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

Morcombe and Secretary, Department of Social Services (Social services second review) [2021] AATA 2626 (2 August 2021)
Division:GENERAL DIVISION
File Number: 2020/4829
Re:Janaina Cordeiro Morcombe

APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member M East
Date:2 August 2021
Place:Perth

The Reviewable Decision, being the decision of the Social Services & Child Support Division of the Tribunal dated 10 August 2020, is affirmed.
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Member M East
CATCHWORDS
SOCIAL SECURITY – parenting payment (partnered) (PPP) – whether the Applicant was overpaid PPP – decision to raise and recover PPP debt – whether a debt to the Commonwealth – whether the debt should be recovered in full – whether recovery of all or part of the debt should be waived or written off – whether debt attributable to sole administrative error of the Commonwealth – whether there are special circumstances that make it desirable to waive the debt – obligation to declare changes in circumstances – failure to disclose partner’s income – Reviewable Decision affirmed
LEGISLATION
Social Security Act 1991 (Cth) – ss 8(1), 66A(2), 68(2), 100(1), 123(3)(b), 503, 1068A, 1068B, 1068A-A1, 1072, 1073B, 1223(1), 1236(1), 1236(1A), 1237A(1), 1237AAD
Social Security (Administration) Act 1999 (Cth) – ss 66A, 68(2), 100(1), 123(3), 182(2), 19
CASES
Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173
Magok and Secretary, Department of Social Services [2021] AATA 571
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Secretary of the Department of Families, Housing, Community services and Indigenous Affairs v Jones (2012) 89 ATR 267
Secretary, Department of Family & Community Services v Sekhon (2003) 73 ALD 41
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
Ward and Secretary, Department of Family and Community Services [2000] AATA 212
SECONDARY MATERIALS
Department of Social Services, Guide to Social Policy Law: Social Security Guide
REASONS FOR DECISION
Member M East
2 August 2021
INTRODUCTION

The decision under review is a decision of the Administrative Appeals Tribunal, Social Services & Child Support Division (AAT1), dated 10 August 2020 (the Reviewable Decision). The Reviewable Decision affirmed an earlier decision made by the authorised review officer (ARO) of Services Australia (Centrelink) dated 28 May 2020, which raised a parenting payment (partnered) (PPP) debt of $26,830.69 (ARO Decision) for the period of 9 July 2016 to 15 February 2019 (the relevant period).
BACKGROUND
The Respondent summarised the relevant facts in the Statement of Facts and Contentions dated 25 November 2020 as follows:
4.On 6 May 2015, 4 September 2015, 14 September 2015 and 5 October 2015 Services Australia (the Agency) sent the Applicant notices under section 68(2) of the Social Security (Administration) Act 1999 (the Administration Act) advising her of the requirement to advise the Agency of any changes relevant to her and her partner’s income .
5.There is no evidence that the Applicant provided income information for her partner during the debt period and during the debt period the Applicant’s payments were based on her partner having earnings of $0.00.
6.On 21 February 2020, the Applicant provided income updates to the Agency and confirmed her partner’s earnings in the form of a payroll summary from the Department of Education ($3,213.56 per fortnight).
7.On 1 May 2020, the Agency decided to raise and recover a PP debt in the amount of $26,830.69 for the period 9 July 2016 to 15 February 2019.
8.On 1 May 2020, the Applicant sought review of the decision.
9.On 28 May 2020, an ARO affirmed the debt.
10.On 9 June 2020, the Applicant sought review of the decision by the AAT1.
11.On 10 August 2020, the AAT1 affirmed the decision under review.
12.On 12 August 2020, the Applicant sought review in the General Division of the Administrative Appeals Tribunal (the Tribunal).
13.The Applicant is not presently in receipt of PP or any other social security payments. The Applicant’s partner is currently in receipt of annual income of $79,289.56. The balance of the debt at the date of the submissions is $26,830.69, no repayments have been made.
[Original emphasis, references omitted.]
Tribunal proceedings
The parties appeared via telephone at the hearing on 9 July 2021. The Applicant was self-represented, and the Respondent was represented by Ms Alexandra Cornfield of Sparke Helmore.
The Applicant gave evidence at the hearing and was cross-examined by Ms Cornfield.
The Tribunal had the following material before it:
·the section 37 T-Documents consisting of T1-T14, pages 1-437 (Exhibit R1);

the Respondent’s Statement of Facts, Issues and Contentions dated 25 November 2020 (Exhibit R2); and
·the Applicant Response to the Respondent’s Statement of Facts, Issues and Contentions (Exhibit A1).

Ms Cornfield directed the Applicant to Exhibit R1 and referred to various documents contained therein.[1] The first document referred to was entitled as “Your Parenting Payment” dated 5 October 2015.[2]
[1] Transcript pages 7–10.
[2] Exhibit R1, page 235.
Ms Cornfield -    Great, and if you go a bit further down it does say “You must tell us” and can you confirm that there is a sentence that states, “Your partner’s total personal income goes over $928 a fortnight”
… Are you able to confirm what date your husband commenced at   the Department of Education?
Applicant -           sometime in July 2015
Ms Cornfield -     July 2015, thank you. Now would you agree that this notice dated 5 October 2015 is more than 14 days before your husband commenced at the Department of Education.
Applicant -         It’s almost one year before he commenced.
Ms Cornfield then directed the Applicant towards a notice dated 29 December 2016, contained in Exhibit R1, and asked her to read the following paragraph:[3]
There are different notification requirements for income support payments, if you or your partner receive an income support payment and you have a change in income you will need to update your income details for that payment too.[4]
[3] Transcript, page 8 – 9.
[4] Exhibit R1, page 245.
The Tribunal notes that the notice referred in the para [7] above was in relation to the Family Tax Benefit and not the Parenting Payment. The Applicant stated at the hearing before AAT1 that she had failed to read that paragraph,[5] and further admitted that she had confused her reporting requirements for annual income for family tax benefit purposes with her requirements for reporting income for parenting payment purposes.
[5] Exhibit R1, page 9.
At the hearing before the Tribunal, the Applicant stated that she thought she had complied with her reporting requirements and felt that the debt should not have been raised against her.
The Applicant referred to a letter received from Centrelink on 8 September 2017 and stated that:[6]
And it [the letter] lists older parenting types and says, “update is incorrect”. It doesn’t say to update anything separately on this page, so I went on line and I updated everything on 18 September and then on 30 October. I believed then that I had done the right thing because it didn’t say to update different payments separately so I just went on line, did the one update and believed it covered everything, but that was in 2017.
[6] Transcript, page 11.
The Applicant also referred to a phone conversation she had with Centrelink on 8 September 2017 which involved an enquiry for Family Tax Benefit and also an enquiry on 12 December 2017 to add her third child to her PPP. The Applicant further explained that Centrelink never asked her to update her income. In response, Ms Cornfield made a submission to the Tribunal as follows:
These file notes are very accurate as how the agency does report conversations, especially as you will see in the lot – in the, you know, the bunch that we do have here, they do go through every single thing that an applicant will discuss with a customer service officer. I think that the answer to that question is due to the ever changing nature of people’s incomes and also reporting requirements, it is on the applicant to ensure that the income that they have reported is correct and unfortunately that’s – you know, that’s how the agency works and that’s just due to the changing nature of people’s income. It is on the applicant to make sure that the agency is updated with that correct income in order to receive correct payment and that kind of explains that file note there.[7]
[7] Transcript, page 13–14.
The Applicant again referred to the letter of 8 September 2017 and asked why the letter did not specifically mentioned anything about updating the different payments separately, “Because if it had said that I [the Applicant] would have updated and this whole thing would’ve been avoided”.[8]
[8] Transcript, page 15.
The Tribunal notes that letter is an Income Statement for 1 July 2016. Subsequent to this statement there were further letters sent to the Applicant from Centrelink dated 9 October 2017 and 14 August 2018.[9] Both of these letters refer to the different notification requirements for income support payments. The Applicant, however, stated that the only notification she received for parenting payment was in 2018 and that is when she updated her income details.[10]
[9] Exhibit R1, pages 266 and 292.
[10] Transcript, page 16.
ISSUES FOR DETERMINATION
The issues for consideration by the Tribunal are:
(a)whether the Applicant was overpaid PPP during the relevant period;
(b)if so, whether the overpayment is a debt to the Commonwealth; and
(c)whether the debt should be recovered in full, or whether recovery of all or part of the debt should be waived or written off.
RELEVANT LEGISLATION
The Tribunal is required to consider the provisions of the Social Security Act 1991 (Cth) (the Act); and the Social Security (Administration) Act 1999 (Cth) (the Administration Act). The Tribunal is also able to have regard to the relevant policy contained in the Guide to the Social Security Law (the Guide). The Tribunal, as a decision maker, will generally apply the guidance contained in the Guide unless there are cogent reasons no to do so (Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, (644–5)).
Section 503 of the Act provides:
A person’s parenting payment rate is worked out using:
(a) if the person is not a member of a couple—the Pension PP (Single) Rate Calculator at the end of section 1068A (see Part 3.6A); or
(b) if the person is a member of a couple—the Benefit PP (Partnered) Rate Calculator at the end of section 1068B (see Part 3.6A).
Section 1068B of the Act sets out the rate at which the benefit is calculated. Further, Module D of s 1068B of the Act sets out the “income test” that is required to be undertaken in order to ascertain the “effect of income on maximum payment rate”.
The terms “ordinary income” and “income” is defined under s 8(1) of the Act:
ordinary income means income that is not maintenance income or an exempt lump sum.
income, in relation to a person, means:
(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;
but does not include an amount that is excluded under subsection (4), (5) or (8).
[Original emphasis, notes omitted.]
Section 1072 of the Act states:
A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.
[Notes omitted.]
Section 1073B of the Act states:
(1) If:
(a) a person is receiving a social security pension or a social security benefit; and
(b) the person’s rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(d) the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;
the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.
(2) If a person has reached pension age and is receiving a social security benefit, subsection (1) does not apply to the person, to the extent that it relates to that benefit.
[Notes omitted.]
Section 66A(2) of the Administration Act states:
Person receiving a social security payment or holding a concession card
(2) If:
(a) either:
(i) a social security payment (other than utilities allowance or energy supplement under Part 2.25B of the 1991 Act) is being paid to a person; or
(ii) a person holds a concession card; and
(b) an event or change of circumstances occurs that might affect the payment of that social security payment or the person’s qualification for the concession card;
the person must, within 14 days after the day on which the event or change occurs, inform the Department of the occurrence of the event or change.
Section 68(2) of the Administration Act states:
(2) The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a) inform the Department if:
(i) a specified event or change of circumstances occurs; or
(ii) the person becomes aware that a specified event or change of circumstances is likely to occur;
(b) give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c) give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
Section 123(3)(b) of the Administration Act relevantly provides:
(3) A determination of the rate of a social security payment continues in effect until:
…
(b) the payment becomes payable at a lower rate under section 98, 99 or 100.
Section 100(1) of the Administration Act states:
(1) Subject to subsection (2), if:
(a) a person who is receiving a social security payment is given a notice under subsection 68(2); and
(b) the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(c) the event or change of circumstances occurs; and
(d) the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(e) because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.
[Original emphasis.]
Subsection 1223(1) of the Act states that 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.
Subsection 1236(1A) of the Act sets out the circumstance in which the debt can be written off. It provides, in part:
(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.
Section 1237A(1) of the Act states that if the debt is attributable to the “sole administrative error” of the Commonwealth (in this case Centrelink), the Secretary must waive the debt. The section provides:
Administrative error
(1) Subject to subsection (1A), 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.
[Note omitted.]
Section 1237AAD of the Act provides:
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.
[Notes omitted.]
CONSIDERATION
Was the Applicant overpaid PPP in the amount of $26,830.69 for the relevant period?
There is no dispute between the parties that the Applicant was entitled to PPP during the relevant period. As outlined above, s 503 of the Act provides that the rate of PPP is calculated using the Rate Calculator at the end of s 1068B of the Act. This provides that the ordinary incomes of the Applicant and their partner are taken into account on a fortnightly basis when calculating the rate of parenting payment.
As outlined above, the Applicant did not report her partner’s earnings during the relevant period which resulted in her rate of PPP being calculated on an incorrect basis and an overpayment of PPP to her.
The Applicant stated during her evidence that the Income Statement dated 8 September 2017 should have included details of updating her income for different payments separately and because the Income Statement failed to mention any such detail, she did not updated her income details separately for both the benefits she was receiving from Centrelink.
The Tribunal finds that the Applicant was repeatedly notified of the need to update her income details for different benefits separately in correspondence from Centrelink. The letter of 5 October 2015 was the most recent one prior to her husband’s increase in salary when he was working with the Department of Education.
Based on the evidence provided in the documents together with the Applicant’s oral evidence the Tribunal finds that the Applicant failed to notify Centrelink of changes in her partner’s income from 9 July 2016 until 16 February 2019 in accordance with her obligations under ss 66A and 68(2) of the Administration Act.
The Applicant’s correct rate of PPP should have been $0 per fortnight; however, the rate was calculated without taking into account her partner’s income and therefore, this resulted in an overpayment of PPP to the Applicant.
Accordingly, the Tribunal finds that the Applicant was overpaid PPP in the amount of $26,830.69 for the relevant period.
Is the overpayment a debt to the Commonwealth?
Section 1223(1) of the Act effectively provides that if a social security payment is made, and the person who obtains the benefit is not entitled to receive it, the amount of the payment is a debt due to the Commonwealth.
The Tribunal has found, as outlined above, that the Applicant received the PPP at a higher rate during the relevant period than she was entitled to and therefore the amount of $26,830.69 is a legally recoverable debt due to the Commonwealth.
Should the debt be recovered?
As outlined by French J (as he then was) in Secretary, Department of Social Security v Hales (1998) 51 ALD 695 at 696, the taxpayer is entitled to expect that if money is paid to people who are not entitled to receive it, that it would be recovered. He further said:
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.
Write off under s 1236(1) of the Act

As noted above, write-off can occur in four different situations. The Tribunal finds that the debt is recoverable at law because the overpayment is a legally recoverable debt to the Commonwealth. Secondly, repayment options are available. The provisions relating to the known whereabouts of the Applicant and the cost effectiveness of recovery do not apply.
Therefore, the Tribunal finds that the debt cannot be written off under s 1236(1) of the Act.
Waiver for sole administrative error
As outlined in the authorities of Gerhardt and Secretary, Department of Employment, Education and Training,[11] Secretary, Department of Family & Community Services v Sekhon [12] and Ward and Secretary, Department of Family and Community Services,[13] sole administrative error requires precisely that. Put another way, administrative error must be the sole or only cause, not just one of multiple causes. This applies even where the other causes are minor.
[11] [1996] AATA 173 at [39] – [40].
[12] (2003) 73 ALD 41 at [37] – [41].
[13] [2000] AATA 212 at [46] – [47].
The Applicant’s debt arose due to her failure to inform Centrelink of her partner’s income, and not due to any error or failing on behalf of Centrelink. As the debt did not arise due to sole administrative error, it is not appropriate to waive the debt under s 1237A(1) of the Act.
Waiver for special circumstances
Senior Member Evans-Bonner in her decision in Magok and Secretary, Department of Social Services [2021] AATA 571 at para 56 explained that:
… s 1237AAD of the Act gives the Secretary the discretion to waive a debt if there are special circumstances, other than financial hardship alone, which make it appropriate to do so. Additionally, the person must not have contributed to the debt by making a false statement, representation or by otherwise failing to comply with a provision of the Act or the Administration Act.
The Tribunal accepts that the Applicant did not deliberately make a false statement or representation. Her evidence, which is accepted, is that she simply did not understand the need to report her income separately for the purposes of the different payments.
“Special circumstances” is not defined in the legislation. In Secretary of the Department of Families, Housing, Community services and Indigenous Affairs v Jones (2012) 89 ATR 267 at para 51, Jacobson J stated:
The effect of the authorities is that the phrase “special circumstances”, although lacking in precision, is sufficiently understood as including events or things that render the operation of the statue in a particular case as unfair, unintended or unjust. What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists. Moreover, the circumstances of the case are not confined to matters that are external to the operation of the statutory scheme...
The Applicant made no submissions regarding special circumstances that may make it appropriate to waive the debt. Her evidence was that she stays at home and has three children aged between four and 12. Her husband is a teacher and they live in a regional Western Australian town.
The Tribunal finds that there is no evidence before it of any special circumstances that would make it desirable to waive the debt under s 1237AAD of the Act.
CONCLUSION
The Tribunal finds that the Applicant failed to accurately report her husband’s earnings which resulted in her being overpaid PPP for the relevant period.
The overpayment is a debt to the Commonwealth and constitutes a legally recoverable debt.
The debt should be recovered in full because there is no basis upon which it can be waived or written off.
DECISION
The Reviewable Decision, being the decision of the Social Services & Child Support Division of the Tribunal dated 10 August 2020, is affirmed.

I certify that the preceding 51 (fifty-one) paragraphs are a true copy of the reasons for the decision herein of Member M East

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Associate
Dated: 2 August 2021

Date of hearing: 9 July 2021

Applicant:

Representative for the Respondent:

Self-represented

Ms Alexandra Cornfield, Sparke Helmore

[2021] AATA 2626

2 August 2021

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