Loch and Secretary, Department of Social Services (Social services second review)
[2021] AATA 910
•19 April 2021
Loch and Secretary, Department of Social Services (Social services second review) [2021] AATA 910 (19 April 2021)
Division:GENERAL DIVISION
File Number(s): 2019/8203
Re:Odin Loch
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:19 April 2021
Place:Sydney
I set aside the reviewable decision dated 22 June 2020 and remit the matter to the Secretary with a direction that 60% of the total debt of $7,178.54 is to be waived.
...................................[sgd]... ..................................
Emeritus Professor P A Fairall, Senior Member
CATCHWORDS
YOUTH ALLOWANCE – Applicant underreported earnings and was overpaid social security benefits – Centrelink issued an account of overpayment (decision) – authorised review officer affirmed the decision – application made to Administrative Appeals Tribunal (AAT) – AAT1 (Social Services and Child Support Division) upheld the decision – second application made to AAT – Centrelink re-calculated debt and substituted the decision – AAT2 (General Division) hearing held – Central issue: whether the Applicant is indebted to the Commonwealth and if so, whether any part should be waived or written off – Provisions of Social Security Act 1991 (Cth) considered – inconsistent receipt of payslips and mismanagement by Applicant’s former employer considered – calculations and material provided by parties considered – Applicant found to be indebted to the Commonwealth – debt found not capable of or practicable to being written off – debt found to be partially waivable under section 1237AAD of the Social Security Act 1991 (Cth) taking into account Applicant’s special circumstances – matter set aside and remitted with directions
LEGISLATION
Fair Work Act 2009 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693
Department of Social Security v Coralie Hales [1998] FCA 219
Dranichnikov v Centrelink [2003] FCAFC 133
Loch and Secretary, Chief Executive Centrelink 2020/S151088
Loch and Secretary, Department of Education and Training [2019] AATA 1101
Loch and Secretary, Department of Education, Skills and Employment (No. 3921 of 2019)
Loch v JB Restaurants Pty Ltd [2018] FCCA 3951
Re Callaghan and Secretary, Department of Social Services (1996-97) 45 ALD 435
Wall and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 740
REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
19 April 2021
BACKGROUND
This application relates to an alleged overpayment of Youth Allowance paid to the Applicant in 2013 and 2014 while he was employed by JB Restaurants Pty Ltd (JB), a company which operates a restaurant in Campbelltown, NSW.
The Applicant was employed by JB for about 15 months. It is the Secretary’s contention that during this period he failed to declare earnings as he was required to do, resulting in an overpayment of $7,178.54[1] of Youth Allowance, a means tested allowance under the Social Security Act 1991 (Cth) (Social Security Act).[2]
[1] ST8 at p 540; Respondent’s Statement of Issues, Facts and Contentions, para 3.13.
[2] Social Security Act s 1067G.
The Applicant has at various times asserted that he was paid more than the amount reported by his employer, and agrees that he received at least as much as that asserted by the Secretary, but says in essence that the employer did not provide him with pay slips, and paid him in cash, making his reporting obligations difficult if not impossible to perform. He also asserts that if there is a debt it should not be recovered because of various special circumstances, including financial hardship, alcoholism and a number of diagnosed mental health conditions.
The Applicant has been persistent if not consistent in his claim of underpayment and the non-provision of pay slips. He has sought redress by various means. In June 2017, he made a complaint to the Ombudsman about unpaid wages, and outstanding annual leave. Shortly thereafter, JB made an offer of $1,938.65 for unpaid annual leave, which he refused.[3] In 2018, he brought proceedings in the Federal Circuit Court (FCC) against JB for unpaid annual leave and unpaid wages.[4] He tendered a detailed spreadsheet setting out his rate of pay, hours of work, and the amounts paid, which were well in excess of the figures provided by JB’s accountant.[5] He said he worked long hours but received only $10 per hour paid in cash and that he did not receive pay slips. He deposed that he normally worked 44 hours per week with three 8 hour shifts (Wednesday, Thursday and Friday) and two 10 hour shifts (Saturday and Sunday), and that he worked a shift every public holiday for 10 hours.[6]
[3] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [40] – [44].
[4] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951.
[5] T5 at p 78 – 92.
[6] T5 at p 25.
JB’s manager told the Court that the Applicant was employed under a wages subsidy initiative administered by CRS Australia (CRS) in tandem with the Department of Human Services, as it was known at the time. She said that the arrangement was initiated by a rehabilitation consultant with CRS.[7] Under the agreement, JB agreed to employ him for a maximum period (28 August 2013 to 25 February 2014) for 30 hours per week.[8] The agreed remuneration was $505.50 gross per week. In return JB received a weekly subsidy of $232.60 from the Commonwealth.[9] JB’s manager stated that he was employed as a waiter at the end of his initial six month period.[10] She said that she provided him with a pay slip every fortnight and that wages were paid in cash because that is what he wanted.[11]
[7] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [33].
[8] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [33].
[9] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [35].
[10] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [36].
[11] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [36].
The company accountant provided copies of pay slips for the relevant period.[12] The pay slips show that the Applicant worked approximately 38 hours per week between July 2013 and March 2014, after which he worked barely five hours per week, and from 1 October 2014 nil wages are regularly recorded.[13]
[12] ST2.
[13] ST2.
The Court accepted the accountant’s evidence regarding the amounts actually paid to the Applicant. The Court found that he was paid in cash and was not given a pay slip, unless he made a specific request.[14] The Court did not accept JB’s manager’s oral evidence that she always gave him a pay slip. Conversely, the judge did not accept his claim that he never received a pay slip. The judge thought that he may simply have forgotten asking for and receiving the occasional pay slip.[15] However, the judge did not impugn the Applicant’s truthfulness.[16]
[14] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [58].
[15] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [64].
[16] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951 at [64].
The Applicant was awarded $2,343.20 plus interest for unpaid annual leave but failed to establish his claim for unpaid wages.
Importantly, for present purposes, the judge noted that JB had ‘facilitated the dispute’, because pay slips were only provided on request.[17] This constituted non-compliance with an important statutory obligation under the Fair Work Act 2009 (Cth) (Fair Work Act), namely, to provide a pay slip within one working day after the performance of paid employment.[18]
[17] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951 at [58].
[18] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951, at [58]; Fair Work Act s 536.
As a postscript to the FCC proceedings, I note that the Applicant filed fresh proceedings in the FCC on 7 December 2018. On 14 February 2019, he failed to appear and the Court dismissed the proceedings.[19]
[19] ST6 at p 534.
THE PRESENT PROCEEDINGS
On 26 May 2016, Centrelink wrote to the Applicant about his employment income from JB.[20] The letter stated that information received from the Australian Taxation Office (ATO) indicated that he received $22,847.00 in the 2013/2014 financial year.[21]
[20] T15 at p 380.
[21] T15 at p 380.
By letter dated 2 June 2016, Centrelink issued an account for overpayment of Youth Allowance.[22] The letter recorded that for the period 19 July 2013 to 25 October 2014 the Applicant had been paid Youth Allowance of $16,499.18, against an entitlement of $7,230.33, resulting in an overpayment of $9,268.85.[23] He was required to repay the amount by 1 July 2016.
[22] T4 at p 18.
[23] T4 at p 18.
On 21 February 2019, the Applicant asked Centrelink for a review of its decision of 2 June 2016.[24] He said that had been underpaid, abused and threatened by his employer. He said his employer refused to give him pay slips or any proper form of tax documentation. He asked for leniency and for a full debt waiver.
[24] T5 at p 22.
On 5 June 2019, Centrelink wrote to the Applicant to say that the matter had been referred to an Authorised Review Officer (ARO).[25]
[25] T15 at p 385.
A file note from Centrelink dated 10 July 2019 records that the Applicant spoke to a departmental officer and asked for a waiver of the debt due to his medical condition.[26]
[26] T6 at p 102.
On 23 July 2019, the ARO confirmed Centrelink’s decision.[27] The ARO referred to the ATO information, as well as information provided to the FCC by the Applicant.[28]
[27] T7 at p 104.
[28] T7 at p 105 – 106.
On 6 November 2019 the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) upheld the decision.[29] The AAT1 referred to the FCC proceedings and noted that the Applicant’s claims to have worked 60 hours per week were not upheld by the Court:
[The Applicant] said his weekly earnings were the same every week throughout the relevant period. In circumstances where [the Applicant’s] income was consistent, it is accepted the tax information used by the Department that was obtained from the ATO reflects his periodic income.[30]
[29] T2 at p 3 – 5.
[30] T2 at p 4.
On 19 December 2019, the Applicant applied to the Administrative Appeals Tribunal (AAT, the Tribunal) for review of the AAT1 decision.[31]
[31] T1 at p 1 – 2.
On 22 June 2020, an officer of Centrelink examined pay slip information[32] obtained under information gathering powers[33] and reduced the debt amount to $7,178.54.[34]
[32] ST2.
[33] Social Security (Administration) Act 1999 (Cth) (Administration Act) s 196.
[34] ST8 at p 540; Respondent’s Statement of Issues, Facts and Contentions, paras 3.13 – 3.14.
If an officer varies or substitutes a decision after an application has been made to the AAT for AAT first review of the decision, the application is taken to be an application for review of the decision as varied or substituted. The AAT is taken, on AAT first review, to have varied or substituted the decision under review in the way the officer did and the application is taken to be an application for AAT second review of the decision as varied or substituted.[35]
[35] Administration Act s 182.
The application before the Tribunal is therefore an application to review the decision made on 22 June 2020 to raise and recover a debt of $7,178.54 for alleged overpayment of Youth Allowance for the reporting periods 19 July 2013 to 25 October 2014.
MATERIAL BEFORE THE TRIBUNAL
The Tribunal was provided with a large volume of material relating to the application:
·The Applicant’s outline of arguments/submissions dated 11 September 2020;
·The Respondent’s Statement of Issues, Facts and Contentions dated 16 October 2020;
·Documents filed under section 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (T Docs) – 385 pages; and
·Supplementary T Docs – 160 pages.
The application was heard by telephone on 24 November 2020. The Applicant was self-represented.
THE ISSUE
The Tribunal is required to determine whether the Applicant is indebted to the Commonwealth in an amount of $7,178.54, and if so, whether any part of this debt should be waived or written off under the palliative provisions of the Social Security Act.
Youth Allowance is means tested and the rate of payment is determined by a person’s gross income from all sources during the claim period.[36] The cumulative effect of the statutory provisions is that the gross fortnightly employment income of the Applicant must be deducted from the maximum payable rate in order to determine the rate of Youth Allowance payable. In essence, the first $143 of earnings is an income free area and has no impact on the rate, but for each dollar above $143 up to $250 the rate is reduced by 50 cents in the dollar, increasing to 60 cents for each dollar over $250.[37]
[36] See the Youth Allowance Rate Calculator in section 1067G, Social Security Act.
[37] Respondent’s Statement of Issues, Facts and Contentions , paras 4.7 – 4.8
As noted above, a revised debt amount of $7,178.54 was calculated by a Centrelink officer on the basis of pay slip information.[38] The Tribunal was not provided with detailed workings for this calculation. However, I have verified the Applicant’s entitlement on a fortnightly basis, which is a function of his gross income for that fortnight.
[38] ST8 at p 540; Respondent’s Statement of Issues, Facts and Contentions, para 3.13.
I have also verified the Applicant’s net receipts by reference to his bank account records and his gross entitlements by reference to a spreadsheet provided by the Respondent.[39]
[39] T12 at p 273 – 274.
I am satisfied that the revised Centrelink debt calculation is correct, as reflecting the overpayment arising from the JB gross income figures.[40]
[40] Applying Social Security Act s 1067G-H1.
But of course, this is a necessary but not sufficient condition, for the result of the calculation is only as good as the information upon which it is based, and the primary input relates to the Applicant’s gross fortnightly income.
The FCC judge accepted that the JB pay slip information was accurate and gave cogent reasons for doing so. The Tribunal is not bound in the present proceedings to accept the findings of fact made in the Court proceedings and may consider de novo factual matters pertaining to the facts in issue. However, there is, much to be said for the judge’s reasoning. The judge noted that given the simple multiples involved in cash payments of $10 per hour, it is unlikely that an underpayment would have gone unnoticed and unlikely that the Applicant would not have raised his concerns in more timely a manner.[41] It appears that the Applicant did not raise concerns about underpayment until after he left the employ of JB, indeed, some years later.
[41] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951 at [59].
In the present proceedings, the Applicant reiterated that he did not receive pay slips and was therefore unable to accurately report his income to Centrelink. The Tribunal has examined the lengthy spreadsheet prepared by the Applicant for the FCC proceedings, setting out his alleged hours of work between 7 June 2013 and 28 December 2014.[42] The totals are much higher than the information provided by JB, upon which Centrelink relies. I note that were the higher figures of gross income accepted, the Applicant’s Youth Allowance entitlement would be lower, and the Centrelink debt would be higher. In the present proceedings, this spreadsheet does not assist the Applicant’s case.[43]
[42] T5 at p 78 – 92.
[43] It appears that as of 4 September 2019, Centrelink proceeded on the assumption that the income figures contained in his spreadsheet were in fact correct, despite the non-acceptance of those figures by the FCC: see T14 at p 288 – 289.
I am not able to find that the information contained in the Applicant’s spreadsheet should be preferred to the information relied upon by the Respondent, for essentially the same reasons as those given by the judge. I also note some minor discrepancies between the spreadsheet data and the health records before the Tribunal.[44] A summary document for the period 20 April 2012 to 16 June 2016 shows that medical certificates were granted on 15 August 2013 and 23 October 2013.[45] The spreadsheet does not record any interruptions to a full time work schedule and the Applicant claims to have worked on each of these days.[46] The spreadsheet looks like a retrospective analysis in the nature of an accounting exercise, rather than a contemporaneous record.
[44] T8 at p 108 – 211.
[45] T8 at p 160.
[46] T5 at p 79, 81.
I am satisfied that the Applicant’s fortnightly earnings have been assessed correctly, and the corresponding Youth Allowance rate has been calculated correctly. I am satisfied that the net fortnightly amounts he received for Youth Allowance, documented in his bank account statements, are appropriately adjusted for rent assistance, energy supplement and withholdings due to recovery action in unrelated matters. I can detect no error in the Centrelink calculation on the assumptions contained therein.
I therefore find that the amount of $7,178.54 is a debt due to Commonwealth, as provided for by subsection 1223(1) of the Social Security Act.
Should the debt be recovered in full from the Applicant?
The Respondent’s solicitor drew my attention to the following comment by French J (as he then was) in Secretary, Department of Social Security v Coralie Hales [1998] FCA 219, where the learned judge said:
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.
I turn to consider the palliative provisions in the Social Security Act referred to by French J.
Can the debt be written off?
Section 1236 of the Social Security Act allows for writing off the debt, if certain conditions are satisfied, such as that the debtor’s whereabouts are unknown or the debtor has no capacity to repay. The section 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.
I note that from July 2016, Centrelink commenced automatic deductions to recover the debt.[47] The last transaction occurred on 13 August 2020 and the outstanding balance is $200.42.[48] In other words, an amount of $6,978.12 has been withheld from the Applicant’s entitlements.
[47] ST8 at p 542 – 544. Debt reference X2371395.
[48] ST8 at p 541 – 542; Respondent’s Statement of Issues, Facts and Contentions, para 3.15.
The conditions for writing the debt off do not apply in this case. Nor is this provision apt where the debt has been substantially repaid, and the practical question involved is whether the monies recovered from the debtor should be returned. For reasons that follow, it is not necessary to explore whether the reference to ‘severe financial hardship’ in subsection 1236(1C) of the Social Security Act can be invoked, when the debt has already been substantially repaid by means of deductions from Centrelink payments provided to the debtor.
Sole administrative error[49]
[49] Social Security Act, s 1237A.
There is no factual basis for a finding that the debt was the result of sole administrative error made by the Commonwealth. The law is clear; any contributing error by the person relying on this section will defeat a claim. The operative error must be ‘attributable solely to an administrative error made by the Commonwealth’.[50]
[50] Social Security Act, s 1237A.
There is no suggestion that the Commonwealth contributed to the underreporting of the Applicant’s income.
I note the evidence given in the FCC proceedings, namely that the Applicant’s employment arrangement with JB involved the operation of a wages subsidy initiative administered by CRS and the Department of Human Services, as it was known. It might be said that such an arrangement imposes on both the employer and Centrelink a duty to ensure compliance with the terms of the Fair Work Act, relevantly in relation to the provision of regular pay slips, which the judge noted had ‘facilitated’ the dispute in that case. However, there is no direct evidence of this wages subsidy agreement before the Tribunal, and for reasons outlined below, further discussion on this point is unnecessary.
I accept the Applicant’s evidence that the underreporting arose because he did not receive regular pay slips and that any under declaration was neither deliberate nor reckless. The problem was compounded by the need to convert gross income to the reporting periods required by Centrelink. But the failure to report according to the reporting requirements is not something that can be sheeted home to the Commonwealth.
Special circumstances waiver under section 1237AAD
Section 1237AAD of the Social Security Act provides:
Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, 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.
(a) The first element – knowingly making a false statement or omitting to comply
The Respondent contends that it is open for the Tribunal to find that the Applicant knowingly made a false statement to Centrelink by understating his income, either on the basis of actual knowledge,[51] or by reference to so-called constructive knowledge, under which a person may be treated as having knowledge if there were opportunities for him or her to acquire that knowledge.[52]
[51] Re Callaghan and Secretary, Department of Social Security (1996-97) 45 ALD 435.
[52] Wall and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 740.
A social security recipient is required to report actual earnings on a fortnightly basis. Where the pay period does not coincide with the reporting period (as in the present case) a calculation is required to allocate actual earnings to the relevant reporting period. In short, a daily rate is derived for each working day from the actual fortnightly earnings and that daily rate is then allocated to the corresponding day falling within the fortnightly reporting period.[53] The provision of pay slips is indispensable to the reporting obligations of Centrelink recipients. This case highlights the problems that abound when wages are paid in cash and not credited to a bank account.
[53] See ST3 at p 491 – 492 for Centrelink calculations for the Applicant.
I do not think that the evidence supports the contention either that the Applicant was aware that he was underreporting income, or that he ought to have known, based on the information then available to him.
The Applicant’s conduct must be assessed against the backdrop of JB’s failure to comply with the duty placed upon employers to provide pay slips within one working day of the performance of paid employment.[54]
[54] Fair Work Act s 536.
The relevance of pay slips has been recognised by Centrelink. For example, I note a previous instance of overpayment for Youth Allowance of $487.80.[55] A file note on 26 September 2013 notes that the customer (the Applicant) did declare his earnings ‘but in some cases it was difficult as did not have pay slips’. The officer recommended no recovery fee because he did not recklessly understate his earnings. A decision was made not to issue a warning to the Applicant.[56]
[55] T15 at p 340; see the letter from Centrelink dated 26 September 2013.
[56] T11 at p 226.
During the first period, from July 2013 to February 2014, the Applicant’s reporting was generally consistent with his belief that he was being paid at $10 per hour. It was during this period that most of the overpayment occurred.
During the second period, from March 2014 to October 2014, there was, for the most part, little difference between his entitlement and the rate at which the allowance was paid, and indeed, if he were earning only $10 per hour he would have received the maximum entitlement.
Like the FCC judge, I do not impugn the Applicant’s truthfulness. He generally reported in the first period on the basis that he was being paid at the rate of $10 per hour. He also declared $500 in August 2014 and $900 in October 2014.
I am satisfied that the Applicant did not knowingly make a false statement or a false representation; and that he did not knowingly fail or omit to comply with a provision of the relevant legislation.
(b) The second element – special circumstances
The question then is whether there are special circumstances in this case (other than financial hardship alone) that make it desirable to waive all or part of the debt.
I note that in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33], Besanko J noted that it was an overstatement to equate ‘special’ circumstances with ‘exceptional’ circumstances. For it was not the intention of Parliament to confine the exercise of discretion to an exceptional case. His Honour noted that:
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.
I note that in Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693, the Tribunal stated (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.
The Applicant has an extensive medical and mental health history.[57] The Tribunal received over a hundred pages of medical records.[58] Much of this material was prepared for use in other proceedings, either in the FCC or before the Tribunal.
[57] T8 at p 160.
[58] T8 at p 109 – 211.
The Applicant was on a mental health plan in August 2011,[59] February 2014,[60] and April 2016[61]. In July 2016, he was diagnosed by a clinical psychologist with Major Depressive Disorder with Alcohol Dependency.[62] In March 2017, his mental health deteriorated.[63]
[59] T8 at p 109.
[60] T8 at p 119.
[61] T8 at p 132.
[62] T8 at p 140; Letter dated 18 July 2016.
[63] T8 at p 138; Letter dated 6 March 2017.
I also note the letter dated 6 December 2017 from Drug Health Services, NSW Health Department, relating to chronic alcoholism and binge drinking.[64]
[64] T8 at p 144.
In October 2018, the Applicant was diagnosed with High Functioning Autism Spectrum Disorder.[65]
[65] T8 at p 162 – 164.
In June 2020, a consultant psychiatrist suggested that the Applicant might suffer from a bipolar or schizoaffective disorder coupled with an alcohol use disorder and a possible background of autism spectrum disorder.[66]
[66] ST7 at p 538; letter dated 19 June 2020.
The Applicant experiences various problems of living associated with his life experiences, mental make-up and disposition. This is well attested to by the many pages of medical information made available to the Tribunal. He has been clinically diagnosed with various maladies as well as acute alcoholism. There is some evidence that he suffers financial hardship resulting in occasional homelessness. The drafting of section 1237AAD suggests that financial hardship is a relevant factor in determining whether special circumstances exist.
I am satisfied that there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt in whole or part. In short, the Applicant experiences significant problems of living associated with his life experiences, mental make-up and disposition, and his underlying mental health problems. The 2020 psychiatric report referred to above points to the possibility of an underlying bipolar disorder or a schizoaffective disorder. Centrelink reporting obligations may be severely affected by such conditions, especially in a non-compliant employment situation.
(c) The third element – waive or write off
The third element is whether it is more appropriate to waive rather than write off the debt. A debt that is waived cannot be reinstated.[67]
[67] Fletcher; Secretary, Department of Social Services and (Social services second review) [2021] AATA 577 at [133].
The Respondent says that the Applicant is capable of working and engaging with health professionals, Centrelink and employers. The Tribunal accepts this contention, and indeed, the Applicant does appear to have a strong work ethic. In 2014, it appeared that the Applicant prioritised his work as a waiter rather than attending counselling sessions.[68] However, the Applicant’s capacity to engage in paid employment in the future may be affected by his underlying vulnerabilities.
[68] T8 at p 129. Note letter dated 17 July 2014 from Headspace, re Termination of Psychological Treatment, citing difficulties in attending due to work.
I note that the Applicant plans to move to Wagga Wagga to study. The Tribunal does not have details of his academic record but on two previous occasions he was withdrawn from studies and applied to the Tribunal for remittal of HECS-HELP debts, with mixed results.[69]
[69] Loch and Secretary, Department of Education and Training [2019] AATA 1101 (3 June 2019), (refusal to remit HECS-HELP debt upheld); Loch and Secretary, Department of Education, Skills and Employment (No. 3921 of 2019) (remittal of HECS debt in relation to certain units - settled by agreement).
In Loch and Secretary, Chief Executive Centrelink, the Applicant was successful in an application for relief in relation to a different Youth Allowance debt. The debt was confirmed but waived.[70] The Tribunal accepted the cogency of the medical reports and that his circumstances were ‘sufficiently uncommon’ to permit waiver of the debt by reference to special circumstances.[71]
[70] 2020/S151088, 06 August 2020, per Member T Bubutievski; ST5 a p. 526 – 533.
[71] ST5 at p 533.
Consistently with this recent decision involving the Applicant, I consider that it is more appropriate to waive than write-off the debt or part of the debt.
Should the debt be waived in whole or part?
The Respondent referred to Dranichnikov v Centrelink [2003] FCAFC 133, where the Full Federal Court, at [66] stated: ‘To some extent the question whether there were special circumstances must depend on how it came about that the error occurred.’
Overall, I consider that the failure of the employer JB to provide regular payslips as required by law was a significant contributing factor to the creation of the Centrelink debt. I note that in the civil proceedings before the FCC, the learned judge noted that JB had ‘facilitated the dispute’, because pay slips were only provided on request.[72] Although the claim for underpayment was unsuccessful, the judge’s comment about ‘facilitation’ has particular relevance for present purposes. There is also evidence that Centrelink was aware of the fact that he was not receiving pay slips.[73]
[72] Loch v JB Restaurants Pty Ltd [2018] FCCA 3951 at [58].
[73] T11 at p 226.
With respect to the first period from July 2013 to February 2014, the Applicant was capable of working on a full time basis and it is reasonable to infer that during this period, at least until the end of 2013, his mental health was relatively stable. I consider that he has some responsibility for failing to clarify the terms of his employment at the outset, especially in relation to his rate of pay, and in failing to ensure that he received a pay slip with each pay.
But I also note that he was on a mental health plan both before and during his period of employment at JB; in August 2011,[74] and again in February 2014.[75] There are aspects of his employment during this period (cash payments sans pay slip) that support a claim for partial debt relief when coupled with his particular vulnerability. I consider that half of the debt associated with the first period should be waived by reason of special circumstances.
[74] T8 at p 109.
[75] T8 at p 119.
The Applicant’s mental health deteriorated substantially during February 2014. From March 2014 onwards he worked irregular hours and was facing various stressors capable of triggering psychotic episodes associated with bipolar and schizoaffective disorder. This combination was particularly harmful, especially when coupled with the possibility of either high functioning autism or Asperger’s syndrome. I consider that the entire debt associated with the second period should be waived.
Of the revised debt amount of $7,178.54, I calculate that approximately $5,730 relates to the first period (July 2013 to February 2014), and $1,445 relates to the second (March 2014 to October 2014). The debt associated with each period is made by the Tribunal with the highest degree of accuracy that the case permits. By coincidence, of the revised debt, approximately two-fifths relates to the first period, one-fifth to the second; a total of three fifths, or 60%.
I therefore consider that the correct and preferable decision is to allow a debt waiver of 60% of the claimed debt of $7,178.54. As noted above, Centrelink has already recovered $6,978.12 from the Applicant, and the Applicant is therefore entitled to a substantial credit.
CONCLUSION
I therefore set aside the reviewable decision dated 22 June 2020 and remit the matter to the Secretary with a direction that 60% of the total debt of $7,178.54 is to be waived.
I certify that the preceding 76 (seventy six) paragraphs are a true copy of the reasons for the decision herein of Emeritus Professor P A Fairall, Senior Member
..................................[sgd]......................................
Associate
Dated: 19 April 2021
Date(s) of hearing: 24 November 2020 Applicant: Self-represented Solicitor for the Respondent: Mr A Quanchi, Services Australia
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