Chevell and Secretary, Department of Social Services (Social services second review) - [2019] AATA 2342

Chevell and Secretary, Department of Social Services (Social services second review) [2019] AATA 2342 (2 August 2019)
Division:GENERAL DIVISION
File Number(s): 2018/1691, 2018/1786
Re:Donna Chevell
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:2 August 2019
Place:Sydney

The reviewable decision is set aside and the matter is remitted for recalculation of each of the debts X9229348, X9289961 and X9351787 and the total of the three debts.
.....................................[SGD]...................................
Mrs J C Kelly, Senior Member
CATCHWORDS
SOCIAL SECURITY – whether Applicant was overpaid social security payment – whether amount of debt overpaid is due to the Commonwealth – whether all or part of each or any of the debts can be waived or written off - Applicant was overpaid debt - overpayment not due solely to administrative error by the Commonwealth - debt recoverable at law – not satisfied that Applicant has no capacity to pay - Applicant's whereabouts are not unknown - not satisfied that it is not cost effective for the Commonwealth to take action to recover the debt - Applicant knowingly failed to comply with obligation to notify income - discrepancy in total of debts assessed post hearing - reviewable decision set aside and matter remitted for recalculation of debts
LEGISLATION
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Social Security Act 1991 (Cth) ss 1068, 1223(1), 1236(1A)(a), 1236(1A)(b), 1236(1A)(c), 1236(1A)(d), 1236(1C), 1237A(1), 1237 (AAD)
Social Security (Administration) Act 1999 (Cth) s 66A(2)
CASES
Cox and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 350
Drake and Minister for Immigration and Ethnic affairs (No 2) (1979) 2 ALD 634
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Re Nisha and Secretary, Department of Family and Community Services [2000] AATA 315
Re Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72
Re Secretary, Department of Social Security and McAvoy [1996] 44 ALD 721
Re Woodward and Secretary, Department of Family and Community Services [2001] AATA 818
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
2 August 2019

The Applicant, Ms Chevell, seeks review of a decision of the Social Services and Child Support Division of the Tribunal (the AAT1) made on 6 March 2018 that affirmed a decision of an authorised review officer of the Department of Human Services (the Department) to raise and recover the following debts, a newstart allowance debt totalling $48,340.76 comprising:
·$4,587.33 for the period 22 March 2011 to 7 July 2011 (Debt X9229348),
·$11,613.67 for the period 2 October 2010 to 31 October 2013 (Debt X9289961),
·$32,139.76 for the period 19 August 2011 to 6 September 2013 (Debt X9351787).
Issues
The issues to be decided in this matter are whether:
·the Applicant was overpaid newstart allowance as set out above; and
·amounts that were overpaid are debts due to the Commonwealth, and
·all or part of each or any of the debts can be waived or written off.
The regulatory scheme
The relevant legislation is contained in the:
·Social Security Act 1991 (Cth) (the Act), and
·Social Security (Administration) Act 1999 (Cth) (the Administration Act).
Government policy set out in the Social Security Guide is also relevant, and should be applied in the absence of cogent reasons to not follow such policy.[1]
[1] Drake and Minister for Immigration and Ethnic affairs (No 2) (1979) 2 ALD 634 at 645.
A person’s rate of newstart allowance is determined in accordance with s 1068 of the Act.
Facts
The Applicant was born in May 1967. She was in receipt of newstart allowance from 24 November 2009 to 21 October 2013.
On 8 January 2014 the Department raised a newstart allowance debt totalling $12,402.94 (and a recovery fee of $1,224.90 resulting in a total of $13,627.84) for the period 2 October 2010 to 30 December 2013.[2] The Applicant was notified of the debt on 8 January 2014. The debt was raised because the correct amounts of the Applicant’s earnings from two of her employers (Wellen Pty Ltd and Myer) were not taken into account in the payments[3].
[2] T19, 304.
[3] T7, 36-37.
On 29 April 2014 the debt of $12,402.94 was reviewed and varied to $11,613.67.[4]
[4] T19, 301.
On 19 February 2016 the Department raised a second newstart allowance debt totalling $32,139.76 for the period 19 August 2011 to 6 September 2013.[5] The Applicant was notified of the debt on 19 February 2016. The debt was raised because the correct amount of the Applicant’s earnings from TS14 Plus and Visy Board was not taken into account in payments made. The letter recorded that the declared income was $0 but the actual income was $131,666.91.[6]
[5] T19, 292.
[6] T8, 38-39.
The Applicant applied for internal review of the decision of 16 November 2016.
On 24 March 2017 an authorised review officer of the Department affirmed the decision that the Applicant had a legally recoverable newstart allowance debt totalling $32,139.76 for the period 19 August 2011 to 6 September 2013.[7] The authorised review officer took into account information provided by Visy Board, Myer and TS14 plus about the Applicant’s income.
[7] T11, 65-68.
On 23 February 2012 the Department raised a third debt newstart allowance debt totalling $4,587.33 for the period 22 March 2011 to 7 July 2011.[8] The Applicant was notified of the debt on 9 June 2017. The debt was raised because the correct amount of the Applicant’s earnings from Pro-Pac Packaging was not taken into account.[9]
[8] T19, 320.
[9] T12, 69.
The Tribunal notes that there are references to repayments of this debt of $1,301.17 on 24 November 2011 and further repayments later which resulted in a balance of the debt of $3,179.97 on 17 October 2017.
On 9 June 2017 the Applicant applied for internal review of the decisions of 23 February 2012 and 6 January 2014.
The Applicant’s case
The Applicant does not dispute that the debt has been properly raised and that the overpaid amounts are debts due to the Commonwealth pursuant to s 1223(1) of the Act.
She argued that she had no capacity to repay the debt, she was in hiding for several years, she did not receive letters from Centrelink and there were special circumstances such that she should not have to repay the debt.
The Applicant gave the following evidence.
She has a daughter who was born in 1988.The Applicant was desperate to keep a roof over their heads. Their relationship was co-dependant because of their circumstances. The Applicant’s daughter was her mother’s protector and greatest support and witnessed everything the Applicant went through. She was studying full-time at university and wanted to give up because of the financial difficulties but the Applicant made her keep going. Her daughter applied for and received youth allowance and newstart allowance during the period 10 September 2010 to 18 April 2012. Debts were raised in respect of those allowances and were the subject of related proceedings.
On 17 December 2007, the Applicant left her husband after years of financial, emotional abuse and violence. She had tried to leave many times before.
Her husband did not pay the mortgage on the jointly owned home which had been in the mother’s family for many years. The bank repossessed the property. The divorce took effect on 29 November 2010.
The Applicant had no support from her family and was grieving for her son who died shortly after birth in 1996 because she had not been allowed to grieve while she was married. She faced financial ruin and had to support the Applicant.
On 15 October 2008, the Applicant took out an Apprehended Violence Order against her brother who had assaulted her. The police pursued an assault charge through the courts. Her parents supported her brother. She was then in dispute with him and his wife who worked in the same industry as she did. They spread malicious gossip about her which adversely affected her ability to find employment and pay the rent. She moved jobs regularly and was working on and off. Her professional and personal life spiralled downwards.
The Applicant moved accommodation often because she could not maintain a job and pay rent. She was often evicted and taken to the Tenancy Tribunal for recovery of rent many times.
She suffered anxiety and depression and could not get out of bed on most days. Her capacity to work was reduced. She went from being a successful, capable person to just trying to survive. She was treated by her general practitioner and then by a specialist.
The only way the Applicant could report to Centrelink was if she was emotionally strong enough to go into an office. She could not contact Centrelink by telephone because it involved sitting on the telephone for hours. Because they moved so many times, they never received the notices Centrelink sent. Centrelink sent her for counselling because she was not strong enough to look for work.
When she was referred to a document that showed she reported regularly to Centrelink on-line, the Applicant said that she did not recall and would have got out of bed because she knew that she had to do it to keep the payment. Contemporaneous records show reports of nil income. Later, she said that she used the computer at a Centrelink office and not at home.
The Applicant said that she was relieved that there would be no more threats of violence when her former husband died unexpectedly in February 2014. However, she then found out that he had another child and she had to sort through the legal mess to establish that her daughter was his only child.
She last lived in an inner city suburb with her daughter around the time her former husband died. Various medical conditions caused her to fall downstairs and break an ankle. She was being bullied at work and received workplace benefits for about 12 months. She had to move in with her parents which did not help her self-esteem.
The Applicant remarried in about 2016. Her new partner encouraged her to sort out her tax affairs because she had not lodged a tax return since 2007. That process took about six months and was completed in 2017.Her tax debt was written off. During that process, the Applicant learned that her former husband had accessed her superannuation account, leaving her with a current balance of about $66,000 and a tax debt. She claimed that the balance should have been $200,000. She said that she cannot use her superannuation to repay the debt because she would have nothing in her old age.
The Applicant started caring for her parents in-law-in April 2017 and continued to care for her father-in-law after his wife died. She said that that she was caring for them 24 hours a day, seven days a week. She ceased doing so in January 2019 for family reasons which were quite traumatic for her. She said that she was receiving carer allowance and carer payment during that time and last received her payment of $100 per fortnight at Christmas time 2018.
Two of her husband’s children who are of university and working age live with the Applicant and her husband. Her husband also supports a 15 year old child who does not live with them.
The Applicant provided documentary evidence about attending a psychologist. She saw Ms Cheung, psychologist on 16 July 2011. She attended nine sessions during 2011 and seven sessions between February and November 2012. Ms Cheung provided a report dated 3 September 2018 which stated that on presentation in 2011, the Applicant presented with symptoms consistent with Adjustment Disorder with Mixed Anxiety and Depression (Chronic). Ms Cheung wrote that Ms Chevell was unable to return to work “as her daily functioning was severely compromised due to” the multiple stressors in her life during that period. She also reported that the Applicant returned to counselling at the end of 2017 “due to interpersonal family and relationship issues in her current marriage” which had resulted in psychological distress and that the Applicant continued to attend counselling sessions.
The Applicant said that she had attended another psychologist before seeing Ms Cheung. There was no documentary evidence to support that claim.
Consideration
Section 1236 of the Act permits a debt to be written off “for a stated period or otherwise” in any of the following circumstances:
·the debt is irrecoverable at law;
·the Applicant has no capacity to pay;
·the Applicant’s whereabouts are unknown; or
·it is not cost effective for the Commonwealth to take action to recover the debt.
There is no evidence that the debt is irrecoverable at law as specified in ss 1236(1A)(a) and 1236(1B).
The Applicant claims that she has no capacity to pay the debt because she has no income, does not know when she will be able to work again, and is not receiving any social security payment.
Section 1236(1C) provides that a debtor is taken to have a capacity to repay the debt if it is recoverable by means of deductions from the debtor’s social security payment or pursuant to two provisions of A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ‘unless recovery by those means would result in the debtor being in severe financial hardship.’
The Tribunal accepts that the Applicant is not currently receiving any social security payment. While she was receiving carer payment and allowance the debts were being recovered by fortnightly withholdings from her entitlement to those payments. There is no suggestion that A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) is relevant to the Applicant.
The Applicant’s 30 June 2018 Super Statement shows that as of that date, she had a superannuation balance in excess of $66,000. She has said that she cannot use those funds to repay the debt because she will not have anything for her old age. She did not say she was unable to access those funds to repay the debt.
There is no medical evidence before the Tribunal that the Applicant is unable to work. Ms Cheung did not express such an opinion in her 3 September 2018 report, although she referred to the Applicant’s psychological distress at that time. Ms Cheung did say that the Applicant was unable to work during the period of counselling in 2011 and 2012. However, the Applicant’s employment records show that she did not work from 4 July 2011 but then worked from 24 August 2011 to 31 October 2012 for Visy Board, from 13 November 2012 to 1 September 2013 at a Myer store for TS14, a payroll company, and thereafter for some time for Myer directly. Ms Cheung’s opinion was not based on fact. The Tribunal did not accept the Applicant’s evidence that she did not talk about work with Ms Cheung because there was too much else to discuss.
The Tribunal does not accept that that the Applicant is unable to work at this time because of a psychological condition. The Tribunal does not accept that a person who decides not to work or not to apply for a social security payment to which they may be entitled, has no incapacity to pay within the meaning of s 1236 of the Act. Such a construction would be inconsistent with the legislative regime for recovery of debts.
The Tribunal does not accept that the Applicant has no capacity to pay.
The Tribunal understood the Applicant’s claim to have been in hiding for several years to be an attempt to satisfy the criterion that her whereabouts are unknown. The Tribunal does not accept that her whereabouts were unknown to the Department during the debt period because of her communications with the Department during that period and the addresses recorded for her during that period. Her whereabouts are known currently.
The evidence did not suggest that it was not cost effective for the Commonwealth to recover the debt.
Section 1236 does not assist the Applicant.
Subsection 1237A(1) of the Act provides:
Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
There is no evidence to suggest that any part of the debt is attributable solely to an administrative error made by the Commonwealth. The debt was raised because the Applicant earned significant income which was not disclosed to the Department. Subsection 1237A(1) of the Act does not apply.
Section 1237AAD of the Act states:
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) 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 this Act, the Administration Act or the 1947 Act; and
…
there are special circumstances (other than financial hardship alone) that make it desirable to waive…
Subsection 66A(2) of the Administration Act states that where a person is being paid a social security payment and an event or change of circumstances occurs that might affect that payment, the person must within 14 days after the day on which the event or change occurs, inform the department of the occurrence of the event or change.
In Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435, Deputy President Forgie at [48] held that:
There is nothing in section 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.[10]
[10] See also Re Secretary, Department of Families and Community Services and Jonauskas (2001) 65 ALD 553.
In Cox and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 350, the Tribunal, citing [48] of Re Callaghan, held that:
Whilst it is clear from this passage that actual (as compared to) constructive knowledge is required, the Tribunal has recognised that the presence of actual knowledge may be inferred from the circumstances where a debtor had the opportunity to gain that knowledge, and there were no obstacles preventing him acquiring that knowledge…[11]
[11] See also Re Nisha and Secretary, Department of Family and Community Services [2000] AATA 315; Re Woodward and Secretary, Department of Family and Community Services [2001] AATA 818.
In Re Secretary, Department of Social Security and McAvoy [1996] 44 ALD 721, in finding that the debt did not result wholly or partly from Mr McAvoy knowingly making a false statement or representation, the Tribunal observed at [45]:
At all times he acted honestly, prudently and upon the advice of departmental officers. He exhibited no recklessness, suspicion or wilful blindness.
It is not in dispute that the Applicant failed to notify Centrelink of her income during the debt period. Did she knowingly fail or omit to comply with the obligation to disclose her income? The evidence shows that she knew of her obligation to advise her income and failed to do so accurately.
The Applicant was working for Wellen Pty Ltd from 11 October 2010 to 1 March 2011. A Centrelink data match record for the period 10 October 2010 to 1 March 2011 showed that the Applicant’s recorded address during that period was Woolooware. There were numerous letters to the Applicant from the Department addressed to addresses at Yowie Bay from 18 August 2011, to Oyster Bay from 9 May 2012, and to Erskineville from 16 May 2013 to 14 October 2013.

The Applicant acknowledged that she had lived at all those addresses and in that chronological order, although she did not specify when she had lived there. Centrelink records show that the Applicant began to use the online letters service from about 1 November 2012 which required that she check for correspondence.
The extensive Centrelink records show that the Applicant contacted Centrelink in response to correspondence from Centrelink on numerous occasions.
On 14 October 2010, when she was employed by Wellen Pty Ltd, the applicant contacted Centrelink regarding “Customer Update for Newstart Allowance and advised that she answered “Yes” to the question of whether she had undertaken the required number of job search activities set out in her Employment Pathway Plan for the period 1 to 14 October but did not disclose that she had a job.
A Centrelink customer contact record dated 10 January 2011, shows that the Applicant answered ‘Yes’ to the question ‘Are you aware you are required to tell Centrelink if you are working & receive a Centrelink payment’.[12]
[12] T17, 88.
For the period 21 January 2011 to 3 February 2011, the Applicant reported no income but the payslips from Wellen Pty Ltd indicate that for the period 1 January 2011 to 31 January 2011 she earned gross income of $6,250.05. For the period 4 March 2011 to 17 March 2011, the Applicant reported no income but the payslips from Wellen Pty Ltd indicate that for the period 1 March 2011 to 31 March 2011, she earned gross income of $6250.05 and received $1090.67 as termination payment.
The Applicant reported no income for the period 2 September 2011 to 15 September 2011. On 29 September 2011, the Applicant contacted Centreline “regarding Customer Update for Newstart Allowance”. She reported no income for the period 16 to 26 September 2011. The payslips from Visy show that for the period 1 September 2011 to 30 September 2011 she earned gross income of $6,747.77.
The Applicant reported no income for the period 3 July 2012 to 16 July 2012 but the payslips from Visy show that for the period 1 July 2012 to 31 July 2012 she earned gross income of $4,951.22.
The Tribunal concludes that the Applicant was well aware of her obligation to advise Centrelink of changes in her circumstances throughout the debt period, including income from employment, but did not do so. She did notify Centrelink of her changes of address. The Tribunal does not accept that her psychological condition prevented her from reporting her income. She was employed and earning significant income, which is reflected in the debts she owes. Her capacity for employment and earning significant income is not consistent with the psychological impairment she claimed. Her explanation to AAT1 that she did not tell the Department about any of her jobs because she never knew if she would be able to retain them is disingenuous, taking into account that her periods of her employment. were at the least over three months, and in the case of Visy and TS14/Myer, over a year.
The Tribunal is not satisfied that the debt did not result wholly or partly from the Applicant debtor make a false statement or a false representation or failing or omitting to comply with a provision of the Act, the Administration Act or the Social Security Act 1947 (Cth).
That finding means that it is unnecessary for the Tribunal to consider whether there were special circumstances in this case.
Decision
At the end of the hearing, the Respondent agreed that the reviewable decision should be set aside and the matter remitted for recalculation to ensure that there was no over-lapping of debt calculations. The Respondent did provide a comprehensive document after the hearing which the Tribunal understood to have calculated a total debt of $49,545.20. It cannot discern calculation of each of the separate debts.
The total of the debts set out at the beginning of this decision is $48,340.76. The Tribunal considers it appropriate that the matter be remitted for recalculation of each of the debts and the total of the three debts.
The reviewable decision is set aside and the matter is remitted for recalculation of each of the debts X9229348, X9289961 and X9351787 and the total of the three debts.

I certify that the preceding 68 (sixty -eight) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member

.................................[SGD].......................................
Associate
Dated: 2 August 2019

Date(s) of hearing: 7 February 2019

Date final submissions received: 21 February 2019

Applicant: In person

Solicitors for the Respondent: Ms A Zinn, Department of Human Services

Date(s) of hearing:	7 February 2019
Date final submissions received:	21 February 2019
Applicant:	In person
Solicitors for the Respondent:	Ms A Zinn, Department of Human Services