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

[2024] AATA 65

Moody and Secretary, Department of Social Services (Social services second review) [2024] AATA 65 (18 January 2024)

Division:SOCIAL SERVICES AND CHILD SUPPORT DIVISION

File Number(s):      2021/10258

Re:Barbara Moody

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member Ranson 

Date:18 January 2024

Place:Brisbane

The Tribunal affirms the decision under review. That means Ms Moody has a debt to the Commonwealth of $30,754.05, including a recovery charge of $2,550.55, less amounts already repaid.

..........................[SGD]...............................
Member Ranson

Catchwords

Social welfare and service – Newstart Allowance – Income reporting – Recoverable debt – Waiver – Write off – Financial hardship – DSP – Decision under review affirmed

Legislation

Social Security Act 1991 (Cth)

Social Security (Administration) Act 1999 (Cth)

Cases

Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

Secondary Materials

Social Security Guide

REASONS FOR DECISION

INTRODUCTION

1. Life has dealt Ms Moody a lot of trouble, some of it her own doing. She has had numerous medical conditions such as a heart attack and has severe osteoarthritis in both knees that have made her life increasingly difficult over many years, and she appears to be estranged from her family.

2. Between 2006 and 2008, Ms Moody was employed in the Proserpine office of a then member of the Queensland Legislative Assembly (QLA), Ms Jan Jarratt. Ms Moody says the office was chaotic and dysfunctional. Sadly, she suffered a heart attack while working there. Unfortunately, her income from that employment was not reported correctly or at all to Centrelink and she continued to receive Newstart Allowance (NSA) throughout this period. That meant she was overpaid NSA by more than $28,000 for that period and Centrelink wants the debt repaid as it is a debt due to the Commonwealth.

3. She has twice been sentenced to terms of imprisonment for defrauding the Commonwealth. After pleading guilty in 2011 to the charge relating to the period from 2006 to 2008, she was immediately released from the first conviction. In 2015, she pleaded not guilty to a similar charge and was found guilty. She was incarcerated for 18 months. The chaos of her employment in the office of Ms Jarratt may have contributed in part to the overpayments she received from Centrelink. Even if that is so, the responsibility always rests with the recipient to correctly report their earnings. Ms Moody failed to ensure that happened.

4. Whilst the case from 2015 is not of itself relevant to the matter before the Tribunal, the newspaper reporting of it includes a reference to her guilty plea to claiming $28,000 of Centrelink benefits she was not entitled to during the period 2006 to 2008. That is relevant to this decision. Ms Moody said at the hearing she regrets pleading guilty in 2011 to the overpayment from 2006 to 2008 and claims she was ill advised by her solicitor at the time. That may be so however the Tribunal is not the place to remedy that claimed error of judgment. Such remedy may be available to her through the court system if she is minded so to do.

5. The first issue in this case is whether and by how much Ms Moody was overpaid NSA while she was employed by the QLA from 2006 to 2008. If she was overpaid, is the amount a debt due to the Commonwealth and is it recoverable.

6. For the following reasons, the decision under review is affirmed. That means the debt as calculated by Centrelink is due to the Commonwealth and is recoverable.

PROCEDURAL MATTERS

1. Centrelink assessed Ms Moody as overpaid NSA during the years 2005 to 2008. During this time, she had three employers although the Secretary is only seeking to recover the debt in respect of QLA.

2. Ms Moody objects to the debt amount, even though she pleaded guilty in court to the charge of defrauding the Commonwealth. The matter came to the Social Security and Child Support Division of this Tribunal for a review of the decision by Centrelink (AAT1). The AAT1 decision dated 17 December 2021 set aside the decision under review and directed the debt be recalculated for the period from 30 September 2005 to 20 January 2006, which is the period when she was employed at Hayman Island Resort. It agreed with the debt calculation for the period 23 January 2006 to 24 April 2008, when she was employed by the QLA, and found the debt was recoverable. Ms Moody referred the AAT1 decision to the General Division of the Tribunal for a second review. The Secretary assessed she had been overpaid $30,754.05 during the debt period, including a recovery charge of $2,550.55, based on a recalculation conducted after the AAT1 decision.

3. Two hearings occurred in this case. The first was on 25 May 2023 and the second on 25 August 2023. The Tribunal identified at the first hearing a possible inconsistency in the calculation of the debt as shown at ST5. The Secretary was directed to check their calculation and the meaning of certain column headings and report back at the second hearing, which they did. No error was found in the calculation, which is set out at ST5.

4. Ms Moody was asked to check the calculation at ST5 and identify any fortnights she agreed with so they could be accepted and identify the fortnights she disagreed with and provide her explanation with reference to the evidence as to why she disagreed. She did not do that in any meaningful way.

Relevant legislation

1. As the Secretary explains in paragraph 4.2 of the SFIC, the legislation relevant to this case is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).

A note about policy

1. Departmental policy is contained in the Social Security Guide (the Guide). Where a general policy exists to guide the decision maker in exercising its powers, the Tribunal “will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision … cogent reasons will have to be shown against its application”.[1]

   [1] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 645 (Brennan J).

2. To the extent the Tribunal has considered policy in this case, it has not applied it inflexibly and has only considered it to the extent the policy is consistent with the requirements as set out in the legislation as it would be an error of law for the Tribunal to state it must (emphasis added) follow what policy says concerning the scope or meaning of a provision in the Act or Regulations.

Was Ms Moody overpaid NSA while she was employed by the QLA?

1. Between 2005 and 2008, Ms Moody was employed first at the Hayman Island resort, then by Ms Jan Jarratt, the then North Queensland based member of the Legislative Assembly of Queensland, and for a short time in 2006 by the Australian Bureau of Statistics. She was also being paid NSA by Centrelink during this time, which brought with it the obligation to accurately report her earnings on a fortnightly basis so her benefits could be correctly calculated.

Law

1. Section 643 of the Act provides the basis of the calculation of NSA entitlement.[2] The ordinary income of the recipient affects the maximum rate of payment.[3] Ordinary income includes amounts earned, derived or received by the person for their own use or benefit that is not maintenance income or an exempt lump sum.[4] This includes employment income, that is, income for remunerative work as an employee in an employer/employee relationship.[5]

   [2] Benefit Rate Calculator B. Module A of the calculator establishes the rate to be paid after applying the income test in Module G.

   [3] Section 1068 of the ACT.

   [4] Subsection 8(1) of the Act.

   [5] Section 8(1A) of the Act.

2. There following table sets out the process of determining a person’s entitlement to an NSA benefit:[6]

   [6] Module A of Benefit Rate Calculator B.

Step 1	Determine the maximum basic rate.[7]
Step 2	Determine pension supplement (if any).
Step 3	Determine rent assistance (if any).
Step 4	The sum of the amounts in steps 1 to 3 is the maximum benefit payable.
Step 5	Apply the income test to determine the income reduction.
Step 6	Reduce the maximum benefit (step 4) by the income reduction (step 5). This is the provisional fortnightly payment rate.
Step 7	The benefit payable is the provisional fortnightly payment rate (step 6) plus any special employment advance less any advance payment deduction and plus any remote area allowance.

[7] Module B.

1. Self-evidently, if the income of the recipient (Ms Moody) of the benefit (NSA) is not correctly reported to Centrelink, the calculation of the benefit payable cannot be correct. If employment income is underreported then applying the above formula the benefit will be overpaid, and vice versa.

Evidence

1. From time to time, the Secretary issues notices to benefit recipients requiring them to inform the department of changes in their circumstances which may affect the benefit payments they receive.[8] These notices usually accompany correspondence and other forms between the Secretary and the recipient.

   [8] Section 68(2) of the Administration Act.

2. The inaccurate reporting of the earnings when Ms Moody was employed by the QLA are the subject of this decision as the Secretary is no longer pursuing any inaccurate reporting of income from the other employers. Her employment letter confirms she was employed on a casual basis in the Proserpine office of Ms Jarratt. As she describes the employment arrangements, she did not complete timesheets claiming they were completed for her by Ms Jarratt or another person in the office. She also claims she was not paid directly by the QLA rather she received cheques from Ms Jarratt for her net pay, and no payslips were provided even though these are required by industrial law. On another occasion she said she was not allowed to print her payslips.

3. The Respondent’s Statement of Facts, Issues and Contentions (SFIC) sets out in detail the requirement for the recipient of a benefit to accurately report their income from employment on a timely basis.[9] Form SU19 is used to apply for an NSA payment, which requires the recipient to declare their earnings from employment and is a valid notice under s 68(2) of the Administration Act. Ms Moody lodged these forms and declared varying amounts of employment income and sometimes nil. The SFIC notes at paragraph 3.11 the dates when forms SU19 were completed and lodged by Ms Moody for the period 20 December 2005 to 8 June 2006. Those forms declared no employment income. Ms Moody had been employed in the office of Ms Jarratt since 6 January 2006.

   [9] SFIC paragraphs 3.5 to 3.15.

4. From 22 June 2006 to 14 September 2006 Ms Moody reported employment income from the ABS and none from the QLA.[10] The reporting of no income continued from 12 October 2006 to 27 March 2008.[11]

   [10] SFIC paragraphs 3.12 and 3.13.

   [11] SFIC paragraph 3.15.

5. The Secretary obtained copies of the payslips from QLA for Ms Moody for the period she was employed by the QLA and confirmed the basis of their calculation of the overpayment was not income averaging such as the now discredited Robodebt system. Ms Moody says the calculation is wrong because she never earned the amounts the payslips say. Nonetheless, her net pay was paid into her bank account. If as she says she was overpaid, the time to deal with that was then, not as part of her evidence here.

6. She repeated her claim that she never submitted timesheets as these were done for her by Ms Jarratt or someone else in the office. The name Peter was mentioned in her oral evidence with no further details. She said she did not receive payslips, as she was not allowed to print them, and only received cheques said to be Ms Jarratt’s calculation of her net pay. She also asserted she had left the Proserpine area and relocated to Bribie Island by January 2008 so any payslips dated later can’t be valid. She also said her timesheets for the period from October 2007 to April 2008 were processed at one time although she provided no evidence of this.

7. Ms Moody provided a copy of an invoice from Furniture Freighters Whitsunday Pty Ltd said to prove when she relocated from the Whitsundays however it is a photograph of an invoice and is not legible, so it carries no weigh in this matter. She also provided other documents said to prove she was not in the Whitsundays for part of the time she is said to have worked for the QLA in the office of Ms Jarratt. These include copies of various documents said to have been missed in the AAT1 decision.

8. The documents appear to be copies of internal Centrelink file notes on which handwritten notes have been made, one of which says she left the Whitsundays in October 2007 and applied for DSP. One document says she contacted Centrelink Whitsunday on 29 November 2007 regarding a review of her NSA. It notes she has medical issues, is unable to work, probably in the long-term. Another is dated 10 December 2007 which also notes her inquiry about her NSA. The accompanying handwritten note says: ‘DSP not Newstart’. The only reference to DSP is a note saying: ‘Does Customer have any Permanent Medical Conditions? Yes, Medical Conditions. Osteoarthritis – fully diagnosed treated & stabilised [a term used in DSP claims]’. The document goes on to discuss temporary medical conditions without any reference to transferring from NSA to DSP.

9. There is a letter possibly intended as a medical certificate. It is dated 8 April 2008 from a Dr Geoffrey Workman. It discusses her severe arthritis in both knees and concludes: ‘However; I do not foresee her [Ms Moody] being able to return to her role as an Electoral Officer at the Legislative Assembly in Parliamentary Services.’ This letter suggests Ms Moody was still in the employ of the QLA in April 2008 despite her assertion she left in October 2007. There are many such inconsistencies in the evidence of Ms Moody.

10. Ms Moody asserted several times in her oral evidence she never earned the amounts of gross income shown on the Secretary’s calculation. Yet, her net pay was paid into her main bank account, and she says she didn’t notice it was there. When asked how she lived if she did not receive NSA and or net pay from the QLA she said she drew funds from her superannuation fund yet provided no evidence of that.

11. Whatever the circumstances of her employment in the office of Ms Jarratt, the responsibility to correctly notify Centrelink of her employment earnings rests with Ms Moody and no one else. She can delegate this task, voluntarily or otherwise, to others. That does not relieve her of the responsibility for their accuracy. If someone else does this task for her and gets it wrong, that is the responsibility of Ms Moody. It is no defence to seek to blame others.

Conviction in court

1. On 6 July 2011, Ms Moody appeared in the Redcliffe Magistrates Court on a charge of incurring an overpayment of Centrelink Newstart Allowance of $28,108.59 for failing to declare her income from employment. Through her solicitor she pleaded guilty to the charge.[12]

   [12] ST4.

2. She was convicted and sentenced to 12 months imprisonment and immediately released by giving security of recognisance of $2,000. A further condition that she be of good behaviour for two years was also imposed on her and she was subject to a probation order for 12 months. According to the transcript of the proceedings, Ms Moody agreed to the probation order.

3. There may be some substance to her claims of a difficult employment relationship with Ms Jarratt because the Tribunal has found a newspaper article dated 6 October 2010 which says:[13]

   “A former electorate officer is planning to sue a Queensland Labor MP after being cleared of stealing more than $16,000 from the politician's taxpayer-funded allowances. Barbara Moody, 54, claims her life has been destroyed by fraud accusations levelled against her by Whitsunday MP Jan Jarratt, a senior member of the Bligh Government. Local police charged Ms Moody after a complaint by Ms Jarratt. However, the case was thrown out last week before going to trial because of a lack of evidence.”

   [13] Former staffer Barbara Moody plans to sue Whitsunday MP Jan Jarratt after being cleared of theft charges | The Courier Mail.

4. Ms Jarratt was not happy with that outcome and the article goes on to quote her as saying:

   "I am perplexed as to how the magistrate explains the depositing of my cheques into Ms Moody's bank account," "And while I accept that he [the Magistrate] has made his decision in this case, I am still considering what option may be available to me in the future."

Finding

1. The Tribunal finds it implausible Ms Moody did not notice the deposits into her main bank account of her net pay from the QLA and her NSA from Centrelink. The cumulative amounts were substantial so even if she did not notice them for some time, eventually the balance of that account would have become apparent. That was the time to contact the QLA and Centrelink and advise an error had occurred, that is, she was no longer working in the office of Ms Jarratt (if that was the case) and so could not have earned the income said to have been paid.

2. The Tribunal also finds it implausible the QLA would continue to pay an employee who had left their employment as Ms Moody claims she did. Even if it is the case her resignation letter was ignored and the time sheets were prepared by others and continued to be prepared and lodged after she finished working at the office of Ms Jarratt, that was an argument Ms Moody could have adduced at the trial in July 2011. That was the forum to agitate that assertion. Instead, she pleaded guilty. That plea weighs heavily against her in this case.

3. The Tribunal finds Ms Moody failed in her responsibility to ensure her employment earnings were correctly reported to Centrelink on a timely basis. As a result, she was overpaid NSA of $28,203.50,[14] plus a recovery charge of $2,550.55, being $30,754.05.

   [14] ST3, page 40.

Is the amount overpaid a debt due to the Commonwealth and is it recoverable?

1. If a social security payment is made and the 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 that person and the debt is taken to arise when the person obtains the benefit of the payment.[15]

   [15] Subsection 1223(1) of the Act.

2. Self-evidently, Ms Moody’s overpaid NSA is a debt due to the Commonwealth.

Are there any grounds for the debt to be written off or waived?

Write off

1. The terms 'suspension' and 'deferral' refers to the write-off of a debt, which stops recovery action either for a defined or an undefined period. At any time, the write-off can be reversed, and recovery proceedings begun where circumstances change. Unlike a waiver, write-off does not extinguish the debt.[16]

   [16] Guide, 6.7.3.10.

2. The Secretary can write-off a debt, meaning delay its recovery, for a stated period in certain circumstances.[17] Those circumstances include:

   (a)The debt is not recoverable at law

   (b)The debtor has no capacity to repay the debt

   (c)The debtor’s whereabouts are unknown, or

   (d)It is not cost effective for the Commonwealth to recover the debt.

   [17] Section 1236(1A) of the Act.

3. There is no suggestion the debt cannot be recovered from future entitlements of Ms Moody to other social security benefits, as occurs now with deductions from her age pension,[18] or future income tax refunds (if any). Ms Moody’s whereabouts are known, and it can be cost effective for the Commonwealth to recover the debt by instalments.

   [18] Exhibit 3, paragraph 32.

4. The Secretary asserts Ms Moody has the capacity to repay the debt by instalments and Ms Moody has not directly challenged this albeit she said at the second hearing she had less than $1 in her bank account and provided evidence of that. Severe financial hardship can be considered in deciding whether to recover a debt, and whilst it does not imply destitution, it is more than just difficult financial circumstances.

1. Ms Moody receives the age pension and according to the Secretary she has previously offered to repay the debt although no evidence of that offer was provided. In 2021, she requested the COVID debt pause be lifted,[19] which suggests she had funds available to her at that time to accommodate such an arrangement. The Secretary is currently accepting repayment by modest instalments from her age pension entitlement, which indicates repayment will not cause her severe financial hardship.

   [19] T29, page 1056.

2. Given the findings above, the Tribunal is satisfied there are no grounds to write-off the debt for any period because it is recoverable, and Ms Moody can negotiate repayment by instalments at a rate which can be accommodated within her modest circumstances.

Waiver

1. Ms Moody asserts she should not have to repay the debt because she is a pensioner with limited means who suffers from many medical issues. This would require the debt waiver provisions of the Act to apply. For the purposes of this decision, there are two circumstances where waiver might apply.

2. Firstly, the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt. This Subsection 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).[20] Solely means the error must have been caused only by the Commonwealth and by no other party.

   [20] Section 1237(A) of the Act.

3. Secondly, the Secretary may also waive the right to recover all or part of a debt if the Secretary is satisfied the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or a false representation or failing or omitting to comply with a provision of the Act, the Administration Act or the 1947 Act. There must be special circumstances (other than financial hardship alone) that make it desirable to waive the debt, and it is more appropriate to waive than to write off the debt or part of the debt.[21]

   [21] Section 1237AAD of the Act.

4. As already discussed, the main issue in this case is the error by Ms Moody in the reporting of gross income while she was employed by the QLA. The SFIC sets out the many times Centrelink wrote to Ms Moody specifying she was to report her gross income.

5. To make a finding of sole administrative error by Centrelink in this case is precluded because the overpayments arose from the underreporting of her income by Ms Moody, which she partially acknowledges, and not by any error by Centrelink.

6. Ms Moody says the error in reporting her income was the fault of others and in any event, she was not employed by the QLA for the whole of the period under review. The error was by Ms Moody not ensuring her gross income from employment at QLA was correctly reported on time. As discussed above, even if the task of reporting her income was delegated to others it was still her responsibility. If as she asserts, timesheets were incorrect that should have been agitated at her first trial instead of pleading guilty.

7. Given the findings above, the Tribunal is satisfied there has been no administrative error by the Commonwealth and the errors which gave rise to the debt are solely those of Ms Moody because she failed to ensure the income was correctly reported.

8. The Secretary does not accept Ms Moody accepted the NSA payment in good faith and cites the guilty plea in her trail in 2011 as compelling evidence of that. The Tribunal concurs with that position. That leaves special circumstances as a possible ground for the debt to be waived.

9. To be special, the circumstances of Ms Moody must be unusual, uncommon or exceptional. She says her medical conditions amount to special circumstances. She says she has been diagnosed with thyroid cancer, PTSD, bilateral knee osteoarthritis and depression, however she provided no medical evidence to support those claims other than the bilateral knee osteoarthritis. It is common for a person in their late 60’s to have medical issues and sometimes they can be severe. The public hospital system in Queensland will assist her with the management of her medical conditions.

10. Many people suffer from PTSD and depression and continue to function in society as does Ms Moody, who lives independently. These medical conditions do not in and of themselves amount to special circumstances for the purpose of debt waiver.

11. Given the findings above, the Tribunal is satisfied there are no special circumstances in this case which would warrant waiver of the debt.

CONCLUSION

1. Magistrate Chilcott said in his sentencing remarks on 6 July 2011:[22]

   ‘I’d like to think that we won’t see you back again before the court. If we do see you before the court, well, you know, it’s only – it’s – you’re the one who will be putting yourself in the hands or the lap of the gods, so to speak’ and ‘Make sure that we don’t see you back again’.

   [22] ST4, page 80.

2. It seems Ms Moody did not take on board the wise words of Magistrate Chilcott because she was back in court in 2015 and found guilty of an even larger overpayment of Centrelink benefits. Ms Moody pleaded not guilty to that charge however she was found guilty and received an 18-month custodial sentence. At the first hearing, she described at length the indignity of her incarceration. No doubt her description was accurate however she was on notice from 2011 to be careful, which for her meant accurately reporting her employment income so her benefits would be correctly calculated.

3. A later newspaper article discovered by the Tribunal reported:[23]

   “It took a jury only half an hour to find a former Whitsundays woman guilty of illegally claiming $74,000 from Centrelink. Barbara Ann Moody, 59, will spend the next one and a half years behind bars after she was convicted on Thursday of claiming Centrelink benefits, including Newstart and the disability support pension, while she was working full time at a school. The grandmother once worked for former Whitsundays MP Jan Jarratt and Hayman Island Resort.

   She pleaded not guilty to obtaining financial advantage by deception. The offending occurred over three and a half years between October 2009 and April 2013 while she was living near Brisbane.

   Towards the end of the four-day trial this week at Brisbane District Court, Moody went into the witness box and told her version of events. Moody claimed she had called Centrelink and was told she was still eligible for the disability support pension. Her case was that she did not knowingly deceive Centrelink.

   But after the jury declared she was guilty Judge Brad Farr said the conviction was inevitable because there was an "overwhelming" prosecution case against her. "The evidence which you gave was at times almost incomprehensible in logic," he said. "In my view you have demonstrated absolutely no remorse whatsoever."

   Judge Farr also said Moody had a history of claiming Centrelink benefits she was not entitled to. She previously pleaded guilty to claiming about $28,000 of payments she was not entitled to between 2006 and 2008. The court heard she was on bail and subject to a good behaviour bond when she committed the later fraud. Judge Farr sentenced Moody to three and a half years jail, to be released after serving 18 months. Moody has also been ordered to pay back the $74,000.”

   [23] Fraudster grandmother sent to jail | The Courier Mail

4. Judge Brad Farr is reported as saying of Ms Moody’s evidence: ‘The evidence which you gave was at times almost incomprehensible in logic’. Sadly, that statement sums up the Tribunal’s assessment of her evidence in this case. Perhaps she was not able to accurately articulate her case, however the Tribunal afforded her two hearings and several hours in which to make submissions. She submitted copious numbers of documents including e-mails and letters from Centrelink much of which were repeats of earlier submissions, sometimes multiple times. However, there were inconsistencies in her evidence and the Tribunal considers her to be an unreliable historian and less than forthright at times.

5. The extended written and oral evidence of Ms Moody and the repeated submission of documents, some of little relevancy, suggests an over-particularised denial of the evidence provided by the Secretary.

6. No doubt Ms Moody’s medical conditions will be considered by the Secretary in negotiating repayment of the debt by instalments.

DECISION

The Tribunal affirms the decision under review. That means Ms Moody has a debt to the Commonwealth of $30,754.05, including a recovery charge of $2,550.55, less amounts already repaid.

I certify that the preceding 60 paragraphs are a true copy of the reasons for decision of Member Ranson.

………………[SGD]……………………                  
Associate

Dated: 18 January 2024