Ielati and Secretary, Department of Social Services (Social services second review) - [2018] AATA 4276

Ielati and Secretary, Department of Social Services (Social services second review) [2018] AATA 4276 (19 November 2018)
Division:GENERAL DIVISION
File Number: 2018/0181
Re:John Ielati
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member Dr M Evans
Date:19 November 2018
Place:Perth

The Tribunal affirms the AAT Tier 1 Decision.
............................[sgd]............................................
Senior Member Dr M Evans
CATCHWORDS
SOCIAL SECURITY – overpayment of Newstart allowance – Applicant not eligible because exceeded the asset limit – Applicant made attempts to correct record of his asset before grant of Newstart allowance – whether debt should be waived or written off – whether debt attributable solely to administrative error by the Commonwealth –whether debtor received payments in good faith – whether special circumstances – whether there should be write off of debt – role of AAT in good government – AAT Tier 1 Decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) – s 25(1)
Social Security Act 1991 (Cth) – s 11(1), s 11A, s 23(1), s 593, s 608, s 611(1), s 612,
s 1068, s 1223, s 1223(1), s 1235(1A), s 1235(1C), s 1236, s 1237, s 1237A, s 1237A(1), s 1237A(1A), s 1237AAD, Part 2.12
Social Security (Administration) Act 1999 (Cth) – s 3(2), s 66A, s 68, s 80, s 142(1),
s 179(1)
CASES
Andrew and Secretary, Department of Family and Community Services [2004] AATA 168
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Beadle v Director-General of Social Security (1984) 6 ALD 1
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1978) 41 FLR 338
Davy v Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60; 46 FLR 409
Faulkner and Comcare [2007] AATA 1541
Gerhardt and Secretary, Department of Employment, Education and Training, Re [1996] AATA 173
Groth v Secretary, Department of Social Security [1995] FCA 1708
Secretary, Department of Social Security and Hales (1998) 82 FCR 154
Sullivan v Department of Transport (1978) 20 ALR 323
Williams and Secretary, Department of Employment and Workplace Relations [2005] AATA 1133
SECONDARY MATERIALS
Department of Human Services, A Guide to Australian Government Payments (Department of Human Services, 20 March 2013 – 20 June 2013)
Department of Human Services, A Guide to Australian Government Payments (Department of Human Services, 20 September 2017 – 31 December 2013)
Department of Human Services, Newstart Allowance (Department of Human Services,
21 September 2018), FOR DECISION
Senior Member Dr M Evans
19 November 2018
OVERVIEW

The Applicant was receiving the Newstart Allowance (NSA) from 17 May 2013 until 26 September 2017 (the Relevant Period), when it was cancelled by the Department of Human Services (the Department). The Department (also known as Centrelink) overlooked the Applicant’s disclosure, made prior to the grant of his NSA, that he owned a factory unit rental property (factory unit) with an estimated market value of approximately $400,000.
After the Department realised that the Applicant owned the factory unit, some four years later, on 25 October 2017, it invoiced him to repay the amount of the NSA he had received during the Relevant Period, which was a total sum of $54,824.68.
The Applicant argues that he should not have to repay this amount primarily because the NSA payments were approved and made due to errors on the part of the Department.
The Applicant is now in receipt of the aged pension, and is currently repaying the debt to the Department by fortnightly withholdings from his aged pension of $15 per fortnight (transcript, page 30).
BACKGROUND FACTS
The Applicant first disclosed to Centrelink that he owned the factory unit with an estimated value of $400,000 in a real estate details form (T5, page 50-54), which was signed and dated 8 April 2013. In this form, he also disclosed that he received a gross amount of rental income of $511.75 per week.
The Applicant also submitted supporting documentation to the Department, including a council rates notice for the 2012/2013 financial year for the factory unit (T74, page 449; Exhibit A4, Appendix E).
At the Tribunal hearing, the Applicant gave evidence that since 2013, with the exception of a two month period, the factory unit had been consistently let to tenants (transcript, page 30 – 31), and that he was receiving rental income from the factory unit during the Relevant Period. However, the Applicant stated that the rental income received was not always the exact amount of $511.75 per week (transcript, page 22).
Centrelink electronic records with an “event date” of 17 April 2013 indicate that, as early as that time, Centrelink had a record of the factory unit with a “current market value” of $400,000, being owned by the Applicant (T80, page 774).
On 26 April 2013, the Department issued a Customer Declaration Form to the Applicant (T13, page 92). At the top of the fifth page of this form, under the heading “Real estate details”, the form stated “I have no real estate interests other than the home in which I live“. On the same page, under the heading “Other income details”, the form stated “I have no other income”. The same declarations were made for the Applicant’s wife in the corresponding “Partner” sections of the form. This form was signed, and each page initialled by the Applicant and his wife, on 7 May 2013.
This form contains three date stamps, two of which have been crossed through (T13, page 92). The two date stamps that have been crossed through are 7 May 2013 and 14 May 2013. The third, and final, date stamp of 16 May 2013 is initialled, but not crossed through.
On the date of the first stamp that has been crossed through, 7 May 2013, the Applicant attended the Centrelink office in Mirrabooka. The Applicant stated that he did not submit the form because it was incorrect in that it did not disclose the factory unit, as evidence by the date stamp being crossed through and the subsequent date stamp of 16 May 2013. A Centrelink file note was made of this attendance (T81, page 909), which stated, in part:
Cus [customer] also advised that he owns the factory unit in his and his wife’s name and the loan was taken against their principal home. Being that the property is owned and in their personal names, that is a personal asset. This asset may put cus over the Asset threshold for NSA. It is yet to be determined.
When we get back assessment from CAO, NSA can then be assessed.
Information obtained by the Applicant pursuant to a freedom of information request, namely an electronic customer service officer record annotated on 3 May 2013, contains a reference to the factory unit as follows: “Cus says loan for factory is against principal home. Please process” (Exhibit A4, Appendix B). These records also show an electronic customer service officer record annotated on 7 May 2013 which states “f/u rental property now rented out to a third party”, and a further electronic customer service officer record annotated on 7 May 2013 which states, “customer doesnt (sic) receive any directors (sic) fees from the company [name omitted], as acctnt (sic) advised 7/5 that company ceased trading in feb (sic) 2013, and they have re-rented out the premise to a third party” (Exhibit A4, Appendix C).
The Applicant also submitted (through submissions made on his behalf by his brother) that he again attended the Centrelink Office in Mirrabooka on 14 May 2013 to connect his ownership of the factory unit, but did not submit the form (found at T13, page 92), on this occasion either because it was incorrect. There are no other records of this visit in the material before the Tribunal, however the Tribunal accepts that the Applicant did attend and attempted to correct the record on this occasion, as evidenced by the Department’s date stamp of 14 May 2013, which was again crossed through. As noted above, the subsequent date stamp of 16 May 2013 indicates submission of the form on this later date.
In a letter dated 16 May 2013, the Applicant was advised by the Department that his NSA, had been approved and would commence on 17 May 2013 (T67, page 315). There is a bold heading on the first page of this letter which states in capital letters “information used for calculating your regular payment”. Stated immediately under this heading was a “Total Fortnightly Income” of $22.32.
This letter enclosed a document called “Your Reporting Statement” (T68, page 349). On page 4 of the Reporting Statement, halfway down the page, there is a heading which states “You must tell us if any of these things below have happened in the period Wednesday 15 May 2013 to Tuesday 28 May 2013”. Under the subheading “Income”, there are six dot points, including, “you/your partner got any money from or changed your investments”, and “you/your partner’s assets changed”, and “you/your partner got any money from any other source.”
After he was advised of the approval of his NSA, the Applicant lodged the Customer Declaration Form (which he had signed and dated on 7 May 2013) with the Department on 16 May 2013, as indicated by the initialled date stamp (T13, page 92). Under cross-examination, the Applicant admitted that he submitted this form knowing it to be incorrect (transcript, page 24), but he did not think it was being relied upon by the Department because his NSA had been approved.
On 17 May 2013, the Applicant and his wife signed an “Income and Assets” form, which was stamped as being received by the Department on 20 May 2013 (T14, page 99). Question 31 of this form was “do you (and/or your partner) receive any payments from other sources that you have not already advised us about on this form?” The Applicant ticked the box marked “No” in answer to this question. Question 45 (T14, page 113) was “Do you (and/or your partner) have an interest in any other real estate in and/or outside Australia?” The Applicant also ticked the box marked “No” in answer to this question.
After the Applicant was granted the NSA, he received letters from the Department which were substantially similar to the letter dated 16 May 2013 (T67, page 315), referred to in paragraph [14] above. These letters, under the bold heading on the first page in capital letters of “Information used for calculating your regular payment” stated a “Total Fortnightly Income” of $22.32. The dates of these letters were:
(a)28 May 2013 (T67, page 317). This letter enclosed a Reporting Statement and stated that “You must report your earnings and other information on the Due Date”. It also included a statement that “If there is a change in your circumstances or you earn income during the period stated on the statement, you will need to contact us or lodge it early”. The second page of this letter contained information about “What is Income?”, which referred to “income from rental properties” and “What are Assets?”, which included “real estate,…any interest in any property”;
(b)31 May 2013 (T67, page 320). This letter also required the Applicant to disclose any events or changes in circumstances which may affect his payments, including if “the value of you or your partner’s combined assets goes over $273,000”;
(c)16 July 2013 (T67, page 322); 23 July 2013 (T67, page 324); 6 August 2013 (T67, page 326); 20 August 2013 (T67, page 328); 3 September 2013 (T67, page 330); 17 September 2013 (T67, page 332); 1 October 2013 (T67, page 334); 15 October 2013 (T67, page 336); and 29 October 2013 (T67, page 338). The second page of these letters also contained information about “What is Income?”, which referred to “income from rental properties” and “What are Assets?”, which included “real estate,…any interest in any property”.
Subsequently, further letters of a similar format were sent to the Applicant from the Department on 12 November 2013 (T67, page 340); 26 November 2013 (T67, page 342); and 10 December 2013 (T67, page 344); which all stated a “Total Fortnightly Income” of $17.86. These letters also enclosed Reporting Statements requiring the Applicant to report his earnings and other information on specified due dates. The second page of these letters contained information about “What is Income?” which referred to “income from rental properties” and “What are Assets?”, which included “real estate,…any interest in any property”.
On 23 December 2013, the Department sent the Applicant a further Reporting Statement. The covering letter explained that the Applicant needed to advise of any events or changes in circumstances which may affect his payments, which included “income you receive from an investment property” (T20, page 131). Similar letters were sent by the Department to the Applicant on 18 March 2014 (T23, page 137), 10 June 2014 (T26, page 152), and 21 July 2016 (T46, page 202).
Further, Income Statements showing details held by the Department of the Applicant’s income and assets were sent to the Applicant on 26 August 2015 (T36, page 176); 23 December 2015 (T37, page 178); 16 September 2016 (T48, page 206); 27 September 2016 (T49, page 208); and 25 July 2017 (T54, page 218). The first sentence of these letters states “This Income Statement shows information we hold about you on your Centrelink record.” The final sentence states, in bold, “If any of the above details are incorrect, please contact us as soon as possible.” None of these statements listed the factory unit as an asset.
On 11 January 2017, the Department wrote to the Applicant (T52, page 214), stating that:
Our records show that you have an investment property at [Address omitted] and you may be receiving rental income which is not recorded on your Centrelink record. As discussed during our telephone conversation on 11/01/2017, to ensure that your Centrelink record is correct and up to date, please provide the required documents as listed below.
On 15 February 2017, the Department again wrote to the Applicant (T53, page 216), stating that “We are writing to ask for more information to help us make the right decision about your Newstart Allowance”. The letter requested further information, including the latest statement of the Applicant’s loan account for the factory unit, tax returns for the previous three financial years, rental profit and loss statements and depreciation schedule for the factory unit.
In a letter to the Applicant dated 29 September 2017 (T58, page 227), the Department advised that “Your Newstart Allowance has been cancelled from 17 April 2013 because the value of your and your partner’s assets is above the allowable limit”.
On 25 October 2017, the Department issued an “Account payable” to the Applicant in the sum of $54,824.68 (T59, page 229). Under the heading “Why this amount is payable”, the following explanation was given:
The correct value of your assets were not taken into account from 24/04/2013. This means you have been overpaid from 24/04/2013 to 26/09/2017 the amount of $54824.68. We are, therefore, required to recover this amount.
On 25 October 2017, the Applicant requested a departmental review of the decision to raise and recover the debt (T80, page 898). However, on 9 November 2017, an Authorised Review Officer (ARO) of the Department affirmed the decision (T61, page 232).
On 20 December 2017, the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT Tier 1) (T3) set aside the ARO’s decision of 9 November 2017 (T61). The AAT Tier 1 found that, whilst the Applicant had a NSA debt in the sum of $54,824.68 for the Relevant Period, the decision of the ARO was varied to provide that the recovery of the debt was to be written off for two months from the date of the Tribunal’s decision (AAT Tier 1 Decision).
On 16 January 2018, the Applicant lodged an application to seek review of the AAT Tier 1 Decision in the General Division of the Administrative Appeals Tribunal (the Tribunal).
ISSUES
The issues which require determination by the Tribunal were described by the Respondent in Exhibit R2 as follows:
(a)whether the Applicant was paid in excess of his correct entitlement to NSA during the Relevant Period (Issue 1);
(b)if so, has the Applicant incurred a recoverable debt (Issue 2); and
(c)if so, whether that debt should be waived or written off, in part or in full (Issue 3).
The Tribunal agrees with the Respondent’s description of the issues in this manner.
At the hearing, the Tribunal queried whether Issue 1 and Issue 2 were in dispute because they had been agreed to by the parties. These issues appeared to the Tribunal not to be in contention, given that the submissions of the parties primarily related to Issue 3 above, namely whether the debt should be waived or written off. Additionally, as submitted by counsel for the Respondent at the hearing, no evidence was submitted disputing that there was an overpayment, nor any evidence that the Applicant had not incurred a recoverable debt. At the hearing, the Applicant’s brother, William Ielati, who made submissions on behalf of the Applicant, stated “No, there’s been no agreement that there is an overpayment. The question is whether the debt should be waived under the Administration Act” (transcript, page 3). For the avoidance of any doubt, the Tribunal will consider each issue stated above.
JURISDICTION
The jurisdiction of the Tribunal is established by s 25(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), which states:
An enactment may provide that applications may be made to the Tribunal:
(a)for review of decisions made in the exercise of powers conferred by that enactment; or
(b)for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment.
In summary, s 25(1) of the AAT Act states that the jurisdiction of the Tribunal is given to it by other enactments which grant it jurisdiction to review certain decisions made under those enactments.
Section 142(1) of the Social Security (Administration) Act 1999 (Cth) (Administration Act) gives the Tribunal jurisdiction to conduct a Tier 1 Review. It provides:
(1)Subject to section 144, application may be made to the AAT for review (AAT first review) of:
(a) a decision of the Secretary, the Chief Executive Centrelink or an authorised review officer made under section 126 or 135; or
(b) a decision under this Act made personally by the Secretary or the Chief Executive Centrelink.
Section 179(1) of the Administration Act provides that an application may be made to the Tribunal for a 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.
Accordingly, the Tribunal has jurisdiction under s 179(1) of the AAT Act to review the AAT Tier 1 Decision.
Some submissions made on behalf of the Applicant sought to identify errors in the AAT Tier 1 Decision. For the sake of clarity, the Tribunal will briefly comment on the nature of its review, which was aptly summarised by Senior Member Hunt in Faulkner and Comcare [2007] AATA 1541 at 27. Senior Member Hunt stated:
The Tribunal aims to reach the correct and preferable decision on the basis of the material before it… and often is said to stand in the shoes of the original decision-maker and consider all evidence again and from the beginning.
The Tribunal’s jurisdiction to review decisions was further described in a decision of the Full Court of the Federal Court in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60; 46 FLR 409 at 419. In their joint judgment, Bowen CJ and Deane J explained:
The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal.

It is the Tribunal’s role to hear the matter again from the beginning (often referred to as a hearing “de novo”) and to look at the merits of the individual case before it. It is not the role of the Tribunal to find errors in the original decision, but rather, to make a new decision based on the material before it.
The Tribunal also has an important role in scrutinising government decision-making, administrative procedures and processes. The Tribunal’s decisions can result in improvements in government transparency, accountability, procedures and policies to the benefit of the citizen. The Tribunal’s role in promoting “good government” has been identified in cases including Sullivan v Department of Transport (1978) 20 ALR 323 at 326, where Smithers J stated:
The Tribunal is established to exercise a function in the sphere of government. The objective is the achievement of justice in the relations between the citizen and the State compatible with standards only definable as those of good government.
Further, in Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1978) 41 FLR 338 (Brian Lawlor), Smithers J stated, at 367, that “…in enacting the [Administrative Appeals Tribunal] Act, Parliament had in mind to provide for the review by an independent Tribunal of certain administrative decisions by reference to standards of good government…”
In Brian Lawlor, Smithers J expanded on the concept of good government at 368:
In essence the Tribunal is an instrument of government administration and designed to act where decisions have been made in the course of government administration but which are in the view of the Tribunal not acceptable when tested against the requirements of good government.
MATERIAL BEFORE THE TRIBUNAL
The hearing of this application was on 4 September 2018. The Applicant appeared in person, and was assisted by his brother William Ielati, who made submissions on his behalf. Ms Jones-Bolla from Sparke Helmore appeared as counsel for the Respondent.
The Tribunal admitted the following material into evidence at the hearing:
(a)Statement of Evidence from the Applicant with a timeline of events and Attachments A, B and C, received by the Tribunal on 9 March 2018 (Exhibit A1);
(b)Further Statement of Evidence from the Applicant with a timeline of events and Attachments A, B and C, received by the Tribunal on 25 April 2018 (Exhibit A2);
(c)Supplementary information in response to Centrelink evidence, and background information on the Applicant, received under a cover email dated 11 July 2018 (Exhibit A3);
(d)Closing submissions of the Applicant with Appendix A through to F (Exhibit A4);
(e)Two volumes of Section 37 (T-documents), including T1 to T70 (Volume 1) and T71 to T80 (Volume 2) (Exhibit R1); and
(f)Respondent’s Statement of Facts, Issues and Contentions, dated 1 June 2018 (Exhibit R2).
The Tribunal also gave leave to the Respondent to file further submissions in response to Exhibit A4. This was because it was handed up by the Applicant on the day of the hearing, and contained information obtained by the Applicant through freedom of information which the Respondent had not had the opportunity to review. As a consequence, the Tribunal also had before it:
(a)an email from counsel for the Respondent, dated 12 September 2018; and
(b)a response from the Applicant, attached to an email dated 14 September 2018, containing further submissions.
The Tribunal has considered all of the material before it, as well as the written and oral submissions of the parties, and the evidence of the Applicant. The Tribunal is satisfied that the parties had an adequate opportunity to present their case and to be heard.
RELEVANT LEGISLATION AND PRINCIPLES
Issue 1: Was the Applicant paid in excess of his correct entitlement to the NSA during the Relevant Period?
The NSA is defined on the Department’s web page as “[t]he main income support payment while you’re unemployed and looking for work”. The website further states that a person needs to meet the eligibility requirements and to be actively looking for work: (see Department of Human Services, Newstart Allowance (Department of Human Services, 21 September 2018)). However, sometimes the Department will recommend that a person apply for the NSA to test their eligibility for, or if they do not meet the requirements of, another payment with more extensive criteria, such as a disability support pension (DSP). This was the Applicant’s situation because his claim for a DSP was rejected on 3 June 2013 (T17, page 122).
Part 2.12 of the Social Security Act 1991 (Cth) (the Act) contains provisions relating to the NSA, including s 593 of the Act which sets out when a person will be qualified for the NSA.
Pursuant to s 1068 of the Act, “the rate of newstart allowance…is to be calculated in accordance with the Rate Calculator at the end of this section.” The rate calculator provides that a person’s assets will be taken into account in calculating their rate of NSA.
“Asset” is defined in s 11(1) of the Act to mean “…property or money…” Some assets are not considered to be assessable assets, including a person’s principal home (defined in

s 11A of the Act). If the person is a member of a couple, the assets of the person’s partner will also be taken into account (s 612 of the Act).
Section 608 of the Act provides, in part, that “…a newstart allowance is not payable to a person if the person’s newstart allowance rate would be nil.” Further, s 611(1) of the Act provides that “a newstart allowance is not payable to a person if the value of the person’s assets is more than the person’s assets value limit.”
The applicable asset limit is specified in a policy document of the Department called, “A Guide to Australian Government Payments” (the Guide). The Guide that was applicable from 20 March to 30 June 2013 specified the asset test limit for a member of a couple who was a homeowner as $273,000 (page 31). This limit was increased in the version of the Guide that was applicable from 20 September 2017 to 31 December 2017 to $380,500 for a member of a couple who was a homeowner (page 33).
As noted above, during the Relevant Period, the Applicant owned a factory unit, which he estimated to have a market value of $400,000 (T5, page 51). This meant that the Applicant exceeded the asset value limit, and was overpaid NSA in the sum of $54,824.68, as calculated by the Department in a debt summary, debt explanation and debt calculator during the Relevant Period (T65-T66, page 281 to 294). No contradictory evidence was put forward by the Applicant. Consequently, the Tribunal finds that NSA was not payable to the Applicant during the Relevant Period because he exceeded the assets value limit and that he was incorrectly paid the NSA in the sum of $54,824.68.
Issue 2: Has the Applicant incurred a recoverable debt?
Section 80 of the Administration Act provides:
(1)If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:
(a) who is not, or was not, qualified for the payment; or
(b)to whom the payment is not, or was not, payable (other than because of the operation of Division 3AA);
the Secretary is to determine that the payment is to be cancelled or suspended.
“Social security payment” is defined in s 23(1) of the Act to include a “social security benefit”, which includes a “newstart allowance”.
Section 3(2) of the Administration Act provides that “[u]nless a contrary intention appears, an expression that is used in the 1991 Act has the same meaning, when used in this Act, as in the 1991 Act”.
Section 1223 of the Act provides:
(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.
Further, s 66A of the Administration Act imposes a general requirement for a person who is receiving a social security payment to advise the Department of any change in circumstances which may affect their benefit. The section provides as follows:
(1)If:
(a)a person has made a claim for:
(i)     a social security payment; or
(ii)    a concession card; and
(b)the claim has been granted or has not been determined; and
(c)an event or change of circumstances occurs that might affect the payment of that social security payment or the person’s qualification for the concession card;
the person must, within 14 days after the day on which the event or change occurs, inform the Department of the occurrence of the event or change.
Person receiving a social security payment or holding a concession card
(2)If:
(a)either:
(i)     a social security payment (other than utilities allowance or energy supplement under Part 2.25B of the 1991 Act) is being paid to a person; or
(ii)    a person holds a concession card; and
(b)an event or change of circumstances occurs that might affect the payment of that social security payment or the person’s qualification for the concession card;
the person must, within 14 days after the day on which the event or change occurs, inform the Department of the occurrence of the event or change.
Section 68 of the Administration Act provides that the Department can issue a notice to a person requiring them to notify the Department of any circumstances which may affect the payment of the Social Security benefit. The section states:
(1)Subsection (2) applies to a person to whom a social security payment (other than utilities allowance or energy supplement under Part 2.25B of the 1991 Act) is being paid.
(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;
(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
The combined effect of these sections is that if the Secretary is satisfied that a person was not entitled to a social security payment (for example, NSA), the Secretary can cancel or suspend the payment. If a person has received payments that they are not entitled to, the amount of the payments will become a debt owing to the Commonwealth. Additionally, if a person is aware of any circumstances which may affect their payment, they have a duty to advise the Department of those circumstances. If the Department requests information regarding a change in circumstances which may affect a person’s payment, the person must provide that information.
As discussed above, the Applicant had been receiving NSA payments that he was not entitled to receive because the value of his factory unit exceeded the assets value limit. Consequently, the Secretary correctly determined that the continued payment of NSA to the Applicant should be cancelled. Further, pursuant to s 1223(1) of the Act, the Tribunal finds that the overpayment of NSA to the Applicant in the Relevant Period, in the sum of $54,824.68, was a debt owing to the Commonwealth, or in other words, a recoverable debt.
Issue 3: Should the debt be waived or written off, in part or in full?
In Secretary, Department of Social Security and Hales (1998) 82 FCR 154, at 155, Justice French (as he then was) stated:
From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. 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 identified by French J (as he then was), the starting point is that the taxpayer expect the repayment of monies received by a person if they were not entitled to them. However, to prevent hardship, the Act balances the requirement to repay an overpayment by providing for a social security debt to be waived or written off in certain circumstances.
The Applicant argued, through submissions made by his brother, that the debt should be waived in full. The Respondent argued that it should not be waived because, under the relevant statutory provisions outlined below, the debt was not solely attributable to an administrative error of the Commonwealth; the payments were not received by the Applicant in good faith; and there were no special circumstances.
Section 1237 of the Act gives the Secretary a limited power to waive a debt:
(1)On behalf of the Commonwealth, the Secretary may waive the Commonwealth’s right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD and, if the debt is an assurance of support debt, subject to section 1237AAE.
When waiver takes effect
(2)A waiver takes effect:
(a)on the day specified in the waiver (whether that day is before, after or on the day on which the decision to waive is made); or
(b)if the waiver does not specify when it takes effect – on the day on which the decision to waive is made.
Note: If the Secretary waives the Commonwealth’s right to recover all or part of a debt, this is a permanent bar to recovery of the debt or part of the debt--the debt or part of the debt effectively ceases to exist.
Waiver for sole administrative error
More specifically, s 1237A of the Act provides that the Secretary can waive a debt when there is an administrative error if certain requirements are met:
(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).
(1A) Subsection (1) only applies if:
(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
The Applicant’s brother made submissions (transcript, page 43-44) with respect to the interpretation of s 1237A(1) and (1A) of the Act at the hearing. In summary, the Tribunal understood the cumulative effect of these submissions to be that if the Secretary did not raise the debt within 6 weeks, then the Secretary lost the right to recover the debt. See, for example, the following submissions from the Applicant’s brother (transcript, page 43):
…my understanding of that is that Centrelink had six weeks to identify the debt, and if after six weeks the debt was not recovered, they had no right to recover after that if Centrelink is culpable for the debt.
And further (transcript, page 44):
… subsection (1A) only applies if a debt is not raised in the period of six weeks. So therefore, if it’s – if a debt is not raised within a period of six weeks, section (1A) applies, and therefore, the Secretary has no right to recover after six weeks.
The interpretation of s 1237A of the Act articulated by the Applicant’s brother is incorrect and requires clarification.
When read with subsection 1237A(1) of the Act, subsection 1237A(1A) of the Act provides that if the debt is raised within a period of six weeks from the first payment that caused the debt, it does not matter whether the debt is attributable solely to an administrative error made by the Commonwealth or if the debtor received the payments in good faith – the Secretary can recover the debt in any event, regardless of fault by the Commonwealth or a lack of any fault on the part of the debtor.
If the debt is raised after this six week period, the Act provides that the debt must be waived if it is attributable solely to an administrative error made by the Commonwealth, and if the debtor received the payments in good faith. The effect is that if the debt is permitted to accumulate beyond this initial six week period, the person receiving the payment has grounds, albeit limited, on which to argue that it should be waived in whole or in part. The Applicant received NSA payments for a substantial period of time after the six week period, that is, during the Relevant Period which spans approximately four years. Consequently, the Tribunal must examine the requirements of subsection (1), namely whether the debt is attributable solely to an administrative error made by the Commonwealth. The Tribunal will also consider whether the Applicant received the payments in good faith.
In Re Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173 (Gerhardt), Deputy President Forgie stated, at [39]-[40], that “solely” in the context of a debt being attributable solely to the Commonwealth’s administrative error should be given its “ordinary meaning”, in the context of an equivalent provision of the Student Assistance (Youth Training Allowance) Amendment Act 1994. Deputy President Forgie stated, at [40] of Gerhardt:
Applying those ordinary meanings to the sub-section mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth’s administrative error. The Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth’s administrative error (i.e. they are incidental to the Commonwealth’s error), then it may be that the debt is attributable solely to the Commonwealth’s administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact.
Was the debt incurred by the Applicant “attributable solely to an administrative error made by the Commonwealth”? The Applicant argues that the debt did arise solely due to administrative error by the Commonwealth because he attempted to advise the Department of his factory unit on a number of occasions prior to the grant of his NSA. The Respondent, however, argues that there is no evidence that the debt arose solely due to administrative error (Exhibit R2, para [5.22]).
The Tribunal finds that whilst substantial blame must be placed upon the Department for failing to correct its records, despite the repeated attempts by the Applicant to disclose his factory unit, the administrative error resulting in the overpayment of NSA to the Applicant cannot be said to be solely attributable to the Department (that is, the Commonwealth). As noted above, the Applicant lodged his Customer Declaration Form with the Department on 16 May 2013 (T13), knowing that the form contained incorrect information about his assets and income (transcript, page 24). He had signed the form, as well as initialling each page, including initialling the page that stated “I have no real estate interests other than the home in which I live, and I have no other income”. In summary, the Applicant’s argument was that he lodged this form immediately after he was advised that his NSA had been granted, and consequently, that all errors leading up to the grant of the NSA were solely attributable to the Department. However, this timing makes little difference because s 1237A of the Act is not limited to administrative actions which predate the decision to grant a social security payment. In lodging a form which he knew to be incorrect, the Applicant made an error which may have contributed to the accumulation of the debt – thus the error was not solely attributable to an administrative error made by the Commonwealth. If he had lodged the form containing the correct information about his assets (that is, the factory unit), the Applicant may have ended up with several weeks or months of overpayment, instead of several years of overpayment.

Also, in knowingly lodging an incorrect form, the Applicant cannot be said to have received the payments in good faith. Further, he did not comply with s 66A of the Administration Act which required him to advise the Department of any change in circumstances which may affect his NSA payment. The Applicant stated at the hearing that his perception was that his circumstances had not changed. However, the Tribunal takes the view that, given the numerous letters received by the Applicant from the Department enclosing reporting statements and requiring him to advise of changes in his income or assets, together with the many letters notifying the Applicant that the Department had calculated his NSA payments on his estimated income figures of either $22.32 or $17.86, the Applicant would have been aware that his NSA was being paid on the basis of calculations which excluded his factory unit and the weekly rental income he was receiving from it.
The cumulative effect of the Applicant knowingly lodging an incorrect form which did not disclose the factory unit and its rental income (T13), and his failure to act on the many letters (discussed in para [73] above) which he received from the Department during the Relevant Period, is that the overpayment cannot be said to be “incidental to the Commonwealth’s error” (Gerhardt) and therefore was not solely attributable to an administrative error made by the Commonwealth.
Similarly, in Williams and Secretary, Department of Employment and Workplace Relations [2005] AATA 1133 (Williams), a failure by the Department to record another pension that an applicant was receiving due to an administrative error resulted in an overpayment of NSA in the sum of $21,099.44. However, in a similar manner to the current application before the Tribunal, the applicant was found not to have acted in good faith because he continued to lodge forms that did not specifically refer to the other pension payments, as well as having a strong suspicion that he should not be receiving the higher NSA payment. In Williams, the Tribunal affirmed the Department’s decision to raise and recover the overpayment to the applicant. The current application before the Tribunal is similar to the situation in Williams in that the Applicant lodged a form knowing that it contained incorrect information about the factory unit asset and the rental income from it. It is also reasonable to infer that the Applicant was aware that his NSA payments may have been incorrect due to the stated calculation of his income at either $22.32 or $17.86, when he was receiving rental income of approximately $500 per week throughout the Relevant Period.
The fact that the Department could have checked its records more carefully, or reconciled its records to discover the existence of the Applicant’s factory unit, does not absolve the Applicant from the responsibility of providing the correct information or of correcting the incorrect record. An applicant’s failure to provide correct answers in a situation where it may be reasonable to expect that the Department would undertake additional crosschecking was discussed by Member Way in Andrew and Secretary, Department of Family and Community Services [2004] AATA 168 (Andrews), which has similarities to the Applicant’s case. Member Way stated, at para [43] of Andrews:
In respect of the first question, the Tribunal notes the respondent’s submission that, with hindsight it might be reasonable to expect that there may have been cross checking of the applicant’s circumstances such that superannuation payments were taken into account in the assessment of his pension. However, be that as it may, any such action does not, in the Tribunal’s view, release the applicant from his responsibility to correctly answer questions directed to him about superannuation ... The Tribunal is not satisfied that the reasons given by the applicant for not providing correct answers… absolve him from being responsible for the incorrect calculations of his pension which the Department made. In arriving at this view, the Tribunal has also taken into account that the applicant, on his own evidence, thought the Department were taking into account, or should have been taking into account his Superannuation payments since they knew all about them. The Tribunal therefore has considerable difficulty in accepting that the applicant was not in a position to answer properly the question put to him about Superannuation being paid to him.
In summary, the Tribunal finds that the Applicant’s debt cannot be waived under s 1237A of the Act because the debt was not attributable solely to an administrative error made by the Commonwealth, and further, the Applicant cannot be said to have received the NSA payments in good faith.
Waiver in special circumstances
Section 1237AAD of the Act provides for waiver in special circumstances. It provides:
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.
Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
…
In summary, s 1237AAD of the Act gives the Secretary the discretion to waive a debt if there are special circumstances, other than financial hardship alone, which make it appropriate to do so. Additionally, the debtor must not have contributed to the debt by making a false statement, representation or by otherwise failing to comply with the Act or the Administration Act.
With respect to special circumstances, neither the Act nor the Administration Act defines “special circumstances”, however, the meaning has been considered by the Federal Court and the Tribunal in numerous decisions.
In Gerhardt at [47], Deputy President Forgie stated:
The words ‘special circumstances’ have been considered in a number of cases in a number of contexts. These include Beadle v Director-General of Social Security (1985) 60 ALR, Secretary, Department of Social Security v Hulls (1991) 22 ALD 570, Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64 and Secretary, Department of Social Security v Smith (1991) 13 AAR 454. The essence of cases such as these is that a consideration of whether or not there are special circumstances must be undertaken in the context in which the discretion is given. It is clear from Division 15 of Part 8 of the Act [Student Assistance (Youth Training Allowance) Amendment Act 1994] that the purpose of the provisions is to ensure the recovery of amounts paid under the Act to persons who are not entitled to be paid those amounts. What are special circumstances must be considered against that background. There will be special circumstances if the circumstances are such that it is unreasonable, unjust or inappropriate to recover the amount paid bearing in mind that the provisions are intended to ensure the recovery of amounts incorrectly paid…
In Beadle v Director-General of Social Security (1984) 6 ALD 1 at 3, the Tribunal stated:
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.
In Groth v Secretary, Department of Social Security [1995] FCA 1708, Kiefel J (as she then was) stated, at [12]:
The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle’s case... and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this 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…
In Secretary, Department of Social Security v Hales (1998) 82 FCR 154, French J (as he then was) stated, at 162:
The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, at [33] Besanko J stated, after reviewing the case law on the meaning of “special circumstances”:
I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
In Davy v Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, Deputy President Forgie explained, at [80]:
The ‘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... 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.
In the current application, the Applicant has not put forward any submissions regarding special circumstances applicable to him which would make it appropriate to waive the debt. The Tribunal notes that a submission made by the Applicant’s brother titled, “Background information on Mr John Ielati” stated that “… he [the Applicant] has no formal education, has limited understanding of written information especially legal, accounting, finance and technological terms…” (Exhibit A3). However, even if a lack of education and difficulty with written documents could be regarded as special circumstances, this submission was contradicted by evidence given by the Applicant at the Tribunal hearing that he had completed the Centrelink forms himself (transcript, page 16), and that “anybody can do that” (transcript, page 17). This indicates that he did not have difficulty understanding and completing the documentation.
The Tribunal also appreciates that having the overpayment debt is very stressful for the Applicant and his wife. The Applicant gave evidence that “…it’s very hard for me to cope…” and that “I never thought that I’ll just stop work and retire and have to spend all these years trying to fight Centrelink and lawyers. To me that’s – that’s too hard” (transcript, page 16). However, stress would not amount to a special circumstance because it would undoubtedly be a commonplace reaction for a person faced with a large overpayment debt, and would, therefore, not be unusual, uncommon, or exceptional.
Further, the Respondent contends that the overpayment to the Applicant was in part, brought about by the Applicant failing to comply with written notices from the Department and failing to report information in relation to his income and assets (see Exhibit R2, para [5.32]). Consequently, the Respondent argued that, even if there were special circumstances, the debt could not be waived because the Applicant knowingly made a false statement, or failed or omitted to comply with the provision of the Act, or the Administration Act. The Tribunal agrees with the Respondent’s submissions and finds that, as described in the “Background to the Application” section above, the Applicant did not comply with his reporting requirements under the Act, including s 66A of the Administration Act which requires circumstances which may affect a person’s social security payment to be reported.
In summary, the Applicant failed to comply with his reporting requirements under the Act. Also, the Tribunal is not satisfied that the circumstances are so unusual, uncommon or exceptional that the Applicant’s case qualifies as giving rise to special circumstances which would justify the exercise of discretion to waive the debt under s 1237A of the Act.
Write off
Section 1236 of the Act provides that the Secretary may write off (that is, delay recovery of) a debt in certain circumstances, as follows:
(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
…
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
The Tribunal agrees with the Respondent’s submission that the write off criteria set out in s 1236 of the Act do not apply to the Applicant. There is no evidence to suggest that the debt is irrecoverable at law. As noted earlier in these reasons for decision, and applying
s 1235(1A) and (1C), the Applicant has the capacity to repay the debt. He is currently repaying the debt to the Department by fortnightly withholdings from his aged pension of $15 per fortnight, and still owns the factory unit, which is producing a weekly rental income. The Tribunal notes that the AAT Tier 1 Decision provided for a write off of the debt for two months from the date of the AAT Tier 1 Decision, however this period has now expired. Accordingly, the Tribunal finds that there is no basis for writing off recovery of the debt for a further period.
CONCLUSION
In summary, and for the reasons outlined above, the Tribunal finds that:
(a)the Applicant was paid in excess of his correct entitlement to NSA during the Relevant Period because he was not entitled to receive it due to exceeding the assets value limit;
(b)accordingly, the Applicant incurred a recoverable debt; and
(c)the debt should not be waived because it was not attributable solely to an administrative error made by the Commonwealth, nor were there special circumstances. Although the AAT Tier 1 Decision wrote off the debt for a period of two months from the date of the decision, the Tribunal finds that it is not appropriate to write off the debt for a further period.
The Applicant is a 66-year-old man who now has a substantial debt of $54,824.68 owing to the Commonwealth. The Applicant made numerous attempts, prior to being granted the NSA, to advise the Department about his factory unit. Despite these attempts, administrative failures on the part of Centrelink resulted in the Applicant’s factory unit not being recorded as an asset, and the corresponding rental income not being recorded. The failures of Centrelink substantially contributed to the Applicant being overpaid and incurring the debt.
It is unfortunate for the Applicant that he submitted incorrect information to Centrelink and that he did not, despite receiving numerous letters and reporting statements from the Department throughout the Relevant Period, attempt to correct Centrelink’s records regarding his factory unit asset and rental income after he started to receive his NSA payments.
At the hearing, the Applicant’s brother submitted on his behalf that they could not ascertain, through inquiries with the Department, or through freedom of information requests, why the factory unit asset finally came to the attention of the Department on 11 January 2017 (T52, page 214). Indeed, the evidence before the Tribunal suggests that there was an electronic record of the factory unit as early as 17 April 2013 (T80, page 774) which was overlooked. In accordance with its role in promoting good government, the Tribunal is of the opinion that further investigation by the Department to ascertain: how the factory unit asset was not recorded prior to the approval of the Applicant’s NSA; how overpayment of NSA to the Applicant was able to occur; and how the overpayment was permitted to continue for so long, should be undertaken, with the aim of improving administrative processes so that similar overpayment errors do not occur in the future. The Department should communicate its findings to the Applicant.
DECISION
For the reasons outlined above, the Tribunal affirms the AAT Tier 1 Decision.

I certify that the preceding 97 (ninety -seven) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr M Evans

..........................[sgd]..............................................
Administrative Assistant – Legal
Dated: 19 November 2018

Date of hearing: 4 September 2018

Date final submissions received: 2 October 2018

Applicant: In person

Advocate for the Applicant: Mr William Ielati

Counsel for the Respondent: Ms Daphne Jones-Bolla

Solicitors for the Respondent: Sparke Helmore

Date of hearing:	4 September 2018
Date final submissions received:	2 October 2018
Applicant:	In person
Advocate for the Applicant:	Mr William Ielati
Counsel for the Respondent:	Ms Daphne Jones-Bolla
Solicitors for the Respondent:	Sparke Helmore