Englezos and Secretary, Department of Social Services (Social services second review)
[2020] AATA 4650
•19 November 2020
Englezos and Secretary, Department of Social Services (Social services second review) [2020] AATA 4650 (19 November 2020)
Division:GENERAL DIVISION
File Number:2020/2523
Re:Mr Costa Englezos
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member, B.Pola
Date:19 November 2020
Place:Brisbane
Pursuant to s43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision under review, and in substitution determines that:
(i)the Applicant has a legally recoverable debt arising from the overpayment of his carer payment during the period of 18 January 2018 to 29 July 2019;
(ii)in accordance with s1237A of the Social Security Act 1991 (Cth), the right to collect part of the debt relating to the period of 22 January 2018 to 3 May 2018 is waived; and
(iii)the matter is further remitted to the Respondent to recalculate the Applicant’s debt in accordance with this decision.
........................[SGD]................................................
Senior Member B.Pola
CATCHWORDS
SOCIAL SECURITY – carer payment – whether the Applicant was overpaid carer payments – whether overpayment constitutes a debt – whether all or part of the debt may be written off or waived – decision set aside and substituted
LEGISLATION
Social Security Act 1991 (Cth)
Social Security Administration Act 1999 (Cth)
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1, [1984] AATA 176
Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114
Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484
Panacci and Secretary, Department of Employment and Workplace Relations [2008] AATA 30
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127
Secretary, Department of Social Security v Hales (1998) FCA 219
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
REASONS FOR DECISION
Senior Member B. Pola
19 November 2020
BACKGROUND
The Applicant, Mr Costa Englezos, has been in receipt of a carer payment for the care of his father since 18 September 2009[1].
[1] Exhibit 1, T13, page 203.
On 11 January 2018, the Applicant advised Centrelink (or herein referred to as the ‘Agency’) that he was getting married[2]. Agency file notes on this date state that the Applicant was issued with a “MOD P” form to complete with information on their soon to be wife, which included a warning that the form was required to be submitted by 26 January 2018, if this requirement was not met their payment could be rejected or cancelled[3].
[2] Exhibit 1, T14, page 232.
[3] Ibid.
On 22 January 2018, following his marriage, the Applicant lodged a completed “MOD P” form, which had included his wife’s pay slips for the period of 29 November 2017 to 26 December 2017[4].
[4] Exhibit 1, T4, pages 62 to 75; and T5, pages 76 to 78.
On 24 January 2018, the Agency had commenced a review regarding the Applicant’s entitlement to his carer payment, and requested that the Applicant provide financial information relating to the 2016-17 financial year for both his wife and himself (including documents such as income tax returns, and any relevant company or trust tax returns for the period)[5].
[5] Exhibit 1, T15, pages 304 and 305.
In the absence of receiving a response from the Applicant, the Agency notified the Applicant on 19 February 2018 that their carer payment had been suspended, with a clear notice on the front page of the letter stating that the combined annual income used for calculating the Applicant’s payment was $17.50[6].
[6] Exhibit 1, T15, pages 306 and 307.
On 28 February 2018, the Applicant responded to the Agency by providing a copy of his wife’s 2016-17 Notice of Assessment from the Australian Taxation Office. In addition to this was a letter submitted from the Applicant stating to the Agency that the Comain Trust had been inactive for two years with no profit or loss statement or tax return required in the circumstances; and that for the purposes of King Harvest Pty Ltd, his wife had been nominated by her parents as a silent director and was not involved in the affairs of the company and did not receive any monetary benefit from her role as director[7]. The Administrative Appeals Tribunal (‘Tribunal’) notes that these documents were not before the Social Services and Child Support Division (‘SSCSD’) of the Tribunal.
[7] Exhibit 2, ST1, pages 4 and 5.
On 14 March 2018, the Applicant lodged with the Agency a copy of their partner’s 2016-17 personal income tax return and Notice of Assessment from the Australian Taxation Office[8]. Again, the Tribunal notes that these documents were not before the SSCSD of the Tribunal.
[8] Exhibit 2, ST2, pages 8 to 12.
On 3 May 2018, the Agency notified the Applicant that their carer payment had been cancelled because they had not received a reply to the letters which were sent to the Applicant. Again, the letter also stated that the combined annual income used for calculating the Applicant’s payment was $17.50[9].
[9] Exhibit 1, T15, pages 308 and 309.
On 19 June 2018, the Agency notified the Applicant that their carer payment would recommence from 15 February 2018, and that they would be receiving a payment of $5,449.45 on 21 June 2018 covering the period of 15 February 2018 to 6 June 2018. The letter also stated that the combined annual income used for calculating the Applicant’s payment was $17.50[10].
[10] Exhibit 1, T15, pages 310 and 312.
On 19 July 2019, the Agency notified the Applicant to contact the Agency regarding their circumstances by 9 August 2019, as records from the Department of Immigration and Border Protection showed that the Applicant had departed Australia on 21 January 2018 (which was a change in circumstances that could affect their payment(s))[11].
[11] Exhibit 1, T15, pages 314 and 315.
On 31 July 2019, the Agency notified the Applicant that by 21 August 2019, they were to provide the Agency with a copy of their 2016-17, 2017-18 and 2018-19 income tax return documents lodged with the Australian Taxation Office for Opal Lighting; in addition to a copy of their partner’s payslips for the period of 21 December 2017 to 31 July 2019[12].
[12] Exhibit 1, T15, pages 316 and 317.
On 5 August 2019, the Applicant provided the Agency with a copy of their partner’s pay slips for the period of 13 December 2017 to 9 July 2019[13].
[13] Exhibit 1, T7, pages 82 to 121.
The Respondent states that on 13 September 2019, the Agency raised a carer payment debt of $23,173.22 for the period of 12 January 2018 to 29 July 2019[14].
[14] Exhibit 3, page 3, paragraph 20.
On 11 November 2019, an Authorised Review Officer (‘ARO’) internally reviewed the original decision of the Agency, set that decision aside, and instead decided to vary the debt to $17,725.04 for the period of 18 January 2018 to 29 July 2019 on the basis that the Applicant’s entitlement to rent assistance had not been included in the original debt calculations[15].
[15] Exhibit 1, T11, pages 191 to 196.
On 18 March 2020, the SSCSD of the Tribunal affirmed the amended decision under review of 11 November 2019[16].
[16] Exhibit 1, T2, pages 3 to 7.
On 14 April 2020, an application was received from the Applicant for a second review of the decision with the General Division of the Tribunal[17].
[17] Exhibit 1, T1, pages 1 and 2.
JURISDICTION
This is an application to review a decision of the SSCSD of the Tribunal, which affirmed a decision to raise a carer payment debt of $17,725.04 for the period of 18 January 2018 to 29 July 2019.
Section 179(1) of the Social Security (Administration) Act 1999 (the “Administration Act”), states:
179 Application for AAT second review
(1) Application may be made to the AAT for review (AAT second review) of a decision of the AAT on AAT first review made under subsection 43(1) of the AAT Act.
(2) For the purposes of subsection (1), the decision of the AAT on AAT first review is taken to be:
(a) if an AAT first review affirms a decision—that decision as affirmed; or
(b) if an AAT first review varies a decision—that decision as varied; or
(c) if an AAT first review sets a decision aside and substitutes a new decision—the new decision; or
(d) if an AAT first review sets a decision aside and sends the matter back to the Secretary for reconsideration in accordance with any directions or recommendations of the AAT—the directions or recommendations of the AAT.
[Boling in original]
In accordance with s179(1) of the Administration Act the Tribunal has jurisdiction to hear the Applicant’s application of 14 April 2020.
ISSUES
The issues for consideration by the Tribunal in this application are:
(a)whether the Applicant was overpaid the carer payment for the amount of $17,725.04, for the period of 18 January 2018 to 29 July 2019;
(b)whether any overpayment of the carer payment constitutes a debt to the Commonwealth; and if so
(c)whether any debt owed to the Commonwealth is recoverable in part or in full.
RELEVANT LEGISLATIVE PROVISIONS
Carer Payment
Section 210 of the Social Security Act 1991 (the ‘Act’), sets out how to determine the rate of a person’s carer payment, which provides:
“210 How to work out a person’s carer payment rate
A person’s carer payment rate is worked out using Pension Rate Calculator A at the end of section 1064 (see Part 3.2).”
Section 1064-A2 of the Act provides the following in relation to members of a couple:
“Members of a couple
1064-A2 Where 2 people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis (see points 1064-E2 and 1064-G2 below). They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis (see section 1070V).”
[Tribunal underlining for emphasis]
The effect of s1064-A2 of the Act for the purposes of the application before the Tribunal, means that when calculating the carer payment in accordance with the Pension Rate Calculator A - Module A within the Act, where a person is a member of a couple, it includes the income and assets of both members of the couple, for the purposes of the income test.
Debts
The following paragraphs outline relevant legislative provisions which apply to debts incurred resulting from a lack of qualification for a payment, or an overpayment. A debt pursuant to subsection 1223(1) of the Act is incurred when:
“1223 Debts arising from lack of qualification, overpayment etc.
(1) 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.”
Writing off a debt
Section 1236 of the Act provides that the Secretary may write off a debt:
“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.
(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.
(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor’s social security payment; or
(b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c) setting off under section 84A of that Act;
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.
(2) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision—on the day on which the decision is made; or
(b) if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).
(3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.”
Administrative error
Section 1237A of the Act provides that:
“(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.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).”
Special circumstances
Section 1237AAD of the Act provides that:
“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.”
Relevant notice
Section 68(2) of the Administration Act, provides the following:
“(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;
…”
Section 100(1) of the Administration Act provides that:
“100 Automatic rate reduction—recipient not complying with subsection
68(2) notice(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.”
[Bolding in original]
Therefore, in circumstances where a person is in receipt of a social security payment and is given notice under s68(2) of the Administration Act by the Agency, and there is a change in the person’s circumstances and the person does not inform the Agency, the social security payment becomes payable to that person at the reduced rate on the day on which the change of circumstance occurs.
CONSIDERATION
The application was heard in Brisbane on 27 October 2020. The Applicant appeared by phone and was self-represented. The Respondent also appeared by phone and was represented by Ms Gillian Gehrke. The Tribunal considered oral submissions made by both the Applicant and the Respondent, along with submitted evidence as outlined in the Exhibit Register (refer to Annexure 1).
Whether the Applicant was overpaid the carer payment?
There is evidence before the Tribunal that, prior to the Applicant’s marriage to his wife, he had informed the Agency on 11 January 2018 that he would become, for the purposes of receipt of the carer payment, a member of a couple[18].
[18] Exhibit 1, T13, page 232.
The evidence before the Tribunal clearly shows that the Applicant was in receipt of the carer payment, incorrectly calculated on the basis of a combined annual income of both the Applicant and his wife totalling $17.50 for the period of 18 January 2018 to 29 July 2019. This is evidenced by:
(a)Payslips belonging to the wife of the Applicant tendered to the Agency on 22 January 2018, for the period of 29 November 2017 through to 26 December 2017, showing that year to date gross earnings as of 26 December 2017 were $34,817.47[19].
(b)A completed and signed “MOD P” form tendered to the Agency on 22 January 2018, clearly stating that the Applicant’s wife’s fortnightly earnings were $2,575, including listing the name of her employer[20].
(c)A Notice of Assessment for the financial year ended 30 June 2017 tendered to the Agency on 28 February 2018, confirming the Applicant’s wife’s taxable income of $67,403 for the year[21].
(d)A copy of the personal income tax return of the Applicant’s wife for the 2016-17 financial year tendered to the Agency on 14 March 2018[22].
(e)Payslips belonging to the wife of the Applicant tendered to the Agency on 5 August 2019, for the period of 29 November 2017 through to 9 July 2019. These payslips show that the year to date gross earnings to 9 July 2019 were $2,653.84; for the 2018-19 financial year to date gross earnings were $70,037.35; and for the 2017-18 financial year to date gross earnings were $68,858.69[23].
[19] Exhibit 1, T5, pages 76 to 78.
[20] Exhibit 1, T4, pages 62 to 75.
[21] Exhibit 2, ST1, page 4; and repeated at ST2, pages 11 and 12.
[22] Exhibit 2, ST2, pages 8 to 10.
[23] Exhibit 1, T7, pages 82 to 121.
The Tribunal has had regard to the Applicant’s absence from Australia in January 2018, and the effect of this overseas absence on their qualification for the carer payment. The Applicant advised the Tribunal that they had been absent from Australia for less than a month and had advised the Agency ahead of their departure[24]. The Tribunal notes that carers in receipt of carer payments may have a temporary absence from caring to travel overseas without the care receiver for up to 6 weeks under the portability provisions.
[24] Transcript 26 October 2020, page 15, lines 29 to 43.
The Tribunal did not have before it immigration records confirming the dates of the Applicant’s departure from Australia, however the Respondent did not believe there were any concerns regarding the Applicant’s qualification for the carer payment during their overseas absence[25]. Therefore, in the absence of additional evidence, the Tribunal has treated the period of the Applicant’s overseas absence as not affecting their qualification for the carer payment during the period of 18 January 2018 to 29 July 2019.
[25] Transcript 26 October 2020, page 15, line 45 to page 16, line 6.
The Tribunal finds that the amount of the carer payment paid to the Applicant during the period of 18 January 2018 to 29 July 2019 was based on the incorrect combined annual income of the Applicant and his wife (pursuant to s1064-A2 of the Act). The Applicant would have been entitled to a lower carer payment during this period due to the higher combined income of the Applicant and his wife.
Whether the overpayment of the carer payment constitutes a debt to the Commonwealth?
As outlined in earlier paragraphs of this these reasons, s1223(1) of the Act states that for debts arising from overpayment (where a social security payment has been made to a person who obtains the benefit of a payment they were not entitled to), the amount of that payment is a debt due to the Commonwealth (arising from when the person obtains the benefit of the payment).
The Tribunal has found that the Applicant has received a greater amount of the carer payment than what they were otherwise entitled to receive during the period of 18 January 2018 to 29 July 2019.
The Tribunal finds that the amount of the carer payment received by the Applicant that was calculated on the incorrect combined income of the Applicant and his wife during the period of 18 January 2018 to 29 July 2019, is a debt due to the Commonwealth by the Applicant and constitutes a legally recoverable debt pursuant to s1223(1) of the Act.
Whether the over payment is recoverable in part or in full?
In establishing whether the Applicant’s overpaid carer payment is recoverable in part or in full, the Tribunal refers to His Honour French J (as his Honour then was), in Secretary, Department of Social Security v Hales (1998) FCA 219, who stated:
“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.”
As previously outlined in these reasons, there are circumstances where the recovery of outstanding debts to the Commonwealth can be either written off or waived. Relevant to the Applicant’s legally recoverable debt, the Respondent may write off or waive the Applicant’s debt if the requirements set out in s1236, s1237A or s1237AAD of the Act are met.
Write off debt (s1236 of the Act)?
Section 1236 of the Act gives the Secretary power to write off the debt for a stated period or otherwise if one or more criteria are met in s1236(1A) of the Act (set out in earlier reasons of this Decision).
The Respondent stated that the Applicant’s debt was currently being recovered by the Agency from the Applicant’s fortnightly carer payment of $542.59 per fortnight, and their carer allowance of $131.90 per fortnight. The Respondent has submitted that there is currently no repayment arrangement in place[26].
[26] Exhibit 23 page 3, paragraphs 24 and 25.
The Tribunal was not presented with any corroborating evidence to suggest that the Applicant could not repay the debt through fortnightly deductions from their current social security payment. The Tribunal notes the financial circumstances of the Applicant, where he had stated to the Tribunal that his wife[27]:
(a)had been placed on JobKeeper from May 2020 (reducing her fortnightly income);
(b)was made redundant at the beginning of October 2020, receiving a redundancy payment of approximately $14,000; and
(c)had recently begun a new job earning approximately $2,500 per fortnight.
[27] Transcript, 26 October 2020, page 25, lines 33 to 39, page 26, lines 16 to 47, and page 31, lines 21 to 26.
Additionally, the Applicant advised the Tribunal that there were no substantial changes to his household expenditure which had been estimated and declared to the Agency on 12 February 2020[28].
[28] Exhibit 1, T2, pages 8 to 13.
The Tribunal is satisfied that the debt is recoverable at law, the Applicant has the capacity to repay the debt, the whereabouts of the Applicant is known, and that there is no evidence to suggest it is not cost effective for the Commonwealth to take action to recover the debt.
The Tribunal finds that the Applicant’s debt to the Commonwealth cannot be written off pursuant to s1236 of the Act.
Waiver of a debt arising from Administrative error (s1237A of the Act)?
Section 1237A of the Act provides that the Commonwealth 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.
The Tribunal refers to Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190, at paragraph 35, where the Full Federal Court observed:
“The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.”
The Tribunal observes the following attempts by the Applicant to comply with directions of the Agency in respect of this application (repeated in earlier reasons but restated here):
(a)Payslips belonging to the wife of the Applicant tendered to the Agency on 22 January 2018, for the period of 29 November 2017 through to 26 December 2017, showing that year to date gross earnings as of 26 December 2017 were $34,817.47[29].
(b)A completed and signed “MOD P” form tendered to the Agency on 22 January 2018, clearly stating that the Applicant’s wife’s fortnightly earnings were $2,575, including listing the name of her employer[30].
(c)A Notice of Assessment for the financial year ended 30 June 2017 tendered to the Agency on 28 February 2018, confirming the Applicant’s wife’s taxable income of $67,403 for the year[31].
(d)A copy of the personal income tax return of the Applicant’s wife for the 2016-17 financial year tendered to the Agency on 14 March 2018[32].
[29] Exhibit 1, T5, pages 76 to 78.
[30] Exhibit 1, T4, pages 62 to 75.
[31] Exhibit 2, ST1, page 4; and repeated at ST2, pages 11 and 12.
[32] Exhibit 2, ST2, pages 8 to 10.
The Tribunal notes that the Applicant’s combined income was not updated by the Agency following receipt of the Applicant’s information on 22 January 2018, 28 February 2018, or 14 March 2018.
The Tribunal observes that notices were sent by the Agency to the Applicant (which the Applicant did not dispute receiving), on the following dates which clearly stated the combined income used to calculate the Applicant’s regular payment was $17.50:
(a)19 January 2018, noting that this notice also stated that the Applicant must notify the Agency within 14 days of any changes listed, which includes reference to “Income: Your or your partner’s gross income changes” [33];
(b)22 January 2018, noting that this notice also stated that the Applicant must notify the Agency within 14 days of any changes listed, which includes reference to “Income: Your or your partner’s gross income changes” [34];
(c)19 February 2018[35];
(d)3 May 2018[36]; and
(e)19 June 2018, noting that this notice also stated that the Applicant must notify the Agency within 14 days of any changes listed, which includes reference to “Income: Your or your partner’s gross income changes” [37].
[33] Exhibit T15, page 295 to 297.
[34] Exhibit T15, page 301 to 303.
[35] Exhibit T15, page 306 to 307.
[36] Exhibit T15, page 308 to 309.
[37] Exhibit T15, page 310 to 312.
The Applicant had stated during the hearing that he had been dealing with the Agency in order to rectify the error of “$17.50” as it had related to an information request he had received when he had visited the Agency in person, as they had requested a Balance Sheet for Opal Lighting[38]. Regardless of the Applicant’s claims, the fact remains that Centrelink did correspond with the Applicant on multiple occasions that his combined income used to calculate his regular payment was $17.50.
Good Faith
[38] Transcript, 26 October 2020, page 22, line 30 to page 23, line 10.
As the Tribunal outlined earlier, s1237A of the Act provides that the Commonwealth 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.
In considering whether the Applicant received the payments in good faith, the Tribunal refers to their Honour Finn J, in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127 at paragraph 130:
“…the burden of the formula [in ‘good faith’]…is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.”
Additionally, the Federal Court has found that a person does not act in good faith where they turn a blind eye to the circumstances which raise doubt as to the entitlement to receive a payment, with reference to their Honour Cooper J, found in Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484, where at paragraphs 40 and 41 it was stated:
“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. Although said in a different context, the observations of Lord Blackburn in Jones v Gordon (1877) 2 App Cas 616 at 629 are apposite. His Lordship said:
‘... If he was (if I may use the phrase) honestly blundering and careless, and so took a bill of exchange or a bank-note when he ought not to have taken it, still he would be entitled to recover. But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but that he must have had a suspicion that there was something wrong, and that he refrained from asking questions, not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind - I suspect there is something wrong, and if I ask questions and make farther inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to recover - I think that is dishonesty. I think, my Lords, that that is established, not only by good sense and reason, but by the authority of the cases themselves’.”
The Tribunal refers to the decision of Panacci and Secretary, Department of Employment and Workplace Relations [2008] AATA 30, where Senior Member Handley stated at paragraph 25:
“… An absence of good faith does not amount to fraudulent conduct on the part of the recipient of a benefit but it does mean that the recipient acts without an honestly held belief of entitlement to receive and retain the payment. The state of mind of the recipient must be examined and the test of good faith is entirely subjective.”
[Tribunal underline for emphasis]
At the hearing the Applicant submitted that it was his belief that he had updated his information as he had visited the Agency on numerous occasions, and had supplied the Agency with the relevant materials at the Agency’s request[39].
[39] Transcript, 26 October 2020, page 24, lines 26 and 27, and page 34.
It is the Tribunal’s view that in circumstances where the Applicant sought to update his income on three occasions on 22 January 2018, again on 28 February 2018, and again on 14 March 2018 (as previously outlined by the Tribunal in paragraph 50 of these reasons), the Applicant had acted in good faith for the period of 22 January 2018 to 3 May 2018. Noting that 3 May 2018, was the first occasion which the Applicant had received correspondence from the Agency stating that the combined income used to calculate their entitlement to their regular payment was $17.50, after having provided multiple updates to the Agency of his wife’s income prior to receipt of this letter.
Additionally, lending weight to the Tribunal’s view that the Applicant has acted in good faith, it is observed that the Applicant during this period acted honestly with the Agency in proactively updating his upcoming marriage and overseas departure.
It is the Tribunal’s view that the Agency failed to take into account:
(a)the updated fortnightly income of the Applicant’s wife tendered to the Agency on 22 January 2018 in the signed “MOD P” form[40];
(b)the payslips tendered to the Agency on 22 January 2018 for the period of 29 November 2017 through to 26 December 2017, showing that year to date gross earnings as of 26 December 2017 were $34,817.47[41];
(c)the Notice of Assessment for the financial year ended 30 June 2017 tendered to the Agency on 28 February 2018, confirming the Applicant’s wife’s taxable income of $67,403 for the year[42]; and
(d)the copy of the personal income tax return of the Applicant’s wife for the 2016-17 financial year confirming gross income of $67,508, tendered to the Agency on 14 March 2018[43].
[40] Exhibit 1, T4, pages 62 to 75.
[41] Exhibit 1, T5, pages 76 to 78.
[42] Exhibit 2, ST1, page 4; and repeated at ST2, pages 11 and 12.
[43] Exhibit 2, ST2, pages 8 to 10.
It is the Tribunal’s view that for the period of 18 January 2018 to 3 May 2018, the debt was attributable solely to administrative error, with the Applicant receiving the subsequent overpayment in good faith (with reference to the reasons of the Tribunal in paragraphs 59 and 60 of this decision). The Tribunal notes that the Respondent had conceded that it was open to the Tribunal to make such a finding[44].
[44] Exhibit 3, page 6, paragraph 51.
For the remaining period of the debt (being 4 May 2018 to 29 July 2019), the Tribunal is of the view that the debt was not solely due to an administrative error on the basis that the Applicant was informed on multiple occasions after having providing updated material to the Agency, that their payment was still being calculated on the basis of a combined income of $17.50. This view is made with specific reference to letters sent by the Agency to the Applicant on 3 May 2018[45]; and 19 June 2018 [46]. There is no evidence before the Tribunal that the Applicant sought to update their income from 4 May 2018.
[45] Exhibit T15, page 308 to 309
[46] Exhibit T15, page 310 to 312.
Waiver in special circumstances (s1237AAD of the Act)?
As outlined in earlier reasons of this decision, s1237AAD of the 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.”
The Tribunal refers to Beadle and Director-General of Social Security (1984) 6 ALD 1, [1984] AATA 176, where the Tribunal at paragraph 12 observed:
“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.”
[Tribunal underlining for emphasis]
The Tribunal refers to Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114, where the Tribunal at paragraph 80 observed:
“…“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances ... that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it. Certainly, he did not know that his father was giving him his own money but the fact that he was deceived by his father does not mean that it is desirable to waive the debt. He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement. His not knowing that his father had continued to receive the money does not take him outside the expectation that all social security recipients should repay money when they receive money but are not entitled to it. The system of administration of the SS Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act.”
Section 1237AAD(a) of the Act requires the Secretary to waive the right to recover all or part of a debt if the Secretary is satisfied that the debt did not result wholly or partly from the Applicant knowingly making a false statement or representation, or knowingly failing to omit or comply with a provision of the Act or the Administration Act.
In regards to applying s1237AAD(a) of the Act, and the term “knowingly” in the circumstances of this application, the Tribunal refers to Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435, where at paragraph 48 the Tribunal observed:
“There is nothing in section 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.”
In the present application, it is the Tribunal’s view that the Applicant’s debts were not a result of the Applicant knowingly failing to omit or comply with the notices issued under the Administration Act, nor providing false or misleading statements.
In terms of special circumstances, the Applicant had submitted to the SSCSD of the Tribunal that they suffered from Crohn’s disease, however when this was put to the Applicant at the hearing they did not wish to press this[47].
[47] Transcript 26 October 2020, page 25, lines 1 to 4.
Based on the evidence before the Tribunal, the Tribunal does not consider the Applicant’s circumstances are sufficiently special or unusual to warrant the exercise of the discretion in s1237AAD of the Act to waive the Applicant’s debt.
DECISION
Pursuant to s43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision under review, and in substitution determines that:
(i)the Applicant has a legally recoverable debt arising from the overpayment of his carer payment during the period of 18 January 2018 to 29 July 2019;
(ii)in accordance with s1237A of the Social Security Act 1991 (Cth), the right to collect part of the debt relating to the period of 22 January 2018 to 3 May 2018 is waived; and
(iii)the matter is further remitted to the Respondent to recalculate the Applicant’s debt in accordance with this decision.
I certify that the preceding 72 (seventy-two) paragraphs are a true copy of the reasons for the decision herein of Senior Member B.Pola
……….…[SGD]……………
Associate
19 November 2020
Date of hearing: 27 October 2020
Applicant: Mr Costa Englezos (self-represented, by telephone)
Solicitors for Respondent: Ms Gillian Gehrke (by telephone) Services Australia
‘Annexure 1 – Exhibit Register’
Exhibit
Number
Description
1
Section 37 T Documents, received 28 May 2020, pages 1 to 333.
2
Supplementary T Documents, received 9 September 2020, pages 1 to 199.
3
Respondent’s Statement of Facts, Issues and Contentions, received 9 September 2020, pages 1 to 12.
5
0