Secretary, Department of Social Security v Danielson

[1996] FCA 1133

CATCHWORDS

SOCIAL SECURITY - Newstart Allowance benefits - whether evidence upon which AAT could conclude that false statement or false representation within s 1224 of the Social Security Act 1991 (Cth).

EVIDENCE - no direct evidence of fact in issue - whether AAT erred in law in concluding that there was therefore no evidence of that fact - inference available to be drawn from evidentiary facts.

Social Security Act 1991 (Cth) s 1224

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47
Edward J Sweeney & Sons Inc v Texaco Inc 637 F2d 105 (3d Cir) (1980), cert denied 451 US 911 (1981)

Secretary, Department of Social Security v Leanne Susan Danielson
No QG 7 of 1996
Cooper J
Brisbane
23 December 1996

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION

No QG 7 of 1996

On appeal from the General Administrative Division of
the Administrative Appeals Tribunal constituted by
Mr K L Beddoe Senior Member

BETWEEN:

SECRETARY, DEPARTMENT OF SOCIAL
  SECURITY

Applicant

AND:

LEANNE SUSAN DANIELSON

Respondent

JUDGE MAKING ORDER:          Cooper J
WHERE MADE:  Brisbane
DATE OF ORDER:  23 December 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. The decision of the Administrative Appeals Tribunal given on 18 December 1995 be set aside.

2. The matter be remitted to the Administrative Appeals Tribunal to be determined in accordance with law and these reasons.

3. The applicant pay the respondent’s costs of and incidental to the appeal to be taxed if not agreed.

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

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

GENERAL DIVISION

No QG 7 of 1996

On appeal from the General Administrative Division of
the Administrative Appeals Tribunal constituted by
Mr K L Beddoe Senior Member

BETWEEN:

SECRETARY, DEPARTMENT OF SOCIAL
  SECURITY

Applicant

AND:

LEANNE SUSAN DANIELSON

Respondent

CORAM:  Cooper J
PLACE:  Brisbane
DATE:  23 December 1996

REASONS FOR JUDGMENT

Introduction
This is an application by way of appeal from a decision of the Administrative Appeals Tribunal (“the AAT”). The AAT affirmed a decision of the Social Security Appeals Tribunal (“the SSAT”) to set aside a decision by a delegate of the Department of Social Security (“the Department”). The Department had determined to raise and recover from the respondent, pursuant to s 1224 of the Social Security Act 1991 (Cth) (“the Act”), an amount of $1,166.54 paid to the respondent by way of Newstart Allowance benefits.

The question of law raised on the appeal is whether there was evidence before the AAT upon which it could properly find that the respondent made false statements or false
representations to the Department and that therefore the $1,166.54 was a debt due by the respondent to the Commonwealth within s 1224(1) of the Act. Whether or not there is evidence of a particular fact is a question of law (Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355) and is properly the subject of an appeal to this Court from the AAT.

Background and Facts
  On 13 July 1992 the respondent registered with the Department for payment of Newstart Allowance.  The respondent was paid Newstart Allowance benefits in respect of the period 30 June 1992 to 18 November 1992.

During the period in respect of which she was paid Newstart Allowance benefits, the respondent was employed as a casual housemaid at the Southbank Motor Inn.  On average she worked four days per week for four or five hours per day.  The respondent was paid weekly in cash and received and retained payslips in respect of her weekly earnings.

Eligibility for the continuing receipt of Newstart Allowance benefits and the amount of such continuing benefits are income tested.  At the relevant times, an applicant for continuation of Newstart Allowance was required to complete a “continuation form” each fortnight and deliver it to the Department.  The form included a question requiring the applicant to calculate the gross income earned from casual employment in the previous fourteen day period.

The amount of continuing Newstart Allowance to which an applicant is entitled is calculated in accordance with Benefit Rate Calculator B in s 1068 of the Act (s 643). In essence, a person who is eligible for Newstart Allowance benefits is
entitled to be paid the “maximum payment rate” less any income reduction.  A person in the respondent’s situation is able to earn $60 per fortnight without affecting his or her Newstart Allowance entitlement.  Any income earned above $60 per fortnight has the effect of reducing the amount of Newstart Allowance benefits payable for that fortnight.

Once a continuation form is lodged, the gross income declared by the applicant for continuation is entered into a computer and is subject to an automatic calculation to determine the amount of benefit payable in accordance with the formula provided for under the Act.

In the instant case, the respondent completed the fortnightly continuation forms during the relevant period, including the relevant declarations as to gross income earned in the previous fourteen days.  The respondent was paid weekly on Wednesdays.  She was required to complete the continuation forms on every second Monday.  Accordingly, she was required to perform a calculation as to the income she had earned in the previous fourteen days and could not complete the form by reference only to her payslips, which simply recorded the gross income earned during the relevant pay period by reference to the total hours worked and did not contain details of hours worked each day.

On 9 March 1994, after inquiries by the Department, a decision was made to raise and recover from the respondent an amount of $1,166.54 as an overpayment of Newstart Allowance benefits in the period 2 August 1992 to 2 November 1992 on the basis that the

respondent had under-declared income earned from her casual employment at the Southbank Motor Inn.  In accordance with the Department’s usual record-keeping practices, the continuation forms completed by the respondent were destroyed and were not available to be used by the decision-maker to ascertain the gross income declared by the respondent each fortnight.  Nonetheless, the Department was able, by reference to the amount of benefit paid to the respondent each fortnight, to perform a reverse calculation as to the gross income declared by the respondent each fortnight.  The Department then compared the amounts so calculated with the income earned by the respondent as reflected in her weekly payslips which she had provided to the Department.  It was on this basis that the Department decided that the respondent had under-declared her gross income from casual employment.

On 19 May 1994 the respondent requested that the Department’s decision to raise and recover the overpayment be reviewed.  The decision was reviewed by an Authorised Review Officer.  By letter dated 31 August 1994 the Review Officer informed the respondent that the Department’s decision was affirmed.

On 12 December 1994 the respondent lodged an application to the SSAT seeking further review of the Department’s decision.  The SSAT heard the respondent’s application on 19 January 1995 and, on that day, set aside the decision and substituted a new decision that there was no debt owing by the respondent.

On 6 March 1995 the Department applied to the AAT for review of the decision made by the SSAT.

Statutory Provisions
The only provision of the Act relevant to the issues before me is s 1224(1), which provides :-

“1224(1)If:

(a)an amount has been paid to a recipient by way of social security payment under this Act or the 1947 Act;  and

(b)the amount was paid because the recipient or another person:

(i)made a false statement or a false representation;  or

(ii)failed or omitted to comply with a provision of this Act or the         1947 Act;

the amount so paid is a debt due by the recipient to the Commonwealth.”

The AAT’s Decision
  On 18 December 1995 the AAT affirmed the decision of the SSAT and gave reasons for so doing.  Relevantly, the AAT said :-

“15.     The material before the Tribunal suggests that the fortnightly amounts for Newstart Allowance were calculated by the Department on the basis of the respondent’s immediately previous payslip from the South Bank Motor Inn, taking into account the net income for the previous week or fortnight.  That conclusion is open as a matter of inference, but that the fundamental problem for this Tribunal is that there is simply no evidence before the Tribunal as to what the respondent stated to the applicant Department on the fortnightly Newstart Allowance claims.

16.      Section 1224 only operates in a situation were the decision-maker can find that there is a false statement or false representation for [sic] an omission to comply with the Act and also that an amount was paid because of the false statement or representation or omission.  The law is to be found in the decisions of von Doussa J (1991) 23 ALD 284 and the Full Court on appeal in McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609.  The case is authority for the proposition that the false statement need only be a contributing factor and not the only factor or cause for the payment of benefit.  The policy of the provision is to protect the revenue against unjustified claims on the public funds made in consequence of false information supplied to the applicant Department.  (See Re Pepi and Director-General of Social Security (1984) 7 ALD 155).

17. If it is a fact that the respondent made a false statement or a false representation or failed or omitted to comply with a provision of the Act such evidence would be found in the fortnightly claims for continuation reports lodged with the Department by the respondent. All of those documents have been destroyed by the Department and there is therefore no basis upon which this Tribunal can make a finding that the respondent made a false statement or a false representation or failed or omitted to comply with the provision of the Act. It is, in my view, not open to this Tribunal to infer that the respondent somehow comes within the terms of subsection 1224(1) because there is no evidence before the Tribunal as to what the respondent did. I was encouraged to accept the proposition as a matter of fact that what the respondent did was fill out the continuation report providing details of her net income for the past two weeks as recorded in her payslips but there is simply no basis upon which I can come to such a conclusion as a question of fact. To draw an inference along those lines would be to make assumptions which are not justified by the material before me. All that has been proved before me is what the applicant Department did in relation to the respondent. Nothing has been proved as to what the respondent did in relation to her fortnightly claims for Newstart Allowance. It follows that I do not have any basis in fact for finding that the respondent comes within the terms of subsection 1224(1) and, in particular, I do not have any basis in fact for finding that the respondent made false statements or false representations to the applicant nor do I have any basis in fact for finding that the respondent failed or omitted to comply with provisions of the Act.”

Submissions on the Appeal
  Counsel for the applicant submitted that the AAT erred in concluding that there was “no evidence” before it as to what the respondent declared on her fortnightly continuation forms.  Counsel submitted that although the continuation forms were not in evidence, there was evidence that :-

(a)continuation forms with declarations of income were submitted;

(b)the respondent’s forms were processed and would not have been processed if incomplete;

(c)the respondent, on her own admission, purported to declare her casual earnings;

(d)casual earnings were recorded by the Department on its computer;

(e)payment to the respondent was made on the basis of income earned;

(f)a simple calculation based upon the amount by which her standard benefit was reduced, enables one to determine what the declared amount must have been.

Therefore, it was submitted, there was evidence as to what the respondent did and what she stated to be her fortnightly casual employment income.  Unless the respondent had made declarations of income as calculated by the Department, she could not have received Newstart Allowance benefits in the amounts she received.

Counsel for the respondent submitted that, read as a whole, the AAT’s reasons for decision reflected a conclusion that there was insufficient evidence, as opposed to “no evidence”, that the respondent had made false statements or false representations within s 1224 of the Act and that, mindful of the principle that, in hearing appeals from the AAT, this Court ought not examine the AAT’s reasons for decision too critically, or with an eye for error, the AAT’s decision should not be set aside or otherwise interfered with.

Conclusions on the Appeal
  I do not accept that the reasons of the AAT, read properly, disclose a conclusion that there was “insufficient evidence”, as opposed to “no evidence”, as to what the respondent declared as her gross income on the fortnightly continuation forms.  The language used in the paragraphs of the AAT’s reasons set out above reflects the conclusion that, in the absence of the continuation forms completed by the respondent, there was no evidence as to what the respondent declared her gross income to be in each relevant fortnight.  In paragraph
15 the AAT said :-

“ ... the fundamental problem for this Tribunal is that there is simply no evidence before the Tribunal as to what the respondent stated to the applicant Department on the fortnightly Newstart Allowance claims.”

To similar effect, in paragraph 17, the AAT said :-

“If it is a fact that the respondent made a false statement or a false representation ... such evidence would be found in the fortnightly claims for continuation reports lodged with the Department by the respondent.  All of those documents have been destroyed by the Department and there is therefore no basis upon which this Tribunal can make a finding that the respondent made a false statement or a false representation ...”

The question on this appeal, therefore, is whether the AAT erred in law in reaching the conclusion that there was no evidence before it upon which to make findings as to what the respondent declared as her gross income on each of the continuation forms.

In the absence of the continuation forms actually completed by the respondent, the applicant sought to rely upon the following facts to support the drawing of inferences that the respondent declared particular amounts on account of gross income on the continuation forms :-

1. The respondent admitted receiving Newstart Allowance benefits in the relevant period.

2. The respondent completed the fortnightly continuation forms and declared an amount in respect of gross income on each such form during the relevant period.

3. Each fortnight the amount of gross income declared was entered into the Department’s computer system and subjected to a calculation to determine, by applying the statutory formula, the amount of Newstart Allowance benefit to which
   the respondent was entitled for that fortnight.

4. The respondent received Newstart Allowance benefits in various amounts for the fortnights during the relevant period.

The applicant’s case was that, given those facts, it was possible to calculate, as a mathematical exercise applying the statutory formula in reverse, the amount of gross income which the respondent must have declared in a given fortnight in order to receive the amount of benefit which she did in fact receive for that fortnight.  Therefore, said the applicant, there was evidence upon which the AAT could properly have made findings as to the amounts declared as gross income by the respondent on the continuation forms.

In order for s 1224(1) to have any application in the instant case, the applicant had to establish, in the first place, that the respondent had made statements or representations and the content of those statements or representations. Without the continuation forms, and in the absence of any evidence from the respondent as to what she declared as gross income on those forms, there was no direct evidence of the statements or representations which the respondent made. However, that there is no direct evidence of a fact does not necessarily mean that there is no evidence of a fact. Courts and tribunals are frequently asked to infer the existence of a particular fact from the existence of a series or number of other facts which, taken together, suggest that the existence of the particular fact in question is more probable than not. The particular fact (the principal or ultimate fact or factum probandum) is inferred from the existence of the other fact or facts (the evidentiary fact or factum probans).  Proof of a fact in issue is legitimately undertaken in this way (see generally Wigmore on Evidence, Tillers Rev 1983, Volume 1A, §30 -  §31;  Cross on Evidence, Third Australian Edition
1986, paragraphs 1.20 - 1.62;  Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47 at 51; Edward J Sweeney & Sons Inc v Texaco Inc 637 F2d 105, 115 - 116 (3d Cir 1980), cert denied, 451 US 911 (1981)).

In the instant case, the AAT rejected as a method of proving up the statements or representations made by the respondent on the continuation forms, the drawing of an inference from the existence of other facts.  It was open for the AAT to find that, as a matter of mathematical logic, if the respondent received Newstart Allowance benefits in amount “X” for a given fortnight then, having regard to the way in which the amount of benefit payable to the respondent was calculated by the applicant, the respondent must have declared gross income in an amount “Y” in order to receive that benefit “X”.  By rejecting such method of proof and concluding that there was no evidence upon which to properly base findings as to the amounts of gross income declared by the respondent on the continuation forms, the AAT erred in law.

What I have said goes no further than holding that there was a body of evidence capable of sustaining an inference as to the amount declared in the continuation forms. Whether or not the inference is drawn is a matter for the AAT. Further, if the inference is drawn it is but the first step required by s 1224(1). The applicant must then prove on credible evidence to the satisfaction of the AAT that the statements were false and that the sum overpaid was in fact $1,166.54.

The respondent was employed as a casual worker.  She was paid weekly in cash on Wednesdays.  The payslips she received each week recorded only the total number of
hours worked and the total income received for that week.  The continuation forms which the respondent completed each fortnight were completed on Mondays and required the respondent to declare the gross income earned in the previous fourteen days, that is, the fortnight ending on the Monday on which she was completing the form.  In the absence of evidence of the number of hours worked on each day during each of the Monday to Monday fortnights during the period for which the applicant claims that the respondent was overpaid, it is impossible to prove, by direct evidence, the amount of income actually earned by the respondent for any Monday to Monday fortnight to which the continuation forms related.  It is not possible, because the respondent was a casual employee, to assume that she earned the same income in any fourteen day period beginning on a Wednesday as she did in a fourteen day period beginning on the Monday before that Wednesday.

The applicant has requested that notwithstanding the difficulty confronting it the matter be remitted in order that it may make submissions as to the inferences to be drawn from the evidence before the Tribunal in an attempt to complete the chain of proof required by s 1224(1).

For my own part, I have difficulty in contemplating an analysis of the payslips and the amounts of benefit paid which would enable such a conclusion to be reasonably reached.  However, that is not a matter with which I am properly concerned.

The decision of the AAT will be set aside and the matter remitted to the AAT to be determined in accordance with law and these reasons.  The applicant will be ordered to pay the respondent’s costs of the appeal, that being the agreement of the parties.

THE COURT ORDERS THAT:

1. The decision of the Administrative Appeals Tribunal given 18 on December 1995 be set aside.

2. The matter be remitted to the Administrative Appeals Tribunal to be determined in accordance with law and these reasons.

3. The applicant pay the respondent’s costs of and incidental to the appeal to be taxed if not agreed.

I certify that this and the preceding eleven (11) pages are a true copy of the reasons for judgment of his Honour Justice Cooper.

Date:23 December 1996

Associate

Counsel for the Applicant:  P D T Applegarth

Solicitors for the Applicant:  Australian Government Solicitor

Counsel for the Respondent:  D P O’Gorman

Solicitors for the Respondent:  Welfare Rights Centre as agents for Townsville   Community Legal Service

Date of Hearing:  14 November 1996

Place of Hearing:  Brisbane

Date of Judgment:  23 December 1996