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

Gosse and Secretary, Department of Social Services (Social services second review) [2018] AATA 55 (23 January 2018)
Division:GENERAL DIVISION
File Number:2017/3148
Re:Misha Gosse
APPLICANT

Secretary,And Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member Theodore Tavoularis
Date:23 January 2018
Place:Brisbane

The decision under review is affirmed.
........................[sgd]................................................
Senior Member Theodore Tavoularis
CATCHWORDS
SOCIAL SECURITY – overpayment – NewStart Allowance – where Applicant was in receipt of NewStart Allowance – where ATO receipts indicated there was an overpayment – where matter was remitted for reconsideration of amounts – whether Applicant has a debt to the commonwealth – whether the debt can be written off – whether the debt can be waived – whether garnishee order was legitimately issued – the debt was correctly calculated – the debt cannot be written off or waived – the garnishee order was legitimately issued – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975
(Cth), s 43
Social Security Act 1991 (Cth), ss 1072, 1223, 1230C, 1233, 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999
(Cth), s 182
SECONDARY MATERIALS
Guide to Social Security Law
REASONS FOR DECISION
Senior Member Theodore Tavoularis
23 January 2018
INTRODUCTION

Mr Misha Gosse (“the Applicant”) was, between July 2012 and February 2013, in receipt of NewStart Allowance. In 2016, the Department of Social Services (“the Respondent”) via its derivative entity, Centrelink, determined that the Applicant had been overpaid during this time and so raised a debt against him in the amount of $1,658.93.[1]
[1] Exhibit 4, T Documents, T 7, p 38.
The Applicant unsuccessfully sought review of that decision by an Authorised Review Officer (“ARO”).[2] On 27 April 2017, the Social Services and Child Support Division of this Tribunal (“AAT1”) set aside the ARO’s decision and remitted the matter back to the Chief Executive of Centrelink for recalculation of the quantum of the debt.[3]
[2] Ibid, T 10, pp 45-49.
[3] Ibid, T 2, pp 3-12.
The remission was accompanied by a direction that the Respondent make certain enquiries about payroll and other information about the Applicant’s income directly from his employers. The ultimate purpose of that enquiry, in essence, was to review and recalculate the amount of NewStart payment payable to the Applicant.
If, following review and recalculation of the amount of NewStart Allowance payable to the Applicant,[4] there was found to be an overpayment, then such overpayment would constitute a debt to the Commonwealth and the Applicant would be compelled to repay that debt.
[4] For the specific period 28 July 2012 to 22 February 2013.
The Respondent could then cause repayment of the debt to be effected via application of the provisions of s 1233 of the Social Security Act 1991 (Cth) (“the Act”) and to thus recover any re-calculated debt from the Applicant’s tax refund.
On reconsideration, the Respondent (via its derivative entity, Centrelink) amended the amount of the debt to $929.63.[5] This reassessment was issued on 19 September 2017 and, pursuant to s 182 of the Social Security (Administration) Act 1999 (Cth) (“the Administration Act”), is deemed to constitute a substituted decision for the original sum ($1,658.93) set aside by AAT1 on 27 April 2017.
[5] Exhibit 3, Supplementary T Documents, S 1, p 1.
THE ISSUES FOR THE TRIBUNAL
In light of the above, there are 4 issues for consideration. Stated sequentially, they are:
a)was the Applicant paid the NewStart Allowance for an amount in excess of his correct entitlement for the period 28 July 2012 to 22 February 2013 (“the debt period”)?;
b)if an overpayment can be demonstrated, whether such overpayment is a debt owing to the Commonwealth?;
c)whether all or part of the debt can be waived or written off?; and
d)whether the debt could be legally recovered from the Applicant by way of garnishee from his tax refund?
THE SEQUENCE OF EVENTS
There is no dispute between the parties that the Applicant received NewStart Allowance during the debt period.
In accordance with its usual practice and procedure, the Respondent conducted a data matching exercise between its records (about the Applicant’s income) and those of the Australian Taxation Office (“the ATO”). The Respondent formed the view that the Applicant had under declared his income for the debt period.
On 5 January 2016, the Respondent, by way of written communication, notified the Applicant as follows:
05 January 2016
Dear Mr Gosse
You need to confirm your employment income
We are writing to you about your employment income. We have received information from the Australian Taxation Office (ATO) that shows your employment income recorded with the ATO is not the same as the amount of employment income declared for Centrelink purposes.
What you need to do
You need to:
·review the income information we have received from the ATO. This has been provided on the second page of this letter.
·call us on 1800 086 400 before 26 January 2016 to confirm your income details. When you call us we will check your details are correct and update them if necessary.
If you do not call
If you do not call us by 26 January 2016 we will update your details based on the information we have received from the ATO. This may result in a debt that you will need to repay. If this occurs, we will send you a letter to let you know.[6]
[6] Exhibit 4, T 16, pp 150 – 152.
The Applicant did not respond to this communication. Consequently, the Respondent notified the Applicant as follows:
Date of issue 22/02/16
…
Amount payable $1,658.93
DUE DATE: 22 MAR 2016
…
Why this amount is payable
The correct amount of your earnings from Labourpower Recruitment Services, BDS People Pty Ltd, Chandler Macleod Group, Logistics Recruitment Support and Workcover Queensland were not taken into account in the payments made to you from 28/07/12 to 22/02/13. This means you have been overpaid $1658.93. We are, therefore, required to recover this amount.
Details of amount payable
for Newstart Allowance
Period Received Entitled Amount
28 Jul 2012 to 22 Feb 2013 $1,658.93 $0.00 $1,658.93[7]
[7] Ibid, T 7, pp 38 – 39.
The Applicant did not pay the sum of $1,658.93 by 22 March 2016. On 24 March 2016, the Respondent wrote to the Applicant noting the non-payment and also noting that no arrangements had been made to extend the time for payment of the debt. This correspondence clearly told the Applicant what would happen if the debt remained unpaid:
What you need to know
If the amount remains outstanding and no arrangements have been made to repay your debt, we will consider further action. This action may include:
·reducing your payments from us to help repay the amount owing
·referring your account to an external debt collection agency
·issuing a garnishee on your wages, your tax refund, other assets and income (including money you may hold in a bank account), and/or
·referring your case to our solicitors for legal action.[8]
[My underlining]
[8] Ibid, T 8, pp 40 – 42.
The Respondent made good on its threat to recover the $1,658.93 by way of garnishee over the Applicant’s tax refund. This decision by the Respondent was communicated, again in writing, to the Respondent on 1 September 2016:
After careful consideration, a decision has been made to request the Australian Taxation Office to withhold $1,658.93 or the total of the money due to you, whichever is the smaller, from your tax refund...
…
This is a notice of decision made under section 1233 of the Social Security Act 1991. Information about what to do if you disagree with the decision is on the back of this letter.[9]
[9] Ibid, T 9, pp 43 – 44.
The actual withholding of the $1,658.93 from the Applicant’s tax refund stirred him into action. The Applicant sought review of the Respondent’s actions in (1) calculating the debt in the sum of $1,658.93 and (2) securing payment of that debt by way of garnishee over his tax refund. An Authorized Review Officer reviewed both of these actions and in a letter dated 18 November 2016 notified the Respondent as follows:
As we discussed during our conversation on 17 November 2016, I would investigate the debt and the garnishee of an amount of your tax refund, and advise you of the outcome in writing. After further investigation, I have found that the decisions were correct. This means your appeal was unsuccessful.[10]
[10] Ibid, T 10, p 45.
The Applicant sought further review. This resulted in the abovementioned hearing at AAT1 level on 27 April 2017 and the matter’s subsequent remission for further investigation and re-calculation in accordance with certain directions which have been summarized above in these Reasons.
On 19 September 2017, the Respondent, in writing, notified the Applicant as follows:
19 September 2017
Dear Mr Gosse
I am writing to you about your debt… The total amount payable has been amended to $929.63. The debt relates to the period 28 JUL 2012 to 22 FEB 2013.[11]
RELEVANT FINDINGS
[11] Exhibit 3, S 1, p 1.
The Recalculation
In recalculating the quantum of the Applicant’s debt, the Respondent wrote to each of the Applicant’s employers to ascertain their records of their payments to him. I am satisfied that each of the Applicant’s employers correctly reported to the Respondent the gross income of the Applicant.[12]
[12] Exhibit 3, S 2, pp 3-5.
Taking into account those payments, the Respondent determined the Applicant’s income for the purposes of calculating his NewStart Allowance, an amount which includes gross payments to him. With that information, the Respondent found that the Applicant had been paid by his employers amounts exceeding the relevant income cutoff threshold on 15 of the 18 fortnights in the relevant period.[13] I am satisfied that the Respondent followed the correct procedure in calculating the amount of NewStart Allowance to which the Applicant was entitled.[14] I am also satisfied that the final amount owing it came to – $929.63 – is correct.
[13] I note that the size of this cutoff changed depending on whether the Applicant was qualified for Rental Assistance, and also as the cutoff amount changed from one year to the next.
[14] See Exhibit 3, S 4, pp 8-18.
A key reason why the Applicant agitates that his debt was incorrectly calculated is that he contends that he has not received any overpayments. I make particular reference to the Applicant’s “Application for Second Review of Decision” and, specifically, the Applicant’s short comment in Section 3 of that document: Reasons for the Application: “My bank details show no overpayments!!”.[15]
[15] Exhibit 4, T 1, p 2.
It occurred to me – and I suggested as much to the Applicant – that perhaps he may have been operating under a misapprehension with regard to how the Respondent treats income figures in a data matching exercise. It transpired that the Applicant – in forming a view that there had been no overpayment – was having regard only to the net figures paid by his employers. That is, the money that was paid by his employers and received by the Applicant “in the hand” or, put another way, directly into his bank account.
As the representative of the Respondent helpfully explained during the hearing, the income figure that is taken into account by the Respondent is the gross figure for a person’s given income, not the net figure received “in the hand” or directly into a bank account. Another way to conceptualise this is that the income figure is not a person’s take-home pay, but rather their pay before tax This position is made clear by s 1072 of the Act, which states:
A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division
I further note that the Applicant’s statement that his bank account shows no overpayments presupposes that his income had been correctly reported to the Respondent and thus that the payments were correctly calculated. As he had not properly reported his income from his four employers while he was being paid NewStart Allowance, this is clearly not the case.
Consequently, while the Applicant’s bank accounts may show that he received certain amounts from Centrelink and from his employers, those numbers do not show the full picture. One must have regard to both the statutory cutoffs for receipt of payments, and the gross payments the Applicant received before one can even begin to see the full picture.
On the basis of the above, I am satisfied that in its recalculation, the Respondent did properly take into account the right amounts of income for the Applicant and has come to the correct conclusion as to the amount of NewStart Allowance the Applicant was entitled to receive. I am therefore satisfied that the Respondent correctly calculated the Applicant’s debt when it found the Applicant have been overpaid in the amount of $929.63.
It follows that the provisions of s 1223(1) of the Act relating to payment of excessive benefits to this Applicant, do apply to the present facts and, as a consequence, the overpaid reassessed amount ($929.63) is a debt due to the Commonwealth;
Can the Debt be Written Off?
In many circumstances, even if a debt has been raised against a person, that is not the end of the road for them – they can still apply for the debt to be written off. Under s 1236(1A) of the Act, a debt can only be written off if one of four circumstances has been met:
(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.
As the debt has already been “repaid” by virtue of the garnishee exercise conducted by the Applicant over his tax refund, it is clear to me that none of these provisions apply.
I note for completeness that the only relevant circumstances where a debt may be considered irrecoverable at law are where “there is no proof of the debt capable of sustaining legal proceedings for its recovery”.[16] That is not the case here as the same evidence which has satisfied me that the debt was correctly calculated could be used to sustain legal proceedings for its recovery.
[16] The Act, s 1236(1B)(b).
Waiver of the Debt
Relevant here are two alternate routes that allow the Respondent to waive debts due to it. First, s 1237A allows for a debt to be waived if the debt is solely attributable to an administrative error. Secondly, s 1237AAD allows for the debt to be waived if there are special circumstances that make it desirable to waive the debt.
With respect to s 1237A, I find that the debt cannot be solely attributable to an administrative error of the Respondent. I am satisfied that at least one cause of the debt is the fact the Applicant did not accurately report his gross income to the Respondent. Thus, the, admittedly very high, hurdle of the debt being solely attributable to the Respondent cannot be overcome.
With respect to s 1237AAD, the provisions of that section have not been, and cannot be, activated because the Applicant has provided no details or evidence of special circumstances attracting waiver of recovery of the debt.
I therefore find that the Applicant cannot rely on either of these provisions for his debt to be waived.
The Garnishee Order
Under s 1230C(1)(e) of the Act, a debt due to the Commonwealth can be recovered by way of garnishee notice. As the recalculated amount has the status of a debt due to the Commonwealth, the provisions of s 1230C of the Act have been activated such that recovery can occur by way of garnishee notice.
Further, I consider the Respondent has acted appropriately and responsibly in exercising its garnishee power by following the provisions of its “Guide to Social Security Law”.[17] That guide relevantly provides, inter alia, as follows:
[17] Exhibit 4, T3, pp 28 – 30.
6.7.2.50 Debt Recovery by Garnishee Notice
Summary
A debt may be recovered by means of a garnishee notice. A garnishee notice may be issued to any person, third party or organization[18] … that:
·has money that is due, or will become due[19], to the debtor[20];
…
Types of payments that can be garnisheed include:
…
·tax refunds/credits…
[18] For present purposes, the ATO.
[19] For present purposes, the Applicant’s tax refund.
[20] For present purposes, the Applicant.
It was therefore appropriate for the Respondent to garnishee the debt owing to it from the Applicant’s tax refund.
Additionally, I note that the entirety of the requirements of ss 1230C(2)(a) and 1230C(2)(b) of the Act were met prior to the Respondent’s garnishee action on 2 September 2016. Section 1230C(2)(a) requires that before issuing a garnishee notice, the Respondent must first seek to recover the payments by reductions from a person’s social security payments or for payment by instalments. The Applicant was not at that time in receipt of social security payments, so that was not possible. He further failed to respond to either of two notices sent by the Respondent – on 22 February 2016,[21] and on 24 March 2016,[22] – regarding his debt. The Applicant further failed to contact the Respondent (or, more correctly, its derivative entity, Centrelink) to discuss payment options or enter into repayment arrangements.
[21] Discussed at para [11] of these Reasons.
[22] Discussed at para [12] of these Reasons.
Any contention by the Applicant to the effect that he did make contact with the Respondent goes nowhere because, in the final analysis, no arrangement to repay the debt was made at any time – despite his telephone communications with the Department on 25 May 2016 and 27 June 2016.[23]
[23] See Attachment A to Exhibit 1, Respondent’s Statement of Issues, Facts and Contentions.
Consequently, I am satisfied that the garnishee order was properly made.
A FINAL MATTER
The Applicant was not interested in giving consideration to the possibility he may be acting under a misapprehension with regard to how the Department treats income figures in data matching exercises. Instead, the Applicant, during the hearing, made certain incoherent and incomprehensible demands and threats on the Respondent about commencing proceedings in another venue for a figure in the order of 150 times the amount of the recalculated debt recovered by the Applicant. Any such order is patently outside the Tribunal’s jurisdiction and so need not be considered any further here.
CONCLUSION
Pursuant to s 43 of the Administrative Appeals Tribunal Act 1975 (Cth), I affirm the decision under review.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for the decision herein of Senior Member Theodore Tavoularis

.....................[sgd]...................................................
Associate
Dated: 23 January 2018

Dates of hearing: 16 January 2018

Applicant: By telephone

Advocate for the Respondent: Mr Rick McQuinlan

[2018] AATA 55

23 January 2018

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Jurisdiction

Procedural Fairness

Remedies

Statutory Construction

Dates of hearing:	16 January 2018
Applicant:	By telephone
Advocate for the Respondent:	Mr Rick McQuinlan