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

Monty and Secretary, Department of Social Services (Social services second review) [2018] AATA 4273 (15 November 2018)
Division:GENERAL DIVISION
File Number(s): 2017/7588
Re:Mr Mario Monty
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Ms Anna Burke, Member
Date:15 November 2018
Place:Melbourne

The Tribunal affirms the decision under review.
.......[sgd]....................................................
Ms Anna Burke, Member
Catchwords
SOCIAL SECURITY – Newstart allowance –– overpayment – debt due to the Commonwealth – whether recovery of debt should be written off or waived – debt not attributable solely to error made by Centrelink – no special circumstances – decision under review affirmed
Legislation
Administrative Appeals Tribunal Act 1975
Social Security Act 1991
Cases
Re Anderson and Secretary, Department of Families and Community Services [2002] 69 ALD 494
Re Callaghan and Secretary Department of Social Security [1996] 45 ALD 435
Groth and Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Secondary Materials
Guide to Social Security Law
REASONS FOR DECISION
Ms Anna Burke, Member
15 November 2018

Mr Monty (the Applicant) is seeking a second tier review of the decision made by the Secretary of the Department of Social Services (the Respondent) to raise and recover a newstart allowance debt of $9,511.94 incurred from 6 July 2013 to 17 June 2016. This decision was varied by the Social Services & Child Support Division of the Administrative Appeals Tribunal (AAT1) on 15 November 2017. AAT1 found there was no debt for the period from 6 July 2013 to 30 August 2013 but there was a debt for the period from 31 August 2013 to 17 June 2016, which has now been calculated to be $9,353.74.
This application was heard on 31 August 2018. Mr Monty was self-represented and Mr James Henderson, a government lawyer in the Freedom of Information and Litigation Team of the Department of Human Services, appeared for the Respondent.
BACKGROUND
On 4 September 2012 Mr Monty lodged a claim for newstart allowance as he was not employed full-time. Attached to his claim was a copy of his payslip for his earnings with Disability Attendant Support Services Inc. (DASSI.) Mr Monty commenced employment with DASSI on 20 July 2005. DASSI was acquired by Independence Australia in September 2013, where Mr Monty continues to be employed. Mr Monty commenced receiving newstart payments on 20 August 2012
From 18 March 2013 Mr Monty has been issued with notices from Centrelink requiring him to report his income and other changes on his reporting date. The letters all state:
If you earn more or less than you estimated, please call us on 132850 within 14 days of reporting your estimate to tell us the correct gross amount of earnings.
You must report your earnings for the whole Centrelink reporting period, including the first and last day.
Your Centrelink reporting period can be different from the period on your payslip. Use your earnings worksheet to help you record and work out how much you earned in a Centrelink reporting period.
If you get paid any allowances for your work (e.g. for fuel, meals, clothing) ask us if you need to report them with your gross earnings. Most allowances are not counted as part of your income from employment.
Mr Monty has at all times provided information of his earnings in the Centrelink reporting period. His pay period did not align with the Centrelink reporting period. Mr Monty’s debt has arisen because he under reported his earnings. Centrelink ascertained this when it did a data match between his actual payslips from DASSI and the income he has declared. Centrelink is the service provider for the Department of Social Services.
On 30 May 2017 Centrelink issued a notice to Mr Monty stating that he had a legally recoverable newstart allowance debt of $9,511.94 for the period from 6 July 2013 to 17 June 2016, as the correct amount of his earnings from DASSI/Independence Australia was not taken into account in the payments made.
On 5 July 2017, on internal review, a departmental Authorised Review Officer (ARO) affirmed the original decision and found that:
The amount of income a person earns each fortnight can reduce the amount of newstart allowance payable for that fortnight. While you are working for DASSI you were declaring earnings and your payment amounts were reduced according to what you told us. However, investigations show that you earned more than you declared and your payments should have been reduced to a lower level than was paid to you.
I have also considered the rules that allow a debt to be waivered. Firstly your debt was caused by the department not being informed of the full details of your earnings in a timely manner. As the debt was not caused solely by departments error, it cannot be waived under section 1237A of the Social Security Act
I have also considered whether the recovery of the debt can be waivered due to special and unusual circumstances. There was no evidence of any such circumstances. I have therefore concluded the debts cannot be waivered under section 1237AAD of the Act.
On 15 November 2017 the AAT1 varied the Centrelink decision, finding there was a debt recoverable from Mr Monty for the period from 31 August 2013 to 17 June 2016 and found:
Mr Monty’s principal concern in seeking review was to make sure that the debt amount was correct because he believed it had overstated his income over the period by including his travel allowance.
The Tribunal is satisfied that the debt in the period 6 July 2013 to 30 August 2013 is unreliable and cannot be sustained because of the absence of complete pay details. The Tribunal has found that the remainder of the debt has been properly calculated and did not use Mr Monty’s travel allowance as he feared.
Mr Monty did not raise any circumstances that he considered made his case one where there were special circumstances. He noted that he is above retirement age but continues to work due to the benefits he receives personally from remaining in the workforce. He stated that if there was a debt, he considered that should be repaid – he just wanted to make sure that it wasn’t over calculated.
After considering Mr Monty’s circumstances, and the nature of the overpayment, and taking into account the expectation of the legislation that debts ought generally to be recovered, the Tribunal concluded there was no basis in this case to waiver any part of the balance after recalculation under section 1237AAD of the Act. This means that the balance of the debt is recoverable from Mr Monty, once it is recalculated.
On 18 December 2017 Mr Monty sought a review of the AAT1 decision by this division of the Tribunal, he believes the decision is wrong for the following reasons:
due, that I did not have a document to show, that I was allowed to claim a deducted from my gross wages my reimbursements of travelling, that why I was not giving my right gross amount when I was reporting my income to Centrelink, said I should report all my gross income, but, I was told by Centrelink staff to deduct my travelling reimbursement.
THE ISSUES IN CONTENTION
The Tribunal needs to consider the following relevant issues:
(a)whether Mr Monty was overpaid newstart allowance of $9,353.74 for the period from 31 August 2013 to 17 June 2016
(b)if so, is the debt recoverable; and if yes
(c)should the debt be waived due to administrative error pursuant to section 1237A of the Social Security Act 1991 ("the Act"); or
(d)whether special circumstances exist such that the debt should be waived pursuant to section 1237AAD of the Act.
RELEVANT LEGISLATION AND ISSUES
Section 593 of the Act outlines the criteria for qualification for newstart allowance:
(1) Subject to sections 596, 596A, 597 and 598, a person is qualified for a newstart allowance in respect of a period if:
(a) the person satisfies the Secretary that:
(i) throughout the period the person is unemployed;
Section 643 of the Act states: A person's newstart allowance rate is to be worked out using Benefit Rate Calculator B at the end of section 1068.
Section 8 of the Act defines "income ", in relation to a person as:
(a) an income amount earned, derived or received by the person for the person's own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
"income amount " means:
(a) valuable consideration; or
(b) personal earnings; or
(c) moneys; or
(d) profits;
(whether of a capital nature or not).
The Social Security Guide states:
1.2.1.10 Newstart Allowance (NSA) - Description
Newstart Allowance is an income support payment that provides financial assistance to people aged 22 years or older but under age pension age who are unemployed or treated as unemployed and, unless exempted from mutual obligation requirements:
· are participating in or willing to participate in approved activities and/or job search, and
· are prepared to enter into, comply with or vary an existing Job Plan to fulfil the mutual obligation requirements
Newstart is calculated on a daily basis and is paid in arrears, generally in instalments of 14 days. Instalment periods of less than 14 days may be paid where a person changes their payday arrangements.
4.3.2.10 Income Received to Cover Expenses
Payment to reimburse for expenses
An amount paid to a person to reimburse for the cost of expenses they have incurred is not considered income. The person does not gain additional benefit from the payment. When an organisation or employer pays MORE than the amount actually incurred by a person, the extra IS income as the person has gained additional funds in excess of the amount they paid for expenses.
Example: A payment is not considered income when an employee pays accommodation costs for a work trip up front and their employer reimburses the employee after for the expenses incurred.
Allowances paid by employers
Payment of an allowance from an employer for expenses incurred IS income where there is discretion to use for the employee's own use or benefit. The payment is NOT included in any income assessment when payments are specifically for expenses associated with their employment and the employee does not have discretion to use for other purposes.
Examples:
Allowances for travelling, clothing or meals.
Mr Monty’s entitlement to newstart allowance would be determined in accordance with the rate calculator, taking account of his gross fortnightly income, less any travel allowance earned.
Section 1223 of the Act outlines how debts arise from lack of qualification, overpayment etc.
(1) Subject to this section, if:
a) a social security payment is made; and
b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
Section 1237A(1) of the Act provides grounds for the decision-maker to waive recovery of any part of the debt. The Act provides that the decision-maker must waive a debt if it was attributable solely to an administrative error made by the Commonwealth and the debtor received the payments in good faith.
Section 1236 of the Act allows the decision-maker to write off a debt 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.
Section 1237AAD of the Act allows the decision-maker to waive all or part of the debt if they are 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
THE TRIBUNAL’S CONSIDERATION AND FINDINGS
Evidence before the Tribunal
The evidence before the Tribunal included documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, referred to as the “T documents”. Additional statements were provided by Mr Monty. Mr Monty also gave oral evidence at the hearing of this matter.
Calculation of the Debt
Mr Monty advised the Tribunal that if he had a debt, he had a debt and it would be appropriate to repay whatever he actually owed. However, he argued that Centrelink had not provided him with a breakdown of the debt for each fortnightly period to demonstrate that the amount had been accurately calculated. He advised the Tribunal that his pay period and Centrelink’s notification periods were out of sync and this made his calculations very difficult. He argued that he believes Centrelink included his travel expenses in the calculation of his debt. He presented a Centrelink customer record of 15 May 2018 which clearly stated:
customer not required to report reimbursement for travel expenses as per guides reference 4.3.2.10 income received to cover expenses. Customer to deduct travel reimbursements from gross earnings before declaring fortnightly earnings.
Allowance with his pay – customer works as a carer taking the disabled people around to park/shopping centre etc. and is paid the allowance for that – hence not to be considered as income as customer using his own petrol hence the reimbursement – customer deducts the allowance …
The Respondent indicated they were at a loss to understand Mr Monty’s position, as it had been clearly demonstrated to him that his travel allowance had been deducted from the calculations of his entitlement to newstart allowance. Centrelink had recalculated Mr Monty’s entitlement to newstart based on his actual pay records provided by DASSI, excluding any entitlement to travel allowance. Centrelink provided four random samples of the calculations of Mr Monty’s debt for four fortnightly periods and had provided an overall summary of Mr Monty’s debt. The Respondent argued that these calculations, which are appended to the decision, clearly demonstrated that travel allowance had been deducted.
Mr Monty continued to press that Centrelink should provide a comprehensive fortnight by fortnight breakdown of his debt for him to be satisfied that the amount of his overpayment had been accurately assessed.
The Tribunal can appreciate Mr Monty’s frustration with the situation in which he finds himself. The Tribunal accepts that Mr Monty was reporting his earnings to the best of his ability for the period in question, estimating what he earned when his hours varied from fortnight to fortnight. He was not able to provide his payslip because it did not correlate to his reporting period for Centrelink. He did not knowingly underreport his earnings to Centrelink and now finds that he has accumulated a debt over a long period of time. Additionally, calculations for any newstart debt can be confusing when you consider the formula required by the legislation to arrive at the debt, compounded by the fact that Mr Monty’s debt has been accumulated over four years.
The calculation is based on the following formula:
In 2013/2014 Maximum benefit for a single person aged over 60 was $557.50, income free area $62 per fortnight
this benefit is reduced by 50c in the dollar for any income earned between $62 - $250
benefit is then further reduced by 60c in the dollar for any income above $250
In 2015 Maximum benefit for a single person aged over 60 was $577.50, income free area $100 per fortnight
this benefit is reduced by 50c in the dollar for any income earned between $100 - $250
benefit is then further reduced by 60c in the dollar for any income above $250
In 2016 Maximum benefit for a single person aged over 60 was $586.50, income free area $102 per fortnight
this benefit is reduced by 50c in the dollar for any income earned between $102 - $252
benefit is then further reduced by 60c in the dollar for any income above $252
The Tribunal is satisfied on the evidence provided that Centrelink has accurately calculated Mr Monty’s debt based on his actual income for the relevant period from pay advice summaries submitted by his employer, DASSI. The calculations have not included Mr Monty’s travel entitlement as it is an exempt payment because it is for actual reimbursement of out of pocket expenses involved in his employment. Therefore, Mr Monty has been overpaid newstart allowance of $9,353.74 for the period from 31 August 2013 to 17 June 2016 and has a recoverable debt payable to the Commonwealth.
Writing-off the debt
The Tribunal, standing in the shoes of the Secretary, has the discretion to write-off the debt under section 1236 of the Act.
On the evidence before the Tribunal, Mr Monty did not meet the criteria as established in section 1236 of the Act and as such, the Tribunal is unable to write-off the debt. Indeed, Mr Monty is currently repaying the debt by way of fortnightly deductions from his current Centrelink benefits.
Waiver the debt on the basis of administrative error
Under section 1237A of the Act, the Tribunal has discretion to waive the right to collect the debt, if it was due solely to administrative error.
The Respondent submitted that the debt had not arisen as a result of administrative error and consequently section 1237A of the Act was not satisfied.
The AAT1 found, and this Tribunal concurs, that the debt occurred because Mr Monty unintentionally underreported his earnings to Centrelink, and not as a result of an error made by the Commonwealth.
Waiver of all or part of the debt in special circumstances
The Tribunal, standing in the shoes of the Secretary, also has the discretion to waive all or part of Mr Monty’s debt in special circumstances. For the discretion to be exercised, all three conditions contained in subsections (a), (b), and (c) of section 1237AAD must be satisfied.
The Respondent contends that there is no evidence to suggest that Mr Monty’s circumstances are such that they can be considered special to the extent that waiver of part or all of the debt is warranted under section 1237AAD.
Knowingly
The term ‘knowingly’ has not been defined in the Act, though it has been considered extensively by the Tribunal in similar circumstances.
In Re Callaghan and Secretary Department of Social Security [1996] 45 ALD 435, Deputy President Forgie said:
There is nothing in section 1237AAD which suggests that the word “knowingly” should be given any meaning other than that a person has actual knowledge rather than constructive knowledge, that he or she is making a false statement or representation that he or she is failing or admitting to comply with a provision of the Act. The actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act of omission.
The Tribunal finds that Mr Monty’s debt did not arise because he knowingly made false statements or declarations. The Tribunal finds that Mr Monty did not deliberately act dishonestly with any intention to mislead Centrelink.
In Re Anderson and Secretary, Department of Families and Community Services [2002] 69 ALD 494, the Tribunal stated:
[…] it is open to the tribunal to infer that the applicant has actual knowledge of his obligations under the act where there are opportunities for that knowledge to be gained when there are no obstacles to him acquiring knowledge. In this case, the applicant has had the opportunity to gain an understanding of his obligations under the Act to the provision of advice letters to him from the respondent. The tribunal is not aware of any obstacles that would prevent Mr Anderson from understanding those letters and gaining that knowledge.

The Tribunal finds Mr Monty did not knowingly or deliberately mislead Centrelink, and therefore the debt has not arisen solely or partly from his knowingly making a false statement or knowingly failing to comply with the legislation. As such, subsection (a) of section 1237AAD of the Act is not satisfied.
Special circumstances
The expression “special circumstances” has not been defined in the Act. However, the meaning of special circumstances has been considered extensively by the Federal Court and the Tribunal.
In Ryde v Sec Department of Family and Community Services [2005] FCA 886, Branson J said:
[…] the evident purpose of s 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for special circumstances discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.
In Groth v Secretary Department of Social Security [1995] FCA 1708, Kiefel J said:
[…] for present purposes it is sufficient to observe that it requires something to distinguish Mr Groth’s case from others, to take it out of the usual ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow if one to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
In summary, it has been held that for circumstances to constitute special circumstances they must be circumstances which are unusual, uncommon or exceptional, markedly different from the usual run of cases, special, or out of the ordinary, and they include events which would render the strict application of the rule in question unfair or inappropriate.
Mr Monty did not present any factors to the Tribunal which demonstrated hardship or unfairness sufficient to constitute special circumstances which would justify waiving his debt. Indeed, Mr Monty has stated on numerous occasions that he is happy to repay the debt if he can be satisfied that the amount claimed by Centrelink is the correct debt he has incurred.
The Respondent submitted there was no substantive reason or evidence provided by Mr Monty which would impugn the correctness of the decision made by the AAT1.
Waiving the debt more appropriate than writing-off the debt
The Tribunal finds it is not appropriate to write-off the debt and therefore Mr Monty does not satisfy section 1237(c) of the Act.
CONCLUSION
The Tribunal finds Mr Monty to be a forthright and honest individual attempting to do the right thing by the system. Indeed, he has continued in the workforce past retirement age as he enjoys “giving back” to the community and providing support to those in need.
Mr Monty has attempted to advise Centrelink at all times of his actual earnings. He has been thwarted by the system and confused by information provided in respect of the calculation of his debt. While this is completely understandable, it cannot be said that the debt was attributable solely to administrative error. Consequently, Mr Monty has accrued the debt and must repay the amount owed as there are no grounds on which to waive or write-off the debt.
DECISION
The Tribunal affirms the decision under review.

49. I certify that the preceding 48 (forty-eight) paragraphs are a true copy of the written reasons for the decision of Ms Anna Burke, Member

[sgd]....................................
Associate
Dated 15 November 2018

Dates of hearing 31 August 2018

Applicant Self-represented

Advocate for the Respondent

Solicitors for the Respondent

Mr James Henderson

Department of Human Services,
Freedom of Information & Litigation Branch

[2018] AATA 4273

15 November 2018

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Remedies

Statutory Construction

Standing