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

Drury and Secretary, Department of Social Services (Social services second review) [2017] AATA 1437 (11 September 2017)
Division:GENERAL DIVISION
File Number: 2016/6473
Re:Camilla Drury
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D K Grigg
Date:11 September 2017
Place:Brisbane

The Tribunal affirms the decision under review.
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Member D K Grigg
CATCHWORDS
FAMILY ASSISTANCE – parenting payment – overpayment – how calculated - where no administrative error – where no special circumstances – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth)
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary Department of Social Security [1995] FCA 1708
Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443
Secretary, Department of Social Security v Hales [1998] FCA 219; (1998) 82 FCR 154
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] 89 ATR 267; [2012] FCA 639
SECONDARY MATERIALS
Guide to Social Security Law (2017, Cth)
REASONS FOR DECISION
Member D K Grigg
11 September 2017
INTRODUCTION & CLAIM HISTORY

Ms Drury was a recipient of parenting payments (PP) until January 2013 when her youngest child turned 8.[1]
[1] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 13 July 2017, Attachment A.
Between 14 July 2010 and 31 December 2012 (“Period”) Ms Drury received PP’s totalling $7407.30.[2] On 8 November 2012 Ms Drury notified the Department of Human Services (“Centrelink”) that she had started a new job (she had previously been working at Flinders Private Hospital as a registered nurse). On 14 November 2012 Ms Drury confirmed that she was now working for Seacombe Medical Centre.[3]
[2] Exhibit 1, T Documents, T7, p.109.,Letter from Centrelink to Ms Drury dated 29 April 2016.
[3] Exhibit 1, T Documents, T 14, pages 293 – 294, Centrelink records.
On 28 November 2012 Centrelink requested Ms Drury provide copies of her payslips from Flinders Private Hospital.[4] Ms Drury provided copies of her payslips, for the period 14 July 2010 to 16 February 2012, to Centrelink on or around 12 December 2012.[5]
[4] Exhibit 1, T Documents, T11, page 122, Letter from Centrelink to Ms Drury dated 28 November 2012.
[5] Exhibit 1, T documents, T11, pages 124 – 166, Ms Drury's pay slips.
On 29 April 2016 Centrelink wrote to Ms Drury to say that an amount of her earnings from Flinders Private Hospital had not been taken into account in the PPs made to her during the Period. As a result, Centrelink determined that Ms Drury had received PPs in the Period to which she was not entitled and on 29 April 2016, Centrelink raised a PP debt in the amount of $1368.57 (PP Debt).[6] It is unclear why it took 4 years after receiving Ms Drury’s payslips for Centrelink to notify her that there had been an overpayment, and it is understandable that it may have come as a shock to Ms Drury.
[6] Exhibit 1, T Documents, T7, page 109, Letter from Centrelink to Ms Drury dated 29 April 2016.
Ms Drury sought a review of Centrelink’s original decision to raise the PP Debt by an Authorised Review Officer (“ARO”) on the grounds that she did not believe that she had under declared her income to Centrelink.[7] The appeal to the ARO was unsuccessful. The ARO found that the PP Debt had not been raised incorrectly and that no “special circumstances” existed to waive the debts.[8] Ms Drury then lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal.[9] The SSCSD rejected Ms Drury’s claim and affirmed the ARO’s decision on 18 November 2016.[10]
[7]           Exhibit 1, T Documents, T 14, page 299, Centrelink records.
[8]           Exhibit 1, T Documents, T8, pages 111–116, Decision of Authorised Review Officer and notes dated 18 July
2016.
[9]           Exhibit 1, T Documents, T9, letter from AAT to Centrelink dated 28 July 2016.
[10]         Exhibit 1, T Documents, T2, pages 6-9, SSCSD’s Decision and Reasons for Decision dated 18 November 2016.
Ms Drury has sought a review of the SSCSD’s decision by this Tribunal and submits that:[11]
(a)she did not under declare her income in a way that resulted in her being overpaid;
(b)during the Period, her income varied greatly and her working fortnight did not line up with the Centrelink fortnight and as a result she had to independently work out the appropriate income amount to declare;
(c)the rules state that you have to declare what is earned in a particular fortnight not what is paid;
(d)after 6 years she does not have all of the necessary records to prove that she had worked out and reported her earnings correctly;
(e)she specifically requested Centrelink to change her declaring fortnight to line up with her earnings fortnight which would have completely avoided the situation but Centrelink refused.
[11] Exhibit 1, T Documents, T1, pages one – 5, Application for Review dated 30 November 2016.
ISSUES FOR DETERMINATION
The issues for determination are whether:
(a)Ms Drury has been overpaid PPs;
(b)the PP Debt is recoverable; and, if yes
(c)the PP Debt should be written off; or
(d)the PP Debt should be waived due to administrative error; or
(e)“special circumstances” exist such that the PP Debt should be waived.
WAS MS DRURY OVERPAID PP PAYMENTS?
Pursuant to section 500 of the Social Security Act 1991 (Cth) (“the Act”), entitlement to PP is dependent upon a person having a PP child. One of the criteria of someone who has a PP child is that they are the principal carer of that child: section 500D of the Act. Section 1068B of the Act sets out how the rate of a parent’s PP is determined.
The Secretary submits that the income received by Ms Drury during the Period was in excess of the amount Ms Drury reported to Centrelink.[12] Based on the employment income earned during the Period Ms Drury was entitled to receive $5,626.69.[13] However, the amount of PP paid to Ms Drury, calculated in accordance with the reported income, was $6,995.29. As a result, Ms Drury was overpaid PPs totalling $1,368.57.
[12] Exhibit 1, T Documents T11, page 202, Centrelink records.
[13] Exhibit 1, T Documents T11, page 188, Centrelink records.
Pursuant to section 1073B of the Act, where:
(a)a person is receiving, relevantly, a PP; and
(b)the rate of PP is worked out with regard to an income test module (see section 1068B); and
(c)the person earns, derives or receives employment income during an instalment period;
(d)that person is taken to earn, drive 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 by the number of days in the period.
The Secretary submits that the entitlement calculations performed by Centrelink, which gave rise to the PP debt, have been calculated in accordance with the legislative obligations. Ms Underhill, representing the Secretary, provided the Tribunal with an example of how each Centrelink fortnight had been calculated in accordance with legislative requirements.[14] This was very helpful information. The Secretary also referred me to the Guide to Social Security Law (“the Guide”) which is used by Centrelink. The Tribunal is not bound to apply the Guide but it may, and it should, apply it in exercising its discretion unless it is unlawful or “tends to produce an unjust decision”.[15]
[14] Exhibit 5, Calculation Example Worksheet prepared by Ms Underhill; see also T 12, page 189, Centrelink Debt
Calculator, and page 202, Casual Earnings Apportionment Table.
[15] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645.
The Guide provides in section 4.3.3.05 that “[a]s a matter of policy, income test assessment is generally based on whichever event occurs first, which is usually when people earn the money. This is because assessing earnings only when received would create inequities, as it would enable some people to defer receiving their earnings until the income would have less impact on their income support entitlement. This would place people who can defer receipt of income in a better financial position than those paid on a regular basis.”
For the purpose of the hearing Ms Drury prepared a spreadsheet using timesheets obtained from her employer.[16] The purpose of the spreadsheet was to demonstrate the basis upon which she had calculated the amount of income to declare each fortnight. I note that the amounts in the spreadsheet do not match the amounts Ms Drury declared.[17] However I accept that the spreadsheet indicates how Ms Drury attempted to comply with her obligations and the issues she says she has with the fact that her pay fortnight did not equate to Centrelink’s fortnight. Be that as it may, where a person is a pay-as-you-go income earner, regardless of whether the amount of income in each fortnight varies, the Act provides for Centrelink to apportion income across a fortnight period (see sections 1073B and 1073C of the Act). Ms Drury argued that this was unfair because on some occasions she would earn a substantial amount less in one period and that she took each fortnight as a separate timeframe. Ms Drury submits that it is unfair to look at total earnings over a period. I should note that there is no suggestion, and in fact Ms Underhill made it quite clear at the commencement of the hearing, that Ms Drury was deliberately under reporting, or incorrectly reporting, to Centrelink. That is not at issue. Therefore, whilst I appreciate the efforts Ms Drury has made in demonstrating to the Tribunal the steps that she undertook and the reasons why, the issue comes down to whether Centrelink was legislatively authorised to calculate Ms Drury’s entitlements the way it did. The fact that it may appear to Ms Drury to be an unfair method of calculating her PP does not mean that the calculations are incorrect. As submitted by the Secretary there needs to be a cogent reason to depart from the guide. Ms Underhill also pointed out, which Ms Drury accepted, that the income amounts reported by her during the period had not taken into account any deductible amounts as required[18] and therefore had not been calculated in accordance with section 1068B as required. Ms Drury acknowledged this at the hearing and said that she had calculated the income amounts that she reported to the best of her ability.
[16] Exhibit 3, Letter from Payroll Officer and Timesheets from Flinders Private Hospital; Exhibit 4, Spreadsheet
prepared by Ms Drury.
[17] Exhibit 1, T Documents, T12, page 202.
[18] See section 8 of the Act (definition of “income”) and section 1068B-Module D calculator.
To expect Centrelink to calculate Ms Drury’s individual hours of employment differently to that provided for under the Act would lead to a logistical nightmare and burden on Centrelink, and ultimately the tax payer.
Centrelink calculated the PPs and the PP Debt in accordance with the Act and the Guide.
Section 1223 of the Act provides that overpaid PP debts are debts due to the Commonwealth.
I find therefore that Ms Drury owes the PP Debt to the Commonwealth.
IS THE PP DEBT AND FTB DEBT RECOVERABLE?
Even if a debt is owed, the Secretary may write off, or waive, a debt in certain circumstances (see sections 1236, 1237A and 1237AAD of the Act).
Should the PP Debt be written off?
The Secretary may write off a debt in certain circumstances set out in section 1236(1A) of the Act. Those sections provide that a debt may be written off, relevantly, where:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)it is not cost effective for the Commonwealth to take action to
recover the debt.
A debt is taken to be irrecoverable at law if, and only if there is no proof of the debt capable of sustaining legal proceedings for its recovery: section 1236(1B) of the Act.
If a debt is recoverable by means of section 1236(1C) of the Act:
(a)deductions under section 84 of the Family Assistance Act; or
(b)deductions under section 1231 of the Social Security Act; or
(c)setting off under section 84A Family Assistance Act; or
(d)application of an income tax refund under section 87 Family Assistance Act; or
(e)setting off under section 87A Family Assistance Act against a payment referred to in paragraph 82(2)(a);
the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
(my emphasis)
Is the debt irrecoverable at law? (section 1236, Act)
None of the circumstances set out in section 1236(1) exist in this case and therefore I find the debt is not irrecoverable at law.
Does Ms Drury have the capacity to repay the debt? (section 1236(1C), Act)
If a debt is recoverable by means of deductions from social security payments, income tax refunds or family assistance payments, the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
The issue is whether Ms Drury is suffering from “severe financial hardship”.
Ms Drury has been repaying the debt by way of fortnightly deductions of $15.00 and the balance owing as at 14 July 2017 was $933.57.[19]
[19] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 13 July 2017, para 28 Annexure D
The Secretary submits that Ms Drury is not suffering from severe financial hardship and has a clear capacity to repay the debt by instalments. Other Tribunal decisions have determined that severe financial hardship needs to involve severe or extreme financial suffering and that a person’s entire financial position would need to be materially less than the current rate of their pension.[20]
[20] Re Lumsden and Secretary, Department of Social Security [1986] AATA 228; Stubbs and Secretary, Department
of Family and Community Services [2003] AATA 729; L and Department of Social Security [1995] AATA 159;
Secretary, Department of Family and Community Services and Birgden [2003] AATA 67.
There is no evidence that Ms Drury does not have the capacity to pay and therefore the PP Debt should not be written off pursuant to section 1236(1A) of the Act.
Is it cost-effective for the Commonwealth to recover the debt? (1236(1A)(d), Act)
There is no indication from the Secretary that it is not cost-effective for it to recover the debt.
Conclusion – Write-Off
There is no basis for the PP Debt to be written off under section 1236 of the Act.
SHOULD THE PP DEBT BE WAIVED DUE TO ADMINISTRATIVE ERROR? (SECTION 1237A, ACT)
The Secretary must also 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 of the Act.
If administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt. The debt “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.[21]
[21] Secretary, Department of Family & Community Services v Sekhon[2003] FCA 76, per Wilcox J (at [41]) and on
appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services[2003] FCAFC 190, at [23].
The PP Debt arose due to a reconciliation by Centrelink of the PP amounts paid to Ms Drury during a time when she was not eligible to receive those payments.
The PP Debt did not arise solely from, or in relation to any, administrative error.
There is no basis for the PP Debt to be waived under section 1237A of the Act.
ARE THERE SPECIAL CIRCUMSTANCES THAT MAKE IT DESIRABLE FOR THE PP DEBT TO BE WAIVED? (SECTION 1237AAD, ACT)
The Secretary may also waive a debt owed, under section 1237AAD of the Act, if satisfied:
(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 the family assistance law; 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.
There are a few elements to be satisfied before a debt may be waived under section 1237AAD of the Act. First, the debt must not have arisen from the debtor; that is, Ms Drury must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Social Security Act or the Administration Act. Second, there must be special circumstances (other than financial hardship alone) that make it desirable to waive the debt. Third, it must be more appropriate to waive than to write off the debt or part of the debt.
The Secretary does not contend that Ms Drury “knowingly” failed to comply.
The issue, therefore, is whether special circumstances exist.
What does “special circumstances” mean?
The Act does not define what constitutes “special circumstances”.
There has been considerable judicial consideration of the phrase in the context of other social security legislation, for example:
·“Special” denotes something different from the usual or ordinary: Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per Kiefel J (as she then was).
·French J (as he then was) said in Secretary, Department of Social Security v Hales (1998) 82 FCR 154, at 162:
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion… It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
·The Full Federal Court in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 held, at 450:
Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.
·Jacobson J in Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] 89 ATR 267; [2012] FCA 639 explained the effect of the authorities as follows [emphasis added]:
[51] ...the phrase “special circumstances”, although lacking in precision, is sufficiently understood as including events or things that render the operation of the statue in a particular case as unfair, unintended or unjust. What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists. Moreover, the circumstances of the case are not confined to matters that are external to the operation of the statutory scheme: see Smith per von Doussa J at 60, 61–62; Groth per Kiefel J at 545, Kertland v Secretary, Dept of Family and Community Services (1999) 95 FCR 64 per Merkel J at 71, 73; Kirkbright v Secretary, Dept of Family and Community Services (2000) 106 FCR 281 per Mansfield J at [22], [26]–[27] and [31]–[32]; see also Secretary, Department of Family and Community Services v Allan (2001) 116 FCR 1 per Heerey J at [17].

The AAT has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at [12] (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[22]
[22]See Hunnibell and Secretary, Department of Family and Community Services [2004] AATA 992, at [19]; Papps and Secretary, Department of Family and Community Services [2005] AATA 660, at [37].
In summary, the circumstances relied upon to be “special” must be unusual, different, uncommon or exceptional.[23]
[23]The core requirement for “special reasons” is that there be something “unusual or different”: French J in Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084,
Do special circumstances exist?
The Secretary submits that there is no evidence that special circumstances exist and that therefore the discretion to waive the debt cannot be invoked.[24]
[24] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 12 July 2017, para 37.
Section 1237AAD of the Act specifically provides that financial hardship alone will not constitute a special circumstance. Ms Drury has a special needs child and is currently the recipient of a Carer Payment for the purpose of providing her child necessary care. I asked Ms Drury if she needed time to consider whether she wished to raise “special circumstances”. Ms Drury said she did not want to delay any longer and did not wish to rely on special circumstances.
On the available evidence, I am unable to find that any “special circumstances” exist. There is no basis for the PP Debt to be waived under section 1237AAD of the Act.
CONCLUSION
The decision under review is affirmed.

I certify that the preceding 46 (forty-six) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

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Associate
Dated: 11 September 2017

Date of hearing: 5 September 2019

Applicant: In person

Solicitors for the Respondent: Department of Human Services

at [37].

[2017] AATA 1437

11 September 2017

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Jurisdiction

Date of hearing:	5 September 2019
Applicant:	In person
Solicitors for the Respondent:	Department of Human Services