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

[2016] AATA 873

Khan and Secretary, Department of Social Services (Social services second review) [2016] AATA 873 (4 November 2016)

Division	GENERAL DIVISION
File Number	2015/4264
Re	Mohammad Khan
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Senior Member CR Walsh
Date	4 November 2016
Place	Perth

The Tribunal affirms the decision under review.

............[Sgd]............................................................

Senior Member CR Walsh

CATCHWORDS

SOCIAL SECURITY -  Newstart Allowance debt – whether debt should be written-off or waived due to “special circumstances” – insufficient evidence of applicant’s mental health condition in the relevant debt period - whether debt must be waived due to sole administrative error by Centrelink – decision under review affirmed

LEGISLATION

Social Security Act 1991 – s 1223(1) – s 1236 – s 1236(1) – s 1236(1A) – s 1237AA – s 1237AAD – s 1237AAD(a)

Social Security (Administration) Act 1999 – s 68

CASES

Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25

Beadle and Director General of Social Security (1985) 60 ALR 225

Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114

Dranichnikov v Centrelink [2003] 75 ALD 134

Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs (2010) 185 FCR 52

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

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173

Re Ivocic and Director General of Social Services [1981] AATA 57

Secretary, Department of Education, Employment, Training & Youth Affairs v Prince [1997] 1565 FCA

Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76

REASONS FOR DECISION

Senior Member CR Walsh

4 November 2016

INTRODUCTION

1. Mr Khan seeks a review of the decision of the Administrative Appeals Tribunal, Social Services & Child Support Division (the AAT1), dated 15 July 2015, which affirmed the decision made by the Department of Human Services (Centrelink) to raise and recover a debt for overpayment of Newstart Allowance (NA), totalling $27,917.52, for the period 29 December 2008 to 8 April 2013 (the Debt Period).

   FACTUAL & PROCEDURAL BACKGOUND

2. On 22 January 2009, Mr Khan was notified by Centrelink that he had been granted NA which was to be backdated from 29 December 2008.

3. On 22 January 2009, 6 February 2009 and every fortnight during the Debt Period, Centrelink sent Mr Khan “reporting statements”. These statements required Mr Khan to provide an “estimate of earnings” (i.e. income) for each fortnightly reporting period. Mr Khan was required to lodge these statements with the Department fortnightly, either in person of via the internet, in order for him to be paid NA. Mr Khan was required to comply with such statements pursuant to s 68 of the Social Security (Administration Act) 1999 (the SSAA).

4. On 3 June 2010, Mr Khan applied to Centrelink for Disability Support Pension (DSP).  On 16 August 2010, a Job Capacity Assessment (JCA) was conducted by a registered nurse in relation to a separate claim made by Mr Khan for DSP.  The JCA Report indicates that Mr Khan was assessed in relation to medical conditions including “musculo-skeletel disorder” (which was found to be permanent and fully diagnosed) and “spinal disorder” (which was found to be permanent and fully diagnosed). In the JCA Report, Mr Khan was assessed as having a fully diagnosed, treated and stabilised work capacity of 30+ hours a week on the basis that he did not have any permanent, fully diagnosed, treated and stabilised medical conditions.

5. The following table sets out the income actually earned by Mr Khan during the Debt Period and the income declared by him to Centrelink during the Debt Period:

Employment	Income earned	Income declared
Inglewood Fresh	$24,190.74	$3,300
Foodworks	$15,970.89	$1,060
Belaire Unit Trust	$178	-
Lynwood Unit Trust	$1,448	-
Nightlife Security	$229	-
Dewsons Leederville	$4,305	-
Nedlands Supa IGA	$7,087.20	$110
Mt. Hawthorn IGA	$25,037.44	$6,080
Novimex	$11,973.45	-
Captain Stirling	$439.98	$150
Belmont Progressive Society	$6,239.44	$54.79
Dewsons Wembley	$1,463.53	-
KFC	$186.49	-
IGA Doubleview	$393	-

1. On 2 May 2013, the Australian Tax Office (the ATO) completed a “Data-matching Program Request for information” form at Centrelink’s request. The information in the above table came to light as a result of the data matching process and was subsequently confirmed by inquiries made by Centrelink with Mr Khan’s various employers in the Debt Period.

2. During the Debt Period, Mr Khan received NA totalling $50,375.79.

3. On 13 December 2013, Mr Khan submitted a Centrelink “Mod iA - Income and Assets” form with Centrelink.

4. On 23 April 2014, Centrelink made a decision to raise and recover a debt in the amount of $27,917.52 for the Debt Period. This was on the basis that Mr Khan’s correct income for the Debt Period had not been taken into account, resulting in an overpayment of NA in the Debt Period of $27,917.52 (i.e. Mr Khan received NA in the Debt Period of $50,375.31 when he was only entitled to receive $22,457.79) (the Original Decision).

5. Mr Khan subsequently requested an internal review of the Original Decision by a Centrelink Authorised Review Officer (ARO).

6. On 23 September 2014, an ARO affirmed the Original Decision (the ARO Decision). The ARO Decision states:

   Reasons for Decision

   The amount of income a person earns each fortnight can reduce the amount of Newstart Allowance payable for that fortnight.  While you were working, you were rarely declaring earnings and your payment amounts were reduced according to what you told us.  However, investigations show that you earned more than you declared and your payments should have been reduced to a lower amount than was paid to you.

   I have included a table below to show the income you declared and your actual income:

   …

   I have checked the calculations and am satisfied the debt has been correctly calculated.

   I have also considered the rules that allow a debt to be waived.  Firstly, your debt was caused by you either not declaring your earnings or by telling the department incorrect amounts of earnings.  As the debt was not caused solely by the department’s error, it cannot be waived on this ground.

   A debt may also be waived if there are special circumstances.  Your circumstances need to be sufficiently unusual or uncommon as to be termed special.  You have stated to the department that you were suffering from depression and memory loss as a result of post-traumatic depression during the period of the debt and were under the care of a psychologist at the time of the overpayment.  I cannot see any medical evidence has been provided to support his.  I have checked the claim for Disability Support Pension you lodged on 6 August 2010 and neither you nor your doctor mentioned this medical condition.  This condition was also not reported to the department on a medical certificate or during a job capacity or employment assessment.  Even if the medical evidence was now provided, it would be difficult to see this medical condition would prevent you from reporting income over a four year period.

   This means that I have decided that you have a debt of $27,917.52 that must be repaid.

7. On 7 April 2015, Mr Khan applied to the AAT1 for a review of the ARO Decision.

8. On 9 July 2015, the AAT1 conducted a hearing with Mr Khan attending by telephone and, on 15 July 2015, the AAT1 affirmed the ARO Decision (the AAT1 Decision). 

9. In summary, in the AAT1 Decision, the AAT1 found that:

   (i)Mr Khan received the benefit of NA payments totalling $27,917.52 in the Debt Period to which he was not entitled and that this amount is a debt owed to the Commonwealth pursuant to s 1223(1) of the Social Security Act 1991 (the SSA):  AAT1 Decision at [19];

   (ii)none of the matters in s 1236 of the SSA apply in Mr Khan’s case, such that Mr Khan’s debt cannot be written off: [23];

   (iii)based on the available evidence, Mr Khan’s debt was not the result of sole administrative error by the Department (Centrelink) but a result of Mr Khan failing to advise the Department of his correct income, such that the debt could not be waived due to sole administrative error pursuant to s 1237A(1) of the SSA: AAT1 Decision at [31]; and

   (iv)the “special circumstances” provisions in s 1237AAD in the SSA were not enlivened such that Mr Khan’s debt could not be waived pursuant to that section: the AAT1 Decision at [43]. At [42] of the AAT1 Decision, the AAT states:

   The tribunal was not able to be satisfied on the available evidence that Mr Khan’s failure to properly report his income was the result of a medical condition.  It appears from the evidence that he was able to engage sufficiently with the reporting system to log in and report each fortnight and that he was also able to engage with paid employment.  In reaching this conclusion the tribunal is not suggesting that Mr Khan’s personal struggles are not significant however on the presented evidence the tribunal is not satisfied that Mr Khan has not knowingly failed or omitted to comply with relevant statutory provisions. [Emphasis added]

10. On 18 August 2015, Mr Khan applied to this Tribunal for a review of the AAT1 Decision.  Mr Khan’s stated “Reasons for the Application” are as follows:

    Case officer failed to understand the severe consequences my mental illness stage being a trangender (sic.), he/she failed to take into account my ongoing suicidal attempt to end up Royal Perth Hospital. he/she satisfy (sic.) I log in forthnightly (sic.) online so I am ok not to make mistake that jugement (sic.) was very shallow.  I expect to see my case from the broad minded view, not that it had done so I am responsible for all.

    ISSUES

11. It is not in dispute that during the Debt Period Mr Khan received the benefit of NA payments totalling $27,917.52 to which he was not entitled and that this amount constitutes a debt owed to the Commonwealth under s 1223(1) of the SSA (the Debt).

12. The issues to be decided by the Tribunal in this case are whether the Debt:

    (i)should be written off under s 1236(1A) of the SSA;

    (ii)must be waived due to sole administrative error by Centrelink, pursuant to s 1237A(1) of the SSA; and

    (iii)should be waived due to “special circumstances”, pursuant to s 1237AAD of the SSA.

13. Each of these issues is considered, in turn, below.

    CONSIDERATION

    (i)        Should all or part of Mr Khan’s debt be written off?

14. Section 1236(1) of the SSA, titled “Secretary may write off debt”, provides:

    (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. [Emphasis added]

15. Section 1236(1A) of the SSA provides:

    (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. [Emphasis added]

16. There is no basis for the write-off of the Debt under s 1236(1A) of the SSA because:

    (i)the Debt is not irrecoverable at law;

    (ii)Mr Khan has the capacity to repay the Debt by way of fortnightly withholdings from his NA: the AAT1 Decision at [22];

    (iii)Mr Khan’s whereabouts are known, and

    (iv)it is cost effective for the Commonwealth to take action to recover the Debt.

    (ii)Should all or part of Mr Khan’s debt be waived due to sole administrative error by Centrelink?

17. Section 1237A(1) of the SSA, titled “Waiver of debt arising from error”, provides for waivers of debts that are caused solely by administrative error on the part of Centrelink. Section 1237A(1) provides:

    Administrative error

    (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). [Emphasis added]

18. For s 1237A(1) of the SSA to apply:

    (i)administrative error by Centrelink must be the sole cause of the Debt, not merely one of multiple causes: Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76 and Re Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173; and

    (ii)the debtor (here, Mr Khan) must have received the security payments that gave rise to the debt “in good faith”: 

19. The meaning of "received in good faith" has been considered judicially on several occasions.  In Secretary, Department of Education, Employment, Training & Youth Affairs v Prince [1997] 1565 FCA the Federal Court held that good faith is concerned:

    with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – i.e. is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith.

20. Section 68 of the SSAA provides that Centrelink may give a person who is in receipt of NA a notice requiring them to inform Centrelink if a specified event or change in circumstances occurs, or is likely to occur. Mr Khan was regularly informed by Centrelink, throughout the Debt Period, of the requirement to notify Centrelink within 14 days if there were any changes to his circumstances (i.e. his earnings/income) that would affect his payment of NA: refer to paragraph 3 above.

21. In his oral evidence before the AAT1, Mr Khan acknowledged that the Debt had arisen because of mistakes that he has made and he had reported “some of his income”: AAT1 Decision at [29]. Mr Khan indicated to the AAT1 that he did not recall receiving notices from Centrelink informing him of his obligation to inform them of changes in his income. Mr Khan conceded he understood that he had this obligation, but that the circumstances his mental health conditions prevented him from complying: AAT1 Decision at [29]. Mr Khan gave similar oral evidence (by telephone) at the hearing of this application.

22. As stated above, Centrelink was not aware of the difference between the income that had been declared by Mr Khan and his actual income until a “data match” was conducted with the ATO:  see paragraph 6 above.

23. Based on the evidence, the Tribunal finds that the Debt was not the result of sole administrative error by Centrelink but a result of Mr Khan failing to advise Centrelink of his correct income in accordance with the s 68 notices which were sent to him throughout the Debt Period. In such circumstances, the Debt cannot be waived under s 1237A(1) of the SSA.

    (iii)Should all or part of Mr Khan’s debt be waived due to “special circumstances”?

24. Section 1237AAD of the SSA, titled “Waiver in special circumstances”, 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.

25. The discretion to waive a debt under s 1237AAD of the SSA cannot be exercised unless all three conditions, in (a), (b) and (c) of s 1237AAD of the SSA, are satisfied.

26. The expression “special circumstances" is not defined in the SSA or the SSAA. However, the meaning of “special circumstances” has been considered extensively by the Federal Court and the Tribunal in the context of social security and family assistance law. In summary, it has been held that for circumstances to constitute “special circumstances” they must be circumstances which are “unusual, uncommon or exceptional,” “markedly different from the usual run of cases,” “special” or “out of the ordinary” and they include “events which would render the (strict application of the rule in question) unfair or inappropriate:” see for example, Re Ivocic and Director General of Social Services [1981] AATA 57 at [45]; Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 per Toohey J; Beadle and Director General of Social Security (1985) 60 ALR 225 at 228 as per Bowen CJ, Fisher and Lockhart JJ; Groth and Secretary, Department of Social Security (1995) 40 ALD 541 at 545 per Kiefel J; Dranichnikov v Centrelink [2003] 75 ALD 134 at [66] per Hill J; Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25 at [33] and Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693 at [80]. Circumstances might be “special”, although they apply to more than one person or class of persons, provided they are not of universal application: see Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs (2010) 185 FCR 52 at [65]. Ultimately, whether circumstances answer any of these descriptions depends on the context in which they occur.

27. Mr Khan told the AAT1 that between 2007 and 2013 he was suffering from depression, anxiety and memory loss and this affected his ability to properly comply with reporting requirements in relation to the Debt Period: AAT1 Decision at [34]. Mr Khan also indicated that during the Debt Period he had been suffering from mental illness because of his personal struggles with being a transgender person and he experienced depression and suicidal thoughts. Mr Khan did not provide the AAT1 with any medical evidence to support this and, when queried on why he had not, Mr Khan said that he “had only recently come to terms with the situation himself”: AAT1 Decision at [36].

28. In addition, Mr Khan gave evidence before the AAT1 that he is currently working between two and four days a week at the supermarket in Rossmoyne and is trying to save money so he can pay for the procedures necessary for him to transition: AAT1 Decision at [40]. Mr Khan told the AAT1 that waiving the debt would remove a lot of pressure and asked for compassion due to his personal circumstances and struggles: AAT1 Decision at [40].

29. As set out above (in paragraph 4), Mr Khan applied for DSP on 3 June 2010 (which date falls within the Debt Period relevant to this application). The JCA Report which was produced as a result of that DSP claim provided no indication that Mr Khan was suffering from any mental condition as at the date of his claim for DSP (which date falls within the Debt Period). Instead, the JCA Report recorded Mr Khan’s medical conditions as being musculo-skeletal disorder and spinal disorder: refer to paragraph 4 above.

30. Subsequent to the hearing before the AAT1 (but before publication or the AAT1 Decision), Mr Khan submitted additional documents in relation to his mental health.  As set out in the AAT1 Decision at [37], this included the following:

    a)Medical certificate dated 5 February 2015 stating that Mr Khan is receiving treatment for depression and anxiety.

    b)Letter from his medical clinic noting that Mr Khan appreciates a reminder call about his appointments.

    c)Record of Mr Khan having attended at Royal Perth Hospital on 19 February 2015 where he is noted as presenting with “a social/behavioural issue – a suicidal situation due to sexual orientation and name calling.  He attempted an overdose and was released after observation, after which he stated he regretted and denied any suicidal ideation”.

    d)Incomplete extracts from a report prepared by Lillian Elek psychologist stating that she was not qualified to provide a diagnosis but that Mr Khan had been referred to her as suffering from reactive depression and that he was advised to see a psychiatrist.  He received treatment in relation to depression, anxiety and stress in the form of cognitive and behavioural restructuring.

    e)        Receipts of counselling sessions undertaken in 2013.

1. On 18 January 2016, Mr Khan provided further medical documents to this Tribunal in support of this application. The various medical reports indicate, amongst other things, suicidal intentions and drug overdoses. All of these medical reports and documents are dated during 2015 and, therefore, they post-date the Debt Period. Importantly, none of this documentary evidence concerns Mr Khan’s mental health condition in the Debt Period. As such, this evidence is irrelevant to this application.

2. At the hearing of this application, Mr Khan informed the Tribunal that he could provide medical evidence in support of his mental health condition (including depression and suicidal thoughts) in relation to the Debt Period. Consequently, at the conclusion of the hearing on 20 September 2016 the Tribunal made the following directions:

   1.On or before 23 September 2016, the Applicant is to give to the Tribunal and the respondent medical evidence regarding his alleged mental health condition during the period 29 December 2008 to 8 April 2013.

   2.On or before 7 October 2016, the Respondent has leave to give to the Tribunal and the Applicant submissions in relation to any medical evidence provided by the Applicant pursuant to Direction 1.

3. Mr Khan failed to comply with Direction 1 (above) by 23 September 2016, but eventually filed further documentary medical evidence on 28 September 2016. 

4. Having reviewed the material filed by Mr Khan on 28 September 2016, the Tribunal reached the conclusion that none of it is relevant to this application as none of it addresses Mr Khan’s mental health condition in the Debt Period, as directed. Some of the material provided by Mr Khan is material which had already been filed in these proceedings on 18 January 2016. All of the material provided is dated outside the Debt Period and, importantly, does not relate to Mr Khan’s mental health condition in the Debt Period. More specifically, the documents provided by Mr Khan on 28 September 2016 are dated December 2014, February 2015, March 2015, April 2015, May 2015 and June 2015. Further, some of the material filed does not relate to Mr Khan’s mental health at all but, rather, concerns his physical health conditions. For this reason, the Tribunal decided (on 29 September 2016) to revoke Direction 2 (above) and to convene a directions hearing to discuss its concerns regarding the material filed by Mr Khan on 28 September 2016 with Mr Khan and the Secretary’s representative. At a telephone directions on 6 October 2016, Mr Khan confirmed that he had no further medical evidence to support his position that he was suffering from a mental health issues in the Debt Period and establishing that his mental health is a “special circumstance” in this case. Mr Khan simply said that he has been “suffering all of his life” with mental health issues as a consequence of coming to terms with being a transgender person.

5. On 7 October 2016, Mr Khan contacted the Tribunal advising it that he would be able to provide the Tribunal with medical evidence that his mental health condition existed before and during the Debt Period. Accordingly, on 11 October 2016, the Tribunal made the following directions:

   1.On or before 1 November 2016, the Applicant is to give to the Tribunal and the Respondent medical evidence regarding his alleged mental health condition during the period 29 December 2008 to 8 April 2013.

   2.On or before 8 November 2016, the Respondent has leave to give the Tribunal and the Applicant submission in relation to any medical evidence provided by the Applicant pursuant to Direction 1.

6. On 19 October 2016, Mr Khan filed and served medical records from Sir Charles Gairdner Hospital.

7. On 31 October 2016, the Secretary filed and served the following submissions in relation to those medical records:

   …

   2.The Applicant provided a record of a hospital admission dated 25 December 2005 where the Applicant presented as suicidal.  The record notes that the Applicant called “crisis care” and told them he was going to kill himself.  The record indicates that the Applicant’s major issues related to “failure at uni” and he stated that he was “just seeking counselling for the issues and crisis care overreacted”. He was recorded as displaying a “bright, animated person” and denied previous suicidal intentions or behaviour.  His mood was reported as “happy” and he indicated that he “feels ok now”.  The Applicant was discharged on the same day with a final diagnosis of “acute grief”.

   3.The E.D. Consultation Notes also include a partially illegible noted dated 30 December 2006 which states that the Applicant had schedules an appointment for that day however did not attend.

   4.The Respondent contends that the documents provided by the Applicant significantly pre-date the debt period and provide no insight into the functional impact of the Applicant’s mental health condition during this period.  The admission reflected in these documents appears to be an isolated incident and does not support the Applicant’s contentions that his mental health condition during the debt period affected his ability to accurately report his income.

8. Whilst the Tribunal is sympathetic to Mr Khan’s situation, the Tribunal agrees with the Secretary’s submissions, as set out above. 

9. There is insufficient documentary medical evidence before the Tribunal for it to reach a finding that Mr Khan was affected by the mental health condition he claims to have had during the Debt Period to a degree that he was prevented from correctly reporting his income to Centrelink in the Debt Period.

10. In such circumstances, the Tribunal finds that Mr Khan’s circumstances are not sufficiently “special”, “unusual, uncommon or exceptional”, “markedly different from the usual run of cases”, out of the ordinary”, to warrant the exercise of the discretion in s 1237AAD of the SSA to waive all or part of the Debt and there is no injustice in requiring Mr Khan to repay public monies that he had no entitlement to receive.

11. As noted by the AAT1, in the AAT1 Decision (at [15]), on a number of occasions Mr Khan reported nil income when he was in fact working and would have been aware that he was in receipt of income. As Mr Khan consistently incorrectly reported his income to Centrelink during the Debt Period, which he has conceded, s 1237AAD(a) of the SSA cannot be satisfied as Mr Khan was “knowingly” making false representations to Centrelink in relation to his income in the Debt Period: refer to the table in paragraph 5 above.

    DECISION

12. For the above reasons, the Tribunal affirms the AAT1 Decision.

I certify that the preceding 47 (forty –seven) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh

..........[Sgd]..............................................................

Administrative Assistant

Dated 4 November 2016

Date of hearing

20 September 2016

Date final evidence received

Applicant

28 September 2016

In person

Representative for the
Respondent

Ms B Rayment

Solicitors for the Respondent

Mills Oakley Lawyers