Editors --- "Validity of activity agreements: delegation of Secretary's power to Job Network" [2009] SocSecRpr 11; (2009) 11(1) Social Security Reporter, Article 11

• LIM v SECRETARY TO THE DEEWR (No 2)
• The issue
• Lim’s case
• Discussion
• Formal decision

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Validity of activity agreements: delegation of Secretary’s power to Job Network

LIM v SECRETARY TO THE DEEWR (No 2)

Decided: 21st November 2008 by Bennett J.

Lim signed three activity agreements dated20 December 2006, 26 February 2007 and 7 March 2007 respectively. Centrelink imposed an eight week non payment penalty when Lim incurred three participation failures in a 12month period for failing to meet certain requirements contained in the terms of the activity agreements.

At the AAT Lim argued that he had a ‘reasonable excuse’ for the failures and so the eight payment period should not apply. The AAT found that the three failures did occur, without reasonable excuse, and so affirmed the eight week non payment period.

Lim did not challenge this finding at the Federal Court. Rather, he challenged the validity of the activity agreements signed by him.

The parties to the agreements were Lim and the Job Network provider ‘Work Directions Tilt’ (Work Directions).Centrelink itself was not a party to the agreements although it was mentioned in the agreements and that failure to comply with the agreement could result in a Centrelink decision to impose an eight week non payment penalty.

The issue

The main issue before the Court was whether the agreements were ‘Newstart Activity Agreements’ within the meaning of s.624 of the Act which states that a person commits a newstart participation failure if the person fails to comply with a term of such an agreement without reasonable excuse.

Section 605(4) of the Act states that ‘A Newstart Activity Agreement is a written agreement in a form approved by the Secretary. The agreement is between the person and the Secretary’.

Section 234 of the Social Security(Administration) Act 1999 authorises the Secretary to delegate all or any of the Secretary’s powers under the Act to ‘an officer’, including a person engaged by an organisation that performs services for the Commonwealth.

At issue was the question of whether the employees of Work Directions had delegation to enter the Agreements on behalf of the Secretary.

Lim’s case

Lim argued that the agreements were invalid because they were not in a form approved by the Secretary; they were not between him and the Secretary but between him and Work Directions and signed by a person on behalf of that company; they were signed on behalf of Work Directions without reference to the Secretary or a delegation from the Secretary; were signed by individuals, not by Work Directions

He also argued that:

the Employment Services Contract in question was with “Work Directions Australia”, not “Work Directions Pty Ltd” delegates must reveal the source of their power when entering into agreements; the delegation does not operate after the change of Government, Department and Secretary following the election of the Labor government in 2007.

Discussion

In relation to the form of the agreements, the Court found that failure to attach a ‘part B’ which was a section of the form to be annexed only where a person agreed to undertake additional voluntary activities(which Lim had not) did not invalidate the form.

In relation to the question of delegation of power, the Department established to the Court’s satisfaction that, during the relevant period:

Work Directions was an Employment Services Provider pursuant to an Employment Services Contract2006-2009 between Work Directions and DEWR (for the Commonwealth).

the employees who signed the agreements were engaged by the Employment Services Provider, Work Directions, to perform functions and to provide services under the Employment Services Contract 2006-2009.

Work Directions was contracted to provide job network services and, as part of that contractual obligation, was required to enter into Activity Agreements with job seekers. The employees in question were, in accordance with their Employment Advisor position descriptions, required to perform functions and to provide services under the Employment Services Contract 2006-2009between Work Directions and DEWR.

The Court held that the agreements were agreements between the person (Lim) and the Secretary for the purposes ofss.605(4) and 624 of the Act. It found that there was no lack of power to enter into the agreements:

It is now established that the Secretary approved the form of the Activity Agreements with which the Lim Activity Agreements complied. The Secretary also delegated, to each person engaged by Work Directions Australia (an Employment Services Provider)to perform functions or to provide services under the Employment Services Contract 2006-2009, the Secretary’s power under s 605 of the Act to enter into Newstart Activity Agreements. Accordingly, the Lim Activity Agreements were signed by Mr Ptok and Ms Dean, persons engaged by Work Directions Australia to perform functions and to provide services under the Employment Services Contract 2006-2009, each as the delegate of the Secretary. (Reasons para. 33)

The Court rejected Lim’s assertion that the reference to ‘Work Directions Pty Ltd’ rather than ‘Work Directions Australia’ invalidated the agreement:

The misstatement of the identity of the contracting party or of the employer of Mr Ptok and Ms Dean, as a mistake in naming the source of the power to enter into the Lim Activity Agreements, does not affect the validity of those agreements (Brown v West [1990] HCA 7; (1990) 169 CLR 195 at 203)” (Reasons para.37).

The Court held that Lim understood the nature of the agreements as each agreement stated that it was ‘an Activity Agreement under the Social Security Act 1991’ and that it referred to activities necessary to receive income support payments from Centrelink. (Reasons para. 39).

Failure to identify the source of the delegated power did not invalidate the agreements:

“The fact that the agreements were signed by employees of Work Directions Australia, as delegates of the Secretary, does not preclude the agreements being between the Secretary and Lim, despite the fact that the Work Directions Australia employees did not indicate the source of power to enter into the agreements. Nor does it otherwise preclude the agreements being Newstart Activity Agreements within s 605(4). (Reasons para.41)

The Court considered the question of whether the change of government had affected the delegation of power and found that it had not.

Formal decision

The application was dismissed.

[A.M.