Geddes and Secretary, Department of Employment and Workplace Relations

[2006] AATA 126

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 126

ADMINISTRATIVE APPEALS TRIBUNAL          № V2005/651

GENERAL  ADMINISTRATIVE  DIVISION

Re:            Jason scott geddes

Applicant

And: SECRETARY,

DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal:       Mr E. Fice, Member

Date:16 February 2006

Place:Melbourne

Decision:The decision under review is affirmed.

(sgd) Egon Fice

Member

CATCHWORDS  Disability Support Pension – overpayment – recovery of debt – failure to comply with recipient obligation notice – receipt not in good faith – false statements – fraud – effect of bankruptcy on debt recovery – hardship and waiver

Social Security Act 1991

Bankruptcy Act 1966

Civitareale and Secretary, Department of Family and Community Services (1999) 57 ALD 451

Ex parte Hemming; re Chatterton (1879) 13 Ch D 163

REASONS FOR DECISION

15 February 2006  Mr E. Fice, Member

1.      Mr Geddes injured his spine on 21 March 1989.  He was granted a Disability Support Pension (DSP) commencing 14 December 1995.  On 10 January 2003, Mr Geddes received a notice from Centrelink stating that he had been overpaid $8,477.39 in DSP between 29 September 1999 and 19 December 2000.  The decision was reviewed by an Authorised Review Officer (ARO) on 24 February 2003, and the debt was reduced to $6,499.75.  Centrelink also raised a debt of $2,588.75 for DSP received by Mr Geddes between 20 June 2001 and 6 November 2001.  Upon review by an ARO, this debt was reduced to $1,577.47.  On 23 June 2005 the Social Security Appeals Tribunal (SSAT) affirmed both decisions.  Mr Geddes seeks a review of those decisions.

BACKGROUND

2.      Mr Geddes recommenced employment when he joined Catalyst Recruitment Systems Limited (Catalyst) on 28 September 1999.  Catalyst Recruitment Systems is a temporary staffing agency, and Mr Geddes, who was a fork-lift driver, was placed with various clients of Catalyst until 19 December 2000.  Mr Geddes was paid by Catalyst and his payroll report was in evidence.

3.      Mr Geddes was first paid by Catalyst on 3 October 1999 and he informed a Centrelink officer on 11 October 1999 that he had commenced work with Catalyst on 2 October 1999.  He also informed Centrelink that he was to receive $299.26 per fortnight as that was the amount of the first pay received by Mr Geddes on 3 October 1999.  Mr Geddes was sent a letter on the same date reminding him of his obligations under the Social Security Act 1991 (the SS Act) to inform Centrelink within fourteen days if his income shown on the statement was incorrect or increased.

4.      On 3 November 1999, Mr Geddes telephoned Centrelink to advise that, for the fortnight ending 17 October 1999, he had received $617.56; and for the fortnight ending 24 October 1999, he had been paid $646.39.  Centrelink recalculated Mr Geddes notional annual income to be $16,806.14 and sent him the usual obligation notice on that date. 

5.      On 6 January 2000, Mr Geddes telephoned Centrelink to say that he had ceased working with Catalyst due to ill‑health.  He said that he would advise Centrelink if he again started working.  However, the payroll report from Catalyst shows that Mr Geddes continued to work for Catalyst, receiving a salary on 16 January 2000, 23 January 2000, 7 May 2000, 14 May 2000 and 21 May 2000. 

6.      Mr Geddes advised Centrelink by telephone on 23 May 2000 that he had recommenced employment with Catalyst on 8 May 2000 earning $834.78 for one week.  He omitted to tell Centrelink that he had received the sum of $434.40 on 7 May 2000.  As a consequence of making that disclosure, Mr Geddes’ DSP was suspended because his earnings were above the allowable limit.  He was sent a letter on that day explaining the situation. 

7.      On 29 May 2000 Mr Geddes telephoned Centrelink to advise that he had ceased working for Catalyst on 21 May 2000 and his DSP payments were restored from that date.  He was again sent the usual obligation notice by Centrelink.  In fact, Mr Geddes did not cease employment with Catalyst on 21 May 2000, but continued to be employed on a regular basis between that date and 18 December 2000.  Centrelink has no records of Mr Geddes having notified any person at Centrelink of his continued employment with Catalyst up to December 2000.

8.      Mr Geddes then obtained employment with Coles Supermarket (Coles), where he worked between 1 July 2001 and 7 November 2001.  On 12 July 2001, Centrelink obtained information from the Australian Taxation Office (ATO) which revealed that Mr Geddes had recently signed an employment declaration form.  Centrelink sent Mr Geddes a letter on that date asking that he contact a Centrelink officer to discuss the matter.  Mr Geddes did so on 20 July 2001, no doubt in response to Centrelink’s letter of 12 July 2001.  He told Centrelink that he had commenced work with Coles on 4 July 2001 and that his earnings for a two week period ending 18 July 2001 were $404.67.  He also requested that he not be required to provide his employer details to the Centrelink officer for fear that he would loose his job.  The Centrelink officer noted that Mr Geddes was advised of the need to provide verification of his income by sending payslips to Centrelink. 

9.      On 27 July 2001 Mr Geddes telephoned Centrelink stating that his earnings for the two‑week period ending 18 July 2001 were nil.  Coles’ payroll records, with respect to Mr Geddes, indicate that he in fact received a payment of $77.35 on 18 July 2001.  After notifying Centrelink that he was no longer receiving an income from Coles, he was again sent an obligation notice on 27 July 2001.

10.     On 3 September 2001 Mr Geddes started working for Purity Supermarkets, receiving payments between 12 September 2001 and 24 October 2001.  From 1 July 2001 to 7 November 2001 Mr Geddes earned $4,205.15 from Coles and $1,041.53 from Purity Supermarkets.

11.     According to Mr Geddes, after he had been informed that he would have to repay a debt to the Commonwealth for overpayment of DSP, he was advised by a Centrelink officer that he could avoid repaying that debt by filing a debtor’s petition, thereby becoming a bankrupt.  It appears that Mr Geddes became a bankrupt on 10 February 2003.  Centrelink had recovered the sum of $591.40 from Mr Geddes prior to his bankruptcy. 

CONSIDERATIONS

12. Mr Geddes, who appeared in person, was very angry with Centrelink and he maintained throughout the hearing that he had always kept Centrelink informed of when he was working and of the amounts which he earned. He believed that he was being harassed by Centrelink staff and he was most annoyed that he had been given information by a Centrelink officer to the effect that if he became a bankrupt, any debt raised by Centrelink could not be recovered from him. However, it seems that it was not pointed out to Mr Geddes that s 153(2)(b) of the Bankruptcy Act 1966 provides that discharge from bankruptcy does not “release the bankrupt from a debt incurred by means of fraud...”. The effect of this section of the Bankruptcy Act was fully explored by Deputy President S.A. Forgie in Civitareale and Secretary, Department of Family and Community Services (1999) 57 ALD 451. Deputy President Forgie concluded that if a debt was incurred by means of fraud, discharge from bankruptcy would not release the debtor from that debt.  She also noted that the relevant case law held that the right of a creditor to take proceedings in respect of a debt incurred by a fraud accrues from the date of discharge (see Ex parte Hemming; re Chatterton (1879) 13 Ch D 163 at page 166). Accordingly, if the debts were incurred as a result of fraud, the Secretary of the Department of Family and Community Services (the Secretary) may recover such debt pursuant to Part 5.2 of the SS Act but only after the bankrupt has been discharged.

13.     Mr Geddes’ evidence was that he had notified Centrelink when he was about to re‑enter the workforce and when he ceased working.  He also notified Centrelink of payments made to him in the course of his employment, by telephone and then, at Centrelink’s request, by mailing of payslips to the post office box number which was given to him.  However, the documentary evidence is against Mr Geddes.  When he contacted Centrelink on 6 January 2000 to advise that he had ceased working due to ill‑health, he in fact continued to work for Catalyst.  When he telephoned Centrelink on 23 May 2000 stating that he had recommenced working with Catalyst, he omitted to state that he was paid the sum of $434.40 on 7 May 2000.  When he notified Centrelink on 29 May 2000 that he had not been working from 21 May 2000, that statement was also false, as the payroll report indicates that he worked on a reasonably regular basis from that date until 17 December 2000 with Catalyst.  Mr Geddes failed to contact Centrelink when he started working at Coles; and he only did so after he received a letter from Centrelink stating that it had information from the ATO that he had signed an employment declaration form.  On 27 July 2001, Mr Geddes told Centrelink that his earnings for a two week period ending 18 July 2001 were nil.  That statement was also false given that he received a further $77.35 on 18 July 2001.

14.     Mr Geddes also said that, in a statutory declaration made on 17 June 2005, he had notified Centrelink of his earnings by mailing the payslips that he had received to Centrelink.  Centrelink has no record of receiving any payslips from Mr Geddes.  In his statutory declaration, Mr Geddes said that after an initial period of what he believed was three weeks, he regularly posted payslips to Centrelink.  Ms L.C. Clinton, a friend of Mr Geddes, who also provides accommodation for Mr Geddes in a unit at the rear of her property, made a statutory declaration on 19 January 2006 in which she said that she knew that Mr Geddes had sent payslips to Centrelink because frequently he would borrow envelopes and stamps from her and he would use her photocopier.  No photocopied payslips were produced at the hearing.  Ms Clinton also said that, on at least three occasions, she personally posted envelopes to Centrelink on Mr Geddes’ behalf.  However, in a telephone conversation with a Centrelink officer on 27 September 2001, the following file note was made by the Centrelink officer:

Cust rang re q135.  Became very upset with assessor who answered the phone and demanded to speak to a manager.  I spoke to customer, who was angry about being asked for payslips.  He said he “had never been asked for payslips before so why are you asking for them now”.  I told cust that the fact he wasn’t asked for verification in the past does not mean he will never have to provide verification of earnings.  I advised cust that we have a TDF match with the tax office and we are required to complete the review.  I advised cust that he must provide payslips for the period he worked or alternately we could write to the employer  Cust became very angry and said “I already told you I’ll give you payslips but I want to know why you are asking for them”  I again explained that we are required to complete this review following the proper processes one of which is verifying earnings.  Cust started to make accusations about Centrelink harassing him.  I advised cust that this is a common review-cust broke in and said”that’s bull----.  I know you don’t review everyone who has signed a tax declaration form”.  I tried to calm cust down however he continued to say “why why why why”  Cust refused to listen to my explanation about the review and after yelling at me hung up. (sic)

15.     I have no reason to doubt that the file note of 27 September 2001 is genuine and was made contemporaneously.  That being the case, I am unable to accept the evidence made by way of statutory declaration from either Ms Clinton or Mr Geddes regarding the provision of payslips.  It is clear from the text of that conversation with Centrelink that Mr Geddes had not, as at the date of that conversation, sent any payslips to Centrelink.  Had he in fact sent in payslips, as he has said on oath, I have no doubt that would have been recorded as part of the conversation. 

16.     Given the facts recorded in documentary evidence, I am also satisfied that Mr Geddes failed to comply with a number of recipient obligation notices in relation to advising of changes to his employment.  It cannot be said that the DSP payments received while he was in receipt of other income were payments made in good faith. 

17. Mr Geddes also submitted that any attempts to recover monies from him will provide long‑term hardship and that the debt ought to be waived. Section 1237AAD of the SS Act provides:

s 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 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.

. . .

18. Having found that Mr Geddes made false statements which gave rise to the debt, s 1237AAD of the SS Act would preclude a waiver in his circumstances.

CONCLUSION

19.     On the evidence that was before me, it is clear that Mr Geddes incurred debts to the Commonwealth as a consequence of false statements he made and his failure to comply with recipient notification obligations.  Necessarily, I do not accept his evidence, or the evidence of Ms Clinton, that he sent Centrelink photocopies of his payslips.  Although Centrelink may not have retained such documents after the lapse of two years, if it had received them, Mr Geddes’ Centrelink records would record the receipt of any such salary advices as they were required in order to calculate the amount to be paid to Mr Geddes as DSP.  No such records exist. 

20.     Although pursuit of the debts owed by Mr Geddes to the Commonwealth may be delayed until he is discharged from bankruptcy, in my view, that is an appropriate course of action to take.  Therefore, the decisions made by the ARO on 10 January 2003 should be affirmed.

I certify that the twenty [20] preceding paragraphs are a true copy of the reasons for the decision herein of

Mr E. Fice, Member

(sgd)     Catherine Lake

Clerk

Date of Hearing:  20 January 2006

Date of Decision:  16 February 2006
Advocate for the applicants:      Self‑represented

Advocate for the respondent:     Mr M. Todd, Legal Services Branch, Centrelink