FEDERAL COURT OF AUSTRALIA ADMINISTRATIVE LAW – Administrative appeals – social security appeal to Administrative Appeals Tribunal – whether "inappropriate" for SSAT to affirm delegate's decision for different reason – whether AAT misconceived review function of SSAT and AAT – function of tribunals not limited to deciding whether error in original decision but extends to making correct and preferable decision. Administrative Appeals Tribunal Act 1977 (Cth) s 44(1), s 43(1) Employment Services Act 1994 s 45(5)(b), s 45(6) Social Security Act s 41, s 660I, s 1247(1), s 1253(1), s 1283(1), s 1283(2) Secretary, Department of Employment, Education and Training Youth Affairs v Ferguson (1997) 48 ALD 593 referred Secretary, Department of Employment, Education, Training and Youth Affairs v Messenger (1997) 48 ALD 26 referred Secretary, Department of Employment, Education, Training and Youth Affairs v O'Connell (unreported, Mansfield J, 15 May 1997) referred Secretary, Department of Social Security v Hodgson (1992) 39 FCR 32 followed Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88 followed Fletcher v Commissioner of Taxation (1988) 19 FCR 442 followed Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 followed SECRETARY, DEPARTMENT OF EMPLOYMENT, EDUCATION, TRAINING AND YOUTH AFFAIRS v MURRAY MACKAY VG 177 of 1998 KENNY J 2 DECEMBER 1998 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 177 of 1998 BETWEEN: SECRETARY, DEPARTMENT OF EMPLOYMENT, EDUCATION, TRAINING AND YOUTH AFFAIRS Applicant AND: MURRAY MACKAY Respondent JUDGE: KENNY j DATE OF ORDER: 2 december 1998 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The decision of the AAT made 31 March 1998 be set aside. 3. The case be remitted to the Administrative Appeals Tribunal for hearing and determination according to law. 4. There be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 177 of 1998 BETWEEN: SECRETARY, DEPARTMENT OF EMPLOYMENT, EDUCATION, TRAINING AND YOUTH AFFAIRS Applicant AND: MURRAY MACKAY Respondent JUDGE: KENNY j DATE: 2 DECEMBER 1998 PLACE: MELBOURNE EX TEMPORE REASONS FOR JUDGMENT This is an appeal brought pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1977 (Cth) from a decision of the Administrative Appeals Tribunal ("the AAT"), given on 31 March 1998. By its decision, the AAT set aside a decision of the Social Security Appeals Tribunal ("the SSAT") which affirmed the Secretary's decision to cancel the respondent's Newstart Allowance ("the Allowance") and decided that the Allowance should not be cancelled. The Secretary appeared by counsel and the respondent appeared in person. The facts may be briefly stated. The respondent, who was born on 30 October 1964, has been registered as unemployed since April 1991. He was in receipt of a Newstart Allowance when he entered into a Case Management Activity Agreement ("the Agreement") on 1 July 1996. By clause 5 of the Agreement, the respondent undertook to "contact, attend or provide information to my Case Manager when … asked". The Agreement recorded the respondent's understanding that "if I do not keep to the activities in this Agreement, my allowance may be stopped; my participation in the case management system may also be cancelled". On 30 August 1996, the respondent and his Case Manager arranged a meeting for 3 September 1996. The respondent failed to attend that interview. He was subsequently requested by his Case Manager by letters dated 3 September 1996, 24 September 1996 and 1 October 1996, to attend interviews on 17 September, 1 October and 9 October 1996. Each of the letters written to the respondent by his Case Manager contained a warning, "failure to attend may affect your benefit payment". The last letter was, it seems, sent by certified mail and was signed for as having been received. The respondent did not attend for interview on any of the nominated dates and, on 17 October 1996, the Secretary's delegate decided to cancel the respondent's Allowance The reason given for the cancellation was that the respondent had failed to enter or "unreasonably delayed entering" into a Case Management Activity Agreement. On 24 October 1996, an Authorised Review Officer ("ARO") reviewed and affirmed the decision of the delegate, stating that the respondent, in failing to attend the three appointments on 17 September, 1 October and 9 October 1996, had "unreasonably delayed entering into a Case Management Activity Agreement [and had] not satisfied s 45(5) of the Employment Services Act …". On 4 April 1997, the SSAT reviewed and affirmed the delegate's decision to cancel the respondent's Allowance. The SSAT did not find that the respondent had unreasonably delayed in entering into a Case Management Activity Agreement, but found that the respondent had failed to take reasonable steps to comply with the terms of his Agreement, so that he had ceased to qualify for an Allowance. In reviewing the decision of the SSAT, the AAT noted that the respondent had not been given any notice by his Case Manager that he was being required to enter into a new Case Management Activity Agreement and, therefore, could not be said to have unreasonably delayed entering into a one. The AAT said that, because the SSAT had made a finding that the respondent's Allowance could not be cancelled because of unreasonable delay in entering such an Agreement, "it was inappropriate for the SSAT to affirm the decision of the delegate, as affirmed by the ARO, in the terms that it did; that is, that Mr Mackay 'had failed to take reasonable steps to comply with the terms of his Case Management Agreement'." It was for this reason that the AAT set aside the SSAT's decision. The legislative framework falls to be considered. A Newstart Allowance is payable under Part 2.12 of the Social Security Act 1991. Section 41 of that Act provides that, before a social security payment, which includes a Newstart Allowance, is payable under the Act, a person must be qualified for the social security payment. For present purposes, it suffices to say that s 660I of the Social Security Act 1991 directs the Secretary to cancel or suspend a Newstart Allowance if the Secretary is satisfied that the Allowance is being paid to a person to whom it is not payable under the Act. Subsection 45(5) of the Employment Services Act 1994 provides that a person is not qualified for a Newstart Allowance in respect of a period unless: (a) when the person is required under section 38 to enter into a Case Management Activity Agreement in relation to the period, the person enters into that agreement; and (b) while the agreement is in force, the person satisfies the Employment Secretary that the person is taking reasonable steps to comply with the terms of the agreement; and (c) at all times during the period when the person is a party to the agreement, the person is prepared to enter into another such agreement instead of the existing agreement if required to do so under section 38. Sub-section 1247(1) of the Social Security Act 1991 allows a person whose interests are affected by the decision of an ARO to apply to the SSAT for a review of that decision. The review powers of the SSAT are set out in s 1253 of that Act. By virtue of s 1253(1), the SSAT may affirm, vary or set aside the decision under review. For present purposes, it is enough to note that s 1253(3) gives the SSAT power, for the purposes of reviewing a decision under the Act, to exercise all the powers and discretions that are conferred by the Social Security Act on the Secretary. Sub-section 1283(1) of the Act provides that, if the SSAT has affirmed, varied or set aside a decision, application may be made to the AAT for a review of the SSAT's decision. Pursuant to s 1283(2), where the SSAT has affirmed a decision, the decision made by the SSAT is to be taken to be "the decision as affirmed". The powers of the AAT are set out in s 43(1) of the Administrative Appeals Tribunal Act 1975. For the purposes of reviewing a decision, the AAT may exercise all the powers and discretions that are conferred on the original decision-maker. The Tribunal is to determine the review application by affirming, varying, or setting aside the decision under review. As I have already indicated, the reasoning of the AAT is very brief. The AAT concluded (as the SSAT had done) that there was no basis upon which the respondent could be said to have unreasonably delayed entering into a Case Management Activities Agreement, and that the basis for the decisions of the Secretary's delegate and the ARO was, therefore, misconceived. Because the reason for the decision under review by the SSAT was not made out, it was, so the AAT reasoned, "inappropriate" for the SSAT to affirm the decision for a different reason, namely, that the respondent had failed to take reasonable steps to comply with the Case Management Activities Agreement. In light of the brevity of the AAT's reasons, the use of the term "inappropriate" is not particularly helpful. Having regard to those reasons and the Tribunal's decision, it seems reasonable to construe the Tribunal's observations and conclusions as amounting to this: because the reason for the decision of the original decision-maker and the ARO to cancel the Allowance proved unsustainable, then, so the AAT reasoned, the decision must also be taken to be unsustainable. Does this disclose an error of law? The Secretary submits that the AAT misconceived the review function of the SSAT and the AAT. I accept that submission. Plainly enough, the function of each of the two tribunals is not limited to deciding whether the original decision-maker erred in making the decision under review, but extends to making the correct and preferable decision on the material before the tribunal: see Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 589 (Bowen CJ and Deane J). It should be borne in mind that neither Tribunal is confined to the decision-making power upon which the decision-maker relied, but is armed with all the powers and discretions of the original decision-maker that are relevant to the review: see, e.g., Re Control Investment Pty Ltd and Australian Broadcasting Tribunal (No 2) (1981) 3 ALD 88 at 92 per Davies J and Fletcher v Commissioner of Taxation (1988) 19 FCR 442 at 453 per Lockhart, Wilcox and Burchett JJ. When the SSAT undertook to review the decision of the delegate to cancel the respondent's Allowance, the SSAT had all the powers and discretions that were available under the Social Security Act of 1991 to the delegate and that were relevant to a decision to cancel the Allowance. The delegate's power to cancel the Allowance derived from s 660I of the Social Security Act, to which I have already referred. Section 41 of that Act provided that before the Allowance was payable to the respondent, he must be qualified for it. The Employment Services Act 1994 sets out a number of circumstances in which a person would not be qualified for a Newstart Allowance, including the situation relied on by the delegate and the ARO: see s 45(5)(a). Another such situation arises where, while a Case Management Activities Agreement was in force, a person fails to satisfy the Employment Secretary that the person is taking reasonable steps to comply with the terms of that Agreement: see s 45(5)(b). The SSAT was not confined to reviewing the reasons for the decision under review but was required to make the correct or preferable decision by reference to the powers and discretions available to the primary decision-maker. Once the SSAT embarked on its review of the decision to cancel the respondent's Newstart Allowance, it was open to that tribunal to consider whether s 45(5)(b) of the Employment Services Act 1994, in combination with ss 41 and 660I of the Social Security Act, required the decision under review to be affirmed. See, e.g., Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32 at 40 per Hill J. The decision made by the delegate was a decision to cancel the respondent's Allowance. That was the decision affirmed by the ARO and, for a different reason, by the SSAT. The SSAT acted within its powers when it affirmed the decision of the delegate on a basis that would have been available to the delegate for the purpose of the decision under review. Having found that the decision to cancel the Allowance was the correct or preferable one, although for reasons different from the ARO, the SSAT was obliged to affirm the decision under review. The AAT erred, in my view, in concluding that that course was not open to the SSAT. In describing the decision of the SSAT as "inappropriate", it appears that the AAT misconceived the function of the SSAT. Further, in the circumstances of the case, the AAT was itself called upon to consider the application and operation of s 45(5)(b) of the Employment Services Act 1994 together with other relevant legislation. That is, the AAT was itself required to consider what was the correct or preferable decision on the material before it and, in particular, whether or not, having regard to subss 45(5) and (6) of the Employment Services Act 1994, the respondent was a person qualified for a Newstart Allowance. As counsel for the applicant noted, those provisions appear to raise issues of some subtlety, I refer to Secretary, Department of Employment, Education, Training and Youth Affairs v Ferguson (1997) 48 ALD 593, Secretary, Department of Employment, Education, Training and Youth Affairs v Messenger (1997) 48 ALD 26 and Secretary, Department of Employment, Education, Training and Youth Affairs v O'Connell (unreported, Mansfield J, 15 May 1997). Whilst relevant matters were raised in the hearing before the AAT, they were not canvassed in the Tribunal's reasons for decision. Accordingly, I accept the Secretary's submission that the AAT misconceived its own function, thereby failing to review the decision of the delegate as affirmed by the SSAT. It follows that I am of the view that the Tribunal's decision should be set aside, the matter remitted to the Tribunal for determination and hearing in accordance with these reasons. There will be no order as to costs. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny Associate: Dated: 2 December 1998 Counsel for the Applicant: Mr P J Hanks Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Self represented Solicitor for the Respondent: Self represented Date of Hearing: 2 December 1998 Date of Judgment: 2 December 1998