Case: Defence Force Retirement and Death Benefits Authority v Lokan [2008] FCAFC 43
Outcome: followed
is essential for the resolution of the present issue to define the scope of such discretion. It was accepted by both parties in these proceedings that the Tribunal had a wide discretion under s 126(4). That is, the Tribunal had the discretion to order recovery of the whole amount of the overpayment or not recover the whole amount, as well as the discretion to recover only part of the whole amount. It is arguable s 126(4) does not grant such a broad discretion, given that it is worded ' where for any reason... an amount of benefit has been paid that is not payable ... the amount so paid may be recovered by the Authority ' (emphasis added). However, the Full Federal Court in Defence Force Retirement and Death Benefits Authority v Lokan [2008] FCAFC 43 at [1] did not question the proposition put before it, namely that by virtue of s 126(4) ' the AAT had a discretion that allowed it not to order the recovery of the full amount '. Accordingly, this Court will follow such interpretation. The issue then becomes one of construction of the Tribunal's decision. The Authority submits that, after considering all of the circumstances, the Tribunal exercised is discretion to recover the overpayment. Having made such finding, the Authority submits it was not open to the Tribunal to then decide that the tax component of the overpayment need not be recovered. The Authority cites [55] of the decision in its favour. The Tribunal found in such paragraph: Unfortunately for Mr Gregory, the circumstances described by him, including administrative errors, misleading information and delay by the respondent in attending to his overpayment, are insufficient reason for not recovering the debt. For these reasons, the discretion to recover the overpayment cannot be exercised in his favour. The Authority's submission proceeds from a misunderstanding of the decision of the Tribunal and overlooks the fact that such statement was only made following the Tribunal's discussion regarding the tax component of the overpayment. At [53] Tribunal found, ' I consider Mr Gregory is not liable to pay the outstanding $9,939 to the respondent. This amount should be deducted from the overpayment... I am unable to see any justification for requiring Mr Gregory to bear the burden of recovering this money '. At [54] it found: In balancing all relevant factors, and bearing in mind that the paramount consideration is that Mr Gregory received public monies to which he was not entitled, I find that the debt must be recovered. The decision to recover the overpayment, however, should be varied in order to substitute the amount actually received by Mr Gregory less tax deducted. Only then did the Tribunal move on to say what was extracted from [55]. In short, it cannot be said that the Tribunal exhausted its discretion at [55] and then went on to treat the tax component differently because it had already discussed the tax component. The only debt which the Tribunal, in the exercise of its discretion, found was owing was the net amount received by the respondent. That is, the monies actually received by him excluding the amount which was paid to the Commissioner. The Tribunal cited the decision of Deputy President Hack in Lokan and Defence Force Retirement and Death Benefits Authority [2007] AATA 1652. In that decision his Honour said at [13]-[15], ' Mr Lokan got no benefit from the PAYG instalments because they represented tax payable on monies to which he was not entitled... In my view, there is no practical benefit that would be achieved by requiring Mr Lokan to repay the PAYG instalments '. However, the Full Federal Court on appeal in Lokan [2008] FCAFC 43 made the following consent orders: The appeal be allowed. The decision of the Administrative Appeals Tribunal dated 9 August 2007 that the respondent repay to the applicant the sum of $21,352.86 be set aside. The respondent repay to the applicant by way of fortnightly instalments of $300.00 the sum of $29,791.86, commencing 28 days after the date the Court affixes the stamp of the Court to these orders. The decisions of the applicant dated 31 October 2006 and 23 March 2007 be affirmed. There be no order as to costs. Their Honours were aware of the deficiencies in the Tribunal decision before them, stating at [7] ' there was no evidence before the Tribunal that would support that conclusion [namely that there would be no ' practical benefit ']'. The Full Federal Court decision thus overturned the decision of Deputy President Hack and the decision should not have been relied upon by the Tribunal.