart allowance and parenting payment and relevantly considered the appropriate legislation, and for present purposes it is sufficient to note the following paragraph:
“23. If a company is a controlled private company in relation to an individual, then the individual is regarded as an attributable stakeholder of the company unless the Secretary otherwise determines. That is not the case as far as Dr Lababidi is concerned and he must be considered to be an attributable stakeholder for the purposes of the Act. Therefore, Dr Lababidi’s individual income attribution percentage in relation to the Company will be 100 per cent unless the Secretary determines that a lower percentage is appropriate. The Secretary has not done so and therefore his asset attribution percentage must be 100 per cent. As I have already found above, Dr Lababidi falls within the definition of homeowner for the purposes of the Act. As at 22 September 2004, the Company had assets of at least $422,000 as disclosed in its financial records. Under the Act, 100 per cent of this asset is attributed to Dr Lababidi. As Mrs Lababidi’s assets include her husband’s assets for the purposes of the Act, and their assets exceed the assets limit for homeowners, which is $217,500 combined, they did not qualify for newstart allowance and parenting payment as at 22 September 2005.”
(Appeal Book p.659)
It is noted that the date which appears in the last line of that paragraph is incorrect and should read 22 September "2004" not "2005".
It is also relevant to set out the conclusion of the Tribunal which appears in the following paragraphs:
“24. At the hearing of this matter, Dr Lababidi said that the financial statements which were prepared by his accountant were false. He said that he would have his accountant prepare fresh financial statements which would disclose the true position of the Company. This is despite the fact that those financial statements had been used in the preparation of company and personal tax returns. Be that as it may, on the evidence that was before the Tribunal at the hearing of this matter, the financial position of the Company at the time of cancellation must be as is stated in the financial documents prepared by Dr Lababidi’s accountant.
25. I have taken into account the hardship Dr Lababidi claims he will suffer if the decision of the SSAT were to stand. However, even at the date of the hearing of this matter, Dr Lababidi had substantial assets which could be called on if necessary to support his family. Of course should his asset situation change in the future so that he becomes eligible for social security payments, there is no reason why he could not immediately make a further application for such support.”
I have deliberately set out in some detail the background including the Tribunal's decision, together with the relevant legislation, as it clearly demonstrates, in my view, that even if the court could assume that there is some error of law identified in the notice of appeal and associated documents, I am satisfied on the material before me that the Tribunal has approached its task in a manner free of any error and has properly interpreted the relevant legislation, consistent with appropriate authorities, including a decision of the AAT in Re Secretary, Department of Social Security and Williams and Another (1995) 52 ALD 418. It has otherwise reached conclusions of fact reasonably open to it, free of any error.
Conclusion
Accordingly, it follows that the appeal should be dismissed with costs.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 23 October 2006
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