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

Phillips and Secretary, Department of Social Services (Social services second review) [2021] AATA 3560 (6 October 2021)
Division:GENERAL DIVISION
File Number: 2021/2110
Re:Jeffrey Phillips
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member R West
Date:6 October 2021
Place:Melbourne

The Tribunal affirms the decision under review.
............................[sgd]............................................
Member R West
Catchwords
SOCIAL SECURITY – aged pension – overpayment – debt due to the Commonwealth - consideration of write off or waiver of the debt – whether debt attributed solely to administrative error – decision affirmed.
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
Douglas and Secretary, Department of Families, Community Services and Indigenous Affairs & Anor [2007] AATA 1072
Jones and Secretary, Department of Family and Community Services [2003] AATA 62
L and Department of Social Security [1995] AATA 159
Re Mary Lumsden and the Secretary, Department of Social Security [1986] AATA 22
Secretary, Department of Family and Community Services and Birgden [2003] AATA 67
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC190
Barnes and Secretary, Department of Social Services [2014] AATA 786
Stubbs and Secretary Department of Families and Community Services [2003] AATA 729
REASONS FOR DECISION
Member R West
6 October 2021
INTRODUCTION

This matter concerns the decision of the Administrative Appeals Tribunal (Social Services & Child Support Division) dated 10 March 2021, affirming the decision of Services Australia to recover from the Applicant a debt in the sum of $53,990.56 resulting from the overpayment of the age pension for the period 13 November 2015 to 27 August 2020 (Debt Period).
The relevant history of the matter is as follows:
·The Applicant was in receipt of the age pension.
·On 21 September 2020, the Respondent notified the Applicant of its decision to raise an age pension debt of $53,990.56 for the period 13 November 2015 to 27 August 2020 (Initial Decision).[1]
·On 9 November 2020, an Authorised Review Officer with Services Australia affirmed the Initial Decision (ARO Decision).[2]
·On 10 March 2021, the Administrative Appeals Tribunal (Social Services & Child Support Division) affirmed the ARO decision (AAT1 Decision).[3]
·The Applicant applied for a Second Tier Review by the General Division of the Administrative Appeals Tribunal on 8 April 2021.[4]
[1] T-Documents T7.
[2] T-Documents T9.
[3] T-Documents T2.
[4] T1.
A hearing in relation to the Second Tier Review was held on 17 September 2021. Due to the restrictions placed on the community in response to the COVID-19 pandemic, the Tribunal determined that the hearing be conducted by telephone pursuant to s 33A of the Administrative Appeals Act 1975 (AAT Act).
The Applicant was self-represented. The Respondent was represented by Mr Tim Noonan, a solicitor with Services Australia.
LEGISLATION
The Tribunal has had regard to the following relevant legislation in making its decision:
·Social Security Act 1991 (the Act);
·Social Security (Administration) Act 1999 (the Administration Act); and
·Administrative Appeals Tribunal Act 1975.
EVIDENCE AND SUBMISSIONS
In conducting the Second Tier Review, the Tribunal has had regard to:
·the documents produced by the Respondent pursuant to s 37 and s 38AA of the AAT Act (T Documents and Supplementary T Documents);
·the oral evidence of the Applicant;
·the Applicant’s written submissions dated 21 June and 6 September 2021; and
·the Respondent’s Statement of Facts Issues and Contentions.
CONSIDERATION
In the AAT1 Decision, the Tribunal found that during the Debt Period, the Applicant was in receipt of income derived from a business in the entertainment industry and commission-only income from his employment with a real estate company. The Tribunal had regard to income information provided to the Respondent by the real estate business and the entertainment business, and the age pension payment history and rate calculations provided by the Respondent. The Tribunal concluded that the Applicant’s employment income was not taken into account when setting his rate of age pension and that as a result, he was overpaid $53,990.56 for the period 13 November 2015 to 27 August 2020.
The Applicant confirmed at the outset of the Second Tier Review hearing that he did not dispute these findings by the Tribunal in the AAT1 Decision, nor did he dispute that the overpayment was a debt due to the Commonwealth under s 1223(1) of the Act. This was also the position of the Respondent.
Accordingly, for the purpose of the Second Tier Review, the Tribunal accepts that the Applicant is indebted to the Commonwealth in the sum of $53,990.56 (Debt).
The issue for determination on review was whether the Applicant’s Debt should be waived or written off in accordance with the relevant provisions of the Act. The relevant provisions are:
(a)Section 1236 - which allows for a debt to be written off if irrecoverable at law or where the debtor has no capacity to repay the debt;
(b)Section 1237A – which requires recovery of any part of the debt to be waived if it was solely due to administrative error; and
(c)Section 1237AAD - which allows recovery of any part of the debt to be waived on the basis of special circumstances.
Section 1236
Section 1236 relevantly provides:
(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(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…
Pursuant to s 1236 (1B), and relevantly in this application, for the purpose of s 1236(1A)(a), a debt is taken to be irrecoverable at law if, and only if, there is no proof of the debt capable of sustaining legal proceedings for its recovery. That is not the case here and the Applicant did not dispute that the Debt was recoverable at law.
For the purpose of s 1236(1A)(b), a debtor is taken to have a capacity to repay a debt unless recovery by those means would result in the debtor being in severe financial hardship.
The term "severe financial hardship" is not defined in the Act, but the Tribunal[5] has previously considered the following issues relevant in assessing the term:
(a)the term must be seen in the context of the legislation and whether recovery would cause such personal hardship to the debtor as to run contrary to the beneficial nature of the legislation;
(b)recovery that causes some financial hardship, stress and inconvenience does not constitute severe financial hardship; and
(c)hardship must be financial suffering of a severe or extreme nature.
[5] Re Lumsden and Secretary Department of Social Security [1986] AATA 228; L and Department of Social Security [1995] AATA 159;Jones and Secretary, Department of Family and Community Services [2003]AATA 62; Secretary, Department of Family and Community Services and Birgden [2003] AATA 67; Stubbs and Secretary Department of Families and Community Services [2003] AATA 729; Douglas and Secretary, Department of Families, Community Services and Indigenous Affairs & Anor [2007] AATA 1072.
While the Applicant asserted that it would be difficult for him to repay the Debt, he did not assert that he had no capacity to do so. He confirmed in his oral evidence that he had assets of approximately $50,000 cash, ownership of a house and had the opportunity to earn income on a commission-only basis with the real estate business with whom he had been working.
The Respondent contends that recovery of the Debt by fortnightly withholdings from his age pension at a rate to be negotiated would not cause the Applicant severe financial hardship, particularly given his employment income.
Given the Applicant’s assets, his opportunity to earn income, and the availability of recovery by fortnightly withholdings from his age pension, the Tribunal is not satisfied that the Applicant has no capacity to repay the Debt and accordingly, there is no proper basis to write off the Debt under s 1236 of the Act.
Section 1237A
Section 1237A(1) relevantly provides:
Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt[6] that is attributable solely[7] 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.
[6] For the purposes of this section, a proportion of a debt may be 100% of the debt – s 1237A(3).
[7] Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by
administrative error and partly by one or more other factors (such as error by the debtor).
The Applicant claims he accepted the age pension payments during the Debt Period in good faith and he attributes the Debt to three administrative actions of Centrelink, namely:
(a) the absence of any clear statement on the first page of each of the fortnightly assessment notices provided to him during the relevant period[8] which would direct him to read the information on the second page and specifically the section headed ‘What you must tell us’;
(b) the failure of Centrelink to undertake data-matching with the Australian Taxation Office (ATO) to confirm his income during the relevant period; and
(c) the failure of Centrelink to require the Applicant to participate in fortnightly telephone reporting on changes to his income.
[8] T-Documents, T10 at pp 184-219.
Whether or not a debt is attributable solely to a particular administrative error requires an objective assessment of causation to determine whether the only cause that objectively can be ascribed to the relevant debt is an administrative error[9]. The concept of sole administrative error does not require that Centrelink made no mistakes, but that the debtor made no contribution to the error.[10]
[9] Sekhon and Secretary Department of Family and Community Services [2003] FCAFC 190 at [35].
[10] Barnes and Secretary, Department of Social Services [2014] AATA 786 at [47].
In this regard it is relevant that a recipient of the age pension is subject to an obligation under s 66A of the Administration Act to inform the Respondent within 14 days of a change in circumstances that might affect the payment of a benefit.
The Tribunal accepts that the Applicant received the payments that gave rise to the Debt in good faith in the sense that he had a genuine belief that the rate of pension he received was correctly calculated. While that belief was genuine, it was born out of an unreasonable set of assumptions by the Applicant.
Firstly, the Applicant incorrectly assumed that the Respondent routinely shared data with the ATO such that it would be aware of his income from information he provided to the ATO. This was no more than an assumption on the Applicant’s part. While the Respondent and the ATO do engage in data matching from time to time, there is no evidence that this was a regular ongoing practice nor that the Applicant was informed that it was, or that it would, displace the Applicant’s notification obligations under s 66A. The Applicant has not identified any obligation on Centrelink to engage in regular data-matching with the ATO and the Respondent denies that any such obligation exists.
Secondly, the Applicant unreasonably failed to understand and act on his obligation under the Administration Act to inform the Respondent of changes to his income. He admitted in his oral evidence that he had never read the information on the second page of each of the fortnightly notices provided to him by the Respondent. This information clearly spelled out his obligation to keep the Respondent informed of any changes in his income.
The Applicant justified his position by asserting that the Respondent had failed to adequately put him on notice regarding the need to read the information on the second page during the relevant period. The Applicant supported this claim by referring to a newspaper report in the Sydney Morning Herald of 7 April 2021 which referred to the Commonwealth Ombudsman’s opinion that Service Australia's debt notices insufficiently publicised the options for disputing a debt. The Applicant noted that in the newspaper article a Services Australia spokesperson welcomed the Ombudsman’s findings. The Applicant also pointed to the fact that notices he received in December 2013 bore the words ‘PLEASE READ THE BACK OF THIS LETTER’ to highlight that something of importance and relevance is on the second page of the notice. Such wording was not included in the notices he received in the relevant period.
The Tribunal accepts that a highlighted statement on the first page of the fortnightly notices drawing the recipient’s attention to the information on page 2 would have made it clearer to the Applicant that he needed to read page 2. However, that is not to say that the notices did not reasonably draw the Applicant’s attention to his obligation to keep Centrelink informed. That obligation is prominently and clearly stated on page 2 of the notices, in bold and in a larger font, and it is not a reasonable justification for a recipient failing to read the information to say, in effect, that they were not told to do so. The information was there to be read. It was up to the Applicant to read it.
The Applicant was also critical of the notices because the statement on page 2 ‘compressed’ the information contained in a twelve-page brochure on Income Reporting issued by the Respondent. The Tribunal does not accept that this criticism identifies a relevant administrative error by the Commonwealth. While the notice is a summarised version of the information contained in the brochure it is sufficiently detailed to enable a recipient to understand their ongoing income reporting obligations. The Applicant’s failure to report changes in his income did not stem from the adequacy of the information in the notices but rather his acknowledged failure to ever read the information.
As to the issue of fortnightly telephone reporting, Centrelink’s standard default reporting arrangement is notification reporting which relies on recipients complying with notices issued under s 68(2) and the continuous reporting obligation under s 66A of the Administration Act. Centrelink was not obliged to place the Applicant on fortnightly income reporting.
Put simply, the Applicant was overpaid the age pension during the Debt Period because the information regarding his income was not updated to take account of his commission earnings. The primary responsibility for providing this updated information fell on the Applicant. While it is arguable that Centrelink could have taken steps to obtain updated information, such as data sharing with the ATO or placing the Applicant on fortnightly reporting, it applied the usual notification reporting system and relied on the Applicant to provide information regarding changes to his income as spelled out in the Administration Act and notified to the Applicant in each fortnightly notice. The Applicant’s failure to discharge his obligation to notify Centrelink of the changes was the operative cause of the overpayments and it therefore cannot reasonably be said that they were solely due to an administrative error of the Commonwealth.
Section 1237AAD
Section 1237AAD relevantly 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.
For the reasons stated above, the Tribunal is satisfied that the Debt resulted, at least partly, from the Applicant’s failure to notify Centrelink of changes to his income as required by the Administration Act and the fortnightly notices themselves.
Further, the Applicant did not put forward any basis upon which the Tribunal could be satisfied that there were special circumstances that would make it desirable to waive recovery of the Debt. The Applicant gave evidence that he was in good health and had assets of approximately $50,000 cash, ownership of a house and had the opportunity to earn income on a commission-only basis with the real estate business with whom he had been working. The Tribunal is satisfied that the Applicant is in a much better financial position than many persons in receipt of the age pension and there are no special circumstances justifying waiver of the Debt.
CONCLUSION
For the reasons stated above, the Tribunal is not satisfied that there are grounds requiring recovery of the Debt to be waived under s1237A or that it is appropriate for the Debt to be written off under s 1236 or waived under s 1237AAD.
The correct and preferable decision is to affirm the decision under review.
DECISION
The decision under review is affirmed.

I certify that the preceding 35 (thirty-five) paragraphs are a true copy of the reasons for the decision herein of Member R West

.............[sgd].....................................
Associate
Dated: 6 October 2021

Date of hearing: 17 September 2021

Applicant, self-represented: Jeffrey Phillips

Advocate for the Respondent: Tim Noonan

Solicitor for the Respondent: Services Australia

[2021] AATA 3560

6 October 2021

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Jurisdiction

Standing

Statutory Construction

Remedies

Date of hearing:	17 September 2021
Applicant, self-represented:	Jeffrey Phillips
Advocate for the Respondent:	Tim Noonan
Solicitor for the Respondent:	Services Australia