Scaife and Secretary, Department of Employment and Workplace Relations

[2006] AATA 550

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 550

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          N2006/37

GENERAL ADMINISTRATIVE DIVISION		)
Re		THOMAS SCAIFE

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal  Ms N Isenberg, Member

Date23 June 2006

PlaceSydney

Decision The Administrative Appeals Tribunal sets aside the decision under review and remits the matter to the Respondent for calculation of the debt for overpayment of Newstart Allowance between 15 September 1997 and 8 January 2000, on the basis that the Applicant earned, during that period, $240 per week. 

[Sgd] Ms N Isenberg, Member

CATCHWORDS

SOCIAL SECURITY – Newstart Allowance – overpayment – debt – understating income to Centrelink – employers records unreliable – no special circumstances to warrant waive or write off – decision under review set aside – decision remitted to recalculate debt

Social Security Act 1991, sections 1236, 1237A, 1237AAD

Re Beadle and Director General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

23 June 2006 Ms N Isenberg, Member

1.      Mr Scaife started receiving Newstart Allowance in January 1996.  In September 1997, he started working casually with Lahuge Organic Services Pty Ltd (Lahuge).  In January 1998, Mr Scaife told Centrelink that he was earning $242 per fortnight and Centrelink paid him Newstart Allowance on the basis of that level of income.  Mr Scaife continued to lodge forms for payment stating that his earnings were “continuous”. He was advised to inform Centrelink of any changes.

2.      On 10 July 1998, Mr Scaife commenced employment with Security Document Disposal Pty Ltd (Security Disposal) and on 8 January 2000 Mr Scaife’s Newstart Allowance was cancelled because he failed to lodge continuation forms.

3.      On 6 December 2001, relying on income information provided by Mr Scaife’s employer, Centrelink decided that Mr Scaife had understated his income between 15 September 1997 and 8 January 2000 and, as a result, was overpaid Newstart Allowance by $12,114.65. 

4.      Mr Scaife concedes that he understated his income and was overpaid Newstart Allowance.  However, he disagrees with the amount of the debt.  Therefore, the issue before me is whether:

oMr Scaife was overpaid $12,114.65 Newstart Allowance for the period 15 September 1997 to 8 January 2000; and if so,

oThis overpaid amount is a debt due to the Commonwealth; and if so,

oThere are any grounds to write off or waive the Commonwealth’s right to recover all or part of the debt. 

Was Mr Scaife overpaid $12,114.65 newstart allowance for the period 15 September 1997 to 8 January 2000?

5.      In August 2000, October 2001 and September 2001 Mr Brian Swayn, the principal of Lahuge and Security Disposal, completed employment questionnaires indicating that Mr Scaife received between $420 and $460 per week from January 1999 to April 2000; that Mr Scaife earned $7,313.75 during the period 1 July 1998 to 13 January 1999 and a total of $7,434.60 in the period from July 1997 to June 1998.  The amounts specified by Mr Swayn in these questionnaires were considerably higher than Mr Scaife’s declared income to Centrelink. 

6.      Centrelink obtained information from the Australian Taxation Office showing Mr Scaife’s income tax returns for 1997/98 through to 2000/01.  Based on this information, Centrelink calculated the debt owing to be $12,114.65.

7.      Mr Scaife conceded in the course of the hearing that he did in fact understate his income to Centrelink.  However, he disputed the income amounts relied upon by Centrelink.  He submitted that his actual income was in fact $242 per week and that accordingly, Centrelink had overestimated the debt. 

8.      Mr Scaife submitted that Mr Swayn’s business and employment practices were unprofessional that Mr Swayn’s figures were unreliable.

9.      Mr Scaife told the Tribunal that when he commenced employment with Lahuge he worked only a couple of hours a day.  He was paid, first by cheque, and then in cash.  There was a period when he worked for both Lahuge and Security Document, but arrangements were informal as the businesses were both owned by Mr Swayn.  In addition to Lahuge and Security Document, Mr Swayn had a printing business and all the businesses, including his accountancy firm, operated from different areas in the one premises. 

10.     At one stage, Lahuge and the printing business started to go bad.  Lahuge's supplier repossessed goods, and left a summons for the value of the balance.  At about the same time the printing staff started to leave because they weren’t being paid.  Mr Swayn then apparently decamped to another town, some six hours away, leaving his secretary, one other person and Mr Scaife running what was left of the businesses.  After an altercation about a client’s tax returns the secretary left too.  Mr Swayn would come in sometimes on the weekends, but otherwise was not seen for months.  Appointments with investigators were not kept.  Contact was by mobile phone only and Mr Scaife would phone him for instructions. 

11.     Curiously, Mr Swayn left a credit card with Mr Scaife and the other person from which they could draw their wages.  Mr Scaife said he would usually, but not always, phone Mr Swayn to tell him how long he had worked and to get approval to make the appropriate withdrawal from the ATM in the Mall.  At first the other employee would make the withdrawals for them both, and then, when he left, Mr Scaife did it himself.  There were not always sufficient funds to cover his entitlement.

12.     At no time did Mr Swayn provide pay slips to Mr Scaife, nor apparently, were superannuation contributions made.

13.     A comparison of the employer’s report (T32 pp 92 to 95) with Security Document’s Commonwealth Bank account (T46 pp 159 to 191) shows that there is some, but not complete, correlation between the amount said to have been paid to Mr Scaife by the employer with amounts withdrawn from the bank account between 22 October 1999 and 28 January 2000.  However, as Mr Scaife pointed out in his submission there is no evidence that the withdrawals attributed to him were made by him or on his behalf.  Further, while there are withdrawals from the Mall ATM consistent with the employer’s report there are multiple additional, and unexplained withdrawals.  

14.     Mr Swayn prepared Mr Scaife’s tax returns (free of charge) because Mr Swayn had done them for him when he, Mr Scaife, had previously been in business.  Mr Swayn prepared the group certificate, then the return and then lodged it electronically. 

15.     Mr Duri suggested Mr Scaife had been given the benefit of the lesser sums contained in the group certificates.  I do not agree that this is the appropriate outcome.  I compared all the group certificate and found them to be inconsistent with the statement of earnings for the same periods.  Further there is one group certificate in evidence with the employer as ‘Crestbush Pty Limited’, about which there is no evidence at all.  In any event, the returns were prepared by Mr Swayn, and the income stated in the group certificates was also calculated by Mr Swayn.  With no pay slips Mr Scaife was not in a position to question what had been done.

16.     Mr Scaife said he wanted to ‘sit down in a room and talk to Mr Swayn’.  Centrelink however, did not call Mr Swayn in these proceedings, nor apparently have attempted to contact him, preferring instead to rely on the available documents. 

17.     Mr Scaife gave an account of Mr Swayn’s business conduct which he described as ‘Mickey Mouse’.  Mr Swayn has apparently been struck off as an accountant (and presumably as a tax agent), is being pursued by ASIC and has fled the town.  His is or was bankrupt and has been pursued by creditors and his property re-possessed.  His businesses have all gone bad and his staff were, for periods, unpaid, and their statutory entitlements doubtful. 

18.     Centrelink had referred Mr Scaife’s papers to the DPP with a view to prosecution.  The DPP found the evidence ‘totally unreliable’, especially as Mr Swayn was ‘either unable or unwilling to provide any further material to substantiate either the hours worked by Mr Scaife or the amounts paid to him’.  While the standard of proof is higher in a criminal proceedings than in the present matter, I do not consider the evidence of Mr Swayn available before me to be reliable.  Everything upon which Centrelink relies has its genesis with the mysterious Mr Swayn, and I reject that evidence.

19.     I accept that Mr Scaife understated his income to Centrelink and that he in fact earned approximately $240 per week.  As Centrelink calculated Mr Scaife’s Newstart Allowance payments on the basis that he was receiving $240 per fortnight, it follows that his Newstart Allowance payments were excessive.  The amount of the overpayment will need to be recalculated by Centrelink.

Is this overpaid amount is a debt due to the Commonwealth?

20.     Mr Scaife also conceded at the hearing that he has been overpaid Newstart Allowance and that he is willing to repay the consequent debt.

Are there are any grounds to write off or waive the Commonwealth’s right to recover all or part of the debt?

21.     The Social Security Act 1991 (“the Act”) makes provisions in limited circumstances for debts not to be recovered.  

22. Mr Scaife’s debt arose because he advised Centrelink of an income amount that was lower than his actual income. As the debt did not arise solely from administrative error, the waiver provisions of section 1237A of the Act do not apply.

23. Section 1236 of the Act provides for a debt to be written off if it is irrecoverable. In this case, it is inappropriate to write off the debt because Mr Scaife is currently working and may have a capacity to repay the debt (even in installments) that would take into account his overall financial situation.

24. Section 1237AAD of the Act provides for a debt to be waived in the special circumstances of the case.

25.     The term “special circumstances” is not exhaustive, but the circumstances must be unusual, uncommon or exceptional: per Re Beadle and Director General of Social Security (1984) 6 ALD 1.

26.     Mr Scaife described his present circumstances to me.  He has operated a car detailing business for seven years, from which he derives an income.  He owes the ATO about $3600 from an earlier failed business.  He rents his accommodation and he has a manageable bankcard debt.  He has had some emotional set backs with the deaths of close relatives but now he is in a steady and supportive relationship.  He remains socially ostracised.  His health is good for his age and he lives a healthy lifestyle. 

27.     I do not consider his circumstances to be so special to warrant the waiving of the debt.

DECISION

28.     The Administrative Appeals Tribunal sets aside the decision under review and remits the matter to the Respondent for calculation of the debt for overpayment of newstart allowance between 15 September 1997 and 8 January 2000, on the basis that the Applicant earned, during that period, $240 per week. 

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Member

Signed:         A. Krilis  Associate

Date of Decision  23 June 2006
Date of Hearing  9 June 2006
Representative for Applicant          Self
Advocate for Respondent              Mr Alan Duri