Secretary, Department of Social Security v Mariot, S.M

[1993] FCA 195

Re: SECRETARY, DEPARTMENT OF SOCIAL SECURITY
And: SHERYL MEREL MARIOT
No. WAG 26 of 1992
FED No. 195/93
Number of pages - 15
Administrative Law
(1993) 29 ALD 677

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Einfeld J(1)

CATCHWORDS

Administrative Law - appeal from Administrative Appeals Tribunal - liability to repay supporting parent benefit because parent married - relevance of criminal convictions on same matter - whether contrary to public policy and an abuse of process to have matter relitigated before AAT - whether de facto appeal against criminal convictions - entitlement of AAT to consider waiver where no decision made by delegate - implication of waiver from decision to seek repayment

Words and Phrases - "married person" - "estranged"

Social Security Act 1947 ss 83AAA, 183, 246(1), 251(1)

Social Security Act 1991 s. 1237

Giannarelli and Ors v Wraith and Ors (1988) 165 CLR 543

Lai v Minister for Immigration, Local Government and Ethnic Affairs (1991) 28 FCR 346

Director General of Social Services v Hales (1983) 47 ALR 281

Commissioner of Australian Federal Police v Butler and Anor (1989) 91 ALR 293

Saffron v Federal Commissioner of Taxation (1991) 102 ALR 19

Secretary, Department of Social Security v Hodgson (1991) 108 ALR 332

Re: Brian Lawlor Automotive Pty Ltd v Collector of Customs (NSW) (1978) 1 ALD 167

Lambe v Director General of Social Services (1981) 4 ALD 362

Secretary, Department of Social Security v Salvona (1989) 10 AAR 521

Secretary, Department of Social Security v Ridley unreported 23 December 1993

HEARING

PERTH, Sydney 6 July 1992

#DATE 8:4:1993

Counsel and solicitor Mr R Le Miere
for the applicants instructed by the Australian Government

Solicitor

Solicitor for the Mr S A Walker
respondent

ORDER

1. Appeal dismissed.

2. Applicant to pay the respondents costs.
Note: Settlement and entry of orders are dealt with in accordance with Order 36 of the Federal Court Rules.

JUDGE1

EINFELD J On 29 June 1990 the respondent Mrs Mariot was convicted by a magistr at Fremantle of 39 counts of having obtained the payment of supporting parent benefits between 10 April (or 2 May) 1985 and 23 June 1988, to which she was not entitled, by falsely stating that she was a single person when she was in fact married and not living separately and apart from her spouse. She was also convicted of eight counts of having knowingly made the false statement. She was placed on probation for twelve months with 240 hours of community service and required to attend a personal development program run by the Department of Corrective Services. No order for reparation was sought.

1. The applicant Secretary's delegate decided on 27 July 1988 "to raise and recover" from the respondent, as a debt to the Commonwealth, an overpayment of $31,329.20 for the benefits thereby paid to the respondent. The overpayment was actually raised in respect of benefits paid from 24 October 1983 but the delegate decided that it should only be enforced after 10 April 1985 because that was apparently when she recommenced living with her husband after a period of estrangement.

2. In her appeal to the Social Security Appeals Tribunal (SSAT), Mrs Mariot claimed that she was not overpaid as her husband was an alcoholic and she was not supported by him or living in a marital relationship with him. It appears that there had been no significant cohabitation and that they had been physically apart for all but 30 days of the marriage of 23 years. The SSAT considered first whether Mrs Mariot was to be regarded as single or married for the purposes of the Act. If single, there was no overpayment. The second issue identified by the SSAT was whether, if Mrs Mariot was married and she was therefore liable to repay the Commonwealth, recovery should be waived.

3. The SSAT determined on 22 November 1989 that she was married notwithstanding her very difficult relationship with her husband including a lack of basic financial and emotional support, but decided under section 251 of the Social Security Act 1947 (the Act) that liability should be waived. The Administrative Appeals Tribunal (AAT) held that there was no false statement because Mrs Mariot was not married. It therefore affirmed the decision of the SSAT on a different basis. The AAT also found that if there was a false statement, there was no evidence that it caused the overpayment as required by the Act. It therefore held obiter that the SSAT was correct to waive the repayment. If it were necessary, the AAT would have done the same. The applicant (the department) now appeals to this Court to set aside the AAT's and SSAT's decisions and to restore the delegate's decision.

4. The grounds of appeal are that by disregarding Mrs Mariot's convictions in its finding that she was not married in the relevant period, and by unlawfully or incorrectly exercising the discretion to waive recovery of the overpayments pursuant to section 251 of the Act, the AAT erred in law. If the department's case is to succeed, it is agreed that Mrs Mariot's liability must be established under section 246(1) of the Act which provides:
   

Where in consequence of a false statement or representation, or in consequence of a failure or omission to comply with any provision of this Act, an amount has been paid by way of pension, allowance or benefit under this Act which would not have been paid but for the false statement or representation, failure or omission, the amount so paid is a debt due to the Commonwealth.

1. The department put the case first that, taken together, all the convictions stood not merely as evidence but conclusive proof of all the facts needed to satisfy section 246(1). The submission was that it is contrary to public policy and an abuse of process to permit Mrs Mariot to relitigate before the AAT matters already determined by criminal conviction and, without any fresh evidence or special circumstances, to allow her to conduct her case before the AAT in a way which effectively challenges the convictions. The department said that the principal issue before the AAT was the same as was before the magistrate and that a decision favourable to Mrs Mariot is "necessarily inconsistent" with the conviction. Proof of the overpayment must be taken to arise by inference from the proof of the convictions.

2. As an alternative, the department said that the convictions represented prima facie evidence that Mrs Mariot was married at the relevant time, that there was no contrary evidence that should have been admitted or received, and that the AAT should have taken the convictions into account on that question. It was said that no weight was in fact given to the convictions as a consequence of which the AAT committed an error of law by failing to take a relevant consideration into account.

3. Section 246(1) provides that there must be a causal nexus between the overpayments on the one hand, and the false statements or other failures or omissions on the other. Contrary to the AAT's finding that there was no evidence of the nexus, the department said that the AAT should have found that the convictions provided the nexus because if the false statements had not been made, the department would have known the situation and the overpayments would not have been made. The department said that these were the only findings reasonably open and, by not making them, the AAT erred in law.

4. As to the waiver, the department said that the AAT's jurisdiction is limited to reviewing decisions of their makers: Re: Brian Lawlor Automotive Pty Ltd v Collector of Customs (NSW) (1978) 1 ALD 167 at 175 (per Brennan J, then President of the AAT). As the delegate had made no decision on waiver, the AAT had no jurisdiction to consider and order waiver. The department also said that the AAT's consideration of the magistrate's remarks on sentence introduced a consideration irrelevant to the exercise of the discretion.

5. Prior to the nexus, section 246(1) requires evidence to support the receiving of moneys to which the recipient was not entitled and the making of false statements. By comparing these requirements to typical examples of the charges preferred against Mrs Mariot before the magistrate, the AAT found that it could not draw the necessary inferences required by section 246(1) merely from her conviction on those charges, not least because of the absence of the nexus. The AAT said (at appeal book pp 412-3):
   

In statutory terms, the payment of benefit to which a person is not entitled must be in consequence of a false statement or omission to advise. Further it must be shown that the overpayment would not have occurred "but for" the statement or omission. The record of convictions, without more, fails to establish that link.

1. Moreover, as the certificate of benefits paid, given under section 183 of the Act, makes no reference to the basis upon which the payments were made, the AAT held that it did not supply the missing link.

2. As a consequence, the AAT regarded itself as entitled to hear evidence about the circumstances of the suggested overpayments. It said that if the findings of the magistrate could be identified and established, they would be persuasive. In Saffron v Federal Commissioner of Taxation (1991) 102 ALR 19, a Full Court of this Court (Davies, Lockhart and Beaumont JJ) held after an extensive review of authority that except where a conviction is the foundation for the exercise of a power, a court or tribunal may receive evidence which might challenge the essential factual findings made in a criminal prosecution. Justice Davies said at 22:
   

...where a conviction is the foundation for the exercise of a power, no challenge can be made to the fact of the conviction or to the essential facts on which it was based. But by making clear the circumstance in which no such challenge may be made, the cases establish that, where the exercise of the power is not founded on a criminal conviction, then even if the conviction be relevant, a challenge may be made to the essential facts on which it was based...

1. See also Justice Lockhart at 32-3 and Justice Beaumont at 39-40. For contrary views, see two judgments of Justice Hill: Commissioner of Australian Federal Police v Butler (1989) 91 ALR 293 and Secretary, Department of Social Security v Ridley unreported 23 December 1992. In deference to Justice Hill's views, may I respectfully say that, apart from the binding effect of Saffron on me, I fully agree with the Full Court's decision as a matter of principle.

2. All members of the Court in Saffron made it clear obiter, and I agree, that civil proceedings should not be permitted to discredit, by way of "collateral attack", the criminal process through which prior convictions had been established. But that is not this case. Mrs Mariot was not attempting before the AAT to conduct a de facto appeal against her convictions, or to go behind the convictions, but to resist and be relieved of a liability to pay a large sum of money to the Commonwealth. This cannot be an abuse of process, especially as her appeal to the SSAT was energised by the department's action to recover the money from her, and the appeal to the AAT was instituted by the department. Obviously a court or tribunal will always take care to avoid findings which are necessarily inconsistent with convictions: see Giannarelli and Ors v Wraith and Ors (1988) 165 CLR 543 at 558 per Mason CJ; Commissioner of Australian Federal Police v Butler and Anor (1989) 91 ALR 293; Lai v Minister for Immigration, Local Government and Ethnic Affairs (1991) 28 FCR 346 at 349 per Morling J; and Saffron at 39 per Beaumont J. But none of this can impede an independent tribunal addressing and assessing a bona fide case on the basis of the relevant law in question and the evidence called. To the extent that Butler and Ridley may be taken as suggesting that such a course, to quote Justice Hill, "could be a source of great embarrassment", I most respectfully cannot see it.

3. To attend to its statutory and other duties in this regard, the AAT received into evidence the transcript of the trial on the criminal charges. Although it found, quite rightly in my view, that the fundamental factual findings grounding the convictions were too briefly expressed to identify clearly, it inferred, again correctly, that the magistrate must have found that she was not single at the relevant times. Hence it recognised that some overlap or reconsideration of the same facts would occur if it did not merely accept that finding at least.

4. However, the AAT decided to have regard to other evidence presented. In my opinion it was manifestly entitled, if not obligated, to do so. If the proceedings were not an abuse of process, the AAT had no choice but to hear relevant evidence tendered. It is an administrative tribunal bound by its own and various other statutes to hear certain types of cases in certain defined ways. It is not permitted to ignore these statutes because a magistrate has made certain findings and orders. If it had not done so, a breach of natural justice may well have occurred because procedural fairness and statutory obligations would have been abused in a way this Court would not have been permitted to, or should not, condone.

5. The evidence received by the AAT was quite extensive and its findings on this evidence are not challenged, including that no causal nexus between the false statements and the overpayments had been established by that evidence. All the department submitted in this regard was that the convictions provided the nexus. For the reasons I have given, that submission cannot be accepted. As it happens, in view of its findings on the overpayment question, the causal nexus decision was not essential to the AAT's conclusions.

6. To determine the overpayment question, the AAT was required to consider whether Mrs Mariot was or was not what the Act then called "a married person". Section 83AAA of the Act as it was at the time excluded from this term any person who was "estranged" from a lawful marriage partner. As a Full Court of this Court (Evatt, Fisher and Elicott JJ) acknowledged in Lambe v Director General of Social Services (1981) 4 ALD 362, this can be a complex factual and legal question. Here it turned on certain so-called admissions made in statements by or records of interviews with Mrs Mariot. A volume of evidence about the circumstances and conduct of these interviews was received by the AAT. Like its other factual findings on the evidence, its findings in this regard that the interviews were "inherently unreliable" were not challenged. It is appropriate to set out its remarks in this regard because they are of very significant import (appeal book pp 441-2). Saying that "formal rituals" were followed "which were designed to give (the statements) the appearance of having been made voluntarily and of Mrs Mariot's free will", the AAT went on:
   

In this respect the Tribunal notes that Investigation Officers carrying out such inquiries are performing law enforcement functions similar to police officers. The results of such investigations may lead to prosecutions, as happened in this case. Departmental officers, if the present case is any indication, do not seem to be required to follow requirements of kind carefully worked out by the courts in relation to fair and proper interrogation practices (see eg. McDermott v The King (1946) 76 CLR 501). There is in the instance of the caution administered by officers a nominal adherence to the first of what have been called "the Judges' rules" about interviewing persons suspected of criminal activities (see Cross on Evidence - 3rd Aust Ed, para 17.134). Beyond that, the interview/interrogation procedures diverge from accepted police questioning methods. In persons of low or diminished intellect, as with children, sensitive and properly structured interrogation should be followed, both as a matter of good administrative practice, and to preserve a person's privilege against self-incrimination. It is also desirable that the purpose in gathering information for a possible prosecution should be made quite evident to avoid inadvertent self-incrimination. If that is a serious prospect, adequate time for questioning is essential. The evidence before the Tribunal suggests that departmental officers engaged in investigations have a dual and possibly schizophrenic role - identifying possible breaches of the Act for cancellation purposes and gathering information for prosecution by the DPP, a more serious matter.

1. The AAT might well have added that interrogated persons should also be given proper meals and refreshments, access in privacy to personal washing and toilet facilities, and reasonable use of a telephone.

2. The AAT's observations were careful, thoughtful and, with respect, right. They were especially appropriate in this case. Having regard to its findings of fact in this regard, the AAT accordingly decided to give no significant weight to these three statements or recorded interviews. Once this evidence was admitted, that view was a matter entirely for the AAT itself. It was not challenged before me, obviously because it does not manifest even the slightest sign of an error of law. From my reading of the evidence, for what my opinion is worth, the decision on this matter was also unquestionably correct.

3. Pointing out that "the evidence relied on by the applicant focuses almost exclusively on residence", meaning that Mr and Mrs Mariot shared the same residence for all or much of the period in question, the AAT said:
   

No sufficient consideration appears to have been given to finding out whether, even if they were living together for most of the time, they were relevantly "estranged".

1. The ultimate finding was that Mr and Mrs Mariot were "estranged" and therefore Mrs Mariot could not be regarded as "married". She was therefore entitled to the pension in question and there was no overpayment. In my view this conclusion demonstrates no error of law. The department's submission to the contrary are rejected.

2. Because I have upheld the AAT's decision on the overpayment question, it is not necessary for me to decide whether its views on the causal nexus are correct. As these views were only challenged on the basis that the conviction supplies the nexus, an argument which I have rejected, what is left is solely an issue of fact which would not be for me to decide in any event.

3. The determination of the AAT obviated the need for it to discuss the SSAT's decision on waiver but it did so to enable this Court to deal with the matter fully if there was an appeal. It is also not necessary for me to decide the waiver issue but a few remarks are convenient. Waiver arises under section 251(1) of the 1947 Act which provided at the relevant time:

4. The Secretary may, on behalf of the Commonwealth, decide to:
   

(a) write off debts arising under or as a result of this Act, or debts arising under or as a result of this Act, that are included in a class of debts specified by the Minister by notice in writing published in the Gazette;

(b) waive the right of the Commonwealth:

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

(ii) to recover debts under or as a result of this Act included in a class of debts specified by the Minister by notice in writing published in the Gazette; or

(c) allow an amount that is payable by a person to the Commonwealth under or as a result of this Act to be paid in instalments.

1. Following well established authority, the AAT dealt with the submission that there was no jurisdiction to review waiver because the delegate had not decided not to waive - or that by deciding to raise an overpayment, a decision against waiver should be inferred. The AAT held that where a decision has been made and steps taken to recover money, there is an implied decision not to waive. It therefore held that the SSAT's decision to waive was competent and that the AAT had jurisdiction to review it. There are some recent dicta that there is not necessarily a decision to waive where there is a decision to seek repayment: Secretary, Department of Social Security v Salvona (1989) 10 AAR 521 at 531-2 per Lee J; Secretary, Department of Social Security v Hodgson (1991) 108 ALR 332 (Hill J). On analysis both of these decisions were in substance that each case will turn on its own facts. For the reasons earlier given, I agree with the AAT that this is a case where it did follow, just as Justice Hill did for different reasons in Hodgson.

2. Although the AAT also contemplated that this jurisdiction might arise for this case under section 1237 of the Social Security Act 1991 (the 1991 Act), and went to some trouble to deal with the case under that provision as well as section 251(1), the applicant did not challenge the applicability of the 1947 provision on this appeal. There is therefore no need for me to deal with the 1991 Act at all.

3. The appropriate criteria for the exercise of this discretion were discussed in Director General of Social Services v Hales (1983) 47 ALR 281. The AAT heard additional evidence referable to these criteria and found:
   

If the decision on waiver should be determined as arising under s.251, having regard to the evidence it decides that the decision of the SSAT was the correct and preferable decision in the circumstances. The circumstances in which the overpayment arose were attended by violence and financial deprivation on the part of her husband. She was left to cope virtually alone, even if one accepts that Mr Mariot did live with her. There was no calculated, deliberate fraud on her part. She is in financially straightened circumstances with continuing indebtedness and there is little realistic prospect of recovery particularly as she has no chance of repayment. Though public money was involved much of it must have been used to support her and her family.

1. So that if it was wrong on the overpayment question, the AAT determined that it was "appropriate and realistic" to waive the whole of the overpayment even though Mrs Mariot would have unlawfully received a large amount of public money. The AAT found that certain remarks of the magistrate in his sentencing of Mrs Mariot supported this conclusion although the decision on this matter was expressly stated to be independent of the magistrate's remarks. These observations were, as it happens, really repetitive of what the SSAT and the AAT had each decided without reference to what the magistrate had said. The criteria applied by the SSAT and the AAT separately and cumulatively made out an overwhelming case for waiver in this case without regard to the magistrate's observations. The department's only submission on this question was that the magistrate's remarks were an irrelevant consideration taken into account. The simple answers are that they were not irrelevant and were not taken into account. The AAT therefore committed no error of law in upholding the SSAT on this issue.

2. The appeal fails on all grounds and will be dismissed. The applicant will pay the respondent's costs.