Robert Wayne Collins and Veronika Mohor and Secretary, Department of Social Services (Social services second review)

[2024] AATA 2776

Robert Wayne Collins and Veronika Mohor and Secretary, Department of Social Services (Social services second review) [2024] AATA 2776 (9 July 2024)

Division:GENERAL DIVISION

File Number(s):      2021/8078 & 2021/8079

Re:Robert Wayne Collins and Veronika Mohor

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Deputy President K Millar

Date:9 July 2024

Place:Adelaide

The decisions under review are set aside and remitted for reconsideration in accordance with directions that:

·     The amounts considered by the Secretary to be income of Mr Collins and Ms Mohor are reviewed; and

·     Items that are not income are removed; and

·     Any resulting overpayment is recalculated.

.....[sgnd]...................................................................

Deputy President K Millar

CATCHWORDS

SOCIAL SECURITY – overpayment – Age Pension – Newstart Allowance – debts due to Commonwealth – whether applicants were overpaid – whether income reported to Centrelink – bankruptcy – effect of bankruptcy on any debt – where debt incurred by fraud – whether overpayment was calculated correctly – transactions incorrectly attributed as income – decisions under review set aside

LEGISLATION

Administrative Appeals Tribunal Act 1974 (Cth)

Bankruptcy Act 1966 (Cth)

Social Security Act 1991 (Cth)

Social Security (Administration) Act 1999 (Cth)

CASES

Barodawala v Perinparajah [2022] VSCA 198

Dolan v the Australian and Overseas telecommunications Corporation [1992] FCA 202

Meriton Apartments Pty Limited v Industrial Court of NSW [2008] FCAFC 172

Secretary, Department of Social Security v Southcott (1998] 82 FCR 100

Truthful Endeavour Pty Ltd v Condon (Trustee), in the matter of Rayhill (Bankrupt) [2015] FCAFC 70

REASONS FOR DECISION

Deputy President K Millar

9 July 2024

INTRODUCTION

1. Mr Collins and Ms Mohor are members of a couple.  The Secretary has raised significant debts against them due to deposits into their personal bank accounts.  The Secretary considers that these deposits are income that was not taken into account in assessing their rates of Age Pension and Newstart Allowance respectively.

2. On finding that Mr Collins and Ms Mohor had additional combined income of approximately $1,100,252 in the period 7 June 2011 to 3 September 2018 (‘the debt period’), the Secretary raised an overpayment against Mr Collins of $103,848.34 and an overpayment against Ms Mohor of $77,576.58.  The decisions to raise and recover these debts were affirmed by an authorised review officer and in a decision of the Social Services and Child Support Division of this Tribunal (‘AAT1’). 

3. Mr Collins and Ms Mohor have applied for a further review of these decisions. In issue is whether Mr Collins and Ms Mohor were overpaid Age Pension and Newstart Allowance respectively, whether these overpayments are debts due to the Commonwealth, and, if so, whether there is any reason the debts should not be repaid.

4. Mr Collins raised for the first time in these proceedings that both he and Ms Mohor were declared bankrupt in the debt period.  Mr Collins was declared bankrupt on 4 March 2016 and discharged from bankruptcy on 5 March 2019.[1] Ms Mohor was declared bankrupt on 2 March 2016 and discharged from bankruptcy on 3 March 2019.[2]  Their bankruptcy is significant because it can affect whether any overpayment is a debt due to the Commonwealth.

   [1] Ex A5.

   [2] Ibid.

   PROCEDURAL HISTORY

5. This matter has been the subject of many interlocutory proceedings originating from all parties, and the matters proceeded to hearing nearly two and a half years after the applications for review were lodged.

6. Mr Collins objected to summonsed material being made available for inspection by the Secretary on two occasions, however as this material was relevant to the matter before me, inspection was allowed. 

7. Mr Collins sought separate hearings for himself and Ms Mohor and claimed that it was unfair to have a combined hearing.  A central issue in this matter is the correct calculation of their rates of social security payments.  As the rate of Age Pension and the rate of Newstart Allowance both require the use of half of Mr Collins’ and Ms Mohor’s combined income to calculate the correct rate,[3] it is inefficient and contrary to the objects of the Administrative Appeals Tribunal Act 1974 (Cth) (‘the AAT Act’) to have separate hearings.  Issues that require separate consideration, such as the calculation of any overpayment, whether there is a debt owing to the Commonwealth, and if there is any reason to waive part or all of the debt, can still be considered separately.  Mr Collins indicated that he wanted to appeal the decision to combine the matters to the Federal Court.  He provided the Tribunal with an unsealed application to the Federal Court and asked for the matter to be further delayed.  He was advised that the matter would proceed until a sealed document was provided, or there was an order from the Court.  This was not pursued further.

   [3] Social Security Act 1991 (Cth) ss 1064-A2 and 1068-G2.

8. Another cause for the delay was the issue of a warrant by SA Police (‘SAPOL’) to seize Mr Collins’ computers and electronic devices, as well as other records he held.  Mr Collins said that this impeded his ability to prepare for the hearing of his matter and in his capacity to act as a representative for Ms Mohor.  He was provided with a three-month adjournment to obtain copies of any necessary documents, such as bank account statements, but did not obtain any further bank account statements in this time.  He said that he tried to get copies of his bank account statements from Centrelink, including through an application under Freedom of Information, but was unsuccessful. He did not explain why he or Ms Mohor did not approach the banks for copies of their personal bank account statements.

9. Mr Collins repeatedly sought delay until the material seized under warrant by SAPOL was returned to him.  As it was not known whether or when this material would be returned to him, his application was refused.  The Secretary urged Mr Collins to seek a summons issued to SAPOL for material seized under warrant.  This summons was issued but ultimately set aside. 

10. Mr Collins also repeatedly raised issues with the documents provided by the Secretary under s 37 of the AAT Act, stating they contained errors and that some documents were unreadable.   Mr Collins also claimed he could not proceed to hearing until the issue regarding his bankruptcy was resolved.  As this was a matter for submissions and evidence during the hearing, this was refused.  After being advised that the matter will proceed to hearing and that the issues raised by the applicants about the bankruptcy will be addressed then, Mr Collins requested that I recuse myself on the basis that the decision to deal with the bankruptcy at hearing, and the failure of the Tribunal and the respondent to address the issues in the T-Documents, was prejudicial. I declined to recuse myself.

11. Mr Collins claimed that he had problems with his memory and needed an assessment before he could proceed to hearing, and that the next available appointment was in October 2023.  He did not persist with this claim.

12. At the time the matter was first before me, Mr Collins was serving a term of imprisonment by way of home detention.  Mr Collins’ home detention was revoked during the proceedings, and he was returned to prison. Mr Collins claimed that he did not have his documents and could not access his documents in prison and made several requests for adjournment on this basis. 

13. Another set of documents was sent to him by the Secretary. I did not accept that he could not receive documents in prison, as this is contrary to s 33 of the Correctional Services Act 1982 (SA). I also did not accept that he would be unable to access the documents necessary to prepare for a hearing and declined to adjourn the matter further on this basis.

14. After considerable protest from Mr Collins regarding the accuracy of the copy of the documents sent to him in prison, the Secretary acknowledged that an incorrect set of the documents had been provided.  A complete set was sent by the Secretary and received by Mr Collins on 27 October 2023.[4] 

    [4] As confirmed by Mr Collins in a letter to the Tribunal received 2 November 2023.

15. Shortly after, Mr Collins stated that there were gaps in the records relating to his and Ms Mohor’s income that he claimed was reported during the relevant period.  The hearing listed for December 2023 was postponed and Directions were issued to the Secretary to provide any further existing records of income reported by either applicant.

16. Mr Collins sought an order that the hearing be held in private but did not respond to a request to provide reasons as to why it should be in private, and his request for an order under s 35 of the AAT Act was refused. 

    CREDIBILITY

17. Mr Collins has a very lengthy criminal history involving fraud. This commences in 1973 with a conviction for false pretences which attracted a sentence of one year and six months’ imprisonment.  He has been convicted of approximately 70 counts of false pretences since. 

18. Mr Collins has been convicted of fraud by a person with a power of attorney, fraudulent conversion, improperly using information obtained as an officer of a corporation to gain advantage, managing a corporation having been convicted of serious fraud, false pretences, dishonest dealings with documents, dishonestly take property without the owner’s consent and practising law without being a local or interstate practitioner.  He has been convicted of knowingly importing cannabis.  He has been sentenced to terms of imprisonment adding to over 31 years in the period 1973 to 2012 for these offences.

19. The sentencing remarks of Judge Chapman were provided for seven counts of deception for which he was convicted on 15 October 2019.  The sentencing remarks state that Mr Collins induced a person to provide a cheque for the purposes of establishing an international bank, then spent the money for his own purposes.  This was conducted through Fountaingate International Corporation Pty Ltd (‘Fountaingate’).  In a second series of offences, Mr Collins attracted investors for a property development in the United States and provided false information to investors about the property.  As a result, he dishonestly obtained $286,000 which he spent.  While spending the money he continued to meet with the victims and send fake emails in an attempt to hide the scam.[5] 

    [5] Ex R2.

20. Judge Chapman states that Mr Collins’ extensive history in deceiving people was such that no leniency could be extended toward him.  He was described as suffering no contrition or remorse, and there being no prospect of rehabilitation.  He was sentenced to a term of imprisonment of six years from 15 November 2019 with a non-parole period of four years.[6]

    [6] Ibid.

21. A report by psychologist Mr Luke Broomhall on Mr Collins for the purposes of sentencing provides a diagnosis of personality disorder with mixed narcissistic and antisocial traits, with the narcissistic traits being a grandiose sense of self-importance, a sense of entitlement, interpersonal exploitation of others and a lack of empathy.  The antisocial traits are reported as deceitfulness, consistent irresponsibility, and lack of remorse.  Mr Broomhall assessed Mr Collins’ risk of recidivism as high.[7]

    [7] Ex R3.

22. Against this background, much of this matter turns on the explanation for deposits to accounts held by Mr Collins or Ms Mohor or both jointly.  Given Mr Collins’ extensive history of false pretences and fraud, any explanation given by him should be approached with caution.  Ms Mohor did not herself offer explanations for deposits to her accounts. 

23. Mr Collins’ explanation of the transactions in his accounts was generally unconvincing.  For example, he claims that he managed insurance monies paid to Ms Mohor’s son for the rebuilding of his home and provided a power of attorney,[8] but declined to call Ms Mohor’s son to give evidence.  He declined to call other people who he had told AAT1 had deposited money to  his bank accounts, including his son Nigel and another person he said deposited money to his account because he was ‘in trouble and didn’t have any bank accounts’.[9]

    [8] Ex A4.

    [9] Ex A4, Mohor and Collins and Secretary, Chief Executive Centrelink (Social Services First Review) 19 October 2021, [81] – [90].

24. Mr Collins repeated as an explanation for certain deposits that the deposits were for an investment in a renewable energy project in Papua New Guinea.  This was expressly discounted by Judge Chapman who stated that ‘[t]he jury clearly rejected that you had any real connection to Papua New Guinea as at 2013 and 2014 when you made representations to [one of the victims of the offending]’.[10]   

    [10] Ex R2, 2.

25. I am not satisfied that I can rely on the oral evidence of Mr Collins or documents generated by him unless this is supported by other independent evidence. 

26. However, contrary to submissions made by the Secretary, I do not consider a finding about Mr Collins’ credibility can be used to establish fraud at large without specific evidence of acts or omissions which are shown to have been made and which are knowingly false, or which are provided recklessly as to whether they are true or false.

    SELF-INCRIMINATION

27. Mr Collins has been convicted of certain offences leading up to a debt being raised by the Secretary.  There are, however, further offences for which he could be charged and convicted under the Social Security Act 1991 (Cth) (‘the Act’), the Social Security Administration Act 1999 (‘the Administration Act’) and the Bankruptcy Act 1966 (Cth) (‘the Bankruptcy Act’). He is not represented and says he is representing Ms Mohor.

28. Mr Collins was advised of his right to refuse to answer questions if this may lead to a criminal or civil penalty.  

29. Mr Collins chose to give evidence and answer questions asked of him.

30. Ms Mohor has also been charged with criminal offences, however these charges were discontinued.  She was also advised of her right not to give evidence if this would expose her to a civil or criminal penalty.  Ms Mohor elected not to give evidence.  It was not pressed by the Secretary that she could answer specific questions without invoking the privilege. 

31. The effect of claiming the privilege against self-incrimination is that no adverse inference can be drawn from Ms Mohor declining to answer questions.[11]  However, in many respects this leaves transactions to the accounts unexplained other than in Mr Collin’s evidence and submissions.

    [11] Dolan v the Australian and Overseas Telecommunications Corporation [1992] FCA 202 at [58] – [61].

    Were Mr Collins and Ms Mohor overpaid Age Pension and Newstart Allowance?

32. The calculator for a person’s rate of Age Pension is set out in Pension Rate Calculator A at the end of s 1064 of the Act.[12] This states at s 1064-A2 that people who are members of a couple are treated as pooling their income and assets and sharing them on a 50/50 basis. In the period of the debt, the rate calculator for Newstart Allowance was set out at Benefit Calculator B at the end of s 1068 of the Act.[13] Section 1068-G2 also deems the income of a Newstart recipient to be half the amount of the combined income of the couple.

    [12] Social Security Act 1991 (Cth) s 55.

    [13] Ibid s 643.

33. The income of a person can affect the rate of Age Pension[14] or Newstart Allowance[15] paid to the person.  To determine if Mr Collins or Ms Mohor was overpaid, their combined income in the debt period must be determined. 

    [14] Ibid s 1064-A1.

    [15] Ibid s 1068-A1.

34. The term ‘income’ has a broad definition in s 8 of the Act, and subject to exclusions that do not apply on the material before me, includes any income amount earned, derived or received for the person’s own use or benefit. It also includes employment income.

35. Mr Collins claims that he declared his employment income, and that Centrelink have withheld records that show he has declared income.  The letters he received from Centrelink during the debt period show that he was considered to have no income other than very small amounts (between 6 to 12 cents per annum) from financial investments and infrequent casual earnings.[16] 

    [16] T16, file no. 2021/8078. For example, at T16, 1774 combined annual income of $150.18 is recorded; at T16, 1782 in the period 23 October 2012 – 5 November 2012 casual income of $350 was reported from Bute Hotel; at T16, 1805 an amount of $75.09 annual income from financial investments; and at T16, 1807 $350 casual earning reported 25 February 2013.

36. In Mr Collin’s oral evidence and submissions about individual deposits to his bank accounts, he lists several payments to his account as being for accounting work he has undertaken for various people and entities.  In the absence of any other evidence to support his assertions, I do not accept that he declared income in the quantum he received it and find that he has received or earned income that was not declared to Centrelink. 

37. This income was not taken into account in calculating his rate of age pension, and I am satisfied that the quantum of these payments affects his rate of Age Pension and Ms Mohor’s rate of Newstart Allowance.  It follows that they have been overpaid.

38. Mr Collins also claimed this was business income stating that ‘all amounts are business income under company before bankruptcy [and the] business name after bankruptcy [of] Rob Collins Research and Investigation.  Division 1A business income this section allows deduction of expenses.  Section 2074 – 1075, all amounts are gross’.[17]  He reports that amounts are ‘cash for work’ under the Rob Collins ABN, and that other sums are ‘work accounting’, or are ‘accounting ABN’.[18]    He could not provide a satisfactory explanation for why the income of a separate company with its own bank account would instead be deposited into his personal accounts in the period before his insolvency, and did not provide any other information to support that deductions apply to this income.  In the absence of supporting evidence I do not accept that this was business income or that deductions apply to this income.

    [17] Ex A12.

    [18] Ibid.

39. Judge Chapman found in sentencing Mr Collins that he had used money deposited to Fountaingate accounts for his own purposes. In relation to money paid by investors for property in New York, Judge Chapman states that:

    You faked emails to the group and you put together information about the non-existent properties.  As a result, you managed to dishonestly benefit yourself by about $286,000.  All of that was paid into the Fountaingate account by the victims by the end of April 2016, and your offending was complete.  After the offences, you proceeded to spend the money.  It was spent by January 2015.[19]  

    [19] Ex R2, 2.

40. The amounts of $268,000 found by Judge Chapman to have been taken from Fountaingate and the purported employment income of Mr Collins are income as defined by the Act. This income is of an amount that would affect Mr Collins’ rate of Age Pension and Ms Mohor’s rate of Newstart Allowance.

41. As a result, I find that Mr Collins and Ms Mohor have been overpaid Age Pension and Newstart Allowance respectively.

    Is the overpayment correctly calculated?

42. While examining Mr Collins’ and Ms Mohor’s income, Centrelink obtained bank account statements for their personal and joint accounts and have attributed deposits to these bank accounts as income.   These deposits appear in a table in the documents provided by Centrelink.[20] 

    [20] T11, file no. 2021/8078; T13, file no. 2021/8079.

43. A review of the bank accounts provided by the Secretary in support of the debt shows that no account statements were provided for a HSBC credit card account.  Centrelink attributes several deposits to this account as income, however neither the applicants nor the Tribunal have had the benefit of examining the statements to see if these deposits have been made, or whether they are transfers from another of Mr Collins’ or Ms Mohor’s accounts.

1. There is evidence that supports Mr Collins’ claim that amounts deposited to his HSBC credit card and treated as income by the Secretary were transfers from another account.  For example:

   ·An amount of $1,500 deposited to the HSBC credit card on 21 September 2015[21] is matched by a transfer of $1,500 to this account from a Bank SA account on 19 September 2015.[22]  

   ·An amount of $600 deposited to the HSBC credit card on 17 November 2015[23] is matched by a transfer of the same amount from another of his personal accounts on the same date.[24]

   ·An amount of $500 deposited to the HSBC credit card on 25 November 2015[25] is matched by a withdrawal of the same amount on 24 November 2015 from another of his personal accounts.[26]

   ·An amount of $410 deposited to the HSBC credit card on 21 December 2015[27] is matched by a transfer from another account on the same date.[28] 

   ·An amount of $500 deposited to the HSBC credit card on 21 January 2016[29] is matched by a transfer of the same amount on the same date from another of his accounts.[30] 

   [21] T13, file no. 2021/8079, 1275.

   [22] T10, file no. 2021/8078, 625.

   [23] T13, file no. 2021/8079, 1275.

   [24] T10, file no. 2021/8078, 636.

   [25] T13, file no. 2021/8079, 1276.

   [26] T10, file no. 2021/8078, 637.

   [27] T13, file no. 2021/8079, 1276.

   [28] T10, file no. 2021/8078, 642.

   [29] T13, file no. 2021/8079, 1276.

   [30] T10, file no. 2021/8078, 648.

2. In the absence of the account statements from the HSBC credit card, it cannot be determined whether these transactions are consistent with funds being transferred from other accounts. 

3. On it becoming apparent that Mr Collin’s evidence that some transactions were incorrectly attributed as income and that accounts may be missing was plausible, both parties were invited to provide any missing bank account statements.

4. In response, it was submitted on behalf of the Secretary that there is no obligation to assist the applicants establish their case or obtain bank account statements using the Secretary’s power to obtain information, and the Secretary did not provide these statements. Section 33 (1AA) of the AAT Act requires a decision maker to use their best endeavours to assist the Tribunal to make a decision and I do not accept this submission. The Secretary has asserted that amounts deposited to the HBSC credit card account are income. If it becomes clear, as in this case, that there is missing information or errors and additional information is required to assist in reaching an accurate decision, the Secretary should assist the Tribunal to make its decision.

5. Mr Collins claims that there are other accounts missing, and also claims that there are account statements that have been withheld by the Secretary.  He provided a list of accounts.  Several of the accounts he lists are the accounts of associated businesses, and he claims that some of the deposits attributed as personal income are income of these businesses.  Mr Collins was provided with the opportunity to summons these accounts.  Mr Collins’ summons request was impermissibly broad and indefinite, and sought bank account statements for entities he does not control.  Considering other errors in the calculations, I did not consider it necessary to further delay this matter by issuing further summons’ for information. 

6. In evidence before the Tribunal, Mr Collins could point to at least one transaction in the accounts before the Tribunal where an amount of $36,400 was taken by the Secretary to be income but was a cheque that was dishonoured.  The deposits and the cheque reversal can be seen in his account statement.[31] 

   [31] T12, file no. 2021/8079, 1129-1131.

7. Mr Collins gave evidence that there are other transactions that are not income despite appearing as deposits in a bank account.  He was provided time to specify any further transactions where amounts had been included as income that were transfers between accounts or bounced cheques.  He provided a somewhat unhelpful list of all the transactions taken to be income with his explanation for each transaction, but without a reference to documents that support his assertions about the transactions.

8. However, within his list it could be identified that there are several transactions included as income which are not income, as supported by other entries in the bank account statements. The Secretary conceded that the following amounts were not income as defined by the Act:

Date	Amount	Reason
10 August 2011	$36,400	Cheque dishonoured
16 March 2012	$766.69	Return of purchase
18 March 2012	$19,000	Cheque dishonoured
6 November 2012	$433	ATO payment

1. The Secretary invited the Tribunal to make findings about the specific items in the transactions incorrectly attributed as income and to remit the matter for reconsideration with a list of the items to be excluded but otherwise affirming the decision.  It was alternatively submitted that the Secretary would ‘accept’ a direction to re-examine the list of transactions line by line but otherwise the decisions under review should be affirmed.

2. I do not find either of these courses of action satisfactory.   Errors have been identified in a list of over 500 transactions, and there may be further errors. As Mr Collins has established that the calculation of his and Ms Mohor’s income is incorrect, all transactions relied on require reconsideration, and merely issuing directions to exclude specific transactions is inadequate.  In the absence of any certainty about the amount of the overpayment, it is inappropriate to proceed to decide if an overpayment is a debt due to the Commonwealth, and if so whether any or all of the debt should be waived.

   Effect of bankruptcy

3. Under s 153 of the Bankruptcy Act 1966 (Cth) (‘Bankruptcy Act’), bankruptcy generally releases the bankrupt from all provable debts incurred prior to the bankruptcy. If a debt is provable in the bankruptcy and is not subject to any exceptions in the Bankruptcy Act, ‘the bankruptcy processes of proof of debt and release of provable debts replace the processes of waiver and write off.’[32]

   [32] Secretary, Department of Social Security v Southcott (1998) 82 FCR 100, 111.

4. A discharge from bankruptcy does not release a bankrupt from certain debts, including a debt incurred by fraud (s 153(2)(b) of the Bankruptcy Act). This fraud must relate to the conduct of the debtor which causes the debt to come into existence, and not the legal source of the debt.[33] As this applies to Mr Collins and Ms Mohor, this requires fraudulent conduct towards Centrelink and not any fraud in obtaining the original funds.   A finding by a Court that the funds in Mr Collins’ or Ms Mohor’s accounts were obtained by fraud does not establish that the Centrelink payments were obtained by fraud. 

   [33] Barodawala v Perinparajah [2022] VSCA 198.

5. Under s 27 of the Bankruptcy Act, the Federal Court and the Federal Circuit and Family Court of Australia have concurrent jurisdiction in bankruptcy, exclusive of the jurisdiction of all courts other than the High Court under s 75 of the Constitution, or the jurisdiction of Division 1 of the Federal Circuit and Family Court under ss 35 or 35A of the Bankruptcy Act. This includes the Supreme Courts of the States and Territories due to the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth),[34] and the Judiciary Act 1903 (Cth).[35]

   [34] Truthful Endeavour Pty Ltd v Condon (Trustee), in the matter of Rayhill (Bankrupt) [2015] FCAFC 70.

   [35] Meriton Apartments Pty Limited v Industrial Court of NSW [2008] FCAFC 172.

6. The definition of bankruptcy in s 5 of the Bankruptcy Act in relation to jurisdiction or proceedings means any jurisdiction or proceedings under or by virtue of the Bankruptcy Act.

7. The question is then whether the Tribunal has jurisdiction to make a finding that a debt was incurred by fraud under s 153(2)(b) of the Bankruptcy Act when it is not a Court and does not have powers other than those conferred by statute.

8. In previous matters before the Tribunal, it has been assumed that the Tribunal has the power to make a finding that a debt was incurred by fraud, and therefore that the bankruptcy of a person does not affect recovery of a debt incurred by fraud.[36]

   [36] See, for example, Civitareale and Department of Family and Community Services [1999] AATA 486; Secretary, Department of Social Security  and Malaj [1993] AATA 181; Secretary, Department of Social Security and Southcott (1998) 82 FCR 100; Re Cook and SDEWR [2007] AATA 1690; SGNZ and SEEWR [2009] AATA 721; Re Dodd and SDEEWR [2009] AATA 451; Re Fode and SDFHCSIA [2011] AATA 543; Fletcher v SDFHCSIA [2013] AATA 633.

9. In Meriton Apartments Pty Limited v Industrial Court of New South Wales[37](‘Meriton Apartments’) the Industrial Court of NSW declared that a bankrupt had standing to proceed with a matter after the assignment of the chose in action to the bankrupt by the trustee in bankruptcy in accordance with the Bankruptcy Act. Meriton Apartments sought a declaration in the Federal Court that the Industrial Court did not have jurisdiction to make this declaration, claiming that the proceedings had been abandoned because the trustee failed to make an election to continue the proceedings as required by the Bankruptcy Act.

   [37] [2008] FCAFC 172.

10. The Full Court, comprised of Branson, Greenwood and Perram JJ, raised the issue of the power of the Industrial Court to make a decision given the operation of s 27 of the Bankruptcy Act. The question raised by the Court was (among other things) whether a State Court could make a finding that that the person who brought the proceeding had standing.

11. Branson J noted the distinction between recognising the binding legal effect of the Bankruptcy Act and matters which only particular Courts are empowered to address.[38] Following an examination of the history of jurisdiction in bankruptcy, the majority held that a decision of a State Court that a person has standing to commence or maintain a proceeding is not a decision under or by virtue of the Bankruptcy Act.

    [38] Meriton Apartments Pty Limited v Industrial Court of New South Wales [2008] FCAFC 172, [8], [18].

12. While the applications in this case arise under the Social Security Act and not the Bankruptcy Act, unless there is a finding that the debt was incurred by fraud under s 153(2)(b) of the Bankruptcy Act, no action can be taken to recover a debt prior to the date of Mr Collins’ and Ms Mohor’s bankruptcy. Unless there is such a finding, an overpayment that is a debt due to the Commonwealth up to the date of the bankruptcy is released.

13. There is a question about the power of administrative decision makers to find that a debt was incurred by fraud for the purposes of the Bankruptcy Act. As it applies in cases such as this, to do so would also permit a finding of fraud to be made by administrative decision-makers at a Departmental level.

14. It could also be argued that in making a finding that the debt was incurred by fraud, the Tribunal is merely applying a provision in the Bankruptcy Act in coming to a decision on a matter arising under the Social Security Act.

15. There are specific provisions in the Act that relate to fraud,[39] and this question may rely on the interaction and context of both the Bankruptcy Act and the Social Security Act.

    [39] For example, a debt cannot be taken to be irrecoverable at law if it was incurred by fraud (s1236(1B)(c) of the Act), or there is a criminal offence where payment is obtained through fraud (ss 216 and 217 of the Administration Act).

16. As this matter is to be reconsidered by the Secretary, further consideration of this issue is no longer necessary.     

17. In addition, there is an absence of specific evidence about how any overpayment was incurred, and I would not be prepared to infer from general findings about credibility that there were instances of fraud that mean that the bankruptcy did not discharge any debt owing to the Commonwealth.

    CONCLUSION

18. On the face of it, this matter involves a routine determination of whether Mr Collins or Ms Mohor were overpaid social security payments, and if so whether this is a debt to the Commonwealth that should be recovered. However, the conduct of the parties and intersection of the Social Security Act and the Bankruptcy Act has added considerable procedural and legal complexity.

19. This matter fails at the hurdle of determining whether any overpayment is correctly calculated, and as correct information is required to decide the remaining issues, the decisions under review must be remitted for reconsideration.

    DECISION

20. The decisions under review are set aside and remitted for reconsideration in accordance with directions that:

    ·     The amounts considered by the Secretary to be income of Mr Collins and Ms Mohor are reviewed; and

    ·     Items that are not income are removed; and

    ·     Any resulting overpayment is recalculated.

I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for the decision of Deputy President K Millar

...[sgnd]...............................................

Associate
Dated: 9 July 2024

Date of hearing:

14 and 15 March 2024, 30 May 2024

Advocate for the applicants:

Robert Collins

Solicitor for the respondent:

Counsel for the respondent:

Michael La Vista,
Sparke Helmore

Paul d’Assumpcao,
Howard Zelling Chambers