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

[2020] AATA 2418

Pelyva and Secretary, Department of Social Services (Social services second review) [2020] AATA 2418 (22 July 2020)

Division:GENERAL DIVISION

File Number:          2019/5287

Re:Andrea Pelyva

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member R West

Date:22 July 2020

Place:Melbourne

The Tribunal affirms the decision under review.

...[sgd]....................................................................

Member R West

Catchwords

PARENTAL PAYMENTS – overpayments – whether debt to the Commonwealth – whether debt recoverable – not solely due to administrative error per s 1237A – no grounds for waiver under s 1237AAD – not prescribed circumstances under s 1236 – decision under review affirmed.

Legislation

A New Tax System (Family Assistance) (Administration) Act 1999

Administrative Appeals Act 1975

Evidence Act 1995

Social Security Act 1991

Social Security (Administration) Act 1991

Cases

Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436

Davy v Secretary, Department of Employment and Workplace Relations, Re (2007) 94 ALD 693

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

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Sekhon v Secretary, Department of family and Community Services [2003] FCR 126

Secondary Materials

Guides to Social Policy Law: Social Security Guide, Department of Social Services, Version 1.270 released 1 July 2020

REASONS FOR DECISION

Member R West

22 July 2020

Background

1. This matter concerns a decision of the Respondent to require the Applicant to repay a parenting payment debt.

2. On 13 March 2017, a Centrelink officer determined that the Applicant had incurred a parenting payment debt of $36,550.22 in respect of over-payments made in the period 1 July 2008 to 14 August 2013, and that she was required to repay the debt (Initial Decision).  The Applicant sought a review of this decision.

3. On 28 March 2019, an authorised review officer (ARO) of the Respondent reviewed the Initial Decision. The ARO determined that the amount of the Applicant’s parenting payment debt was $31,279.79, as it related to over-payments made in the period 13 November 2008 to 30 June 2013, and determined that the Applicant was required to repay the debt (ARO Decision).  The Applicant sought review of this decision by the Social Services and Child Support Division of this Tribunal.

4. On 29 July 2019, the Social Services and Child Support Division affirmed the ARO Decision (AAT 1 Decision). 

5. On 22 August 2019, the Applicant applied for a review of the AAT 1 Decision by the General Division of the Tribunal.

6. On 15 January 2020, the Tribunal ordered, with the consent of the parties, that the decision under review be stayed until final determination of the matter or until further order (Stay Order).

7. The legislation relevant to the review is the:

   ·Social Security Act 1991 (Act); and

   ·Social Security (Administration) Act 1991 (Administration Act).

8. In addition, the Tribunal is required to apply lawful policy set out in the Social Security Guide (Guide), unless there is a cogent reason not to follow it.[1]

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

9. The Respondent filed a detailed Statement of Issues Facts and Contentions setting out the Respondents submissions regarding these issues and lodged with the Tribunal documents totalling 930 pages (T Documents) as required under s 37 of the Administrative Appeals Act 1975 (AAT Act).

10. On 14 January 2020, the Applicant filed with the Tribunal a brief written statement dated 13 January 2020 setting out her two main concerns regarding the AAT 1 Decision.  In summary those concerns were:

    (a)she did not understand how the amount of the debt was calculated; and

    (b)the payments had been made to her in error and Centrelink had not taken any responsibility for the error.

11. On 6 February 2020, a hearing was conducted by telephone at which the Applicant was self-represented and the Respondent was represented by Mr Brian Sparkes, a solicitor with the Respondent.  Following brief submissions by the parties, the hearing was adjourned and the following directions were issued by the Tribunal:

    1On or before 28 February 2020, the Respondent must lodge with the Tribunal and give to the Applicant:

    (a)A written statement setting out:

    (i)     for each income year between 13 November 2008 and 13 June 2013 the calculation of the Applicant’s income and its source detailing the amount to which the Applicant was entitled;

    (ii)    [t]he details of the payments received by the Applicant each year; and

    (iii)   [a] summary sheet covering the period from 13 November 2008 to 13 June 2013.

    (b)A signed witness statement for any witness on which the Respondent intends to rely

    2On or before 20 March 2020 the Applicant must lodge with the Tribunal and give to the Respondent a written statement setting out any matter she disputes about the calculations provided by the Respondent.

12. On 28 February 2020, the Respondent lodged a written statement in accordance with paragraph 1(a) of the Direction.  The Respondent did not seek to rely on any witness evidence.

13. On 11 March 2020, the Applicant lodged a written statement in accordance with paragraph 2 of the Direction. 

14. The matter was re-listed for a further hearing on 9 April 2020.

15. On 30 March 2020, Tribunal staff contacted the parties regarding the public health measures introduced in response to the COVID-19 pandemic and the implications of those measures for the hearing scheduled for 9 April 2020.  Following consultation with Tribunal staff, the parties each confirmed in writing their consent to the Tribunal determining the review on the papers without a further hearing (the Applicant on 1 April and the Respondent on 7 April 2020).

16. Noting the consent of the parties, and having regard to the extensive documentation lodged with the Tribunal under s 37 of the AAT Act and the written submissions filed by each of the parties, the Tribunal was satisfied that the issues for determination on review could be adequately determined in the absence of the parties.  Accordingly, pursuant to s 34J of the AAT Act, the Tribunal determined to review the AAT 1 Decision by considering the documents and other material lodged with or provided to the Tribunal without holding a further hearing.

17. On 12 May 2020, a further direction was issued offering the Applicant an opportunity to submit any further written submissions regarding the matters raised in paragraphs [48]–[61] (inclusive) of the Respondent’s Statement of Facts, Issues and Contentions by 29 May 2020.  The Respondent was offered an opportunity to submit any reply submissions by 12 June 2020.

18. The Applicant provided a further submission on 24 May 2020 and the Respondent provided a submission in reply on 9 June 2020.

    Consideration of the Issues

19. The issues for determination on review are:

    (a)whether the Applicant was overpaid parenting payments, and if so, the amount of the overpayment and the period to which it relates;

    (b)whether the overpayment constitutes a legally recoverable debt; and

    (c)whether the debt should not be recovered because:

    (i)the debt, or a portion of it, was attributable solely to an administrative error under s 1237A of the Act;

    (ii)there were grounds to waive the debt under s 1237AAD of the Act; or

    (iii)a prescribed circumstance set out in s 1236 of the Act applies to permit the debt to be written off.

    The Applicant was overpaid parenting payments, by $31,279.79

20. In the Respondent’s final submissions filed on 9 June 2020 the Respondent updated its table setting out details of the overpayments.  A copy of the table is annexed to this decision as Annexure A.  The Respondent claims that the Applicant was overpaid parenting payments totalling $31,279.79 in the period 13 November 2008 to 30 June 2013, as follows:

    (a)2008/2009 — $4,506.82;

    (b)2009/2010 — $2,142.67;

    (c)2010/2011 — $7,650.02;

    (d)2011/2012 — $8,266.13;

    (e)2012/2013 — $8,453.95; and

    (f)2013/2014 — $260.20.

21. The Applicant did not dispute the Respondent’s calculations in so far as they record the parenting payments received by the Applicant each year.  Rather the dispute relates to the calculation of the correct entitlement amount and specifically the income figures upon which it was based.

22. The Applicant’s submission questions the correctness of the income figures used by the Respondent, although she does not identify definitively why the figures are incorrect.  The Respondent identified the assessable income for each of the respective years by reference to the T Documents which were set out in a summary table attached to the reply submission.[2]  The Tribunal has verified that the assessable income figures used for the calculation match the income tax returns for the Applicant and her partner as recorded in the T Documents. 

    [2] Annexure A.

23. In her reply submissions of 9 June 2020, the Respondent stated that the amount of debt each year was calculated by a complex automated process based on the Applicant’s assessable income for the relevant period (among other things). While the Tribunal is not bound by the rules of evidence, it accepts the Respondent’s submission that it is appropriate in this case, having regard to s 147 of the Evidence Act 1995, to accept the output of the automated process, unless there is evidence that the process has not produced the correct calculation. Section 147 applies to a document:

    (a)that is produced wholly or partly by a device or process; and

    (b)that is tendered by a party who asserts that, in producing the document, the device or process has produced a particular outcome.

24. Section 147(2) of the Evidence Act1995 provides that such a document

    is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that, in producing the document on the occasion in question, the device or process produced that outcome. 

25. The Applicant’s submissions, while expressing her own inability to understand how the calculations were conducted, do not raise any basis for disputing that the automated process has produced a correct calculation.

26. The Tribunal also notes that the calculations were reviewed by the ARO and by the Tribunal in the AAT 1 Decision and confirmed in each case.

27. Having regard to these matters the Tribunal is satisfied that the Applicant was overpaid parenting payments over the period from 13 November 2008 to 30 June 2013 in the sum of $31,279.79.

    The overpayment constitutes a legally recoverable debt

28. Section 1223(1) of the Act provides 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.

29. A parenting payment is defined by s 23(1) of the Act to be a social security payment.

30. Accordingly, the Applicant is indebted to the Commonwealth in the amount of $31,279.79.

    The debt, or a portion of it, is not attributable solely to an administrative error under s 1237A of the Act

31. Section 1237A relevantly provides that the Respondent 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.

32. The Respondent submits that the overpayments were not attributable to administrative error, rather they occurred because the Applicant failed to provide details of her and her partner’s income in compliance with notices sent to her.[3]  The Tribunal noted in the AAT 1 Decision that the Applicant had not disputed that she did not inform Centrelink of changes to her circumstances after 2007, such as changes to her and her partner’s business income or the sale of rental properties.  The Applicant did not dispute this in her written submissions to the Tribunal.  She did express her dissatisfaction with the delay in resolving the matter and asked the rhetorical question — Why this error of payment weren’t [sic] discovered earlier and why the department let this figure grow for several years.

    [3] T7, T Documents, at pp. 677–687, 908.

33. While the Applicant’s frustration with the length of time this dispute has been going on is understandable, the reasons she raised do not establish that administrative error was the reason for the debt being incurred.  It is only where administrative error is the only cause which can be ascribed to the incurring of the debt that the discretion under s 1237A of the Act is enlivened. [4]

    [4] Sekhon v Secretary, Department of family and Community Services [2003] FCR 126 at 135 [35].

34. Accordingly, there is no basis for the waiver of the debt under s 1237A of the Act.

    There are no grounds to waive the debt under s 1237AAD of the Act

35. Section 1237AAD 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.

36. The evidence does not support a conclusion that the Applicant knowingly made a false statement or failed or omitted to comply with a legislative requirement, and so the exercise of discretion under s 1237AAD depends on whether there are special circumstances other than financial hardship alone.

37. The Applicant did not advance anything specific which would constitute special circumstances.  In her written submissions dated 24 May 2020, she advanced three reasons why she felt that payment of the debt was not justified:

    (a)it is not financially beneficial for the Government to deal with this case any further;

    (b)I do not wish to receive any further payment or assistance from the Government;

    (c)I don’t want to [live] in a stressful environment knowing that I may have to pay that back in 10 years time; and

    (d)This situation is very stressful and has uncertain areas that put pressure on the average working people…and needs to be reviewed and changed.

38. The term special circumstances is not defined in the Act.  It has been held that the words require that there be something which distinguishes the Applicant’s case from the ordinary or usual case,[5] although it can involve a consideration of the general administration of the social security system as well.[6]  This includes recognition that there is a public interest in having persons repay moneys to which they were not entitled.

    [5] Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436 at 445 [33].

    [6] Davy v Secretary, Department of Employment and Workplace Relations, Re (2007) 94 ALD 693 at 715 [80]–[81]; Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545.

39. The Tribunal is not satisfied that there is anything unusual or uncommon about the Applicant’s circumstances which could properly be described as special circumstances for the purpose of s 1237AAD of the Act.  The reasons advanced by the Applicant are more in the nature of a critique of the system generally than an indicator of the Applicant’s unique position.

40. Accordingly, there is no basis for the waiver of the debt under s 1237AAD of the Act.

    There is no prescribed circumstance as set out in s 1236 of the Act which would permit the debt to be written off

41. Under s 1236(1) of the Act the Secretary may, write off a debt, for a stated period or otherwise 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.

42. Clearly, paragraph (c) is inapplicable in this case. 

43. As to paragraph (b), the Applicant has not raised any claim that she has no capacity to repay the debt.  In fact, her submissions indicated that she is likely to have the financial means to repay the debt.  She has an interest in a business with her partner and owns a rental property.  She also stated in her 24 May 2020 submission that she increased her income estimate to a very high level on the Centrelink my Gov page in July 2019 for the future financial year, as I do not wish to receive any further payment or assistance from the Government. 

44. There is nothing to indicate that the debt is legally irrecoverable, under paragraph (a), within the extended definition contained in s 1236(1B) of the Act.

45. Whether it is cost effective to take action to recover the debt depends on the steps available to the Commonwealth to effect recovery. The Applicant suggests that the debt recovery costs would exceed the debt itself, although she did not attempt to objectively justify this assertion. Sections 82 and 84A of the A New Tax System (Family Assistance) (Administration) Act 1999 set out various options available to the Commonwealth to recover debts through the taxation and social services systems, and s 1236(1C) of the Act deems a debt recoverable if deductions are available under those provisions without causing the debtor severe financial hardship. There is no evidence that the recovery of the Applicant’s debt by way of deductions would cause her severe financial hardship and when given the opportunity to make submissions specifically about that issue she did not make any such assertion.  Quite apart from the options available to the Commonwealth under statute, the amount of the debt is sufficient to reasonably conclude that even in civil proceedings the recovery of the debt could be achieved cost effectively in the lower courts.

46. Having regard to these matters, the Tribunal is not satisfied that there is a prescribed circumstance under s 1236 of the Act which would permit the debt to be written off.

    Conclusion

47. The Tribunal finds that the Applicant was overpaid parenting payments in the amount of $31,279.79 which constitutes a debt to the Commonwealth and there are no grounds for waiving or writing off the debt under the Act.  Accordingly, the Tribunal affirms the decision under review and as a result the stay order of 15 January 2020 is set aside.

    DECISION

48. The Tribunal affirms the decision under review.

I certify that the preceding 48 (forty -eight) paragraphs are a true copy of the reasons for the decision herein of Member R West

.......[sgd]................................................................

Associate

Dated: 22 July 2020

Date of hearing on the papers:	9 April 2020
Date final submissions received:	9 June 2020
Applicant:	Self-represented
Solicitors for the Respondent:	Mr B Sparkes, Services Australia

ANNEXURE A

Financial Year	Income Andre Sourced from Tax Returns	Income Imre Sourced from Tax Returns	Centrelink Payments Received (PPP)	Centrelink Payments Entitled	Debt Amount
2008/09 Both Provided on 22/8/13	49.     $21566 profit T4/146-148; T3/16	50.     $1916 loss T4/323	$4506.82 13/11/08-24/6/09	$0.00	$4506.82
2009/10 Provided on 22/8/13	51.     $10773 9/12/13 T4/131, 297 & 306	52.     $5067 profit 22/8/13 T4/105	$7468.92 25/6/09-23/6/10	$5326.25	$2142.67
2010/11 Both provided on 22/8/13	53.     $30676 T4/86 & 98	54.     $1148 T3/277 & 279	$7756.67 24/6/10-22/6/11	$106.65	$7650.02
2011/12 Both provided on 5/2/13	55.     $36794 T4/70, 76 & 255	56.     $35714 T4/54, 58, 70, 76 249 & 391	$8266.13 23/6/11-20/6/12	$0.00	$8266.13
2012/13 Provided 9/10/13	57.     $22647 T4/204, 206, 208 & 215	$0	$8453.95 21/6/12-19/6/13	$0.00	$8453.95
2013/14	$260.20 20/6/13-30/6/13	$0.00	$260.20
58.     Notes 59.     Total of debt (After ARO decision and the debt the subject of this application for review) amount column is $31,279.58 - i.e. the debt amount determined by the ARO: T3 60.     The italicised and bold notations in the two income columns are references to the tax return evidence supporting those amounts.