Cmunt and Secretary, Department of Social Services

[2015] AATA 674

Cmunt and Secretary, Department of Social Services (Social services second review) [2015] AATA 674 (4 September 2015)

Division	GENERAL DIVISION
File number	2015/0793
Martin Cmunt
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

Decision

Tribunal	Dr James Popple, Senior Member
Date	4 September 2015
Place	Canberra

The decision of the Social Security Appeals Tribunal on 19 January 2015 is affirmed

................................[sgd]........................................

James Popple, Senior Member

Catchwords

SOCIAL SECURITY — Carer allowance — whether Applicant overpaid — Applicant failed to report earnings — Applicant misunderstood correspondence from Centrelink — calculation of debt — whether debt should be written off — whether debt or part of debt should be waived — whether debt attributable solely to administrative error — whether special circumstances exist — decision affirmed.

Legislation

Social Security Act 1991, ss 1064, 1223(1), 1236(1), 1236(1A), 1237(1), 1237A, 1237AAD

Cases

Beadle and Director-General of Social Security (1984) 6 ALD 1

Beadle v Director-General of Social Security (1985) 7 ALD 670

Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60

Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553

Secretary, Department of Family and Community Services v Sekhon (2003) 73 ALD 41

Secretary, Department of Social Security v Hales (1998) 82 FCR 154

Secondary materials

Department of Social Services, Guide to Social Security Law (version 1.214, 17 August 2015)

Reasons for decision

Dr James Popple, Senior Member

4 September 2015

Summary

1. I affirm the decision of the Social Security Appeals Tribunal (the SSAT) that the applicant must repay $33,131.77 in overpaid carer payment.  The applicant was overpaid carer payment because he underreported his earnings during the relevant period.  He underreported his earnings mainly because he honestly believed that he did not have to report them.  Nonetheless, he owes a debt to the Commonwealth.  His debt cannot be written off under the Social Security Act 1991 (the SS Act), and it should not be waived under the SS Act.

   Background

2. For more than a decade, Mr Martin Cmunt has provided care for his brother who suffers from cerebral palsy and hydrocephalus.  Mr Cmunt has been in receipt of carer payment since 25 June 2003.

3. On 19 August 2014, Centrelink raised a debt against Mr Cmunt.  Centrelink said that Mr Cmunt had not correctly reported his earnings during the period 1 March 2009 to 20 September 2013 (the relevant period).  Centrelink said that, having regard to his earnings during the relevant period, he was overpaid $33,131.77 in carer payment.

4. Mr Cmunt applied for internal review of that decision.  On 30 September 2014, a Centrelink authorised review officer affirmed the decision.  On 13 November 2014, Mr Cmunt applied to the SSAT for review of that decision.  On 19 January 2015, the SSAT affirmed Centrelink’s decision.

5. On 20 February 2015, Mr Cmunt applied to the Tribunal, under s 179 of the Social Security (Administration) Act 1999, for review of that decision.

   Decision under review

6. The decision under review is the SSAT’s decision on 19 January 2015 affirming Centrelink’s decision that Mr Cmunt must repay $33,131.77 in overpaid carer payment.

   Issue

7. The issue in this review is whether Mr Cmunt was overpaid carer payment and owes a debt to the Commonwealth.  If he does, the question arises whether that debt can or should be written off or waived.

   Factual background

8. I make the findings set out in [9]–[13] below, on the balance of probabilities.  These findings are based on the documents before me, and on statements and evidence given at the hearing by Mr Cmunt and his mother.  This evidence is generally uncontested, though some of it is uncorroborated.  I accept this evidence.

   Mr Cmunt’s employment and receipt of carer payment

9. Mr Cmunt has been working for the NSW Department of Education and Communities (the Education Department) as a casual teacher since 2008.  He only works occasionally because his brother requires a high level of care.  On 5 December 2008, Centrelink wrote to Mr Cmunt advising him to report his earnings regularly.  He reported his earnings to Centrelink online.

10. On 10 March 2010, Centrelink wrote to Mr Cmunt about his carer payment, saying:

    As your circumstances have changed, you are no longer required to report every two weeks to get paid.

    You must tell us within 14 days about events or changes in circumstances affecting your payment (see the enclosed form “Changes you must tell Centrelink about” for details).

    Mr Cmunt was surprised to receive this letter because he did not think that his circumstances had changed since he started casual work as a teacher in 2008.  He attempted to report his earnings from the previous fortnight, but the online system would not let him do so.  He rang Centrelink and was told to go to a Centrelink office.  Later in March 2010, Mr Cmunt and his mother went to a Centrelink office.  I discuss below what happened there.

11. Sometime in June, Centrelink rang Mr Cmunt and asked if he was still working for the Education Department.  He was asked how much he had been paid for teaching in the previous fortnight, and he answered that he had not been paid at all during that period as he had not worked for the previous three weeks.

12. From 4 June 2010 until 20 September 2013, Centrelink sent Mr Cmunt at least nine letters each of which included a “Centrelink Statement for Carer Payment”.  Each of these statements detailed the amounts paid by Centrelink, and amounts earned by Mr Cmunt, in the period covered by the statement.  The following note was included at the start of each statement:

    Please check the information on this statement carefully.  If the details on this statement are correct there is no need for you to contact Centrelink.  If your circumstances have changed please contact us within 14 days.

13. As noted above, on 19 August 2014, Centrelink raised a debt of $33,131.77 against Mr Cmunt, saying that he had not correctly reported his earnings during the relevant period.

    Mr Cmunt’s visit to a Centrelink office

14. Sometime in the second half of March 2010, Mr Cmunt and his mother went to a Centrelink office to discuss Mr Cmunt’s carer payment.  They both say that the Centrelink officer who they spoke with advised Mr Cmunt that he did not have to report his earnings from the Education Department because Centrelink had access to that information directly from the Department.  They both say that Mr Cmunt was told that he would only need to contact Centrelink if he received income from another source.  Mr Cmunt also says that he was advised, by the Centrelink officer, that as long as his employment did not affect his ability to care for his brother for at least 25 hours a week, he would be entitled to the full amount of carer payment.

15. The Secretary says that Centrelink does not—and did not, during the relevant period—receive regular information about anyone’s earnings from the Education Department.  Mr Cmunt and his mother both say that the Centrelink officer they spoke to showed them, on a computer screen, details of Mr Cmunt’s earnings from the Education Department.  They both say that they saw on the screen detail of earnings after 10 March which Mr Cmunt had not provided to Centrelink, because the online system would not let him.  Therefore, Mr Cmunt says, those earnings must have been provided to Centrelink directly by the Education Department.

16. I think that both Mr Cmunt and his mother gave honest evidence.  I think that they both thought that what they saw on the computer screen in the Centrelink office was information about Mr Cmunt’s earnings that had not been provided by Mr Cmunt.  However, I find that Centrelink did not then have information about Mr Cmunt’s earnings other than the information that he had provided.  I make that finding on the balance of probabilities.  I accept the Secretary’s advice that Centrelink did not receive regular updates about Mr Cmunt’s earnings from the Education Department.  I cannot find that the Centrelink officer told Mr Cmunt and his mother otherwise.  I note that they went to Centrelink about a fortnight after Mr Cmunt’s unsuccessful attempt to give Centrelink information online about his earnings.  On the day that they went to Centrelink, there had been no more than two fortnights for which Mr Cmunt had not been able to provide details (online) after Centrelink’s letter of 10 March about his earnings.  I think that the information that Mr Cmunt and his mother saw on the computer screen was probably information about his earnings before 10 March, as reported to Centrelink by Mr Cmunt.

    Mr Cmunt’s understanding of his reporting obligations

17. I think that Mr Cmunt misunderstood what Centrelink meant when it told him to contact Centrelink only if his “circumstances have changed”.  Mr Cmunt understood his “circumstances” to be his continuing casual employment by the Education Department, which involved him earning different amounts of money—or none—in a given fortnight.  But Mr Cmunt earning a different amount of money in a given fortnight would amount to a change in his circumstances.

18. Mr Cmunt did not think that his circumstances had changed, so he did not think that he was required to advise Centrelink of them.  Even if he had thought that his circumstances had changed, he also thought that Centrelink was receiving regular updates about his earnings from the Education Department, so he would not have thought that he was obliged to advise Centrelink of those changes.  I think that Mr Cmunt’s views were honestly held.  But they were misconceived.

    Was Mr Cmunt overpaid carer payment?

19. Mr Cmunt disputes Centrelink’s calculations of the debt it says he owes.  This dispute was the subject of submissions from Mr Cmunt and the Secretary after the hearing of this matter.

20. On 25 March 2014, Centrelink required the Education Department to provide it with information about Mr Cmunt’s earnings.  On 1 April 2014, the Education Department provided Centrelink with details of payments it made to Mr Cmunt during the pay periods ending 30 May 2008 to 27 September 2013 (the payment advice).  Mr Cmunt takes issue with some of the information in the payment advice.  But, there is no other evidence before me of the amount of income that Mr Cmunt received from the Education Department.  I find that he did receive income from the Education Department as detailed in the payment advice.

21. The Secretary says that documents before me (described as “various Centrelink online screens”) demonstrate how Mr Cmunt’s debt was calculated.  One of these documents is a summary of Mr Cmunt’s income (the income summary).  The income summary shows, for each fortnight between 4 July 2008 and 24 February 2012, the amount that the Education Department paid to Mr Cmunt and the amount that he reported to Centrelink that he had received.  I have checked several of the first type of these fortnightly amounts: they are consistent with the (daily) amounts in the payment advice.  I accept that the summary correctly shows the second type of fortnightly amounts: the amounts that Mr Cmunt reported to Centrelink.

22. Section 1064(1) of the SS Act provides that the carer payment (amongst other payments) is to be calculated in accordance with the rate calculator at the end of s 1064. Module A of the calculator provides for the calculation of an annual rate, which is divided by 364 to obtain a daily rate. That annual rate is calculated by first determining the maximum payment rate, then the income reduced rate and the assets reduced rate.  The provisional annual payment is the lower of those two reduced rates.  Any special employment advance deduction and advance payment deduction are then subtracted from the provisional annual payment, and any remote area allowance is added.  The result is the applicable rate.

23. Two of the documents before me are described as the “rate explanation” and the “debt explanation”. The rate explanation calculates the annual and daily rate for Mr Cmunt for each fortnight in the relevant period. Those calculations would appear to have been made in accordance with the rate calculator at the end of s 1064 of the SS Act. The debt explanation compares the amount payable in each fortnight in the relevant period applying the “old rate” (presumably the rate that was applied when Mr Cmunt’s carer payment was paid) and the “new rate” from the rate explanation.

24. The Secretary says that the documents before me demonstrate how Mr Cmunt’s debt was calculated.  Even with the assistance of submissions from the Secretary, I find these calculations almost impenetrable.  What is clear is that Mr Cmunt significantly underreported his earnings during the relevant period.  From the payment advice and the income summary I have calculated the following.  For almost a year of the relevant period (from 1 March 2009 until 26 February 2010) Mr Cmunt underreported his earnings in relation to three fortnights by a total of $86.64, and on one occasion overreported his earnings by $0.36.  He also appears to have reported his earnings in relation to the wrong fortnights in October 2009, with the effect that he underreported his earnings by a further $272.81.  For the remainder of the relevant period (from 27 February 2010 until 20 September 2013) he did not report any earnings at all, because he did not think that he had to.[1]  In total, during the relevant period, Mr Cmunt was paid $115,187.98 by the Education Department, and reported to Centrelink that he had been paid $27,509.44—a difference of $87,678.54.

    [1] See [17]–[18] above.

25. Therefore, I find that Mr Cmunt was overpaid carer payment during the relevant period. His rate of payment was calculated on the basis of the earnings he reported, which were significantly less than the amount that he was paid. I accept that Centrelink has correctly calculated the amount of the overpayment in carer payment and, therefore, Mr Cmunt’s debt. Centrelink’s calculations have not been well explained. But, I am satisfied that Centrelink has accurately calculated, for each fortnight, the amount that Mr Cmunt was paid and the amount that he should have been paid in carer payment, and the difference—the overpayment. That overpayment totals $33,131.77 for the relevant period. Under s 1223(1) of the SS Act, that overpayment is a debt due to the Commonwealth by Mr Cmunt.

    Can Mr Cmunt’s debt be written off?

26. Sections 1236(1) and (1A) of the SS Act provide:

    1236  Secretary may write off debt

    (1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

    (1A) The Secretary may decide to write off a debt under subsection (1) 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.

27. Section 1236(1B) specifies the circumstances in which a debt is taken to be irrecoverable at law. None of those circumstances apply to Mr Cmunt, so s 1236(1A)(a) does not apply. Mr Cmunt’s whereabouts are known, so s 1236(1A)(c) does not apply. The Secretary says—and I accept—that, because of the size of the debt, it is cost-effective for the Commonwealth to take action to recover the debt. So, s 1236(1A)(d) does not apply.

28. Mr Cmunt says that he has no capacity to repay the debt. He says that his financial situation is precarious, and that he is currently unable to work because of the level of care that his brother requires. But the Secretary points out that Mr Cmunt is in receipt of a social security benefit, from which money can be regularly withheld in order to repay the debt over time. I accept Mr Cmunt’s evidence that repaying the debt in this way will cause him financial difficulty. However, it cannot be said that he has no capacity to repay the debt. So, s 1236(1A)(b) does not apply.

29. None of the paragraphs of s 1236(1A) of the SS Act applies. Mr Cmunt’s debt cannot be written off.

    Should Mr Cmunt’s debt be waived?

30. Section 1237(1) of the SS Act provides that the Secretary may waive the whole or a part of a debt only under s 1237A, s 1237AA, s 1237AAA, s 1237AAB, s 1237AAC or s 1237AAD. Sections 1237AA (waiver of debt relating to an offence), 1237AAA (waiver of small debt), 1237AAB (waiver in relation to settlements) and 1237AAC (waiver where debtor or debtor’s partner would have been entitled to an allowance) do not apply to this review. I must consider whether Mr Cmunt’s debt should be waived under s 1237A or s 1237AAD.

    Waiver of debt arising from error (s 1237A of the SS Act)

31. Section 1237A(1) of the SS Act provides:

    1237A  Waiver of debt arising from error

    Administrative error

    (1)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.

    (Section 1237A(1A) does not apply to this review.)

32. Mr Cmunt says that his debt is solely attributable to Centrelink’s administrative error.  He says that Centrelink’s letter of 10 March 2010 erroneously advised him that he was no longer required to report his earnings.  He says—and I accept—that he would have continued to report his earnings if he had not received that letter.  But he misunderstood the letter, and what would amount to a change in his circumstances about which he would have to advise Centrelink.[2]  He says that Centrelink erroneously advised him (and his mother) that Centrelink was receiving regular updates about his earnings from the Education Department.  I have already found that, although Mr Cmunt honestly thought that that was what was happening, it was not.[3]

    [2] See [17]–[18] above.

    [3] See [14]–[18] above.

33. As the Federal Court explained in Secretary, Department of Family and Community Services v Sekhon, for s 1237A(1) to have effect:

    It is not enough that, in the absence of administrative error, the debt would not have arisen.  Administrative error must be the sole cause, not merely one of multiple causes.[4]

    Even if Mr Cmunt’s debt could be attributed to an administrative error made by Centrelink—and I am not convinced that it could—it cannot be attributed solely to that error. The statements that Centrelink sent to Mr Cmunt from 4 June 2010 until 20 September 2013 (each of which asked him to check the information on the statement carefully) did not take account of his earnings from the Education Department. Mr Cmunt could have noticed that, and taken steps to prevent the debt arising. Section 1237A(1) does not apply to Mr Cmunt’s debt.

    [4] (2003) 73 ALD 41 at 47 [41] per Wilcox J.

    Waiver in special circumstances (s 1237AAD of the SS Act)

34. Section 1237AAD of the SS Act provides:

    1237AAD  Waiver in special circumstances

    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

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

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

35. The Secretary says that Mr Cmunt was aware of his obligation to notify Centrelink about his earnings, because of the many letters that Centrelink sent him during the relevant period.[5] The Secretary also points out that Mr Cmunt should have noticed, after he stopped reporting his earnings, that his fortnightly carer payment had increased. This, the Secretary says, should have alerted him to the fact that his payments were being calculated without taking his earnings into account. For these reasons, the Secretary says, I can infer that Mr Cmunt knowingly failed to comply with his reporting obligations under the SS Act.

    [5] See [10] and [12] above.

1. I have already found that Mr Cmunt honestly thought that he was not obliged to report his earnings.[6]  Accordingly, I am satisfied that Mr Cmunt’s debt did not result wholly or partly from him knowingly failing or omitting to comply with the SS Act (as required by s 1237AAD(a)).[7] However, I do not think that Mr Cmunt’s circumstances amount to special circumstances for the purposes of s 1237AAD(b).

   [6] See [17]–[18] above.

   [7]     In Callaghan and Secretary, Department of Social Security, the Tribunal held that “knowingly” in s 1237AAD(a) requires actual knowledge, rather than constructive knowledge: (1996) 45 ALD 435 at 443–445 [46]–[48] per Forgie DP; see also Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553 at 569–572 [62]–[73] per Forgie DP.

2. The SS Act does not define “special circumstances”. In Beadle and Director-General of Social Security, the Tribunal said:

   An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.[8]

   On appeal from that decision, the Full Court of the Federal Court added that what constitutes special circumstances will “depend upon the circumstances of the particular case” and that:

   We do not think it is possible to lay down precise limits or precise rules.  …  The phrase “special circumstances”, although lacking precision, is sufficiently understood in our view not to require judicial gloss.[9]

   [8] (1984) 6 ALD 1 at 3 per Toohey J, Wilkins M and Billings M.

   [9]     Beadle v Director-General of Social Security (1985) 7 ALD 670 at 674 per Bowen CJ, Fisher and Lockhart JJ.

3. The Guide to Social Security Law (the Guide) is available on the web site of the Department of Social Services.[10] The Guide is a statement of government policy, and I should have regard to it when exercising the discretion in s 1237AAD(b).[11]  The Guide says that “special circumstances waiver would be appropriate only if the person’s particular circumstances made it unjust for the general rule [that the debt be repaid] to apply”.[12]

   [10]    Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 69 per Bowen CJ and Deane J.

   [12]    Guide, section 6.7.3.40, >

   The discretion in s 1237AAD is a broad one,[13] and Mr Cmunt says that his circumstances are special and that those circumstances make it desirable that his debt be waived.  He points to what he calls Centrelink’s failings in administering his payments, which led to him incurring the debt.  As noted above,[14] I am not convinced that Mr Cmunt’s debt can be attributed (even in part) to an administrative error made by Centrelink.  And the Guide says that administrative error would not generally be considered a special circumstance, because specific provision is made for the waiver of debts arising solely from such errors—though “an administrative error may sometimes combine with other circumstances to create a situation that is, overall, special”.[15]

   [13]    Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at 162 per French J. See also Guide, section 6.7.3.40, See [33] above.

   [15]    Guide, section 6.7.3.40, >

   Mr Cmunt also says that the high level of care that his brother requires amounts to a special circumstance.  But, he is in receipt of carer payment for the care that he provides his brother.  Even if the amount of that payment is (as Mr Cmunt says) inadequate given the level of care required, that level of care cannot be a special circumstance.

4. Mr Cmunt says that his financial situation is precarious, and that he is currently unable to work because of the level of care that his brother requires. And he says that he suffers a severe stress disorder caused by the debt. Even accepting Mr Cmunt’s evidence about his finances and his health, I do not think that his circumstances are “special circumstances (other than financial hardship alone) that make it desirable to waive” his debt, as required by s 1237AAD(b). His circumstances are certainly difficult, and he did not knowingly incur the debt. But I do not think that his circumstances are unusual, uncommon, unforeseen and exceptional, or markedly different from those in the usual run of cases. I do not think that his circumstances make it unjust that he repay the debt. Section 1237AAD does not apply to Mr Cmunt’s debt.

   Conclusion

5. Mr Cmunt was overpaid carer payment. He owes a debt to the Commonwealth. His debt cannot be written off under s 1236 of the SS Act. His debt should not be waived under s 1237A or s 1237AAD.

I certify that the preceding 42 (forty-two) paragraphs are a true copy of the reasons for the decision herein of Senior Member Popple

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Associate

Dated 4 September 2015

Date of hearing	3 August 2015
Date final submissions received	19 August 2015
Applicant	In person
Counsel for the Respondent	Ms Adine Barton
Solicitors for the Respondent	Legal Services Division, Department of Human Services