Editors --- "Tribunal review of social security compliance penalty decisions" [2010] SocSecRpr 15; (2010) 12(2) Social Security Reporter, Article 1

• Tribunal review of social security compliance penalty decisions
• Introduction
• Purpose of the compliance regime
• External merits review
• Evidentiary onus
• Standard of proof and degree of satisfaction
• Summary
• Footnotes

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Tribunal review of social security compliance penalty decisions

Introduction

Australian social security law imposes a variety of obligations on those receiving social security payments, particularly in relation to ‘newstart allowance’ (unemployment benefits).This article considers how these decisions might be approached in the context of Tribunal review.The relevant legislation is the Social Security (Administration) Act 1999 (Cth), and all references in this article are to that Act unless otherwise specified. The Act itself refers to the relevant provisions as the ‘compliance regime’,1 and this article also adopts that term.

Purpose of the compliance regime

The social security system has an established history of using administrative penalties to deter breaches of the rules imposed by social security law.2The objectives of the current compliance regime are ‘to encourage people to participate in employment and engage with employment services’ and ‘to secure compliance with a person’s obligations and requirements’.3This is achieved through various ‘punitive consequences’4 that apply in response to specified conduct of persons receiving (or claiming) certain social security payments.5

The theory underpinning the compliance regime appears to be deterrence: that is, using punishment to deter people from ignoring or flouting legislative obligations.6 The regime recognises its punitive character when it points out that it ‘is not intended to punish a person who has a reasonable excuse for failing to comply with ... obligations’.7 The penalties that can apply to a person include the deduction of a ‘penalty amount’ from ongoing payments8 or the imposition of a ‘compliance penalty

period’ during which payments are suspended for up to 8 weeks.9

External merits review

Generally, Centrelink administrators have a discretion to determine whether or not a penalty should apply to a person.10 This calls for a decision to be made under the relevant provisions of the Act, and those decisions are subject to both internal and external review.11 The final level of merits review of compliance penalty decisions is the Administrative Appeals Tribunal (AAT).

It seems that the main decisions likely to be subject to external review are decisions that a person:

• has committed a no show no pay failure12

• has committed a connection failure13 or reconnection failure14

• has committed a serious failure15

• is unemployed as a result of misconduct or a voluntary act.16

The first two types of decision may lead to the deduction of a ‘penalty amount’ from the person’s social security payments, while the second two types of determination may lead to payments being completely suspended for up to 8 weeks.

Evidentiary onus

In AAT proceedings, there is generally no ‘onus of proof’.17However, the Federal Court has pointed out that if the AAT is ‘unable to decide a question of fact either way on the balance of probabilities, it will be necessary for it to analyse carefully the decision it is reviewing’ to determine what outcome should follow.18The Court gave the example of a decision to cancel a pension.If the AAT is uncertain of the facts needed to justify the cancellation, then the cancellation must be set aside.19 This serves to emphasise that while there is no formal onus of proof, there may as a practical matter be an ‘evidentiary onus’.20

If the imposition of a compliance penalty depends on a particular fact and the AAT is unable to decide that question

of fact either way, it follows that the AAT is not satisfied that the penalty should be applied.This means that in compliance penalty reviews, an absence of sufficient evidence should result in the compliance penalty being set aside or, perhaps, result in the AAT calling for more evidence.21 In a practical sense, if Centrelink wishes a compliance penalty decision to be upheld, it must ensure it presents adequate evidence.22

Once the AAT is satisfied that there has been a compliance failure, the next question will be whether there is any ‘reasonable excuse’ or other grounds for not imposing the penalty.23At this stage of decision-making, the evidentiary onus shifts because after the necessary compliance failure is established, the question becomes whether there are facts to establish a reasonable excuse.24That is, if the evidence does not show that the person had a reasonable excuse, the AAT would not be satisfied that the conduct should be excused.

Standard of proof and degree of satisfaction

The AAT makes findings of fact according to the balance of probabilities.But when the AAT is considering whether or not to impose a compliance penalty, just how much evidence is enough?And how satisfied of the facts does the AAT need to be?

The classic case regarding standard of proof is Briginshaw v Briginshaw.25 There, Dixon J said that ‘when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found’.His Honour stated that, while an asserted fact simply needs to be ‘made out to the reasonable satisfaction of the tribunal’, this process may depend on the ‘nature and consequence of the fact or facts to be proved’.He explained:

The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters ‘reasonable satisfaction’ should not be produced by inexact proofs, indefinite testimony, or indirect inferences.

Briginshaw does not introduce a different standard of proof.It simply emphasises that ‘the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove’.26In cases where fraud or other serious allegations are made, the decision maker will require stronger evidence than if the allegations are non-contentious.Similarly, where a particular finding of fact will lead to serious consequences, this will influence the strength of evidence needed to establish that fact.27

In compliance penalty cases, the factual allegation may involve a suggestion that there has been some deliberate defiance of a legal requirement.This is perhaps not as serious as alleging fraud, but it is still an allegation of conduct in breach of legal requirements.Similarly, the consequence of factual findings in compliance penalty cases will be the imposition of an administrative penalty of reduced or temporarily suspended social security payments.It is suggested that these factors might justify the AAT taking a strict approach to the evidence necessary to prove the fact of non-compliance.

Summary

The review of social security compliance decisions raises a variety of issues, including the evidentiary onus and the standard of proof.While these decisions have been litigated in some form for a considerable time, the current regime is in its relatively early stages.28There would appear to be scope for applicants to challenge some of the previous approaches taken in the AAT, particularly in relation to the adequacy of evidence upon which Centrelink might rely.

Matt Black is a barrister at the Queensland Bar, and was previously an advocate with Centrelink. The views and opinions expressed are those of the author only.

Footnotes

1 Section 42ZA.

2 See Australian Law Reform Commission (2002) Principled Regulation: Federal Civil and Administrative Penalties in Australia, Report 95.

3 Section 42B(1).It “is intended that decision makers will have regard to these objects in interpreting and applying Division 3A”: Explanatory Memorandum, Social Security Legislation Amendment (Employment Services) Bill 2008 (Cth) 5.

4 A term used in the Explanatory Memorandum, Social Security Legislation Amendment (Employment Services) Bill 2008 (Cth) 9.

5 Particularly newstart allowance, youth allowance, parenting payment, and special benefit: Schedule 1, clause 1(1).

6 Explanatory Memorandum, Social Security Legislation Amendment (Employment Services Reform) Bill 2008 (Cth) 1.

7 Section 42B(2).

8 Sections 42D, 42L.

9 Sections 42P, 42S;Social Security Act 1991, s 23.

10 The decision maker “may” (not must) determine that a person has committed a “failure”: ss 42C, 42E, 42M, 42N.

11 See Part 4 of the Act.

12 Section 42C.

13 Section 42E.

14 Section 42H.

15 Sections 42M, 42N.

16 Section 42S.

17 Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408, 425.

18 McDonald v Director-General of Social Security [1984] FCA 57; (1984) 6 ALD 6, 11.

19 Muller and Secretary, Department of Workplace Relations [2005] AATA 1019, [22].

20 See Richards, D. “Evidentiary onus and prejudice in the AAT”, Law Society of SA Bulletin June 2006.

21 For example, further evidence was requested by the AAT in Heathcote and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 109.

22 See, in a different context, the AAT’s comments in Tejani and Migration Agents Registration Authority [2009] AATA 240, [18].

23 See ss 42C(4)(a)(ii), 42E(4)(a), 42H(3), 42N(2), 42S(2).

24 As to which, see Secretary, Department of Employment and Workplace Relations v Real [2007] FCA 988.

25 (1938) 60 CLR 366.

26 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; (1992) 110 ALR 449, 450.

27 See Rana v University of South Australia [2007] FCAFC 188, [31]. 28 The current compliance regime commenced in 1 July 2009.