Cambridge and Secretary, Department of Social Services (Social services second review)

[2024] AATA 952

Cambridge and Secretary, Department of Social Services (Social services second review) [2024] AATA 952 (29 April 2024)

Division:GENERAL DIVISION

File Number(s):      2023/2045

Re:Nicholas Mark Cambridge

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member George

Date:29 April 2024

Place:Adelaide

The Tribunal sets aside the Reviewable Decision and substitutes it with a decision that Mr Cambridge has a Newstart Allowance debt of $938.26.  

....................[Sgnd]..............................

Senior Member George

CATCHWORDS

SOCIAL SECURITY – Newstart Allowance – whether Applicant failed to declare his income correctly – whether Applicant has a Newstart Allowance debt - whether the debt should be recovered in part or in full – whether special circumstances exist – decision under review set aside and substituted.

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth)

Social Security Act 1991 (Cth)

Social Security (Administration) Act 1999 (Cth)

REASONS FOR DECISION

Senior Member George

29 April 2024

1. Mr Nicholas Mark Cambridge was in receipt of Newstart Allowance from 5 August 2015 to 11 June 2016. At this time, he was employed by Vesco Fine Foods Pty Ltd (“Vesco”).

2. On 7 March 2019, a Newstart Allowance debt of $1,397.22 was raised against Mr Cambridge. Mr Cambridge’s income had not been correctly reported.

3. Mr Cambridge sought internal review of the 7 March 2019 decision. On 12 July 2019, the decision was affirmed by an Authorised Review Officer.[1] Mr Cambridge applied to the Social Services & Child Support Division (“AAT1”) for review of this decision on 7 November 2022,[2] and it was affirmed on 2 March 2023.[3] This is the Reviewable Decision.

   [1] Exhibit R2, T-Documents, T8, pages 110-113.

   [2] Exhibit R2, T-Documents, T13, Application for Review of Decision.

   [3] Exhibit R2, T-Documents, T2, pages 5-9.

4. In his application for review, when asked why he claimed the decision was wrong, Mr Cambridge said “unsound verdict will not hold up in a court of law. not all facts were considered.”[4]

   [4] Exhibit R2, T-Documents, T1, page 4.

5. The issues for the Tribunal to now determine are:

   (a)whether the Applicant has a Newstart Allowance debt, including the amount of any such debt; and

   (b)whether the debt, if any, should be written off or waived. 

6. For the following reason the Tribunal sets aside the Reviewable Decision and substitutes it with a decision that Mr Cambridge has a Newstart Allowance debt of $938.26.

   SUMMARY OF THE MATERIAL FACTS

7. Mr Cambridge applied for Newstart Allowance on 5 August 2015. His claim was granted on 24 September 2015, and he received Newstart Allowance with effect from 5 August 2015.[5]

   [5] Exhibit R2, T-Documents, T18, pages 235-237.

8. During the period 5 August 2015 to 26 April 2016 (“the Debt Period”), Mr Cambridge was notified on various occasions by letter that he was to report any changes in his income. The Tribunal notes Mr Cambridge’s evidence in the hearing that he cannot necessarily recall receiving correspondence from such a long time ago, however the Tribunal is satisfied that these letters were sent and that they were received.

9. On 1 September 2017, Mr Cambridge was issued a notice stating they had received information from the Australian Tax Office regarding Mr Cambridge’s income details and that they were different to those reported by Mr Cambridge.[6]

   [6] Exhibit R2, T-Documents, T18, pages 275-278.

10. On 18 April 2018, pursuant to s 196 of the Social Security (Administration) Act 1999 (Cth) (“the Administration Act”), Vesco was issued a notice requesting Mr Cambridge’s employment details for the period 1 July 2015 to 30 June 2016.[7]

    [7] Exhibit R2, T-Documents, T4, pages 91-102.

11. On 11 May 2018, Vesco produced Mr Cambridge’s payroll records. These documents indicate that there was a discrepancy between the income Mr Cambridge earned and what he declared. At the hearing, Mr Cambridge asserted that he had not committed welfare fraud. Indeed, welfare fraud is not a live issue in these proceedings.

12. On 7 March 2019, a Newstart Allowance debt was raised in the amount of $1,397.22 against Mr Cambridge on the basis that he did not report his income correctly.[8] On 8 April 2019, Mr Cambridge was issued with a notice to say an interest charge had been applied to this debt.[9]

    [8] Exhibit R2, T-Documents, T5, pages 103-105.

    [9] Exhibit R2, T-Documents, T6, pages 106-108.

13. On 25 July 2023, pursuant to s 196 of the Administration Act, Vesco was issued a notice seeking Mr Cambridge’s earnings for the period 1 July 2015 to 30 June 2016.[10]

    [10] Exhibit R3, Supplementary Documents, ST1, pages 1-3.

14. On 28 July 2023, Vesco provided further information. On 15 September 2023, the debt was recalculated and decreased to $1,044.35 for the Debt Period.[11]

    [11] Exhibit R3, Supplementary Documents, ST4.

15. On 13 December 2023, the debt was again recalculated following further information provided by Vesco. The debt was recalculated and decreased to $938.26 for the Debt Period. The Tribunal accepts these final calculations as being accurate.

    DID A DEBT ARISE?

16. A person entitled to receive Newstart Allowance is paid subject to an income test under s 1068 of the Social Security Act 1991 (Cth) (“the Act”). If a person earns income from employment but does not correctly report the income amount, a debt to the Commonwealth may arise.

17. The debt amount has decreased to $938.26. The Secretary contends that this is due to receiving better information from Vesco about Mr Cambridge’s employment income. Mr Cambridge’s verified earnings from Vesco are contained in Exhibit R3 and there is no evidence before the Tribunal to contradict this evidence.[12]

    [12] Exhibit R3, Supplementary T-Documents, ST4.

18. Consistent with his evidence in AAT1,[13] Mr Cambridge accepted during the hearing that he has been paid money that he was not entitled to receive.

    [13] Exhibit R2, T-Documents, T2, page 7, paragraph [16].

19. The Tribunal is satisfied that a debt to the Commonwealth has arisen.  

    SHOULD THE DEBT BE WRITTEN OFF?

20. Under s 1236 of the Act a debt may be written off, if, and only if:

    (a)the debt is irrecoverable at law; or

    (b)the debtor has no capacity to repay the debt; or

    (c)the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

    (d)it is not cost effective for the Commonwealth to take action to recover the debt.

21. The Tribunal is not satisfied, on the material before it, that Mr Cambridge’s Newstart Allowance debt should be written off because it is irrecoverable at law. There is no evidence before the Tribunal that Mr Cambridge does not have capacity to repay the debt. Mr Cambridge’s whereabouts is known.

22. During his oral evidence, Mr Cambridge submitted that it was not cost effective for the Secretary to have engaged a lawyer to represent them in these proceedings given the debt amount of $938.26. However, these are merits review rather than recovery proceedings. Accordingly, the Tribunal is not satisfied that it is not cost effective for the Commonwealth to take action to recover the debt.

23. Accordingly, the Tribunal is not satisfied that the debt should be written off.

    SHOULD THE DEBT BE WAIVED?

24. Section 1237 of the Act provides the Secretary with the power to waive the Commonwealth’s right to recover all or part of a debt, where under:

    (a)section 1237A of the Act, the Secretary must waive the right to recover a debt that it attributed solely to an administrative error.

    (b)section 1237AAD of the Act, the Secretary may waive the right to recover all or part of the debt if the Secretary is satisfied that the debt did not result wholly or partly from the debtor or another person knowingly:

    (i)making a false statement or a false representation; or

    (ii)failing or omitting to comply with a provision of the Act (and its 1947 antecedent) or the Administration Act;

    (c)And:

    (i)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

    (ii)it is more appropriate to waive than to write off the debt or part of the debt.

    Administrative error on behalf of the Commonwealth – s 1237A of the Act

25. For the debt to be waived under s 1237A of the Act, the debt must be attributed solely to administrative error by the Commonwealth. The Secretary contends that the debt arose due to Mr Cambridge’s failure to correctly report his income. There is strength to this contention.

26. Mr Cambridge was sent several notices during the Debt Period notifying him of his obligations to report his income, and to inform of any circumstance that might affect his Newstart Allowance payments within 14 days. It is immaterial that Mr Cambridge was unfamiliar with the precise wording of sections 68(2) and 66A of the Administration Act, as the letters were written in plain English. The relevant sections of the letters read as follows:

    “Changes you must tell us about

    You must tell us if you have or are likely to have any of the following changes in circumstances. You must tell us about any changes on your reporting day immediately following the change…

    If you do not tell us about changes, you could have a debt. If you have a debt, you may have to pay all or some of the money back. If you do not tell us about income you have earned, or if you provide false or misleading information about your income, you may also have to pay a recovery fee.

    Employment

    • profession, trade, business or self-employment

    • income from employment changes (the amount earned goes up or down)

    To help us pay you the right amount you should bring your payslips with you.”

27. In his oral evidence, Mr Cambridge said that he would have reported his income between 5 August 2015 and 24 September 2015 if he had been made aware of that requirement. He said that he also did not have the ability to report his income. He believes it is a failure on behalf of the Secretary to not inform him of this obligation. However, it is clear from the correspondence sent to Mr Cambridge that he was informed of his responsibilities to notify changes in his circumstances.

28. When asked why he did not take steps to pay the debt back once he was informed of it, Mr Cambridge said he was first unaware of the debt amount and then he subsequently noticed errors in the calculations and disputed the amount. Although it was proper to dispute the amount where miscalculations have occurred, in part due to a misreporting by Vesco, this alone does not absolve Mr Cambridge from now paying his properly calculated debt.

29. Mr Cambridge raised concerns during his oral evidence that the Secretary had breached its duty of care by not informing him of the debt amount when informing him he had a debt. This duty is vague and not of a type known to the law. Mr Cambridge raised further concerns about the debt amounts and why they have changed over time. These concerns have some merit, although the debt amount changed after receiving more accurate income information from Vesco.

30. Vesco and the Secretary may have made mistakes, but Mr Cambridge was obliged to accurately report his income and change of circumstances in a timely manner. He did not. He carries some responsibility for this omission. The Tribunal therefore finds that the cause of Mr Cambridge’s debt was, at least in part, the result of his failure to correctly report his income.

31. Accordingly, the Tribunal is satisfied that the debt was not the result of an administrative error attributed solely to the Commonwealth, and therefore, cannot be waived on this basis.

    Special circumstances – s 1237AAD of the Act

32. A debt may only be waived under special circumstances where the debt has not arisen wholly or partly from the debtor or another person making a false statement or false representation or failing or omitting to comply with a provision of the social security law.

33. For a debt to be waived under s 1237AAD of the Act, the circumstances must be so unusual, uncommon, or exceptional that they give rise to an unjust, unreasonable, or inappropriate outcome. Financial hardship alone will not suffice.

34. The Secretary contends that Mr Cambridge failed to report his income correctly and that the discrepancies between the income he reported, and his actual earnings suggests he knowingly failed to comply with his reporting obligations under the Administration Act.[14] The evidence does not support a finding of this nature.

    [14] Exhibit R1, Respondent’s Statement of Facts, Issues and Contentions, page 15 [4.73].

35. Mr Cambridge did not submit a statement nor any evidence in these proceedings. His oral evidence did not raise any special circumstances.

36. Accordingly, the Tribunal is not satisfied that there are sufficient special circumstances to warrant waiving the debt.

37. The correct and preferable decision is therefore to set aside the Reviewable Decision and substitute it with a decision that Mr Cambridge has a Newstart Allowance debt of $938.26.

    DECISION

38. The Tribunal sets aside the Reviewable Decision and substitutes it with a decision that Mr Cambridge has a Newstart Allowance debt of $938.26.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for the decision herein of Senior Member George

.............................[sgnd]..................................

Associate  

Date of Decision:

29 April 2024

Date of Hearing:

17 April 2024

Representation for the Applicant:

Self-represented

Solicitor for the Respondent:

Hannah Laviano & Jake Kyranis
Sparke Helmore

ANNEXURE A – EXHIBIT REGISTER

39.     EXHIBIT	DESCRIPTION OF EVIDENCE	PARTY	DATE OF DOCUMENT	DATE RECEIVED	DATE TENDERED
R1	Respondent’s Statement of Facts, Issues and Contentions.	R	8/1/2024	8/1/2024	17/4/2024
R2	T-Documents		N/A	11/5/2023
R3	Supplementary T-Documents (S1-S4)		N/A	8/1/2024