Editors --- "Validity of activity agreements: delegation of Secretary's power to Job Network" [2009] SocSecRpr 51; (2009) 11(4) Social Security Reporter, Article 14

---

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

PIOTTO V SECRETARY TO THE DEEWR

(Federal Court of Australia)

Decided: 8th October 2009 by Marshall J.

Background

Piotto was required on 4 August 2007, 6 September 2007 and 5 October 2007 to enter into a Newstart Activity Agreement. Piotto disagreed with the terms that were included in the activity agreements and sought to cross them out and inserted new terms, such as being paid for lunch and dictating the amount of remuneration for work for the dole. The AAT found that Piotto had failed to comply with the requirement to enter into activity agreements without a reasonable excuse. Three participation failures arising out of those occasions were imposed. As a result, Piotto’s newstart allowance (NSA) was suspended for eight weeks.

Piotto was again required to enter into an activity agreement on 30 September 2008. Piotto amended the activity agreement with deletions and substitution of terms, such as the number of job search contacts. The AAT found that Piotto committed a participation failure by failing to enter into an activity agreement without a reasonable excuse. As a result, Piotto’s NSA was cancelled with effect from 26 September 2008.

Piotto sought to have both AAT decisions separately delivered on 1 May 2008 and 22 April 2009 quashed pursuant to section 44(1) of the AAT Act 1975 (Cth). Both proceedings were heard concurrently.

The issue

The Court considered whether the power to enter into a ‘Newstart Activity Agreement’ as required under ss.605 and 606 of theSocial Security Act 1991 (the Act) was properly conferred from the Secretary to the Job Network provider (MatchWorks) by relevant Delegation Instruments.

Section 234 of the Social Security (Administration) Act 1999 (the Administration Act) 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.

Section 624 of the Act provides that a person commits a newstart participation failure, amongst other things, if the person fails to comply with a requirement to enter into a Newstart Activity Agreement without a reasonable excuse.

Piotto’s case

In both proceedings, Piotto relied on similar grounds, namely:

• the AAT erred in finding that there was evidence of a valid delegation in place from the Secretary to MatchWorks;

• the AAT erred in finding that Piotto had no ‘reasonable excuse’ as the proposed activity agreements were ‘unconscionable’ or ‘inherently faulty’;

• the AAT erred in finding that Piotto was required to sign the Newstart Activity Agreements when parties to the agreements had not engaged in a negotiation process.

Discussion

The Court held that the AAT had in fact erred in finding that there was a valid delegation in place when no evidence of the correct delegation was presented before it. The Court contrasted the current case with Lim v Secretary to DEEWR (No 2) [2008] FCA 1752, which also considered the same issue of valid delegation and said:

In contrast to the circumstances described in Lim, the respondent did not produce evidence before the Tribunal to show that MatchWorks provided services to the respondent pursuant to an arrangement described in cl 3 of the delegation, or that the relevant employees of MatchWorks were employed to perform functions and provide services pursuant to that arrangement. In particular, no document was before the Tribunal to show that MatchWorks was an Employment Service Provider within the meaning of cl 3(b) of the delegation. The mere assertion in submissions that such was the case is not tantamount to evidence before the Tribunal.

In both proceedings, the Court held that the matters must be remitted back to the Tribunal for consideration for want of a valid delegation from the Secretary to MatchWorks.

Although not strictly necessary, the Court also considered the other grounds of appeal relied by Piotto. Counsel for the Secretary argued that the Act empowers the Secretary to impose the terms of a Newstart Activity Agreement rather than requiring a true process of negotiation and relied on a Tribunal’s decision in Dunn v Secretary to DEEWR [2007] AATA 1031. The Court saw no reason to depart from the Tribunal’s observations in Dunn regarding the extent of ‘negotiation’ required by the Act. However, the Court held that in relation to the alleged denial of a right to negotiate, it is not a ground which raises any question of law upon which a review of the AAT decision could be raised and referred to the decision in Despot v Department to FCS [2004] FCA 140.

The Court also found that Piotto had not demonstrated he had a reasonable excuse for refusing to enter into the Newstart Activity Agreement. The Court noted that matters which will constitute a reasonable excuse for the purposes of s.624 of the Act are serious matters which have a significant impact on the person’s ability to comply and accordingly referred to matters listed in the Social Security (Reasonable Excuse) (DEWR) Determination 2006. The Court stated that Piotto’s disagreement over which terms were suitable for inclusion in the Newstart Activity Agreement did not constitute a reasonable excuse.

Accordingly, all other grounds of appeal relied by Piotto failed.

Formal decision

The matters were remitted back to the Tribunal for reconsideration. The Court decided that it was appropriate that there was no order as to costs.

[C.W.]