McIntyre and Secretary, Department of Social Services (Social services second review)
[2024] AATA 2772
•7 August 2024
McIntyre and Secretary, Department of Social Services (Social services second review) [2024] AATA 2772 (7 August 2024)
Division:GENERAL DIVISION
File Number: 2024/0227
Re:Secretary, Department of Social Services
APPLICANT
AndJames McIntyre
RESPONDENT
DECISION
Tribunal:Senior Member D. J. Morris
Date:7 August 2024
Place:Hobart
Pursuant to s 43(1)(c) of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the reviewable decision. In substitution, the Tribunal decides that part of the outstanding debt of the Respondent should be waived under s 1237AAD of the Social Security Act 1991. The Tribunal finds that the Respondent has a debt of $10,000 due and payable to the Commonwealth as at the date of this decision. The Respondent can enter into a repayment plan with the Applicant’s Department.
..................................[signed].....................................
Senior Member D. J. Morris
Catchwords
SOCIAL SECURITY – pensions, benefits and allowances – where applicant receiving newstart allowance – applicant originally receiving benefit as a single person – where applicant married – where applicant contends he advised respondent of marriage – where status as member of a couple not recorded – where overpayment occurred owing to exceeding income threshold through wife’s income – debt – internal review affirmed debt – can all or part of debt be written off or waived – first review waived all of debt – statutory provisions regarding write off or waiver – special circumstances in this case – first review decision is set aside and substituted with a decision waiving part of the debt
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)Social Security (Administration) Act 1999 (Cth)
Cases
Jones v Gordon (1877) 2 App Cas 616
Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287
Jazazievska v Secretary, Department of Family & Community Services [2000] FCA 1484REASONS FOR DECISION
Senior Member D. J. Morris
7 August 2024
On 13 December 2023 the Social Services and Child Support Division of this Tribunal (‘first review’) set aside a decision of Services Australia (‘the Agency’), which is part of the Applicant’s Department, that the Respondent, Mr James McIntyre, had a recoverable newstart allowance debt of $66,974.59 for the period 27 October 2012 to 11 January 2017 and substituted a decision that the outstanding debt amount (which at 13 December 2023 was $40,576.10 including interest charges) was waived owing to special circumstances.
Dissatisfied with that decision, the Secretary of the Department of Social Services, as is his right, applied to the General Division of the Tribunal for a second review. In conducting the second review, the Tribunal is not reviewing the first review decision, it is examining the reviewable decision afresh, although evidence presented at the first review stage may be relevant.
HEARING
A hearing was held by telephone on 20 June 2024 as is permitted under s 33A of the Administrative Appeals Tribunal Act 1975 (‘the AAT Act’). Mr McIntyre made oral submissions and gave evidence. He was cross-examined by Mrs Aarabi Raveendiran, a senior lawyer with the Agency. For ease of comprehension, these reasons will refer to the Applicant as ‘the Secretary,’ and the Respondent by his name.
The Tribunal admitted into evidence documents submitted by the Secretary under s 37 of the AAT Act (‘TD’) (Exhibit R1) and supplementary documents submitted under s 38AA of the AAT Act (Exhibit R2). The Tribunal also had regard for a document titled Secretary’s Statement of Issues, Facts, and Contentions, lodged on 2 June 2024.
BACKGROUND FACTS
Mr McIntyre was in receipt of newstart allowance from May 2012 (TD, p 243). Commencing in October 2012, the Agency sent him notices regarding his newstart allowance which reminded him of an obligation under s 68(2) of the Social Security (Administration) Act 1999 (‘the Administration Act’) to advise the Agency of any changes to his circumstances, including his marital status and employment income.
On 27 October 2012, Mr McIntyre married. His wife will be referred to as ‘BM.’ The Secretary submits that there was no evidence that his change in marital status was advised to the Agency, nor that he completed what is described as a ‘Mod P (Partner details)’ form advising of BM’s income in response to a notice sent to him on 24 October 2012.
On many subsequent occasions, from 5 November 2012 to 12 October 2016, the Agency sent Mr McIntyre notices regarding his newstart allowance. Each of the notices reminded him of his obligation under s 68(2) of the Administration Act.
On nineteen occasions, the Secretary submitted that Mr McIntyre reported his hours and income with his then employers, but there was no evidence that he reported BM’s income to the Agency.
In December 2016, the Agency embarked on a review of Mr McIntyre’s entitlement to newstart allowance at single rate because BM had attended an office of the Agency to inquire about a claim for parental pay leave and family tax benefit, and had provided a copy of her marriage certificate to Mr McIntyre (TD, p 120). The Agency suspended Mr McIntyre’s newstart allowance while it investigated. The Agency sent Mr McIntyre a notice under s 63 of the Administration Act requiring him to complete a Mod P (Partner details) form and to provide all supporting details, otherwise his payments would be cancelled (TD, p 215).
On 20 January 2017, the Agency sent Mr McIntyre a s 63 Administration Act notice requiring him to provide all his wife’s payslips, or his payments would be cancelled (TD, p 222). Mr McIntyre complied on 2 February 2017. The payslips showed that BM had been employed throughout the debt period. Her annual salary at the start of the debt period was $58,898, increasing to $60,657 at the end of the debt period and her total income was around $160,000 over the span of the debt period. None of BM’s income had been reported to the Agency.
On 30 June 2017, the Agency raised a newstart allowance debt of $66,974.59 for the period between 27 October 2012 to 11 January 2017 on the basis that Mr McIntyre’s entitlement to newstart was nil because BM’s income exceeded the income threshold (TD, p 278). This was the original decision.
From 10 August 2017, the Agency started withholding various amounts from Mr McIntyre’s newstart allowance to recover the debt. Recovery of the debt by withholdings ceased in September 2017 because Mr McIntyre had stopped receiving newstart. The Secretary submitted that there was no evidence of any repayment plan.
From December 2019, the Agency started garnisheeing various amounts from Mr McIntyre’s then employer and, in addition, where he was entitled to income tax refunds from the Australian Taxation Office, these were redirected to repay the debt.
In December 2022, Mr McIntyre requested an internal review of the original decision. An authorised review officer (‘ARO’), who is an officer of the Agency not involved in the original decision, undertook a review. On 17 January 2023, the ARO affirmed the original decision (TD, p 143).
Mr McIntyre sought review by the Social Services and Child Support Division of the Tribunal. On 13 December 2023, the first review varied the ARO’s decision and waived the outstanding balance of the debt owing to special circumstances.
The Secretary noted that the first review found that it is likely that Mr McIntyre notified the Agency of his marriage shortly after it occurred, and found that his debt had thus arisen from a major error on the part of the Commonwealth. The Secretary noted that the first review found that Mr McIntyre had contributed to the debt by failing to advise the Agency of the changes in his wife’s income, and that precluded waiver under s 1237A of the SocialSecurity Act 1991 (‘the Act’).
The Secretary noted that the first review considered that Mr McIntyre’s ignorance about his notification requirements is related to his literacy and educational issues and found that his comprehension that he was being overpaid was ‘more explicable and less blameworthy’ than instances where people have a better understanding of the social security system. The Secretary noted that the first review found that the stress the debt has caused to Mr McIntyre led to a deterioration in his health and a stroke while only in his early forties.
The Secretary noted that the first review decided that s 1237AAD(b) of the Act was satisfied and the debt should be waived.
ORAL SUBMISSIONS
Mrs Raveendiran submitted that the outstanding debt cannot be written off, and that Mr McIntyre is not in severe financial hardship. She submitted that he failed to advise of his marriage or his wife’s income, and did not receive the newstart allowance in good faith.
Mr McIntyre told the Tribunal that he had been overseas, and his allowance had been suspended, so he went to the local office of the Agency to advise them he had returned from abroad. He said that he remarked that he had been on his honeymoon. Mr McIntyre said that the officer told him that, in this case, he needed to provide evidence of his marriage and, he said, three forms of identification. Mr McIntyre said he went home and returned to the Agency the same day. He named the Agency officer that he spoke to.
He said he was accompanied by BM, and he ‘signed up’ as being married, providing the marriage certificate, driver licence and bank details. He said that if the Agency had asked him directly if he were married on any later occasion, he would have answered ‘yes.’ He said he never deliberately intended to receive an overpayment. He told the Tribunal he had a ‘stroke’ – which, on the Tribunal querying whether he meant a transient ischemic attack (commonly called a ‘TIA’), he thought that might be correct.
In response to direct questions from the Tribunal about whether BM registered for Centrelink that day, Mr McIntyre said the officer said they “would sort everything out.” He said they took the marriage certificate away, and he assumed it was photocopied. He remembered dropping the certificate out of a plastic envelope on his way into the Agency office, and his wife being annoyed that he wasn’t more careful with it. He did not explicitly remember whether BM registered that day.
Mr McIntyre said he could not read or write. He can recognise numbers and basic words, and has learned to understand road signs, but cannot read any written document. He said he has developed strategies over the years to hide his illiteracy, because it is embarrassing, and when he has to know the contents of a document, he will get BM, a friend or a work colleague to read it and tell him the contents.
Mr McIntyre told the Tribunal that the debt had caused him great stress. He said that he had a lot of bills and was paying off his house and a car. He said he could not get a home loan because of the debt to the Agency. He told the Tribunal he was seeing a psychologist and had been diagnosed with PTSD. The job he currently has means he has to attend motor vehicle crashes where people have been injured or have died, which was traumatic.
ORAL EVIDENCE
Mr McIntyre was asked whether he married on a date in October 2012. He responded, “Yes, if that’s what it said – I am unclear on the date. I am not good with dates.”
He agreed that he received newstart allowance at a single rate, and that throughout the debt period his wife was employed as a nurse.
When asked when he advised the Agency of his marriage in October 2012, Mr McIntyre responded “When we got back. About three or four weeks afterwards. We went to Darwin and then Thailand for a holiday and honeymoon.”
Mrs Raveendiran asked Mr McIntyre if he was aware that he had to advise the Agency of his marriage. He responded, “No. I’m pretty sure my payments had stopped because I was overseas. We were talking and this came about.”
When asked whether he knew he had to advise the Agency of his wife’s income every time it changed, he responded, “No. Why would that be a thing – is that still the same?” He agreed he knew he had to report his own income.
Mrs Raveendiran confirmed that correspondence from the Agency was sent to Mr McIntyre, and he agreed the residential address was correct at the time. She noted that most of the notices advise that if there is a change to a person’s status and that the person’s partner’s income may affect payments, and asked him if he knew this. Mr McIntyre responded, “There was no change to my financial circumstances. No change to my wife’s income. As far as I knew, Centrelink knew BM was being paid this amount. Centrelink could ask me – are you still married, or has your wife got a pay rise, etc.”
Mrs Raveendiran noted that Mr McIntyre had said he was illiterate and could not read even simple words. She asked what he normally does when he has a document he needs to understand. He responded, “I don’t worry about it. I hide it. I have a job now where I don’t need to read or write.”
In response to a direct query from the Tribunal as to whether he would give a letter he needed to know about to BM to read, Mr McIntyre responded, “She knows I can’t read. I stick my head in the sand. I don’t like to ask her.”
Mr McIntyre agreed he and BM have a child who is at school. He said all the school correspondence goes to his wife, and she handles it. He said if he gets any documents, for instance from the police in relation to the recovery of a car, he takes it to someone at work to read for him.
When he was reminded that the notices that had been sent to him on many occasions alerted him to advise in any change of personal circumstances, Mr McIntyre said that as far as he knew, the Agency was aware of his marriage, and a change of circumstance would be if he “divorced, or something like that.” When asked whether it ever occurred to him to clarify the periodic notices he was being sent, because he couldn’t read them, he responded, “No. Because as far as I knew, Centrelink knew – we saw them face-to-face. I hate looking at a piece of paper and not knowing what it says. I can recognise basic words, but have no hope with a letter from Centrelink.”
CONSIDERATION
It is not in contention before the Tribunal that Mr McIntyre received newstart allowance at a single rate and, thence, once he married and his wife’s income exceeded the allowable threshold, his entitlement reduced to nil. He therefore received a social security benefit to which he was not entitled and, as a consequence, a debt is raised and is due and payable to the Commonwealth: s 1223 of the Act.
Section 1229A of the Act provides that a person is liable to pay an interest charge, by way of a penalty on their debt if they have been issued with a debt notice and have not entered into a repayment arrangement with the Agency. Section 1229F of the Act provides that a person may be exempted from an interest charge if he or she had a reasonable excuse for not entering into, or complying with, a repayment arrangement. There was no evidence before the Tribunal of any repayment arrangement being entered into; therefore interest is applied. The debt recovery tools the Agency has used have been withholding of newstart allowance, garnisheeing of Mr McIntyre’s wages and obtaining tax refunds he was due from the Australian Taxation Office.
After the hearing, the Tribunal asked for submissions from Mr McIntyre on his medical history and also asked the Secretary to see if there was any record of BM attending the Agency office around the time Mr McIntyre said they did, and when he submits that he furnished a copy of their marriage certificate.
Mr McIntyre provided a medical history letter from his general practitioner dated 21 December 2023 which recorded a number of health conditions, and confirmed that earlier in 2023 he was admitted to hospital with a possible TIA. Subsequently, an MRI confirmed he had actually suffered a small stroke. The doctor recorded that Mr McIntyre has no neurological deficit as a result and had made a good recovery. He also has diabetes and hypertension.
The Secretary searched the Agency’s records and advised after the hearing that a CRN, or Centrelink Reference Number, had been recorded for BM when she was a child, but there was no record of subsequent more recent contacts with the Agency until December 2016 when she attended an Agency office to inquire about paid parental leave and family tax benefit.
Taking Mr McIntyre’s oral evidence into account about his attendance at the Agency, and his subsequent returning and providing them with a marriage certificate, I find the evidence plausible. This is what he told the ARO, and it is logical that, his payments having been suspended because he was overseas, he would attend the Agency to have then restarted and would be likely to explain why he was abroad. I note, in this respect, what he said is consistent with what he told the first review. I am satisfied on the quality of his evidence that he did, around that time, provide proof of marriage in the form of his marriage certificate, and accept that he assumed that an Agency officer had made a copy of the marriage certificate, but that he did not know for sure that this was the case. Accordingly, I find that Mr McIntyre did provide Centrelink of proof of his marriage around four weeks after he married.
In his submissions and evidence, it was evident to the Tribunal that Mr McIntyre has difficulty with dates. I accept that he may have conflated some of his interactions with the Agency but overall am satisfied that he did attend and thought he had properly advised them of his marriage, and that BM accompanied him. I accept that the submissions from the Agency which were provided after the hearing show no interaction between BM and Centrelink at that time, but that is unremarkable, because she was not applying for, or inquiring about, any social security benefit. She did not do so until late in 2016.
I accept that Mr McIntyre received the notices the Secretary has listed in his written submissions, and which he did not deny receiving when asked directly by Mrs Raveendiran. It is my conclusion that he, to use his own words, “put his head in the sand” because he could not read the notices, and he did not ask his wife or anyone else to read them. From his perspective, given that he had what I believe is an honest belief he had told the Agency of his marital status, his answer to the question ‘Do you have any changes to declare to Centrelink that you have not already told us about?’ was, in his honest belief, ‘No.’
I consider that the failure of the Agency to record that Mr McIntyre was married directly led to no adjustment in his newstart allowance, which continued to be paid at single rate, and, as a concomitant, also meant that BM’s income was not taken into account in assessing whether Mr McIntyre had reached the household income threshold. Therefore, I find on the evidence before the Tribunal that there was error on the part of the Agency.
Section 1237A(1) of the Act requires the Secretary to 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 that gave rise to that proportion of the debt. However, there is a note to s 1237A that states:
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).
On the evidence, Mr McIntyre was sent many notices advising him of his newstart allowance payments but – importantly – also advising him that he must inform the Agency of changes in his circumstances. He did not read the notices because he said he could not. However, his evidence also was that when he ‘needed’ to know what was in a letter or on a written page, he would ask BM or someone else to read it to him. The Tribunal accepts the genuineness of Mr McIntyre’s evidence about his embarrassment about his literacy level, but it was his choice to put the letters to one side and not assure himself that there was anything he needed to do. Therefore, he contributed in part to the accumulation of the overpayment and, thereby, the debt for monies he was not entitled by law to receive. The debt cannot be waived under s 1237A.
The Act provides, at s 1236(1), that a debt may be written off for a stated period or otherwise. Section 1236(1A) provide the preconditions that must be met before the Secretary (or the Tribunal standing in his shoes) can decide to write off a debt. A precondition that must be met are as follows: that the debt is irrecoverable at law; that the debtor has no capacity to repay the debt; that the debtor’s whereabouts are unknown; or that it is not cost-effective for the Commonwealth to take action to recover the debt.
None of those preconditions are relevant in this case. In particular, the Tribunal notes that Mr McIntyre is gainfully employed as a roadside assistance patrol man, and BM remains employed as a health professional. I accept that they have household expenses, a son, and that grandparents live with them, but there is no evident economic hardship that especially stand out as unusual or particularised to Mr McIntyre, over and above the usual cost-of-living pressures that many Australians face, day to day.
In terms of whether Mr McIntyre received the overpayments in good faith, the Secretary drew the Tribunal’s attention to a Federal Court of Australia decision, Haggerty vDepartment of Education, Training and Youth Affairs [2000] FCA 1287, where French J (as he then was) stated, at [16]:
…want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt.
I am satisfied that there was no positive belief by Mr McIntyre that he was receiving payments by mistake or where he may have held a suspicion or doubt about his entitlement. He presumed that the Agency had taken account of the change in his marital status, about which I have found he did inform it. True it is that he did not read the notices, to the extent that he understood he had to advise of a change in his circumstances, he did not think there had been any change; that occurred when he and BM became parents and BM then made inquiries of Centrelink. I make the point that the very fact that BM attended the Agency with proof of marriage in 2016 is a significant factor in my being satisfied that Mr McIntyre, and BM, both were under the impression that the Agency already knew about their marriage; BM was open in her inquiries, there was no evidence of any subterfuge or admission to the officers that this was new information that she or her husband should have provided earlier.
The Secretary submitted that the Federal Court has previously found that a person does not receive payments in good faith if they turn a blind eye to circumstances which raise doubt as to the right to receive and retain a payment, or refuses to make reasonable inquiries where doubt exists: see Jazazievska v Secretary, Department of Family &Community Services [2000] FCA 1484, Cooper J at [41]. His Honour quotes an English authority, Jones v Gordon (1877) 2 App Cas at [629] where Lord Blackburn said:
…If he was (if I may use the phrase) blundering and careless, so took a bill of exchange or a bank-note when he ought not to have taken it, still he would be entitled to recover. But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but that he must have had a suspicion that there was something wrong, and that he refrained from asking questions, not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind – I suspect there is something wrong, and if I ask questions and make farther inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to answer – I think that is dishonesty. I think, my Lords, that that is established, not only by good sense and reason, but by the authority of the cases themselves.
The language is of the time, and the Tribunal would not for a moment describe Mr McIntyre as an honest blunderer or a stupid man, but the kernel behind what the Court was saying is that there must be a mental element when a person may be found to have ‘turned a blind eye’, either that they know they are receiving some public benefit they are not entitled to, or they at the least suspect it. I find because of his literacy challenges that he is less blameworthy for his conduct, because while it might have been neglectful, it was not deliberate, or with any suspicion that he was receiving a benefit to which he was not entitled.
The Tribunal makes no finding that Mr McIntyre received the overpayment other than in good faith.
Are special circumstances applicable?
Section 1237AAD of the Act provides a discretionary power for the Secretary to waive all or part of a debt if there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt. However, special circumstances can only be considered if the Secretary is satisfied that the debt did not result, partly or wholly, from the debtor or another person knowingly making a false statement or a false representation, or failing to comply with a provision of the Act or the Administration Act, or the former Act.
There is no evidence that Mr McIntyre made a false declaration or statement. Where he responded that there had not been any change in his circumstances, he was doing so in the honest belief that (a) the Agency knew of his marriage and (b) that there had been no change. I take account that Mr McIntyre’s literacy challenges are somewhat added to by what from his submissions and evidence is a relatively unsophisticated understanding of the way the newstart allowance entitlement operated and that it was, or would be, affected by BM’s income.
I am satisfied that special circumstances exist in Mr McIntyre’s case because of a combination of circumstances that are not run of the mill: the error I have found by the agency in not recording his marriage; his inability to read notices sent to him; his genuine lack of understanding of the payment regime; and his illness. In regard to the last of these, I am satisfied on the evidence of his doctor that he has made a good recovery and that there are no lasting effects.
The Tribunal is able, standing in the Secretary’s shoes, to waive all or part of a debt under s 1237AAD of the Act. Weighing all the material before me, and noting that Mr McIntyre has repaid a proportion of the debt, I find that the discretion should be exercised under that section of the Act to waive the recovery of all but $10,000 of the debt. I depart from the first review which waived all of the debt, because of the general principle that the public will expect that payments to a person who was not entitled to them should be recovered, where the recovery would not place the person in severe financial hardship. Mr McIntyre told the Tribunal what he does when he needs to know the contents of a written document: he asks someone to read it to him. He could easily have done this, but instead put the notices he received aside. I note that a payment plan can be arranged between the Secretary and Mr McIntyre for this debt to be repaid on a fortnightly basis at a rate that is manageable, given his other household costs. I do not think repayment of this amount would place Mr McIntyre in severe financial hardship.
At the beginning of these reasons I made the point that I am not reviewing the first review decision. Where it has been quoted is in response to submissions from the Secretary. But I now also make the point that I agree with the general thrust of the first review and the conclusions of the first review Member. Where I differ is in his characterisation of Mr McIntyre’s stress-induced illness as causing ‘a likelihood of further prolonged recovery,’ which is at odds with the medical evidence now before me, which I emphasise was not before the Member at first review.
The Tribunal will set aside the first review decision and make a new decision in substitution that Mr McIntyre has a debt of $10,000 which is due and payable to the Commonwealth, and that he is able to enter into a repayment plan with the Secretary’s Department.
DECISION
Pursuant to s 43(1)(c) of the AAT Act, the Tribunal sets aside the decision under review. In its place, the Tribunal substitutes a decision which waives part of the outstanding debt of the Respondent under s 1237AAD of the Act. The Tribunal finds that the Respondent has a debt of $10,000 due and payable to the Commonwealth as at the date of this decision. The Respondent can enter into a repayment plan with the Applicant’s Department.
I certify that the preceding 59 (fifty-nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member D. J. Morris
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Associate
Dated: 7 August 2024
Date of hearing: 20 June 2024 Date final submissions received: 3 July 2024 Applicant: Self-Represented Advocate for the Respondent: Mrs Aarabi Raveendiran Solicitors for the Respondent: Services Australia
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