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

Khan; Secretary, Department of Social Services and (Social security second review) [2024] ARTA 469 (18 October 2024)
Applicant:  Secretary, Department of Social Services
Respondent:  Elijah Khan
Tribunal Number:                2024/1029
Tribunal:General Member S Evans
Place:Sydney
Date:18 October 2024
Decision:The Tribunal sets aside the decision under review and in substitution decides that:
·Mr Khan’s Austudy was correctly cancelled by the Agency from 30 November 2021.
·Mr Khan has an Austudy debt in the amount of $2,776.44 for the period 13 December 2019 to 6 April 2020 which was correctly recovered by the Agency from GIO on 1 March 2022.
·Mr Khan has an Austudy debt in the amount of $9,529.88 for the period 19 December 2019 to 29 November 2021 which was correctly recovered by the Agency from GIO on 1 March 2022.
·Mr Khan has a Coronavirus Supplement debt in the amount of $7,497.15 for the period 15 June 2020 to 29 March 2021 which was correctly recovered by the Agency from GIO on 7 March 2022.

............[SGD].......................
General Member S Evans
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 201(1A) - 201(1B) of the Social Security (Administration) Act 1999
CATCHWORDS
SOCIAL SECURITY – recovery of debts – overpayment of Austudy and Coronavirus supplement – Respondent in receipt of compensation affected payment – appeal by the Secretary – periodic compensation payments – present legal entitlement – compensation affected payment – compensation preclusion period – insufficient evidence to support the existence of ‘special circumstances’ – reviewable decision set aside and substituted
LEGISLATION
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Drake and Minister for Immigration, and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Minister for Immigration, Local Government and Ethnic Affairs v Gray (1994) 33 ALD 13
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Beadle and Director-General of Social Security [1984] AATA 176
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] FCA 639
SECONDARY MATERIALS
Social Security Guide
STATEMENT OF REASONS

On 14 October 2024, the Administrative Appeals Tribunal (AAT) became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
INTRODUCTION
The Secretary of the Department of Social Services (the Secretary) seeks review of a decision by the Social Services and Child Support Division (AAT1) of the Tribunal made on 8 January 2024 (the reviewable decision).[1] The reviewable decision set aside an earlier decision by Services Australia (the Agency) to raise and recover debts for overpayment of Austudy and Coronavirus supplement (CVS) to Elijah Khan (the Respondent).[2]
[1] T1, p.3-9.
[2] T2, p.10-15.
The AAT1 remitted the matter to the Secretary with a direction that, the rate at which Mr Khan was entitled to Austudy and whether he was entitled to receive the Coronavirus supplement (CVS) be recalculated, on the basis that back payment of periodic compensation was not income prior to a determination by the New South Wales Personal Injury Commission (the Commission) made on 16 November 2021.[3]
[3] Ibid.
For the reasons that follow, the reviewable decision will be set aside.
BACKGROUND
Mr Khan was injured at work on 5 January 2016.[4] On 24 July 2018, he was granted Newstart Allowance (NSA) and on 29 July 2019 he was granted Austudy.[5] Mr Khan continued to be paid Austudy until it was cancelled by the Agency from 30 November 2021.[6]
[4] T22, p.412.
[5] T21, p.291.
[6] T22, p.400.
Mr Khan was in receipt of compensation by way of periodic payments at different rates from 1 July 2018. The Agency was notified of these payments by Mr Khan’s workers compensation providers on 10 February 2020, 14 February 2020, 6 April 2020, 15 April 2020 and 24 November 2021.[7]
[7] T4, p.131-133; T5, p.136-137; T7, p.144-145; T8, p.148-149; T12, p.161-163.
On 13 January 2021, the Agency raised an Austudy debt of $2,776.44 (the first Austudy debt) for the period 13 December 2019 to 6 April 2020 because Mr Khan was back paid periodic compensation payments at a rate of $261.48 per week from 13 December 2019 to 6 April 2020.[8]
[8] T20, p.284; T7, p.144-145.
On 16 November 2021, the Commission determined that Mr Khan would be paid $400 per week from 19 December 2019 and the Agency was notified of the decision by GIO Workers Compensation (GIO) on 24 November 2021.[9]
[9] T18, p.188; T12, p.161-163.
On 3 December 2021, the Agency raised an Austudy debt of $18,779.88 for the period 19 December 2019 to 29 November 2021 comprised of:
·an Austudy debt of $9,529.88 for the period 19 December 2019 to 29 November 2021 (the second Austudy debt); and
·a debt arising from an increase in the rate of Mr Khan’s Austudy payments due to a Coronavirus supplement in the amount of $9,520.00 for the period 4 May 2020 to 29 March 2021 (the first CVS debt).[10]
[10] T20, p.274, 278-279.
On 3 December 2021 the Agency cancelled Mr Khan’s Austudy from 30 November 2021.[11]
[11] T22, p.400.
On 18 February 2022, Mr Khan’s sought internal review of the Agency’s decision to raise the debts and cancel his Austudy.[12] On 1 March 2022, an Authorised Review Officer (ARO) determined that:
·Mr Khan had an Austudy debt of $2,776.44 for the period 13 December 2019 to 6 April 2020 which would be recovered from GIO;
·the cancellation of Mr Khan’s Austudy from 30 November 2021 was correct;
·the first CVS debt should be changed to $7,947.15 for the period 15 June 2020 to 29 March 2021;
·the first Austudy debt and the first CSV debt would be recovered from GIO; and
·Mr Khan had a further debt of $1,752.85 arising from an increase to the rate of his Austudy payments due to CVS for the period 4 May 2020 to 15 June 2020 (the second CVS debt).[13]
[12] T15, p.180-181.
[13] T14, p.170-175.
On 29 May 2023, Mr Khan became eligible to receive a lump sum compensation payment of $280,000.[14]
[14] T22, p.416.
On 29 November 2023, Mr Khan sought review of the ARO’s decision with the AAT1.[15] The AAT1 was not satisfied that the periodic compensation payments of $400 per week to Mr Khan from 19 December 2019 onwards should be considered as income because Mr Khan did not have a “present legal entitlement” to the payments until 16 November 2021 when the Commission made its determination.[16]
[15] T16, p.185.
[16] T2, p.14.
The AAT1 remitted the matter back to the Agency for reconsideration with a direction that the Agency recalculate the rate at which Mr Khan was entitled to Austudy and whether he was entitled to receive CVS on the basis that he did not receive $400 per week in compensation prior to 16 November 2021.
On 16 February 2024, the Secretary sought second tier review of the AAT1 decision.[17]
[17] T1, p.3-9.
At the time of the hearing, the following debts had been fully recovered by the Agency:
·The first Austudy debt in the amount of $2,776.44 for the period 13 December 2019 to 6 April 2020 was recovered by the Agency from GIO on 1 March 2022.[18]
·The second Austudy debt in the amount of $9,529.88 for the period 19 December 2019 to 29 November 2021 was recovered by the Agency from GIO on 1 March 2022.[19]
·The first CVS debt in the amount of $7,497.15 for the period 15 June 2020 to 29 March 2021 was recovered by the Agency from GIO on 7 March 2022. [20]
[18] T22, p.404-405.
[19] T20, p.274, p.278-279.
[20] T22, p.402-403.
Mr Khan has an outstanding debt of $1,752.85 in relation to the second CVS debt.
ISSUES
The issues to be determined by the Tribunal are:
·whether Mr Khan was entitled to receive Austudy and CVS, and the rate at which he was entitled to receive these benefits.
·whether Mr Khan owes and debt to the Commonwealth; and if so
·whether there is any basis to write off or waive part or all of the debts.
LEGISLATION AND POLICY
The relevant law is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act). Policy guidance is contained in the Social Security Guide (the Guide). It is well established that the Tribunal is not bound by government policy, but it will generally be taken into consideration unless there is good reason not to do so.[21]
CONSIDERATION
[21] See Re Drake and Minister for Immigration, and Ethnic Affairs (No. 2) (1979) 2 ALD 634, 645 per Brennan J, which was cited with approval in Minister for Immigration, Local Government and Ethnic Affairs v Gray (1994) 33 ALD 13, 30 per French and Drummond JJ.
At what rate was Mr Khan entitled to receive Austudy and CVS?
Mr Khan applied for and was granted Austudy on 29 July 2019.[22] It is not in dispute that Mr Khan was receiving periodic compensation payments for work-related injuries between 19 December 2019 and 21 November 2021. Nor is it in contention that he received Austudy and CVS payments.
[22] T21, p.291.
Section 581 of the Act provides that the rate of a person’s Austudy and CVS entitlement is worked out using the Austudy Rate Calculator in section 1067L of the Act. Module A of the Austudy Rate Calculator establishes the overall rate calculation process, and the remaining Modules provide for the calculation of the component amounts used in the overall rate calculation. The Austudy Rate Calculator incorporates the income test (Module D).
The income test in section 1067-D1 (Module D) of the Act details the effect that the ordinary income of a person has on their maximum basic rate of payment. The cumulative effect of the provisions of Module D is that ordinary income earned, derived or received by a person must be applied to the income test in Module D of section 1067L of the Act in order to determine the correct rate of Austudy.
Section 17 of the Act defines a compensation affected payment (CAP) to include a social security benefit. Section 17 also includes supplements related to a compensation affected payments as compensation affected payments. Section 23 defines Austudy payments as a social security benefit. From 27 April 2020, recipients of Austudy were eligible to receive a temporary coronavirus supplement of $550.00 with their fortnightly payment. I am satisfied that Austudy and CVS are a compensation affected payment.
As Mr Khan was not receiving any social security payments at the time of his injury, section 1173 of the Act applies:
1173 Effect of periodic compensation payments on rate of person’s compensation affected payment
(1) If:
(a)a person receives periodic compensation payments; and
(b)the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(c)the person receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the rate of the person’s compensation affected payment in relation to that day or those days is reduced in accordance with subsection(2).
(2) The person’s daily rate of compensation affected payment is reduced by the amount of the person’s daily rate of periodic compensation.
Section 1173 is to be applied if a person who is receiving periodic compensation payments receives or claims a compensation affected payment during the periodic payments period. Subsections 1173(1) and (2) have the effect of reducing a compensation recipient's rate of compensation affected payment by the rate of their periodic compensation payments on a dollar-for-dollar basis.
The Commission made the determination that Mr Khan was to be paid $400 per week on 16 November 2021, and the insurer agreed to pay Mr Khan $400 per week from 19 December 2019.[23] The Agency included the back payment as income attributable to the period for which the payment related when determining Mr Khan’s entitlement to Austudy and CVS and the consequent overpayments. The AAT1 found that as Mr Khan was not entitled to the payments of $400 per week until the Commission’s determination, back payments relating to the period prior to the determination were not to be treated as income when determining his entitlement to Austudy and CVS.[24]
[23] T18, p.188.
[24] T2, p.14-15.
By operation of section 1173(1) and (2), I am satisfied that the correct approach is for the periodic compensation back payments to be taken as income during the period to which they relate, and the rate of Austudy and CVS that Mr Khan is entitled to should reflect this.
Mr Khan received periodic compensation payments of $400 per week from 19 December 2019.[25] He was originally entitled to receive $675.85 in Austudy payments per fortnight, meaning that upon application of the direct deduction method, he had a nil entitlement to Austudy payment.[26] As such, the decision to cancel his Austudy from 30 November 2021 was correct.
[25] T18, p.188.
[26] T20, p.263-67.
Has Mr Khan incurred recoverable debts to the Commonwealth?
The Agency calculated Mr Khan’s entitlement to Austudy and CVS from 19 December 2019 to 29 November 2021 and determined he was overpaid both benefits. Austudy in the total amount of $13,850.13, of which $1,543.81 had been recovered, leaving an overpayment of $12,306.32.[27] He was overpaid a total of $9,250 in CVS.[28]
[27] T20, p.262; T21, p.295
[28] T15, p.180.
The Agency’s debt calculations correctly assess the periodic compensation payments Mr Khan received as ordinary income pursuant to s 1174 of the Act. Section 1184 of the Act provides that the Secretary may send a recovery notice to a compensation payer where a claimant has received a compensation affected payment in relation to a day or days in the periodic payments period. I am satisfied that the Agency’s calculations of the debts are correct, and the amounts are recoverable pursuant to section 1184 of the Act.
Should all or part of Mr Khan’s compensation payment be disregarded due to special circumstances?
Section 1184K of the Act provides the Secretary (or the Tribunal standing in the shoes of the Secretary) discretion to disregard part or all of a compensation payment in ‘special circumstances’.
1184KSecretary may disregard some payments
(1)For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:
(a)not having been made; or
(b)not liable to be made;
if the Secretary thinks it is appropriate to do so in the special circumstances of the case.
(2)If:
(a)a person or a person’s partner receives or claims a compensation affected payment; and
(b)the person receives compensation; and
(c)the set of circumstances that gave rise to the claim for compensation is not related to the set of circumstances that gave rise to the person’s or the person’s partner’s receipt of, or claim for, the compensation affected payment;
the fact that those 2 sets of circumstances are unrelated does not alone constitute special circumstances for the purposes of subsection (1).
What constitutes special circumstances is not defined in the Act or related legislation but has been considered extensively by the courts and this Tribunal. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at [545] the Federal Court stated that ‘special’ denoted something different from the usual or ordinary, but it is the circumstances that must be special, not the individual’s experience of them. In Beadle and Director-General of Social Security [1984] AATA 176 the Tribunal stated that:
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.[29]
[29] [1984] AATA 176.
In Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones,[30] the Federal Court observed that ‘special circumstances’ is “…sufficiently understood as including events or things that render the operation of the statute in a particular case as unfair, unintended or unjust” and set out that, “What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists”.
[30] [2012] FCA 639.
Instruction 4.13.4.10 of the Guide provides policy guidance for application of the special circumstances provisions in section 1184. The Guide states that the exercise of the special circumstances provisions should be based on a holistic view of an individual’s circumstances and ‘would not usually be based on just one factor but a combination of factors'.
Mr Khan gave evidence at the hearing and provided statements setting out his position on the Secretary’s application. In his 12 June 2024 statement he writes that the issue has caused him distress and that he believes it is ‘unfair and unjust’ for him to ‘pay back’ the debts because they were ‘legitimate payment[s]’ when they were made. He said that he was ‘attacked on four different occasions’ at work and in 2016 he was hijacked at knifepoint while driving a taxi.[31] He says he was struggling for many years with both his health and finances after the workplace incident, and that he was required to borrow money from friends and family who he had to repay. As the compensation was paid directly from GIO to the Agency, he says he was deprived of the opportunity to repay his debts.
[31] Statement of the Respondent dated 12 June 2024, p.1-4.
At the hearing, Mr Khan stated that until the Commission determined he was to be paid $400 per week, he was experiencing such severe financial hardship he was unable to afford to have his hair cut.
In his 12 June 2024 statement, Mr Khan said that he sought assistance from Centrelink who gave him a ‘tough time’ but told him he was eligible for Austudy and provided him with a small income. Regarding the Commission’s determination, he writes:
In 2021, I asked the government for assistance and justice. I went to the Personal Injury Commission, which ordered Work Cover to pay me $400 weekly. The commission advocated that the Work Cover be paid back to Mr Khan in 2019 as I was behind and owned a vast debt, So the insurance agreed to pay it back.
While waiting for the money to be paid back to my account, Centrelink took all the money, around $18,000 from Work Cover, that was supposed to come to me. It caused me more stress and struggle, and I experienced financial difficulties, but I did not give up; I continued to fight for my rights for years to get the money back from Centrelink.
I have followed up with Centrelink many times, and Centrelink told me to appeal the claim, which was rejected. Centrelink then promised me that if I applied for AAT, they would provide my money back, which they said was my only option.[32]
[32] Ibid, p.1.

In relation to the CVS debt, Mr Khan writes:
I believe it is not my duty to pay back the money that had come to my bank during the coronavirus pandemic (approximately $9000) that I had not even applied for initially.
Every morning, I would hear the NSW government news say they would support people where I could not leave more than 5km from my home to get food from my cousin I was under the impression the money was government support.
It’s like providing someone with food and telling them to return it after eating it. I’ve struggled to claim the $18,000 owed for almost three years. It’s been exhausting and traumatising for me. It’s caused me more stress on top of my injury in times of hardship.
I believe it’s not my responsibility to pay this money back. Centrelink mentioned the compensation that I received on a separate occasion…[33]
[33] Ibid, p.2.
Mr Khan claims to be experiencing financial hardship and was asked to provide evidence as to his financial circumstances. In the 12 June 2024 submission he writes in part:
The AAT requested a bank statement, which I did not have access to; looking back at the statement where I lost all my money giving back to people I owed, it caused me stress and anxiety. Centrelink still hassles me with warning letters and reminder letters telling me to pay them back, causing more stress. I barely have money for food and survivability, but Centrelink remains. I owe almost $2000, which makes me stressed again and anxious.
I have no income or assets; I have nothing to support myself. I am contacting the community again to help with my rent and bills. I am behind on my bills, and I am ashamed and embarrassed having to reach out again for help. Centrelink has let me down in all my times of need.[34]
[34] Ibid, p.2-3.
Mr Khan is no longer receiving periodic compensation payments and is not eligible to receive income support payments from the Agency as he is subject to a compensation preclusion period until 31 March 2026 after he became eligible for a lump sum compensation payment of $280,000 on 29 May 2023.[35] Mr Khan writes that he had relied on community groups, family and friends since 2023, and indicated that much of the compensation payment was used to repay debts.[36]
[35] T22, p.416; 419.
[36] Statement of the Respondent dated 12 June 2024, p.2.
When asked at the hearing about his current financial circumstances, Mr Khan was not forthcoming. I note the observations of the ARO in their notes of 21 February 2022 that Mr Khan would ‘would not agree to lodge a copy of his [income tax return]’.[37] His assertions around borrowing money from friends and family while in receipt of periodic compensation payments, particularly prior to the determination, are vague and non-specific. I do not accept that he was unable to provide bank statements as he told the Tribunal. Based on the available information, it is not possible to make an accurate assessment of Mr Khan’s financial circumstances at this time. I am not satisfied that financial hardship, or his current financial circumstances, warrant a special circumstances waiver.
[37] T15, p.176.
Another ground for potentially disregarding some of the compensation payments is ill health. Mr Khan has provided some limited information on the nature of the injuries sustained in the workplace. He writes that he received a knife injury and experienced extreme stress and has “…seen various medical practitioners, including psychologists and psychiatrists”.[38] While acknowledging Mr Khan’s workplace injuries, I do not consider that the evidence supports the existence of special circumstances that warrant disregarding some or all of the compensation payments.
[38] Statement of the Respondent dated 12 June 2024, p.1.
Does Mr Khan have debts to the Commonwealth?
Mr Khan accepts he was paid money that he was not entitled to receive. A debt in relation to a social security payment arises by operation of subsection 1223(1) which provides that where a person obtains the benefit of a social security payment and was not entitled to obtain the benefit, the amount of the payment is a debt due to the Commonwealth.
I am satisfied that Mr Khan was overpaid Austudy and CVS between 19 November 2019 and 29 November 2021 as these benefits were calculated on an incorrect basis and that the payments were not payable. The Austudy and CVS overpayments in the amount of $12,306.32 and CVS in the amount of $9,250 were debts owed to the Commonwealth in accordance with subsection 1223(1) of the Act.[39]
[39] T15, p.180; T20, p.262-272.
Section 1236 of the Act sets out that a debt may be written off, 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.
I have already detailed my understanding of Mr Khan’s financial circumstances. Although he is no longer receiving periodic compensation payments and is currently subject to a compensation preclusion period, I note that most of the debt has been recovered and the only outstanding debt is the second CVS debt of $1,752.85.[40] In the context of receiving a compensation payment of $280,000, I am not satisfied that the circumstances in section 1236 of the Act exist which would warrant writing off Mr Khan’s debts.
[40] T22, p.406-409.
Section 1237A(1) of the Act provides for waiver of debt arising from an error made by the Commonwealth. Mr Khan’s debts were the result of his periodic compensation payments being retrospectively increased from 19 December 2019. There is no evidence the debts arose due to administrative error.
Section 1237AAD of the Act provides for waiver of debt in special circumstances. In considering the discretion in section 1184K I have determined that special circumstances are not a relevant consideration in this matter, and the same reasoning applies here.
DECISION
For the reasons outlined above, the reviewable decision dated 8 January 2024 is set aside and substituted with a finding that:
·Mr Khan’s Austudy was correctly cancelled by the Agency from 30 November 2021.
·Mr Khan has an Austudy debt in the amount of $2,776.44 for the period 13 December 2019 to 6 April 2020 which was correctly recovered by the Agency from GIO on 1 March 2022.
·Mr Khan has an Austudy debt in the amount of $9,529.88 for the period 19 December 2019 to 29 November 2021 which was correctly recovered by the Agency from GIO on 1 March 2022.
·Mr Khan has a Coronavirus Supplement debt in the amount of $7,497.15 for the period 15 June 2020 to 29 March 2021 which was correctly recovered by the Agency from GIO on 7 March 2022.
·Mr Khan has a recoverable Coronavirus Supplement debt owed to the Commonwealth in the amount of $1,752.85 for the period 4 May 2020 to 15 June 2020.

Date(s) of hearing: 3 September 2024

Solicitors for the Applicant: M Gauci, Hunt and Hunt Lawyers

Respondent: In-person

[2024] ARTA 469

18 October 2024

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Compensation Affected Payment

Rate Calculation

Income Test

Social Security Act

Date(s) of hearing:	3 September 2024
Solicitors for the Applicant:	M Gauci, Hunt and Hunt Lawyers
Respondent:	In-person