Danielson and Secretary, Department of Social Services (Social services second review)
[2022] AATA 4139
•5 December 2022
Danielson and Secretary, Department of Social Services (Social services second review) [2022] AATA 4139 (5 December 2022)
Division:GENERAL DIVISION
File Number: 2020/5117
Re:Michael Danielson
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
Decision
Tribunal:Brigadier AG Warner, AM LVO (Retd), Member
Date:5 December 2022
Place:Perth
The Reviewable Decision, being the decision of the authorised review officer dated 20 November 2019, as affirmed by the Social Services & Child Support Division of the Administrative Appeals Tribunal on 24 August 2020, is hereby affirmed.
....................[Sgd].................................................
Brigadier AG Warner, AM LVO (Retd), Member
Catchwords
SOCIAL SECURITY – disability support pension – overpayment due to not reporting wife’s income – debt not disputed – whether write off or waiver provisions available – whether debt can be written off – administrative error – whether overpayment received in good faith – special circumstances – decision under review affirmed
Legislation
Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 (Cth)
Social Security Act 1991 (Cth) – ss 8(1)(a), 117, 1064, 1064-E2, 1073B, 1073C, 1223(1), 1236, 1236(1A), 1236(1C), 1237A, 1237AAD
Social Security (Administration Act) 1999 (Cth) – ss 66A, 68, 100(1), 182(2)
Cases
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9
Beadle and Director-General of Social Security (1984) 6 ALD 1
Brookes and Secretary, Agency of Education, Employment and Workplace Relations [2008] AATA 501
Douglas and Secretary, Agency of Families, Community Services and Indigenous Affairs and Anor [2007] AATA 1072
Feneley and Secretary, Agency of Family and Community Services [2003] AATA 496
GGGD and Secretary, Department of Social Services [2020] AATA 802
Groth and Secretary, Department of Social Security (1995) 40 ALD 541
Haggerty v Department of Education Training and Youth Affairs [2000] FCA 1287
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Lisa Ann McKnight and Secretary, Department of Social Security [1994] AATA 318
Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Re Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173
Re Stubbs and Secretary, Department of Families and Community Services [2003] AATA 729
Re Tabije and Secretary, Agency of Social Services [2014] AATA 778
Rosser and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 47
Secretary, Department of Families, Community Services and Indigenous Affairs and George [2007] AATA 1456
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Walsh [2008] AATA 75
Secretary, Department of Family and Community Services v Sekhon (2003) 73 ALD 41
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
Stafford and Secretary, Department of Social Services [2018] AATA 2746
Waqar and Secretary, Department of Social Services [2020] AATA 1493
Ward and Secretary, Agency of Families and Community Services [2000] AATA 212
Secondary Materials
Department of Social Services, Guide to Social Policy Law: Social Security Guide
REASONS FOR DECISION
Brigadier AG Warner, AM LVO (Retd), Member
5 December 2022
Introduction
Mr Danielson seeks review of a decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal (AAT1), dated 24 August 2020 (the Reviewable Decision) (T2/5-10). The Reviewable Decision affirmed an earlier decision made by the Authorised Review Officer (ARO) of the Department of Human Services, now Services Australia (Centrelink), dated 20 November 2019 (T8/127-133). The ARO decided that Mr Danielson was overpaid his disability support pension (DSP) in the amount of $46,942.31 for the period 28 May 2015 to 10 October 2018.
Mr Danielson has been in receipt of DSP since 29 June 2014. During the period 28 May 2015 to 10 October 2018, Centrelink calculated the rate of Mr Danielson’s DSP without considering his wife’s income and accordingly his rate of DSP for this period was substantially more than the rate he was entitled to receive. Therefore, Centrelink raised a DSP debt due to the undeclared income.
On 3 March 2021, Centrelink recalculated Mr Danielson’s debt to $57,592.37 for the period 14 May 2015 to 7 November 2018 (the Debt Period). On 22 December 2021, following the receipt of new information, the debt was recalculated; however, there was no change in the debt amount or the Debt Period.
Therefore, by the operation of s 182(2) of the Social Security (Administration Act) 1999 (Cth) (the Administration Act), the AAT1 is taken to have varied the decision under review with the new calculation. Accordingly, the decision under review before the Tribunal is the recalculated debt amount of $57,592.37 incurred during the Debt Period. Mr Danielson does not dispute the debt nor the method by which it was calculated (T2/7, Transcript/7).
The matter was originally listed for 28 June 2021, however due to the Tribunal’s unavailability the hearing was relisted for 8 July 2021. That listing and several subsequent listings were vacated because of Mr Danielson’s medical circumstances and more recently his engagement with March On Legal. The matter was listed again for 14 September 2022, and on that day the Respondent’s representative requested, and the Tribunal granted an adjournment to allow review of new submissions filed by Mr Danielson.
The matter was finally heard by the Tribunal on 13 October 2022 by video conference. Mr Danielson was represented by Ms Alicia Irving of March On Legal and gave evidence on affirmation. Ms Laura Hinwood of Sparke Helmore Lawyers represented the Respondent.
Background
Mr Danielson has previously been in receipt of Newstart or Austudy allowance for various periods between 2008 and 2019 (Exhibit R1, para 9; T14/324). He received numerous notices prior to commencing on DSP, which informed him of his obligation to advise Centrelink if there were any changes to his or his partner’s income while receiving a payment (ST1/415-427).
On 28 November 2014, Mr Danielson’s Austudy was cancelled because he was granted DSP with effect from 29 June 2014 (Exhibit R1, para 10; T4/63). Mr Danielson was also provided with a reporting statement which informed him of his obligation to report employment income and other changes in his circumstances and advised the days he had to report to Centrelink (T4/60).
Following the grant of DSP, Mr Danielson regularly declared his wife’s earnings, resulting in a reduced rate of DSP until 27 May 2015. However, because Mr Danielson did not report his wife’s income for the fortnights 10 June 2015, 24 June 2015, 8 July 2015 and 22 July 2015, Centrelink decided he was no longer required to report every two weeks in order to receive a payment unless he or his partner’s starts working again (Exhibit R1, para 13; T12/146; T15/383).
On 27 July 2015, a letter was issued to Mr Danielson informing him of this decision (T4/74-77). He was advised that if an event or change of circumstances occurred which might affect his payment, he must notify Centrelink within 14 days. The notifiable changes noted in the letter included any change to the employment income of Mr Danielson or his partner, including when “the amount earned goes up or down” (T4/76).
Mr Danielson subsequently began receiving payments at a substantially increased rate. For example, while he had been reporting his income, his DSP payment was approximately $36.30 per fortnight. However, from June 2015 it was approximately $617 per fortnight (ST24/522-526). Centrelink continued to issue Mr Danielson with notices during the Debt Period informing him of the requirement to advise Centrelink if his or his partner’s income changed, including when it “starts, stops, recommences or amounts vary” (T4/100-101).
Mr Danielson was also issued with numerous Centrelink income statements which outlined the rate of DSP he had received over the previous three months and what income and assets Centrelink was taking into account in calculating that rate. The statements issued include those dated 22 August 2015 (T4/78-81), 24 August 2015 (T4/82-85), 7 December 2015 (T4/86-89), 17 December 2015 (T4/90-92), 23 February 2016 (ST17/474-476), 1 September 2016 (T4/97-99), 19 December 2016 (ST19/480-483), 8 March 2017 (ST20/486-487), 29 August 2017 (T4/106-108), 14 September 2017 (ST20/494-495), 6 December 2017 (ST20/496-497), 13 February 2018 (T4/109-111), 6 April 2018 (ST20/502-503), 26 June 2018 (ST20/504-505) and 20 August 2018 (ST20/506-507). These statements do not show the income earned by Mr Danielson’s wife.
On 12 October 2018, Centrelink requested Mr Danielson to confirm or update his earning’s via online services (T15/379). Mr Danielson submitted his wife’s earnings online on 15 October 2018. He spoke with a Centrelink service officer on 7 February 2019 and advised that the earnings amounts submitted were consistent each fortnight. The service officer requested that he provide further details within seven days. On 15 February 2019, the service officer tried contacting Mr Danielson by phone, but was unsuccessful (T15/379).
On 12 April 2019, Centrelink raised a DSP debt for $45,427.08 for the period 28 May 2015 to 10 October 2018 due to the undeclared Silverchain income for Mr Danielson’s wife (T5/118; T15/380). Mr Danielson requested a review of the debt decision, and on 20 November 2019, an ARO affirmed the decision that Mr Danielson was overpaid DSP but amended the debt amount to $46,942.31 for the period 28 May 2015 to 10 October 2018. The ARO also determined that the DSP debt could not be waived (T8/127-131).
On 6 January 2020, Mr Danielson requested review by the AAT1 (T9/134). The AAT1 conducted a hearing on 14 April 2020 and then sought further information from Centrelink. Centrelink provided the requested information on 30 April 2020 and 27 July 2020 (T12/146; ST24/519; Exhibit R1, para 24), and the AAT1 affirmed the decision under review on 24 August 2020 (T2/5).
On 24 August 2020, Mr Danielson applied for review by the Administrative Appeals Tribunal – General Division, and claimed that the AAT1 decision was wrong because (T1/4):
The decision indicates that there is information from me that was sought, I received no missed calls for the hearing today and made certain I was available.
The decision is also considered wrong as there seems to be a misinterpretation of what I explained during the initial hearing and also that Centrelink has already made administrative error in this matter.
On 29 January 2021, Centrelink requested pay information from Silverchain, Mr Danielson’s wife’s employer. On 2 February 2021, Silverchain provided Centrelink with Mr Danielson’s wife’s earnings during the Debt Period (the Silverchain earnings) (ST25/529-534). On 3 March 2021, Centrelink recalculated the debt to $57,592.37 for the Debt Period using the Silverchain earnings (ST26/551; ST28/571).
On 16 November 2021, Centrelink requested further information from Silverchain, and on 9 December 2021, Silverchain provided Centrelink with further details of Mr Danielson’s wife’s earnings during the Debt Period (Further Silverchain earnings) (ST31/615-715).
In the table below, the Respondent provides examples of the Further Silverchain earnings not reported by Mr Danielson during the Debt Period (Exhibit R1, para 30). Mr Danielson does not dispute these earnings.
Period
Silverchain earnings
15/05/2015 – 28/05/2015
$2,529.30
29/05/2015 – 11/06/2015
$2,706.21
12/06/2015 – 25/06/2015
$2,529.30
30/10/2015 – 12/11/2015
$2,787.69
25/12/2015 – 07/01/2016
$2,996.09
22/01/2016 – 04/02/2016
$3,041.69
15/04/2016 – 28/04/2016
$2,650.90
08/07/2016 – 21/07/2016
$2,682.80
09/12/2016 – 22/12/2016
$2,917.65
17/02/2017 – 02/03/2017
$2,776.74
12/05/2017 – 25/05/2017
$2,917.65
29/09/2017 – 12/10/2017
$3,105.53
24/11/2017 – 07/12/2017
$3,184.06
19/01/2018 – 10/02/2018
$3,139.39
30/03/2018 – 12/04/2018
$3,112.32
03/08/2018 – 16/08/2018
$2,881.34
26/10/2018 – 08/11/2018
$2,783.90
On 22 December 2021, the debt was recalculated using the Further Silverchain earnings, however resulted in no change to the debt amount of $57,592.37 for the Debt Period (ST32/716).
In Exhibit R1, the Respondent states (Exhibit R1, para 32):
The Applicant is presently on a Mobility allowance of $99.50 per fortnight, with the majority of it being withheld ($94.50) to repay the debt. The Applicant’s wife continues to be an employee of Silverchain. The outstanding balance of the debt is $55,783.56 (as at 17 February 2022).
The Issue
The Tribunal in this matter must decide whether Mr Danielson was overpaid DSP during the Debt Period, which is a debt due to the Commonwealth; and if he has a DSP debt, are there any grounds to write off or waive recovery of any or all of the debt.
Evidence
The Tribunal had the following material before it:
·The ‘T Documents’ (T1-T15, pp1-414);
·‘Supplementary T Documents’ (ST1-ST29, pp 415-614);
·‘Further Supplementary T Documents’ (ST30-ST32, pp 615-759);
·Dr P. Max Majedi booking letter filed 21 January 2022 (Exhibit A1);
·Dr Majedi Table of Appointments filed 5 January 2021 (Exhibit A2);
·Psychology Progress Assessment by Mary Roberts, Clinical Psychologist, dated 17 September 2020 (Exhibit A3);
·Psychology Progress Assessment by Mary Roberts, Clinical Psychologist, dated 13 November 2020 (Exhibit A4);
·St John of God Murdoch Hospital Admission and Discharge Information dated 6 January 2021 (Exhibit A5);
·Michael Danielson Health Record filed 5 January 2021 (Exhibit A6);
·Applicant’s email dated 10 October 2020 (Exhibit A7);
·Bundle of documents under cover of Amended Submissions made on behalf of the Applicant, filed 23 September 2022 (Exhibit A8);
·Secretary’s Amended Statement of Facts & Contentions dated 18 February 2022 (Exhibit R1); and
·The oral evidence of the Applicant.
Legislative Framework
The Tribunal is required to consider the provisions of the Social Security Act 1991 (Cth) (the Act); and the Administration Act.
The Tribunal must also have regard to the relevant policy contained in the Guide to the Social Security Law (the Guide). The Tribunal as a decision maker, will generally apply the guidance contained in the Guide unless there are any cogent reasons not to do so (Re Drake and Minister of Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, (644-5)).
The Respondent’s contention is that since some of the relevant provisions of the Act and Administration Act have been subject to amendments since the Debt Period the version(s) of the Act and Administration Act that were in force at the time the debts accrued should be applied, where appropriate, in determining the application for review. The Tribunal agrees.
Rate of DSP
Section 117 of the Act provides that a person’s rate of DSP is calculated using Pension Rate Calculator A at the end of s 1064 of the Act.
Module A of s 1064 of the Act provides a Method Statement for calculating the rate of DSP. Pursuant to the rate calculator, a number of factors will affect the rate payable to a person. The calculation relevantly requires Centrelink to assess a person under an income test and an assets test and determine the rate of payment in accordance with the test that produces the lower rate.
Module E of s 1064 of the Act provides the income test. The income test in Module E requires the ordinary income of a person to be worked out on a yearly basis.
Depending on the amount of ordinary income, an income reduction may apply, which reduces the maximum rate of DSP. Further, the income of a person who is a member of a couple is assessed by adding the couple’s ordinary incomes (on a yearly basis) and dividing by two (s 1064-E2).
The term “ordinary income” is defined in s 8(1) of the Act as “income that is not maintenance income or an exempt lump sum.”
The term “income” is defined in s 8(1)(a) of the Act:
8(1)income, in relation to a person, means:
(a)an income amount earned, derived or received by the person for the person's own use or benefit…
Sections 1073B and 1073C of the Act were inserted by the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 (Cth). The date of commencement was 20 September 2003. Accordingly, these provisions were in force during the Debt Period.
Section 1073B of the Act provided that if:
(a)a person is receiving a social security pension or a social security benefit; and
(b)the person's rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(c)the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;
the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.
…
Section 1073C of the Act provided that:
If, in accordance with the operation of section 1073B, a person is taken to earn, derive or receive a particular amount of employment income on each day in an instalment period:
(d)the rate of the person’s employment income on a fortnightly basis for that day may be worked out by multiplying that amount by 14; and
(e)the rate of the person’s employment income on a yearly basis for that day may be worked out by multiplying that amount by 364.
The cumulative effect of those provisions is that the gross employment income is assessed under the ordinary income test in Module E of s 1064 of the Act in order to determine the appropriate rate of DSP.
The Respondent in Exhibit R1 explains that for the purposes of these proceedings, calculations have been performed which take into account Mr Danielson’s ordinary income in the instalment period in which it was earned, derived or received based upon the Further Silverchain earnings. Those calculations attribute income to each instalment period in accordance with Module E and s 1073B of the Act using the amount earned by Mr Danielson’s wife on each day during the relevant instalment periods.
The Respondent further explains that at the start of the Debt Period, which is 14 May 2015, in accordance with Module E of the Act, Mr Danielson’s rate of DSP reduced by 25 cents in the dollar for any ordinary income above $284 per fortnight, before reaching a cut-off amount of $2,877.60. The income test reductions changed throughout the Debt Period.
Section 66A of the Administration Act states that;
66A General requirement to inform of a change of circumstances etc.
Person receiving a social security payment or holding a concession card
(2)If:
(a)either:
(i) a social security payment (other than utilities allowance or seniors supplement) is being paid to a person; or
(ii) a person holds a concession card; and
(b)an event or change of circumstances occurs that might affect the payment of that social security payment or the person’s qualification for the concession card;
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.
…
Interaction with notices under this Subdivision
(4)If:
(a)a person is subject to a requirement under subsection (1), (2) or (3) in relation to an event or change of circumstances; and
(b)the person is given, or purportedly given, a notice under this Subdivision in relation to the same event or change of circumstances; and
(c)the person complies with the notice to the extent that it relates to that event or change;
the person is taken to have also complied with that requirement within the period referred to in that subsection.
…
(Original emphasis.)
Section 68 of the Administration Act states that:
68 Person receiving social security payment or holding concession card
(1)Subsection (2) applies to a person to whom a social security payment (other than utilities allowance or seniors supplement) is being paid.
(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a)inform the Department if:
(i) a specified event or change of circumstances occurs; or
(ii) the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
…
(Original emphasis.)
Section 100(1) of the Administration Act states that:
(1)Subject to subsection (2), if:
(a)a person who is receiving a social security payment is given a notice under subsection 68(2); and
(b)the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(c)the event or change of circumstances occurs; and
(d)the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(e)because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.
…
(Original emphasis.)
Section 1223(1) of the Act states that:
(2) Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
Section 182 of the Administration Act states that:
182Variation or substitution of decision before AAT review determined
…
(2)If an officer varies or substitutes a decision after an application has been made for AAT second review in relation to the decision:
(a) the AAT is taken, on AAT first review, to have varied or substituted the decision under review in the way the officer did; and
(b) the application is taken to be an application for AAT second review of the decision as varied or substituted.
(3)If the person who made the application does not want the AAT to review the decision as varied or substituted, the person may notify the AAT under subsection 42A(1A) or (1AA) of the AAT Act that the application is discontinued or withdrawn.
(Original emphasis.)
Consideration
The Respondent contends that Mr Danielson failed to notify Centrelink of changes to his income, specifically his partner’s income, in accordance with his obligations under ss 66A and 68(2) of the Administration Act during the Debt Period. As a result, Mr Danielson’s rate of DSP was paid on an incorrect basis during the Debt Period and he therefore received payment of DSP in excess of his actual entitlement (Exhibit R1, paras 48-52).
The amount of overpayment was calculated using Centrelink’s debt calculator, the MultiCal – Centrelink Debt Calculator, which shows that Mr Danielson was overpaid DSP of $57,592.37 for the period 14 May 2015 to 7 November 2018. Centrelink relies on the MultiCal calculator, dated 22 December 2021, as being an accurate calculation of the debt. Further Silverchain earnings confirm the debt was correctly calculated by using Mr Danielson’s wife’s daily earnings during each relevant period (Exhibit R1, para 53). As stated at paragraph [4] above, Mr Danielson does not dispute the debt or the method of its calculation.
The Respondent contends that the amount of $57,592.37 is a debt due to the Commonwealth pursuant to s 1223(1) of the Act (Exhibit R1, para 54).
Should the debt be waived or written off?
In the Federal Court decision of Secretary, Department of Social Security v Hales (1998) 51 ALD 695 at 696, French J commented:
The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.
The Administration Act allows for debts to the Commonwealth to be written off or waived in certain circumstances.
Mr Danielson submits that the debt should be waived due to his reliance on information provided by Centrelink and “a third party called Keystart” (Transcript/4).
Should the DSP debt be written off?
Section 1236(1A) of the Act sets out the circumstances under which the debt may be written off. The section states that:
(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.
(1B)For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
…
Subsection 1236(1C) of the Act provides that where a debt is recoverable through deductions from a social security payment, the person is taken to have capacity to repay the debt unless recovery would cause severe financial hardship
The Respondent notes that the meaning of “severe financial hardship” has been considered in a number of Tribunal decisions (Exhibit R1, para 60). In Feneley and Secretary, Agency of Family and Community Services [2003] AATA 496, the Tribunal stated:
36.Severe financial hardship is not defined in the Act. However, the meaning of the term, while not implying destitution goes beyond straightened financial circumstances and imports a need for the particular circumstances of a person to include suffering of a severe or extreme nature…
In Douglas and Secretary, Agency of Families, Community Services and Indigenous Affairs and Anor [2007] AATA 1072 the Tribunal stated:
As to severe financial hardship, I accept that Mr Douglas is on the disability support pension and has little, if any, assets. He has high medical expenses and must use taxis extensively because of his condition. He has provided most generously for his daughter. He gave evidence that he owes his father $10,000 which he pays back at the rate of $100 per fortnight. I do not consider that have to repay the debt to Centrelink at their current rate of $15 per fortnight would result in severe financial hardship.
The Tribunal in Re Stubbs and Secretary, Department of Families and Community Services [2003] AATA 729 stated at [20] that: “Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature.”
The Respondent contends that it is inappropriate to write off the debt under s 1236 of the Act because the debt is not irrecoverable at law, Mr Danielson’s whereabouts are known, and it is cost effective for the Commonwealth to take action to recover the debt (Exhibit R1, para 63). The Respondent’s contention is supported by the evidence.
The Respondent submits that Mr Danielson “has the capacity to repay the debt, noting that his wife is presently employed, and the Applicant is repaying the debt via withholdings of $94.52 per fortnight from his Mobility Allowance” (Exhibit R1, para 64). The Respondent also notes that Mr Danielson “was employed by Red Mulga Australia from 1 November 2019 on a salary of $85,000 per annum”. Before the Tribunal, Mr Danielson confirmed that he worked for Red Mulga from October 2019 until November 2020 and then again “late last year, up until just a few weeks ago when they’ve sold the company” (Transcript/23).
There is evidence that Mr Danielson receives a war pension from the United Kingdom (see for example T4/111), and he confirmed receipt of the pension during the hearing (Transcript/21).
Having careful regard to the evidence and circumstances of this matter, the Tribunal finds that the discretion to write off Mr Danielson’s debt for the Debt Period is not enlivened.
Waiver of debt due to sole administrative error
Section 1237A of the Act states:
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.
(1A) Subsection (1) only applies if:
(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
…
(Notes removed.)
The Tribunal discussed the meaning of the word “solely” in the case of Re Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173, and stated at [40]:
There is nothing in sub-section 289(1) which indicates that any meaning should be given to "solely" other than its ordinary meaning. Applying those ordinary meanings to the sub-section mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth's administrative error. The Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth's administrative error (i.e. they are incidental to the Commonwealth's error), then it may be that the debt is attributable solely to the Commonwealth's administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact.
Sole administrative error was considered by the Federal Court of Australia in Secretary, Department of Family & Community Services v Sekhon (2003) 73 ALD 41 at [41] which stated:
However, it seems to me, the Tribunal failed to consider the significance of the inclusion, in s 1237A(1), of the word “solely”. For the subsection to have effect, the “proportion” of the debt – in this case, it is common ground, that would be the whole of it – must be “attributable solely” to administrative error. 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.
The Respondent contends that the debt was not solely caused by Centrelink’s actions given Mr Danielson’s failure to meet his notification obligations and advise Centrelink about his partner’s income, and that when a person fails to comply with a notice given under s 68 of the Administration Act, there can be no sole administrative error pursuant to s 1237A(1) of the Act (Exhibit R1, paras 70-71). In support of this contention, the Respondent relevantly cites the Tribunal’s observations in GGGD and Secretary, Department of Social Services [2020] AATA 802 at [79] – [81]:
79.In the present case the applicants received multiple letters from the respondent over a number of years requiring updated information about their changing circumstances…
80.The respondent outlined many other occasions where the applicant had been notified of their reporting requirements.
81.There are many cases where the reach of s 1237A has been curtailed by the applicant’s subsequent failure to inform Centrelink of a change of circumstances. A recent example is Stafford and Secretary, Department of Social Services (Social services second review) [2018] AATA 2746 at [78], where the Tribunal noted:
78....It is at least arguable that, had the Applicant fully complied with the reporting requirements imposed on him, the debt for which he now finds himself liable might not have accrued. Without further evidence it is ultimately impossible to determine if this would have been the case. However, it is certainly not the case that, given his failure to comply with the reporting requirements made clear in the notices sent to them, the debt in question can be blamed solely on an administrative error on the part of the Commonwealth.
79.In the circumstances, section 1237A of the Act has no application to the facts of this case and the debt in question cannot be waived under section 1237A of the Act.
(Footnotes removed.)
The Tribunal notes that despite finding that there had been administrative error because Centrelink took Mr Danielson off fortnightly reporting and continued to pay him DSP even though he no longer reported his income, the AAT1 concluded that due to his failure to meet his notification obligations the debt was not solely due to administrative error.
The evidence is that Mr Danielson had been on social security payments previously, and had been reporting the fortnightly earnings of his wife up until June 2015, which supports a finding that he was or should have been aware of his reporting obligations. Mr Danielson told the Tribunal that he had been absolutely bombarded with letters from Centrelink advising what was required of him when in receipt of a payment, and that he was aware of the requirement to report his income (Transcript/11).
Under cross examination, Mr Danielson said that he had been reporting his income as required until 28 May 2015 when he stopped as a consequence of a letter he received from Centrelink (T4/74; Transcript/12; para 10 above refers). Mr Danielson was unable to explain why there were four fortnights where zero income had been reported/recorded at the time the letter was issued (Transcript/13).
The Centrelink letter dated 27 July 2015 stated in part “[a]s your and/or your partner’s circumstances have changed, you are no longer required to report every two weeks to get paid unless you start working again. If you start working again you must notify us within 14 days” (T4/74).
Mr Danielson explained his failure to respond to that requirement thus “I actually didn’t pay any – a huge amount of attention to it, other than I didn’t have to report. I honestly did not read anything into it. Now that you’ve pointed it out, I can see where you’re coming from” (Transcript/15).
Mr Danielson also told the Tribunal that the way he interpreted the requirement could have been affected by his medication and attendance at medical appointments (Transcript/8).
In contending that his DSP debt resulted from Centrelink’s administrative error, Mr Danielson also relies on the role of a third party, Keystart. Ms Irving submitted (Transcript/4):
Now Keystart is a mortgage – a lender, a finance lender. And the significance of Keystart is that they are actually an initiative of the Western Australian government who were – it was setup to assist low income earners and people with low deposits to access funds. So on that basis, they had a good knowledge of Centrelink processes and Centrelink debts. And Mr Danielson provided them with an authority to contact Centrelink and to confirm that the information that he had provided to them was correct.
He then subsequently received the loan, he was approved for the loan. And it’s his argument that because he was approved for that loan, they must have checked that the debt was correct, and Centrelink must have said, that is the correct rate that you’re on. And that occurred in around December to February of – December 2015 to February 2016.
So he was – he was approved that loan. And he says because of that approval, there must have been some communication between Keystart and Centrelink, and he had given his authority for that communication to occur. And at that point in time, Centrelink had an opportunity to check the rate of pension that Mr Danielson was on. And had they done that, had they checked it, then this debt wouldn’t be as large as it is. They should have picked up at that point of time that he was on the incorrect rate of pay.
There is no evidence to substantiate the claimed role of Keystart. The Respondent told the Tribunal that a thorough Centrelink review of the records failed to find any reference to the claimed Keystart/Centrelink conversation (Transcript/27), and on 13 September 2022 the mortgage broker, who helped Mr Danielson with his loan, responded to Mr Danielson’s request for written confirmation as follows: “Unfortunately I am unable to put anything in writing as requested below but I can provide you with a copy of your documents that you provided to support your application at the time of applying for finance” (Exhibit A8, Attachment 2).
The Tribunal places little weight on the available evidence regarding Keystart’s role in Mr Danielson’s DSP debt, and finds that the evidence does not indicate any administrative error by Centrelink.
In the decision dated 20 November 2019, ARO noted that Mr Danielson claimed that he reported income for Family Tax Benefit purposes and further explained that the income tests for family assistance and social security payments were different by nature (T8/130). The Respondent accepts that Mr Danielson was providing income estimates for the purposes of family assistance payments during the Debt Period, however submits, correctly in the Tribunal’s view, that this information is insufficient to enliven the sole administrative error provision in the present matter. The Respondent relevantly cites a number of authorities in support of this submission:
(a)In Re Tabije and Secretary, Agency of Social Services [2014] AATA 778, it was found that:
The general run of decisions from relevant cases is that advising Centrelink of income for FTB purposes does not equate to providing Centrelink with income information for other purposes. In cases such as Rosser and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 47 and Secretary, Department of Families, Community Services and Indigenous Affairs and George [2007] AATA 1456 the Tribunal has decided that advice to Centrelink for FTB purposes did not meet a recipient’s obligations for responding to notices under social security law. Where the Tribunal has decided otherwise, in cases such as Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Walsh [2008] AATA 75, it is because in those cases the recipient made a significant and conscientious effort to keep Centrelink informed.
(b)In Brookes and Secretary, Agency of Education, Employment and Workplace Relations [2008] AATA 501, it was found that “[t]here is no legislative obligation on Centrelink to be pro-active in applying data about FTB income to a person’s other benefits.”
(c)In Waqar and Secretary, Department of Social Services [2020] AATA 1493, it was found that:
The test for whether a debt is due solely to administrative error is not against the standard of administration contended by the respondent, that is for the department to co-relate all information for a couple between different types of payments. Nor is it one that requires the department to correct for the respondent’s failure to report as she was instructed.
Unlike the AAT1, the Tribunal is satisfied that Centrelink’s letter sent to Mr Danielson on 27 July 2015 and the associated removal of the requirement to report fortnightly was not an administrative error by the Commonwealth which resulted in the debt; in circumstances where income has not been reported over a period of time, such a letter would, in the Tribunal’s view, be a reasonable response. Nor can Mr Danielson’s reliance on information allegedly provided by the third party, Keystart, be construed as evidence of administrative error by Centrelink. Furthermore, the evidence before the Tribunal does not establish that Mr Danielson made a significant and conscientious effort to keep Centrelink informed despite notices to do so. Mr Danielson’s failure to advise Centrelink of his wife’s correct income precludes a finding of sole administrative error and consequently the DSP debt cannot be waived on this basis under s 1237A of the Act.
In reaching this conclusion, the Tribunal has regard to the comment of Deputy President Forgie in Ward and Secretary, Agency of Families and Community Services [2000] AATA 212 at [47]:
This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor…
For the sole administrative error waiver provision to be enlivened, s 1237A of the Act requires that the overpayment giving rise to the debt was received in good faith (see para 59 above).
The AAT1 noted that Mr Danielson’s DSP payments in January and February 2015 were $36.40 per fortnight but increased shortly afterwards to approximately $617.05 per fortnight. The AAT1 concluded that: “I cannot accept that these increases were not noticed. I consider some question must have formed in Mr Danielson’s mind as to the correctness of Centrelink’s ongoing rate of payment given the unexplained substantial increase” (T2/9).
The Tribunal also considers that Centrelink’s 27 July 2015 letter advising Mr Danielson that his circumstances had changed and that he was no longer required to report unless he or his partner started working again should have raised questions in Mr Danielson’s mind. On questioning whether there was any change in his circumstances during that period, Mr Danielson told the Tribunal that “No. Nothing had changed” (Transcript/14).
When questioned regarding the significantly higher DSP payments, Mr Danielson told the Tribunal: “To be honest, I didn’t really pay much attention to the bank at the time. I have no idea what went in and out” (Transcript/16).
The Respondent relevantly cites cases in which term “good faith” has been discussed by the Federal Court, as follows:
(a)In Jazazievska v Secretary, Department of Family and CommunityServices (2000) 65 ALD 424 at [40] – [41]:
Prima facie, s 1237A(1) is concerned with actual personal receipt by the debtor of the payment or payments which give rise to the debt. The issue of good faith is, for the purpose of the section, to be determined when the debtor commences to exercise control over the payment by retaining it. It is at this time that the recipient must act with the requisite good faith. A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when he or she receives the payment and decides to exercise control over it by retaining it.
A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists…
(b)In Haggerty v Department of Education Training & Youth Affairs [2000] FCA 1287 at [16] – [17]:
Consistently with what his Honour said in the Prince case, want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient. That proposition is quite consistent with the view that the existence of such facts may support an inference that the recipient disbelieved or doubted or was suspicious about his or her entitlement. “Reason to know” as Finn J used that term in Prince does not necessarily import a criterion of imputed as distinct from actual want of good faith as I have described it.
…
None of these findings go to the state of mind and whether he had a belief, doubt or suspicion as to entitlement which would require a recipient acting in good faith to make an inquiry. Concern, puzzlement, upset and a perception of unusual circumstances, coupled with absence of further inquiry, are not enough themselves to constitute want of good faith. The Tribunal may well have been able to make the necessary findings to support a conclusion of want of good faith on the evidence before it. It did not do so and proceeded upon a view of the section which raised the bar of good faith higher than the law requires. For these reasons the application will succeed, the decision of the Tribunal will be set aside and the matter remitted to the Tribunal to be dealt with according to law.
Further, in Lisa Ann Mcknight and Secretary, Department of Social Security [1994] AATA 318 the Tribunal accepted that “naive” and “wilful[ly] blind” conduct contributing to a debt precluded the finding of administrative error waiver.
Therefore, the Tribunal finds that Mr Danielson cannot be said to have received the DSP overpayments in good faith.
Waiver of the debt due to special circumstances
Section 1237AAD of the Act provides for the possibility of waiving all or part of a debt on the grounds of special circumstances where:
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.
(Notes removed.)
The term “special circumstances” in s 1237AAD of the Act is not defined in the relevant legislation. However, the term has been considered extensively in case law and the Tribunal regularly cites the following relevant cases:
(a)In Beadle and Director-General of Social Security (1984) 6 ALD 1 where the AAT stated at 3:
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.
(b)In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 where the Federal Court stated:
The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss...it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
(c)In Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9 where the Federal Court stated at [33]:
... There is less risk of overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case…
The Respondent contends that Mr Danielson’s circumstances do not amount to special circumstances that make it desirable for recovery of the debt to be waived (Exhibit R1, para 87).
For the special circumstances waiver to apply, the debts must not result from the person knowingly making a false statement or false representation, or knowingly failing or omitting to comply with a provision of the Act. The AAT1 did not accept that Mr Danielson failed to notice the very significant increase to his DSP payments and this Tribunal has reached a similar conclusion. Having previously been on a social security payment and having reported his earnings up to June 2015 as required, Mr Danielson would have been or should have been familiar with his reporting requirements. Consequently, it is open to the Tribunal to find that Mr Danielson knowingly omitted to comply with a provision of the Act, and the Tribunal so finds.
Mr Danielson filed medical evidence regarding his mental health condition for which he was receiving treatment, an appointment history with Dr Max Majedi and a letter referencing the dates of his previous surgeries. Before the Tribunal, Mr Danielson described the injuries sustained in a helicopter accident while serving in the British Army. He told the Tribunal that he had an electronic pain stimulator in his spine, had a number of future medical appointments and procedures including a right knee replacement this year, and currently managed his pain with very strong opioid medication (Transcript/9-10).
During the hearing, the Tribunal expressed its appreciation of and respect for Mr Danielson’s military service and accepts his evidence regarding the significant ongoing medical consequences of that service. The Respondent expressed similar sentiments.
Despite his medical challenges, Mr Danielson was able to undertake some employment and study both during and following the Debt Period, engage in obtaining finance and purchasing a house, and engage with health professionals regarding his injuries. Mr Danielson’s wife remains employed by Silverchain, and Mr Danielson is in receipt of a war pension from the United Kingdom and Mobility Allowance which is being used to repay the debt via withholdings. Ms Irving made no submissions during the hearing regarding financial issues which might be relevant to a consideration of special circumstances.
The Respondent contends that Mr Danielson’s circumstances “are no more uncommon or difficult than other social security recipients with similar health and financial issues” (Exhibit R1, para 90). Without minimising Mr Danielson’s circumstances as presented by the evidence, the Tribunal agrees, noting particularly that the nature and purpose of the DSP means that many recipients of the DSP experience very difficult circumstances. It follows that the special circumstances waiver provision should not be applied in this case.
CONCLUSION
Mr Danielson does not dispute that he has been overpaid DSP during the Debt Period and that the amount of the debt has been calculated correctly. The Tribunal is satisfied that the DSP debt was not due solely to administrative error, and special circumstances have not been established so as to make it desirable that the recovery of the debt be waived. Further, the Tribunal finds that the discretion to write off the debt for a period is not enlivened.
DECISION
The Reviewable Decision, being the decision of the ARO dated 20 November 2019, as affirmed by the AAT1 on 24 August 2020, is affirmed.
I certify that the preceding 91 (ninety-one) paragraphs are a true copy of the reasons for the decision herein of Brigadier AG Warner, AM LVO (Retd), Member
................[Sgd]................................................
Associate
Dated: 5 December 2022
Date of hearing: 13 October 2022 Counsel for the Applicant: Ms Alicia Irving Solicitors for the Applicant: March on Legal Lawyers Counsel for the Respondent: Ms Laura Hinwood Solicitors for the Respondent: Sparke Helmore Lawyers
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