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Social Security Reporter |
Debt recovery: review of decision to issue a garnishee notice; whether Tribunal made an error of law when making findings of fact
Federal Court of Australia
Decided: 8th August 2012 by Murphy J
Elbayeh was employed by The Age newspaper from 1989 to 2000. From 1990 to 1996 he received newstart allowance. He did not declare all of his income from employment to Centrelink during that period. This led to a decision by a departmental officer to raise a debt of $47,471 in respect of the period 9 March 1990 to 26 May 1996 (‘the first overpayment’). Elbayeh entered into a periodic repayment arrangement in respect of this debt at the rate of $50 every fortnight. Elbayeh was also convicted of knowingly obtaining payments to which he was not eligible by a Magistrate’s Court.
Elbayeh next began to receive newstart allowance from 3 January 1997 to 3 November 2000. Again, due to his income from employment not being declared, Elbayeh was found not to have been entitled to the newstart allowance he received in this period. An overpayment of $31,019.27 was raised. This was Elbayeh’s ‘second overpayment’. Elbayeh was again convicted by a Magistrate’s Court in relation to the second overpayment.
In December 2000 the Secretary issued a garnishee notice to Elbayeh’s employer to recover the first and second overpayments through weekly payments from his wages. In March 2003 Centrelink became aware that Elbayeh might become entitled to a voluntary redundancy payment from The Age of about $75,000. A delegate of the Secretary issued a garnishee notice (‘the redundancy garnishee notice’) to The Age for the amount $64,652.33, in case Elbayeh chose to take the redundancy payment. Elbayeh asked the Secretary to cancel this notice, and to accept continuing weekly repayments of $80.
Elbayeh elected to take the redundancy payment offered by The Age. On 14 April 2003 The Age paid $64,652.33 to Centrelink, pursuant to the redundancy garnishee notice.
In July 2003 Elbayeh requested that Centrelink return the redundancy payment to him so that he could purchase a café business and continue making weekly repayments. Centrelink considered, but refused this request. He then sought a review of the decision to issue the redundancy garnishee notice by an Authorised Review Officer (‘ARO’). In July 2004 the ARO affirmed the Secretary’s decision.
In October 2010 Elbayeh applied to the SSAT for review of the decision to issue the redundancy garnishee notice. On 3 February 2011 the SSAT affirmed the decision before it. Elbayeh then appealed to the AAT for review of the SSAT decision.
The power to issue garnishee notices is given to the Secretary in s.1233 of the Social Security Act 1991 (‘the Act’).
Section 1230C of the Act, however, sets out the various methods of recovery available to the Commonwealth under the Act and the rules that govern when they may be used. Elbayeh’s appeals to the AAT and then the Federal Court were based on whether the Secretary had made a lawful decision under s.1230C to issue the redundancy garnishee notice. The section relevantly states:
Section 1230C- Methods of recovery of debt
(1) Subject to subsection (2), a debt due to the Commonwealth under this Act or Part 3B of the Administration Act is recoverable by the Commonwealth by means of one or more of the following methods:
(a) if the person who owes the debt is receiving a social security payment- -deductions from that person's social security payment;
(b) if, in respect of the debt, section 1234A applies to another person who is receiving a social security payment--deductions from that other person's social security payment;
(c) repayment by instalments under an arrangement entered into under section 1234;
(d) legal proceedings:
(e) garnishee notice.
(2 Subject to subsection (3), a debt due to the Commonwealth under this Act or Part 3B of the Administration Act is recoverable by means of a method mentioned in paragraph (1)(d) or (e) only if the Commonwealth:
(a) has first sought to recover the debt by means of a method mentioned in paragraph (1)(a), (b) or (c); and
(b) can establish that the person who owes the debt:
(i) has failed to enter into a reasonable arrangement to repay the debt; or
(ii) after having entered into such an arrangement, has failed to make a particular payment in accordance with the arrangement.
(3) If the Secretary determines that the recovery of the debt by means of a method mentioned in paragraph (1) (a), (b) or (c) is not appropriate having regard to the circumstances of the case, paragraph (2)(a) does not apply in respect of the recovery of the debt....
The Tribunal considered the operation of s.1230C and the circumstances in which the Secretary has the power to issue a garnishee notice under s.1233. The Tribunal made the following relevant findings of fact, which were the main subject of review by the Federal Court:
a) That Elbayeh had not entered into a reasonable arrangement to repay the debt, as referred to in ss.1230C(2)(b)(i);
b) That, having previously entered into a debt repayment arrangement, Elbayeh had failed to make a particular payment, as referred to in ss.1230C(b)(ii) of the Act.
c) That Elbayeh had a gambling problem.
The Tribunal decided that the Secretary’s decision to issue the garnishee notice to the Age was authorised under both ss.1230C(2)(b)(i) and 1230C(2)(b)(ii) of the Act. The finding that Elbayeh had a gambling problem was relevant to the question raised by s.1230C(3), about whether an instalment repayment arrangement for the debts would have been appropriate.
Elbayeh appealed the Tribunal's decision to the Federal Court under s.44 of the Administrative Appeals Tribunal Act, which provides the avenue for appealing Tribunal decisions to the Federal Court on a question of law.
Elbayeh put forward four separate grounds of appeal in his Amended Notice of Appeal to the Federal Court. The Federal Court was of the view that, although these grounds were imprecise, it was clear enough from the Amended Notice of Appeal that Elbayeh was contending that the Tribunal made errors of law in making various findings of fact without having a proper basis upon which to do so.
Before looking at whether the three findings of fact listed above were open to the Tribunal, the Court discussed the legal principles set out in the High Court’s decision in Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321. The Court stated that it was not enough to show that the Tribunal’s reasoning was ‘not preferable’ for it to have made an error of law. Elbayeh would need to show that there was no material before the Tribunal upon which the conclusions the Tribunal reached could properly be based:
There is no error of law in making a wrong finding of fact and no error of law in drawing an inference based upon illogical reasoning as long as the inference drawn was reasonably open on the facts. As long as there is some evidence to support a finding of fact, no error of law will have been committed...
(Reasons, para.35).
The Court then proceeded to look at the three relevant findings of fact by the Tribunal, to decide if they were open to the Tribunal.
Elbayeh denied that he had ever failed to comply with a repayment arrangement, and contended that the Tribunal’s finding amounted to an error of law, as there was no evidence before the Tribunal capable of supporting it. The only evidence before the Tribunal on this issue was a file note taken by a Centrelink office on 11 December 2000, in which the officer recorded:
[Elbayeh] wanted to make payments himself. I told [Elbayeh] he failed to repay in the past and in light of this and his gambling it was more prudent that we recover via garnishee.
The Court found that this evidence was sufficient for the finding of the Tribunal to be properly based, even though it would not have been admissible as evidence before the Court. The Court noted that the Tribunal is not bound by rules of evidence, and stated that the completeness of the file note and the weight it should be given were not issues for the Court. It followed that the Tribunal made no error of law in making the finding.
The Tribunal made a finding of fact that, given his receipt of the redundancy payment, Elbayeh’s offer to repay the debt at the rate of $80 per week was not a reasonable arrangement. Elbayeh argued that this finding was not open to the Tribunal. Elbayeh further contended that, as the arrangement to repay at this rate was initially accepted as reasonable by Centrelink, it could not then be seen as ‘unreasonable’ by reason of his changed financial circumstance.
The Court did not accept this argument:
The question of what is a reasonable repayment arrangement is clearly conditioned by factors that include the financial circumstance of the debtor, the alternative repayment arrangements available to the debtor, and the size of the debt reflected by the length of time required by the proffered repayment arrangement.’
(Reasons, para. 44)
The Court found that it was plainly open to the Tribunal to find that an offer to repay a debt of over $70,000 by weekly instalments of $80 per week was unreasonable. The Court also noted that even if it took a different view as to the reasonableness of the arrangement offered by Elbayeh, it was not the Court’s role to substitute its view for the finding made by the Tribunal. The finding that the offer of $80 per week was not a reasonable arrangement meant that the Secretary was authorised to issue the garnishee notice by operation ss.1230C(2)(b) (i), as well as under s.1230C(3) on the basis that the recovery of the debt by instalments was not appropriate in all of the circumstances.
Elbayeh challenged the Tribunal’s finding of fact that he had a gambling problem as at 2003. Elbayeh accepted that there was evidence before the Tribunal indicating that he had a gambling problem but argued that, by the time of the decision to issue the redundancy garnishee notice, that evidence was too old or too open to doubt to form a proper basis for the finding.
The Court rejected this argument, saying that there was plainly some evidence before the Tribunal capable of supporting its finding that he had a gambling problem in 2003, and that this evidence was enough to sustain the finding. The available evidence included records of interview with Centrelink in 1997, where Elbayeh accepted he had a gambling problem. There was also a report dated 1999 prepared by a psychologist which opined that Elbayeh was a compulsive gambler. There was also evidence before the Tribunal that Elbayeh had been sentenced by the Magistrate who heard his criminal charges to attend a rehabilitation program for gamblers. Elbayeh argued that little weight should have been placed on this evidence. However, the Court stated:
Even if I had found his argument about the state of the evidence persuasive, the authorities are clear that it is not an error of law for the Tribunal to make a wrong finding of fact or to do so upon a doubtful basis. An attack upon the weight given the evidence referred to, or to point to other evidence that might or even should have weighed against a finding that he had a gambling problem, is not sufficient to disturb the finding of fact by the Tribunal. In order to disturb the finding of fact he must establish that there is no evidence at all upon which the finding could have been based. He has not done so. (Reasons, para. 55)
Elbayeh argued that s.1230C(2)(b) operates so that once the instalment repayment arrangement of $80 per week had been put in place, the Secretary was not able to later determine that in difference circumstance, a different arrangement was reasonable. The Court did not agree with this submission, and stated:
There is nothing in s.1230C which operates to require that an assessment as to whether an arrangement is reasonable can only be made once.... The reasonableness of a repayment arrangement is conditioned by factors including the debtor’s financial circumstance, the available alternative methods, and the length of time which it would take to repay the debt under the repayment arrangement offered. Such matters may well change over time and the Act does not operate to lock the Secretary into a repayment arrangement reached when circumstances were different. (Reasons, para.62)
The Court found no reason to disturb the Tribunal’s decision that the Secretary had made a lawful decision under s.1230C in issuing the redundancy garnishee notice.
The Court ordered that the appeal be dismissed and that Elbayeh pay the respondent’s costs. [D.A.]
Court:
Federal Court of Australia
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URL: http://www.austlii.edu.au/au/journals/SocSecRpr/2012/27.html