Riddell, G. v The Secretary to the Department of Social Security

[1993] FCA 356

CATCHWORDS

ADMINISTRATIVE LAW - Soclal securlty - Overpayment of supporting parent's benefit - Appllcatlon that recovery of overpayment be walved because of extreme financial hardshlp - Discret~onary power to walve rlght of recovery conferred by statute on designated offlcial - Statutory requirement that off~clal, in exerclsing the power, act in accordance wlth dlrect~ons determined in wrltlng by Mlnlster - Determinatlon made by Mlnlster - Textual difficulties in construing determlnatlon - Evident purpose and effect of determlnatlon to lim~t dlscretlon conferred on officlal - Whether determlnatlon a valid exercise of power to glve directlons.

Administrative Appeals Tribunal Act 1975 (Cth), s.44(1)
Social Securlty Act 1947 (Cth) s.251

Social Security Act 1991 (Cth), s.1237

Beadle v Director-General of Soclal Security (1985) 7 ALD 670

Secretary, Department of Soclal Securlty v Hodgson (1992) 108

ALR 322

Britlsh Oxygen Co. Ltd v Mlnlster of Technology [l9711 AC 610

Howells v Nagrad Nominees Pty Ltd (1982) 43 ALR 283

GAIL RIDDELL v THE SECRETARY TO THE DEPARTMENT OF SOCIAL

SECURITY

No. ACT G 21 of 1992

Neaves, Burchett and O'Loughlin JJ.
3 June 1993

Canberra

IN THE FEDERAL COURT OF AUSTRALIA	)
1
AUSTRALIAN CA? ITILL TERRITORY	1 No. ACT G 21 of 1992
DISTRICT REGISTRY	1
I
GENERAL DIVISION	)

ON APPEAL FROM THE GENERAL ADMINISl'RATIVE

DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: GAIL RIDDELL

Applicant

AND: THE SECRETARY TO THE DEPARTMENT

OF SOCIAL SECURITY

Respondent

MINUTE OF ORDER

THE COURT	Neaves, Burchett and O'Loughlin JJ.
DATE OF ORDER	3 June 1993
WHERE MADE	Canberra
THE COURT:

1.    Declares that the determination made by the Minister of State for Social Security on 8 July 1991 was not

authorised by s.1237(3) of the Social Security Act

1991 (Cth).

2.   Orders that the decision of the Adminlstratlve Appeals Tribunal given on 24 Aprll 1992 be set aside.

3.   Orders that the matter be remitted to the Administrative Appeals Tribunal for the

determination of the question whether the circumstances of the case are such that the power

conferred by s.1237(1) of the sald Act should be
exercised.

4.    Orders that the respondent pay the applicant's costs of and incldental to the application to this Court.

Note: Settlement and entry of orders is dealt wlth ln Order

36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	) )
AUSTRALIAN CAPITAL TERRITORY	)
) No. ACT G 2 1 of 1 9 9 2
DISTRICT REGISTRY	)
GENERAL DIVISION

ON APPEAL FROM THE GENERAL ADMINISTRATIVE

DIVISION OF THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: GAIL RIDDELL

Applicant

AND: THE SECRETARY TO THE DEPARTMENT

OF SOCIAL SECURITY

Respondent

CORAM: Neaves, Burchett and O'Loughlln JJ.

DATE:  3 June 1 9 9 3

REASONS FOR JUDGMENT

THE COURT: 

T h ~ s is an application by Gall Riddell ("the applicant") by way of appeal pursuant to s.44(1) of the

Administrative Appeals Tribunal Act 1 9 7 5 (Cth) from a dec~sion

of the Administrative Appeals Tribunal given on 24 Aprll 1 9 9 2 . The application was heard by a Full Court of this Court pursuant to ~.44(3)(b)(ii) of that Act.

- 3

The Adm~n~stratlve Appeals Trlbunal set aslde a

declslon of the Social Securlty Appeals Trlbunal glven on 6 February 1991. That Tribunal had set aside a decislon made by a delegate of the Secretary to the Department of Social Securlty and conveyed to the applicant by letter dated 13 November 1990 and had remitted the matter to the Secretary "with directions that the debt outstanding to the Commonwealth at the date of the Tribunal's hearing on 25 January 1991 be waived pursuant to S. 251 (l) (b) (l) " of the Soclal Security Act 1947 (Cth). The delegate of the Secretary had decided not to waive recovery of the debt that was owing by the applicant as a result of the applicant having received payment of a supporting parent's beneflt between 4 October 1984 and 5 September 1985 to which she was not entitled. The delegate's decision had been confirmed by an Authorised Review Offlcer prior to the matter being determined by the Social Security Appeals Trrbunal.

It was common ground that, pursuant to s.246 of the

Soclal Security Act 1947, the applicant was indebted to the

Commonwealth in an amount of $8,163 and that, rn October 1985, she commenced making regular payments in reduction of that indebtedness by way of deduction from the famlly allowance to which she was entitled under that Act. When the debt had been reduced to $4,250.85, she asked that recovery be waived because of extreme financial hardship. It may be noted that s.246 was, prior to 1 November 1988, numbered s.181 and, prror to 2 July 1987, numbered s.140.

At the tlme when the matter was determined by the Soclal Securlty Appeals Tribunal, the relevant legislative provlslon authorlslng the waiver of the right of the Commonwealth to recover a debt payable under the Social Securlty Act 1947 was s.251 of that Act. That section, so far as material, then provided:

"251(1) The Secretary may, on behalf of the Commonwealth, decide to -

(a) . . . .

(b) walve the right of the Commonwealth -

(i)to recover from a person the whole or a part of a debt that is payable by the person under or as a result of thls Act; or

(ii)to recover debts under or as a result of this Act included ln a class of debts specifled by the Mlnlster by notice ln wrltlng published ln the Gazette; or

(1A) In exercising the power under subsection (l) to waive the rlght of the Commonwealth to recover the whole or a part of a debt that is not referred to in subparagraph (l)(b)(ii), the Secretary shall act in accordance with directions from tlme to tlme in force

under subsection (1B).

(1B) The Minister, by determination in writing:

(a) may give directions relatlng to the exerclse of the Secretary's power under subsection (1) to waive the right of the Commonwealth to recover debts or parts of debts; and

(b) may revoke or vary those directions.

(1c) The Minister shall cause a copy of a determination under subsection (1B) setting, revoking or varying directions to be laid before each House of the Parliament within 15 sitting days of that House after the making of the determination.

(5) A deternnnatlon made under sub-sectlon (1)

takes effect -

(a)	on the day specifled in the determlnation, belng the day on wh~ch the determlnation was made or any other day before or after that day; or
(b)	if no day 1s so specified, on the day on whlch the determlnatlon was made."

It may be convenient, before proceeding further, to refer to the legislative hlstory of s.251. Prlor to 1 November 1988 the section was numbered s.186. Prlor to 2 July 1987 it was numbered S. 146. Section 146 was lnserted in the

Social Secur~ty	Act 1947 wlth effect from 1 November 1985 by
S.	73 of the Social Securl ty and Repatriation (Budget Measures)

Amendment Act 1985 (Cth). Relevantly, s.146 contained a provision having similar effect to subs. (l) of S. 251 set out above but contained no provisions slmllar to the other subsections of s.251 there set out. A provision in identical terms to subs.(5) of s.251 as set out above was inserted rn s.146 with effect from 1 July 1986 by s.42 of the Social Security Legislation Amendment Act 1986 (Cth). A further

amendment, not materlal for present purposes, was made to	s.146 by s.45 of the Social Security Amendment Act 1987
(Cth) .
Subsections (lA), (1B) and (1C) of s.251 were inserted with effect from 22 December 1988 by s.57 of the
Social Security Legislat~on Amendment Act 1988 (Cth) . So far as appears from the material before the Court, at the time when the matter was determined by the Social Security Appeals Tribunal, no drrectlons had been given by the Mlnister under s.251(1B).
Before the matter was heard by the Adminrstrative Appeals Tribunal, the Social Security Act 1947 had been repealed by s.3 of the Soclal Securlty (Rewrite) Transition Act 1991 (Cth). That Act (see s.2) came lnto operation
immediately after the commencement of the Social Security Act
1991 (Cth). The latter Act commenced on 1 July 1991 (s.2).
The Admlnlstrative Appeals Trrbunal proceeded upon the basis that the issue before it, namely whether recovery of the outstanding balance of the debt should be waived, was to be declded by the application of the provisions of the Social
Securlty Act 1991. On the hearrng of the present application no challenge was made to the correctness of that approach.
Section 1237 of the Social Securlty Act 1991, as enacted by Act No.46 of 1991, was in the following terms:

"(1) The Secretary may, on behalf of the Commonwealth, decide to walve the Commonwealth's right to recover from a person the whole or a part of an overpayment or a debt.

(2) In exercising the power under subsection (l), the Secretary must act in accordance with directions from time to time in force under subsection (3).

(3) The Minister may, by determlnatlon in writing:

(a) give dlrectlons relating to the exercise of the Secretary's power under subsectron (1); and

(b) revoke or vary those directions.

The Mlnlster 1s to cause a copy of a determlnat~on under subsectlon (3) to be lald before each House of the Parliament w~thln 15 slttlng days of that House after the maklng of the determlnatlon.

( 4 )

(5) A decislon of the Secretary under subsectlon (1) takes effect:

L£ no day is speclfied in the decision - on the

(a)	day on whlch the declslon is made; or
(b)	if a day is speclfied in the decision - on the day so specifled (whether that day is before, after or on the day on which the decision is
made ) . "

Before Act No.46 of 1991 and, in particular, s.1237 thereof came into operation on 1 July 1991, s.1237 was amended. The words "an overpayment or" ~n subs. (l) were deleted by the Social Secur~ty (Rewrite) Amendment Act 1991 (Cth) (see S. 3 and Schedule 1) and subs. (4) was omltted and a new subsection substituted by s.20 of the Social Security Legislation Amendment Act (No. 2) 199 1 (Cth) . The substituted subsectlon read:

"(4) A determination made under subsectlon (3) glving,

revoklng or varying directions is a disallowable instrument for the purposes of sectlon 46A of the Acts Interpretation Act 1901. "

Section 46A of the Acts Interpretation Act 1901 makes applicable to a disallowable instrument, except so far as the law otherwise provides, ss48, 48A, 48B, 49 and 50 of that Act. Section 48, as so made applicable, provides for the disallowable instrument to be notlfied in the Commonwealth of Australia Gazette, for it to be laid before each House of the Parliament within 15 sitting days of that House after the

making of the instrument and for the disallowance of the

Instrument by resolution of either House in pursuance of a motion of whlch notice has been given within 15 sitting days after the Instrument has been laid before that House. It may also be noted that, prior to 1 July 1991, s.1235 as enacted by Act No.46 of 1991 was omitted and a new section subst~tuted by the Social Security (Rewrite) Amendment Act 1991 (see s .4 and Schedule 2). By virtue of the substituted section, "debt" where appearing in Part 5.4 of the Social Security Act 1991 - a Part whlch lncluded s.1237 - was to lnclude a debt under the Social Security Act 1947.

In purported exercise of the power conferred by s.1237(3), the Mlnister of State for Social Security on 8 July 1991 made a determination In the following terms:

"COMMONWEALTH OF AUSTRALIA
Social Securlty Act 1991

NOTICE UNDER SUBSECTION 1237(3)

moneys pald in excess of the entitlements authorised by

Having regard to the importance of recovering publlc

Parliament, the longstanding approach under the

Commonwealth Audit Act 1901 to the recovery of debts, the obligations placed on social security recipients by the Social Security Act 1991 (the Act) to notify changes in thelr circumstances and the importance of deterring fraudulent activity, and having regard to subsections 1237(2) and (3) of the Act whlch requlre the Secretary of the Department of Social Security (the Secretary) to act in accordance with directions issued by me from time to time, I hereby dlrect that the power of the Secretary in section 1237 to waive the right of the Commonwealth to recover from a person the whole or a part of a debt must, subject to the attached schedule, be exercised in the following circumstances only:

(a)	Where the debt was caused solely by administrative error on the part of the Commonwealth, and was received by the person in good falth, and recovery would cause financial hardship to the person.
(b)	In respect of the remainder of a debt where it is cost-effective for the Commonwealth to accept a lump sum of money immediately, belng a proportion of the debt that is not less than 80 per cent, and the person does not have the capaclty to repay a greater proportion.
(c)	Where a debt has been written off on the ground of lack of means on the part of the person to repay, or inability to locate the person, and these circumstances still pertain after six years.
(d)	Where a Court has indicated that it imposed a longer

custodial sentence because of the person's inability

or unwillingness to repay a debt.

(e)	Where the Department of Social Security has settled a clvil action for less than the full amount of the overpayment claimed, the difference.
(f)	Where qualification for Family Allowance is accepted as existing (though not actually paid) in a period in respect of whlch a pension, benefit or allowance has been overpaid - the amount of Famlly Allowance that would have been payable in that period is to be deducted from the overpayment. Any such amount is limited to Family Allowance for a perrod of three years prior to the end of the perlod in respect of which pension, benefit or allowance had been overpald.
(g)	Where in the opinion of the Secretary special circumstances apply such that the circumstances are
extremely unusual, uncommon or exceptional (as discussed by the Federal Court of Australia in
Beadle v Director-General of Soczal Security (1985) 7 ALD 670)."

The schedule to the determination provided as follows:

"The following debts must be waived:
(1) A debt which is, or is likely to be, less than $200,

not	being :
(a)	a debt due by a person in respect of the payment of unemployment benefit, job search allowance or newstart allowance which could be deducted under subsection 1223(1) of the Act from an instalment of job search allowance or newstart allowance payable to the person;
(b)	a debt due by a person in respect of the payment of a family allowance, a child disability allowance or a double orphan pension which could be deducted under subsection 1223(1) of the Act from an amount of family allowance, child disability allowance or double orphan pension, or from a combination of any of those amounts.

(2) A debt due by a person whose annual rate of pension, beneflt or allowance is calculated under the assets test provisions of the Act where:

(a)	the debt arose because the person or, if the person is a member of a couple, the person's partner, underestimated in good faith the value of particular property of the person or the person's partner; and
(b)	the value of that particular property was not readily ascertainable."

The first thing to notice concerning the instrument of 8 July 1991 is that it exhiblts a number of textual difficulties. The instrument is structured so as to identify the only circumstances in which the power of the Secretary under s.1237(1) to waive the Commonwealth's right to recover

expressed to be capable of exercise only if the particular	the whole or part of a debt is to be exercised. The power is
case under consideration falls wlthln one or other of the lettered paras (a) to (g) inclusive. For example, under par. (a), the power may be exercised if and only if, objectively considered, three crlteria are shown to exist namely -

(i)  that the debt was caused solely by administrative error on the part of the Commonwealth;

(li)  the debt [sic] was recelved by the person in good faith; and

(iii)  recovery would cause financlal hardship to the person.

Paragraph (d) refers to the debtor's inability or unwillingness to pay "a debt" whereas what appears to have been intended was that he be unable to pay the particular debt in relation to whlch the question of waiver arises. Paragraph (e) has the difficulty that it appears to assume that a civll action for debt may be settled for an amount less than the full amount clalmed without the settlement necessarily having the effect of extinguishing the balance of the debt. Paragraph (f) appears to have been included in error or at least to have been drafted without regard either to the nature of the power to be exercised by the Secretary, or to its consistency with the opening portion of the determination or with the other paragraphs. T h ~ s must follow from the circumstance that ~t stands alone ln being expressed, not in

terms of walver, but as a direction to make a deduction.	Paragraph (g) 1s expressed in such a way as to be confusing,
if not meaningless. Apart from any difficulty to which the collocat~on of the words used ln the expression "extremely unusual, uncommon or exceptional" gives rise, it is not clear whether, in order to satisfy the requirements of the paragraph, lt is necessary to show special circumstances or circumstances that are extremely unusual, uncommon or exceptional. The paragraph seems to proceed on the footing that the two expressions, which are, In truth, quite different, express identical concepts. Further, the paragraph postulates that the judgment of this Court in Beadle v. Director-General of Social Securlty ( 1 9 8 5 ) 7 ALD 670 discussed the concept of "extremely unusual, uncommon or exceptional" circumstances. This, however, involves a misunderstanding of the issues that arose in that case.
The provision of the Social Security Act 1947 with which that case was concerned was a provision under which a family allowance granted to a person was to be payable from the commencement of the next family allowance period after the date on which the claimant became eligible to claim the allowance provided the claim was lodged within 6 months after that date or, in special circumstances, within such longer perlod as the Director-General of Social Security allowed. The Court was not required to consider, and did not discuss, what might be involved in the concept of "extremely unusual, uncommon or exceptional" circumstances. As Hill J. pornted out in Secretary, Department of Soclal Security v . Hodgson ( 1 9 9 2 ) 108 &R 322 at p.332, nowhere in the judgment did the
Court use those words. Its consideration was conflned to the expression "special circumstances" in the context in which it appeared in the provisron then before it. Even in relation to that expression, the Court expressly declined to lay down precise limits or precise rules, each case depending on its own Clrcumstances.
The language of the Instrument is also curlous in its use of the word "must" in the operative clause. The instrument rs open to the construction that, whlle the Secretary is precluded from exercrslng the power conferred upon hlm by S. 1237(1) unless the circumstances of the particular case satlsfy the requirements, objectively considered, of the lettered pars (a) to (f) inclusive or unless he forms the requisite opinion under par.(g), he is bound to exercise the power of walver in every case ln which those requirements are satisfied. The extraordinary inconsistency between the drafting of par.(f) and the drafting of the rest of the determination would at least be reduced somewhat by this construction - for, in providing that an amount "is to be deducted from the overpayment", par. ( f) would be in conformity in its effect with the other paragraphs. Furthermore, most of the paragraphs describe situations where refusal of a waiver would be very hard to justify, or even where walver might not be actually necessary (cf. par.(e)).
meaning of those words, one would expect to find in the "subject to the attached schedule". According to the ordinary
The instrument also provides that it is to operate schedule provisions qualifying what would otherwise be the operatlve effect of the instrument. The schedule, however, has a different operation. It provides that the power conferred by s.1237(1) must be exercised so as to waive the Commonwealth's right to recover debts that are identified in the schedule. In so providing, the schedule does not qualify the other provisions of the instrument but appears to have been lntended to operate as a separate substantlve provision. It clearly deals with some classes of debts that do not fall within the lettered pars (a) to (g) inclusive.
The question for determlnation is whether the instrument of 8 July 1991 was a valid exerclse by the Minlster
of the power conferred upon him by s.1237(3) of the Social
Security Act 1991. Putting aslde the textual difficulties to
some of which reference has been made, the evldent purpose and effect of the instrument, if valid, was to llmit the very wide discretion conferred on the Secretary by s.1237(1) so that, on the one hand, it mlght only be exercised in the restricted classes of case identified in the lettered paragraphs and, on the other, to require the discretion to be exercised so as to waive the debt in the cases falling within the schedule or, perhaps, in all the cases specified. The instrument will be valid only if the language of S. 1237(1) will support an instrument havlng that effect.
In our opinion, the language of s.1237(3), when considered in its context and having regard to its legislative history, is not apt to have authorised the Mlnister to make the instrument of 8 July 1991. Section 1237(3) is not expressed in terms which authorise the Minister to circumscribe the wlde discretion vested in the Secretary by s.1237(1). The language used is more apt to describe a power in the Minister to give general guidance to the Secretary, whether by way of statements of pollcy or otherwise, In the exercise by hlm of the discretion vested in him but guidance which wlll leave the Secretary free, in any particular case, to depart from the guidance provlded by the Minister's directions if the circumstances of the individual case warrant such a departure: see, for example, Brltlsh Oxygen Co. Ltd v. Minlster of Technology [l9711 AC 610 and Howells v Nagrad Nominees Pty Ltd (1982) 43 ALR 283 per Fox and Franki JJ. at p. 307.
Section 1237(3) refers to "the Secretary's power", and authorizes a determination which will affect the manner of its exercise but wlll leave the power ltself intact. This point is confirmed by a consideration of the terms of subss. (l) and (2). Subs. (l) confers upon the Secretary a power of dec~sion - "(t)he Secretary may ... decide" - and subs.(2) then requires the Secretary, "(i)n exercising the power" i . e . of decision), to comply with directions. It is
important to note that subs. (2) stlll regards the Secretary as
exercising the power. When the determination purports to lay down quite precise rules dictating the result of all, or
nearly all, applications, it departs radically from the statutory scheme because it is not giving guidance in the exercise of the power, but attempting to deny the existence of the power.
That s.1237(3) does not authorise the Mlnister to circumscribe the discretion conferred on the Secretary by s.1237(1) is reinforced by the legislative h~story. The wide
discretion which is now conferred by s.1237(1) first appeared
as s.146(1). There was, at that time, no provision simllar to s.1237(3). Provisions providing for the giv~ng of directions by the Minlster were frrst inserted in 1988 when subss(lA), (1B) and (1C) were inserted lnto what had by then become 5.251. If, by enacting those subsections, the Parliament had intended to make such a significant change as would be involved in reading the language of those subsections as operat~ng to enable the Minister to crrcumscribe the power which had, since 1985, resided in the Secretary, one would have expected that language more appropriate to achieving that result - language addressed to the ambit of the power itself and not simply to its exercise - would have been used. This view of the provisions is not, in our oprnion, affected by the requlrement - a requlrement inserted at an even later
stage - that any direction by the Minister be "a disallowable instrument". Nor is the circumstance that the word "dlrectlons" is used to describe the Minister's intervent~on
of overriding significance. It is a word of varying import deriving much from the context in whlch it appears. It will,
in appropriate circumstances, signify authorrtatlve or binding instructions but, in other circumstances, wlll signify nothing more than gurdelines.
It follows that the instrument of 8 July 1991 was not authorised by s.1237(3) of the Social Security Act. As the decision of the Administrative Appeals Trlbunal proceeded

on the basis that, in determining the issue before it, that instrument was valid and binding upon it, its decision involves an error of law and must be set aside. The matter is remitted to the Tribunal for the determination of the question whether the circumstances of the case are such that the power conferred by s.1237(1) should be exercised. The respondent must pay the applicant's costs of and incidental to the application to thls Court.

The Court was informed that the instrument of 8 July 1991 had been revoked and replaced by an instrument dated 5 May 1992. Although that instrument meets some, but not all of the textual difficulties of the earlier instrument - indeed, it may have introduced additional difficulties of a textual nature - the considerations which have led us to conclude that the instrument of 8 July 1991 was not authorised by s.1237(3) are equally applicable to the later instrument.

The Court was invited to give general guidance to relevant to be taken into account in exercising the discretion the Administrative Appeals Tribunal as to the circumstances

conferred by s.1237(1). However, we do not think it is appropriate for the Court to accept that invitation. Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.

I certify that t h ~ s and the

preceding 16 pages are a

true copy of the Reasons for Judument herein of the - Court.

Dated: 3 June 1993

Counsel for the applicant : M r P. Bayne

Solicitors for the applicant : Legal Aid Offlce (ACT)

Counsel for the respondent : Mr J.S. Hilton

Solicitor for the respondent : Australian Government

Solicitor

Date of hearing	: 4 November 1992
Date of judgment	: 3 June 1993