Gayle Bronson and Secretary, Department of Social Services

[2013] AATA 937

[2013] AATA 937  

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2011/2036
Re	Gayle Bronson
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Mr R G Kenny, Senior Member
Date	23 December 2013
Place	Brisbane

The Tribunal affirms the decision under review.

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Mr R G Kenny, Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, Benefits and Allowances – Newstart allowance – Applicant not compliant with notification requirements – Failure to advise Centrelink of relevant income information – Overpayment raised – Debt due to the Commonwealth with no basis to write off or waive – Debt confirmed by Social Security Appeals Tribunal (SSAT) – Decision set aside by SSAT and remitted to respondent for recalculation of amount of debt in accordance with directions – Application for review by Administrative Appeals Tribunal lodged prior to variation of debt – Imposition of a 10% penalty- decision under review affirmed.

LEGISLATION

Social Security Act 1991 (Cth) ss 1223, 1228B, 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 (Cth) ss 68, 180

CASES

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

Mr R G Kenny, Senior Member

23 December 2013

BACKGROUND

1. Gayle Bronson (“the applicant“) received Newstart allowance from 18 January 2007. This is payable in accordance with the terms of the Social Security Act 1991 (Cth) (“the Act”) and the Social Security Administration Act 1999 (Cth) (“the Administration Act”). On 20 May 2010, Centrelink determined that the applicant was overpaid because of her understatement of income from Asset Protection Systems Pty Ltd (“APS”). Accordingly, Centrelink determined to raise and recover a debt of Newstart allowance in the amount of $8,427.64 for the period from 18 January to 21 May 2008. On 18 June 2010, Centrelink further determined that the applicant was also overpaid because of her understatement of income from Engineering Welding Services Pty Ltd (“EWS”) in the amount of $2,249.81 and raised a debt in that amount for the period from of 19 June 2008 to 14 April 2009. Those decisions were affirmed by an authorised review officer in Centrelink. On further review on 4 March 2011, the Social Security Appeals Tribunal (“the SSAT”) decided:

   …to set aside the decisions under review and send the matters back to Centrelink with directions that:

   (i) Ms Bronson’s entitlement for the period 18 January 2007 to 21 May 2009 be recalculated using a ‘MultiCal’ debt format with respect to income received from Asset Protection Systems Pty Ltd and Engineering Welding Services Pty Ltd.

   (ii) Income is to be taken into account only once, and allowances made for debts previously raised.

   (iii) Any debt is to be fully recovered.

2. The applicant sought review of that decision on 24 May 2011. Subsequently, through successive recalculations of the two debts, Centrelink determined, on 22 November 2012, that the combined amount of the debt which was referable to the understatement of income from APS and EWS was $10,594.01. Centrelink also determined that an additional penalty amount of 10% was payable by the applicant and that her total debt was $11,653.41.

3. In addition to the above debt calculations, Centrelink raised debts by the applicant for Newstart allowance overpayments in the periods from 8 November 2007 to 13 February 2008 and from 14 February 2008 to 9 April 2008. These relate to income from employers other than APS and EWS. They have been recovered and do not form part of the calculation of the amount, noted above, of $11,653.41.

   DECISION UNDER REVIEW

4. The application to the Administrative Appeals Tribunal (AAT) for review by the applicant was in relation to the SSAT decision. The ambit of the Tribunal’s capacity to review SSAT decisions is provided for in the Administration Act. In so far as relevant, jurisdiction of the Tribunal in this matter falls within the terms of s 180(1) of the Act which reads:

   180  Variation of decision before AAT review completed

   (1)  If an officer varies a decision after an application has been made to the AAT for review of that decision but before the determination of the application, the application is to be treated as if:

   (a)  the decision as varied had been affirmed by the SSAT; and

   (b)  the application were an application for review of the decision as varied.

5. The applicant applied for review by the Tribunal on 24 May 2011. The successive recalculations by Centrelink were made after that date with notification that the “amount payable has been amended to $10,594.01” being given to the applicant by letter dated

   
   

   22 November 2012. It follows that the decision concerning the amended debt is to be treated as if that decision had been affirmed by the SSAT and that the application was an application for review of the decision as varied.

   LEGISLATION AND ISSUES

6. Any overpayment of Newstart allowance to the applicant is a debt under s 1223 of the Act. The assessment of the interest added to the debt was made under s 1228B of the Act which reads:

   1228B  Additional 10% penalty for understatement etc. of income

   (1)  An amount by way of penalty is added to a debt due to the Commonwealth under this Chapter by a person in relation to a social security payment if:

   (a)  at the time the payment was made, the person:

   (i)  had attained the minimum age for youth allowance as defined by section 543A; and

   (ii)  had not reached pension age; and

   (b)  the payment was:

   (i)  a social security benefit; or

   (ii)  a disability support pension; or

   (iii)  a wife pension; or

   (iv)  a widow B pension; or

   (v)  a pension PP (single); and

   (c)  the debt arose wholly or partly because the person had:

   (i)  refused or failed to provide information in relation to the person’s income from personal exertion; or

   (ii)  knowingly or recklessly provided false or misleading information in relation to the person’s income from personal exertion;

   when required, under a provision of the social security law, to provide information in relation to the person’s income from personal exertion.

   (2)  The amount added by way of penalty is an amount equal to 10% of so much of the debt as arose because the person refused or failed to provide the information or provided the false or misleading information.

   (3)  An amount worked out under subsection (2) must be rounded down to the nearest 5 cents.

   (4)  This section does not apply if the Secretary is satisfied that the person had a reasonable excuse for refusing or failing to provide the information.

   (5)  This section does not apply in relation to a debt due to the Commonwealth under section 1229A or 1229AB

7. The issue for determination is whether the applicant was overpaid an amount of Newstart allowance which is a debt due by her to the Commonwealth and, if so, whether it was appropriate for a penalty amount to be added to the debt.

   EVIDENCE

   The applicant

8. The applicant’s work with APS was as a security guard involved in matters such as crowd control. For EWS, she worked in the capacity of a sole trader as a book-keeper preparing BAS statements. She said that she had no formal accounting qualifications and was reliant on her considerable experience with such work. She accepted that she may not have provided accurate information to Centrelink about her earnings. She said that much of her work was in security with irregular rosters and shift lengths in that she would be asked to take on particular shifts without knowledge of their duration. She said that this resulted in uncertainty that all of her work hours had been included in the fortnightly Application for Payment Forms which she provided to Centrelink. She said that these were completed and forwarded to Centrelink each second Thursday and that, each Monday, she contacted Centrelink by telephone to advise of hours worked and which had been omitted from the fortnightly form. She said that she followed that course throughout the period of employment with APS and EWS from 18 January 2007 until

   
   

   31 January 2009. She believed that, by advising through the fortnightly forms and by telephone, all of her hours of work were advised to Centrelink. However, she also said that she would include in her forms all income except for that which she had reported to Centrelink by telephone. In that way, the applicant agreed that her fortnightly forms were not accurate if the phone call information was not included. She also agreed that some of her earnings were reported to Centrelink as net amounts of pay rather than her gross earnings before tax. The applicant accepted that she had been overpaid Newstart allowance but did not understand how the amount of the debt was so high. She said that she had not deliberately understated her income but that she had been remiss and careless in advising Centrelink of income levels as she did.

9. The applicant conceded that she had been prosecuted and convicted for offences in relation to the overpayment amounts that she had received. She said that she had pleaded guilty on the basis of advice from her solicitor and that a reparation order had been made against her in the amount of $9,864.90.

10. The applicant described herself as being in good health except that she has coeliac disease which has little impact upon her. Additional stresses in her life both during the overpayment periods and currently have arisen because of her daughter’s association with drug usage. She lives by herself in her own home which is subject to a mortgage. She also has credit card debts but said that she is able to cope financially on a week to week basis.

    Penelope Graham

11. Ms Graham is an investigation officer with the respondent and has served in that position for eight years. She has worked for the respondent for 11 years. She gave evidence on the basis that she had undertaken the assessment of the applicant’s Newstart allowance entitlements. Her calculations relied on statements from APS and EWE which advised the amounts that the applicant had been paid over the relevant period. This amounted to $50,074.32. She also had access to the information about earnings provided by the applicant over the relevant period. This totalled $19,093.20. Applying the rate calculator in the Act, Ms Graham confirmed that the applicant was overpaid $10,594.01 in the relevant period. Ms Graham advised that there were two means of calculating an overpayment. These were through the MultiCal and the Adex systems. She utilised the former but said that the same result would be obtained under either mode of calculation.

12. Ms Graham’s evidence was that there was no Centrelink record of the weekly phone calls made by the applicant in relation to her earnings. Her Newstart allowance had been calculated on the basis of information in her fortnightly Application for Payment Forms. Ms Graham also advised that there had been two other overpayments of Newstart allowance to the applicant which had arisen because of understatement of income for different employers. She confirmed that the applicant had repaid the overpayments which had been raised as debts against her. In her evidence, Ms Graham referred the Tribunal to the calculations which were set out in the documents in evidence before the Tribunal.

    Centrelink Records

13. In evidence were copies of the advices provided by APS and EWS regarding the payments made to the applicant by those employers and copies of the overpayment calculations. Although Centrelink has no record of weekly phone reports of income by the applicant, some telephone records were in the Centrelink files. Some of these were referred to the applicant. On 1 February 2008, the applicant advised that she had not worked in January 2007. Her records show that she received wages in the week ending 14 January 2007.

14. The applicant was required to provide Application for Payment Forms each fortnight in which she was to give details of her employment and her earnings. Several of these were in evidence. An analysis of these shows that they provide information which does not accord with the information provided by the employers for the same periods. Each of those Forms includes a declaration, which the applicant signed, that the information provided in the respective forms was complete and correct and an understanding that the giving of false or misleading information was a serious offence. The first of these was from the date of the commencement of Newstart allowance on 18 January 2007 to

    
    

    31 January 2007. Therein, the applicant declared that she did not work in that period but that is not consistent with the employer’s record of payment to her at that time.

    CONSIDERATION

    Overpayment and debt

15. There is conflicting evidence on the manner and frequency of notifications by the applicant to Centrelink of her income. Centrelink records do not support the applicant’s reference to making calls each Monday. She said that the fortnightly Application for Payment Forms were not accurate and needed to be read with the information given by telephone each week in order to have complete information about her income. In that regard, there are Application for Payment Forms in the applicant’s files denying income in particular periods when employer records reveal that payments were made to her. Also, the applicant conceded that she sometimes provided details of her net income rather than the required record of gross income.

16. The applicant was unable to identify any errors in the mode of calculating the overpayment of her Newstart allowance. On the other hand, Ms Graham demonstrated the process whereby she calculated those overpayments. I am satisfied that she has done this correctly in determining that the applicant was overpaid by $10,594.01. Under

    
    

    s 1223 of the Act, the overpayment of Newstart allowance to the applicant is a debt due by her to the Commonwealth.

17. Under s 1228B of the Act, an additional 10% penalty may be imposed for understatement of income. I am satisfied that the applicant failed to provide fully the information in relation to her income from personal exertion which she was required to do.

    
    

    The Application for Payment Forms which were sent to the applicant include declarations that the Forms constitute information notices under the Administration Act. Under s 68 of the Administration Act, those notices must be complied with. The forms require accurate information about times worked and income earned and I am satisfied that not all of these were completed accurately by the applicant. I am also satisfied that the applicant had not reached pension age when Newstart allowance was paid to her; that the Newstart allowance was a social security benefit; and that there was no reasonable excuse for provision of incorrect information. It follows that it was appropriate for the respondent to impose the 10% penalty under s 1228 of the Act.

    Writing off debt

18. A debt may be written off under s 1236 of the Act. This is the case if the debt is irrecoverable at law; the debtor has no capacity to repay the debt; the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or it is not cost effective for the Commonwealth to take action to recover the debt. Those factors are not met in this case. In particular, I am satisfied that the applicant does not lack capacity to repay the debt on a continuing, albeit long term, basis. In that situation, the debts should not be written off. However, Mr Christopher Bishop, for the respondent, assured the Tribunal that the reparation amount ordered against the applicant in criminal proceedings would be set off against any debt that arises under s 1223 of the Act.

    Waiver of debt

19. A debt to the Commonwealth may be waived under s 1237A of the Act because of sole Commonwealth error. Clearly, the incorrect information which was given to Centrelink contributed to the overpayment to the applicant and, therefore, the debt may not be waived under s 1237A of the Act. A debt to the Commonwealth may be also be waived under s 1237AAD of the Act which reads:

    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.

20. While I am satisfied that the applicant did not knowingly make a false statement or a false representation to Centrelink, I am satisfied that she did not comply with the terms of s 68 of the Administration Act. It is also the case that the applicant professed a level of expertise in book-keeping and she admitted to being careless in her recording of her income details on her Application for Payment Forms. In Groth v Secretary, Department of Social Security[1], Kiefel J observed that special circumstances:

    …would require something to distinguish ... [the] ... case from others, to take it out of the usual or ordinary 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.

    [1] Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545.

21. The applicant received payments to which she was not entitled and no circumstances have been advanced which may be regarded as special such as to justify waiver of that debt under s 1237AAD of the Act.

    DECISION

22. The Tribunal affirms the decision under review.

I certify that the preceding 22 (twenty -two) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member

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Associate

Dated 23 December 2013

Date of hearing	27 November 2013
Date final submissions received	12 December 2013
Applicant	In person
Solicitor for the Respondent	Mr Christopher Bishop, Departmental Advocate