Smith and Secretary, Department of Family and Community Services
[2003] AATA 412
•8 April 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 412
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2002/1235
GENERAL ADMINISTRATIVE DIVISION ) Re COLIN SMITH Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Professor T Sourdin, Member Date8 April 2003
PlaceSydney
Decision The Tribunal affirms the decisions under review.
……………………………
Professor T Sourdin
Member
CATCHWORDS
Social Security – job search allowance/newstart allowance – debt recovery – failure to declare earnings from casual employment – prosecution – effect of reparation order and amount sought to be recovered – amount of weekly repayments
Social Security Act 1991 – ss1237A, 1237AAD
REASONS FOR DECISION
T Sourdin, Member
1. This matter involves an application by Colin Smith dated 22 August 2002, for a review of a decision of the Social Security Appeals Tribunal (“the SSAT”) made on 19 July 2002 in relation to the repayment of a debt amount then exceeding $19,326.19 by garnishment.
2. At the hearing, Mr Smith was self-represented and Mr John Kenny of Centrelink represented the Secretary of the Department of Family and Community Services (“the Department”). The evidence before the Tribunal comprised the documents produced pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“the T-Documents”) together with the documents tendered by the parties. Mr Smith gave oral evidence at the hearing.
background
3. A previous matter involving the Applicant, Mr Smith and many of the same factual circumstances was heard before the AAT on 23 March 2001 (date of Decision 9 April 2001) where Mr Smith gave evidence and a full background was prepared. At the hearing held on 7 April 2003, Mr Smith agreed that the background taken was correct, except in two respects (which are referred to below). In the decision of 9 April 2001 it was noted that:
“Mr Smith was born on 2 October 1948 and is now aged 52. Until 20 June 1991, he was employed as a heavy vehicle mechanic by International Trucks (N2000/1078, T4). On 18 October 1991, he commenced employment as a casual school bus driver for Pearce Coaches (N2000/1078, T6). On 18 December 1992, Mr Smith lodged a claim for job search allowance (N2000/1078, T4) which was granted from 25 December 1992 (N2000/1078, T13). On 31 December 1993, he was transferred to newstart allowance (N2000/1078, T13).
Following a data matching review undertaken with the Australian Taxation Office (“ATO”) which revealed a discrepancy in the income details held by the Department of Social Security (“DSS”) and the ATO, on 28 May 1996 the DSS raised a debt against Mr Smith of $8041,50 in respect of newstart allowance paid during the period 1 June 1994 to 30 June 1995 (N2000/1691, T8).
On 7 May 1997, payment of newstart allowance to Mr Smith was cancelled for failure to attend an interview (N2000/1078, T16).
On 15 August 1997, DSS raised debt of $10,938.99 in respect of newstart allowance paid to Mr Smith during the period 13 July 1995 to 1 May 1997 (N2000/1078, T17).
On 16 October 1997, an authorised review officer affirmed the decision of 28 May 1996 to raise a debt in respect of the period 1 June 1994 to 30 June 1995, but referred the matter to the original decision maker to recalculate the debt using details of Mr Smith’s weekly earnings supplied by his employer, rather than his annual income averaged on a fortnightly basis (N2000/1691, T19, T20). Also on 16 October 1997, the authorised review officer affirmed the decision of 15 August 1997 to raise a debt of $10,938.99 in respect of the period 13 July 1995 to 1 March 1997 (N2000/1691, T20).
On 29 October 1997, DSS raised a further debt of $10,299.99 in respect of job search allowance and newstart allowance paid during the period 15 January 1993 to 17 June 1994 (N2000/1078, T8, and T9).
On 29 October 1997, the debt in respect of the period 1 June 1994 to 30 June 1995 was recalculated at $6908.07 (N2000/1078, T21).
In the case of all three debts, the overpayment of job search allowance/newstart allowance arose because of Mr Smith’s undeclared earnings from his casual employment with Pearce Coaches.
On 23 June 1999, the SSAT affirmed two decisions to raise the debts of $6908.07 and $10,938.99 (N2000/1691, T2).
On 12 August 1999, Mr Smith was convicted of eight offences under the Social Security Act 1991 (“the Act”), section 1350, in respect of his failure to declare income from Pearce Coaches while receiving a social security payment (N2000/1691, T30). These offences covered the following periods:
11/2/1993 to 22/4/1993
6/5/1993 to 23/9/1993
7/10/1993 to 30/12/1993
10/2/1994 to 16/6/1994
13/7/1995 to 14/12/1995
on or about 28/12/95
8/2/1996 to 26/12/1996
6/12/1997 to 1/5/1997
Charges in respect of the periods 9 February 1995 to 6 April 1995 and on or about 20 April 1995 were dismissed.
The Downing Centre Local Court sentenced Mr Smith to perform a total of 400 hours community service, and the Court made a reparation order under the Crimes Act 1914, section 21B, of $19,326.19 (N2000/1691,T30).
On 20 December 1999, an authorised review officer affirmed the decision of 28 October 1997 to raise and recover a debt of $10,299.99, in respect of the period 15 January 1993 to 17 June 1994 (N2000/1078, T11).
In August 1999, Centrelink commenced garnisheeing Mr Smith’s wages at a rate of $50 per week. Recovery at this rate was affirmed by an authorised review officer on 20 December 1999, but reduced to $25 per week by the SSAT on 13 March 2000 (N2000/1078, T2).
On 1 June 2000, the SSAT affirmed the decision to raise and recover a debt in respect of the period 15 January 1993 to 17 June 1994, but remitted the matter to Centrelink to recalculate the debt on a fortnightly basis in accordance with the details of Mr Smith’s income provided by Pearce Coaches, rather than his annual income averaged on a fortnightly basis (N2000/1078, T2).
On 14 July 2000, Mr Smith lodged an application with the Tribunal to review the SSAT decision made on 1 June 2000 (N2000/1078, T1).
On 15 September 2000, Centrelink recalculated the debt in respect of the period 15 January 1993 to 30 June 1994 at $8,553.59 (N2000/1078, T29). Mr Smith was notified of this by letter dated 16 October 2000.
On 31 October 2000, Mr Smith lodged a further application with the Tribunal to review the SSAT decision made on 23 June 1999 (N2000/1691, T1).
Extensions of time were granted by the Tribunal in respect of both Mr Smith’s applications.
In summary, the Department is seeking to recover three debts:
(1) $8,553.59 in respect of the period 15 January 1993 to 30 June 1994;
(2) $6,908.07 in respect of the period 1 July 1994 to 30 June 1995; and
(3) $10,938.99 in respect of the period 1 July 1995 to 30 June 1997.
This is a total of $26,400.65.”
Mr Smith’s case
Mr Smith did not dispute the calculation of the debts. He was, however, concerned about the difference between the reparation order of $19,326.19 made by the Local Court and the debt of $26,400.65 which the Department is seeking to recover.
Mr Smith read out a statement he had prepared for the hearing. He said he had been retrenched at the age of 42 without any redundancy payout. At first, he was too proud to seek any Government assistance. He worked as a casual bus driver and mechanic at Thredbo and then as a casual bus driver for Pearce Coaches. The Depot Manager at Pearce Coaches suggested that he apply for social security benefits because the manager was unable to give him any more hours work. He made an appointment at the Merrylands office of the Department where he spoke with a female officer. He told her that he had a casual job but no regular hours because he was on call. The officer told him that he could earn a certain amount before social security payments would be affected but did not tell him specifically what this amount was. He did not fill out his income details on the application form because he did not know these details. The officer did not show him how to fill out the form. She seemed to assume that this was common knowledge. He was not given any brochures or customer charter setting out his rights and responsibilities.
Mr Smith said he continued to look for work while he was receiving social security benefits. He assumed that the money he was earning from his casual work was “ok” in terms of his social security benefits. He said while he accepted some of the blame for what happened, nevertheless, the Department was also negligent in failing to inform him properly of his responsibilities. Mr Smith said that the attitude of Centrelink staff is now more helpful and understanding of people’s needs. He was able to obtain a copy of their customer service charter.
The Tribunal asked Mr Smith about when he had been called in by the Department for review interviews while he was receiving social security benefits.. Mr Smith said he did not mention that he was doing casual, on-call work, because he was not asked. He was only asked about his efforts to find work.
Mr Smith said he has been working for Australia Post for the past three and a half years. When he got the job, he stopped applying for social security benefits.
Mr Smith said when the court proceedings against him were started, he applied for Legal Aid but was told he did not qualify. He was referred to the Welfare Rights Centre but they said they could not help him. Mr Smith saw a solicitor at Penrith but he asked for $800-$900 “up-front” to take the matter on and Mr Smith did not have this money. Consequently, Mr Smith represented himself in court. The matter was adjourned twice and then transferred from Penrith Local Court to the Downing Centre Local Court.
Mr Smith said he barely spoke two words in court. He suffers badly from nerves, for which he takes medication. The magistrate suggested that he should plead guilty and referred him to the duty barrister to discuss how much he was able to repay. Because he was already paying child maintenance of $100 per week, it was proposed that he repay $25 per week to the Department. This figure was accepted by both the Director of Public Prosecutions (“DPP”) and the magistrate. The magistrate ordered Mr Smith to serve 400 hours of community service. Mr Smith took three weeks holiday to serve the first 200 hours and served the other 200 hours on Saturdays over about four months.
Mr Smith could not understand why the Department then garnisheed his wage for $80 per week when the Court had accepted $25 per week. He was only earning $550 per week gross. Mr Smith objected and, finally, the SSAT reduced these payments to $25 per week.
Mr Smith could also not understand why the Department was now seeking to recover $26,400.65 when the Local Court reparation order was for $19,326.00. he pointed to the DPP’s letter dated 17 June 1999 (Exhibit A1), by which Mr Smith was notified that the prosecution was not proposing to rely on certain applications for job search/newstart allowance dated between June 1994 and January 1997. Mr Smith also noted that some of the charges against him were dismissed because no evidence was offered by the prosecution (N2000/1691, T30).
Mr Smith submitted a statement by Kathryn Anne Wheatley dated 18 June 1999 provided to him by the DPP (Exhibit A3). In that statement, Ms Wheatley, a Customer Services Officer at the Merrylands office, said she could not recall the conversation with Mr Smith, which she recorded in a file note (N2000/1691, T9). Mr Smith noted that Ms Wheatley was not called to give evidence in the court proceedings.
Mr Smith also provided a series of references as to his good character (Exhibit A2). He said he has had a happy second marriage of 10 years. He has two children from his first marriage, a daughter who is aged 23 and a son, David, aged 20, who is severely affected by spina-bifida and confined to a wheel chair. Mr Smith said he is still paying back maintenance through the Child Support Agency.
The department’s case
Mr Slattery explained that the Department is seeking to recover a sum greater than the $19,326.00 reparation ordered by the court, because the period in respect of which recovery is sought is a longer one. He could only guess at why the DPP had not sought reparation in respect of a larger sum – perhaps not all the evidence had been available at that time.”
4. At the hearing held on 7 April 2003 Mr Smith indicated that in his view, no reparation order had been made by the Local Court and that the background information noted above was, in this respect, incorrect.
Mr Smith
5. Mr Smith indicated that he did not agree with the decision of the authorised review officer on 27 May 2002 to increase the amount recovered by garnishee from Mr Smith from $50 per fortnight to 10% of his gross salary per fortnight. Mr Smith had a number of concerns regarding this decision. Firstly, Mr Smith noted that the decision reached and communicated in the letter dated 27 May 2002 was inconsistent with the reasons for the decision that were attached to the letter.
6. Secondly, he noted that he had understood that the Local Court had set a rate of recovery for the debt. He indicated that he had not been able to obtain a copy of the Local Court transcript or orders (the Local Court Bench sheet was marked R6 and does not reveal that any reparation order was made or that any repayment amount was set). Thirdly, Mr Smith contended that if no reparation order had been made – no repayment was due.
7. Mr Smith also gave evidence that following the death of his mother he had repaid part of the mortgage on his wife’s home and also invested in a property at Taralga (these matters were omitted in his previous evidence).
The Department
8. Mr Kenny submitted that the debt had been correctly raised and should be recovered. He submitted that in all probability a reparation order had been made but was not recorded. He noted that no audiotapes were available from the Local Court hearing and that no transcript existed. If a reparation order was made (and not noted – See R6), this would be consistent with an Order under 21B. He noted that if no reparation order were made, this would not prevent the recovery of the debt.
9. Mr Kenny indicated that it was possible that Mr Smith had indicated that he would pay an amount of $50 per fortnight in the Local Court proceedings (R6). However, this offer did not bind the Respondent in any way. In any event, Mr Kenny noted that the circumstances of the Applicant had changed. He is in full time employment, he has come into a sum of money (the Tribunal notes that this was the situation some months prior to the AAT hearing in March 2001 but that this information was not made known to the Department or the AAT at that time).
10. Mr Kenny noted that the Applicant had not been candid with information regarding his financial affairs. The information relating to the Applicants financial Information Statement (T14) completed by the Applicant on 8 January 2002 does not show the applicants correct earnings at that time. In addition, the information in relation to other information (such as property holdings) is incorrect.
consideration of law and findings
11. I turn firstly to the decision of the Authorised Review Officer. Mr Smith raised concerns about the apparent inconsistency between the covering letter advising him of the decision (which incorrectly advised Mr Smith that the decision was to raise the amount repayable to $50 per fortnight) and the attached decision statement (T36) (which referred to the decision to garnish Mr Smiths wages at 10% of Mr Smiths earnings per fortnight). It is the Tribunals view that both Mr Smith and the SSAT clearly understood what the decision of the ARO was. The correspondence sent by Mr Smith (T41) immediately following the receipt of the covering letter and statement of Decision shows that Mr Smith was aware of the apparent inconsistency. At T41 at 107, Mr Smith wrote to the Department seeking to have the inconsistent paragraph enforced. However at T43 at 110, Mr Smith on the same day wrote to the Local Court indicating that “I’am having trouble again with centre – link in regard to garneshee of my wages” (sic). A further letter was written by Centrelink to the Applicant on 19 June 2002 that referred to the garnishee rate of 10%. In the Tribunals view this inconsistency, that was not referred to by the SSAT, does not impugn the substance of this decision which the Tribunal considers was understood by Mr Smith at the relevant time.
12. The Tribunal also notes that Mr Smith does not dispute the calculation of the debts. In any event, the Tribunal has no jurisdiction to review the debt raised by the Department. The decision of the Administrative Appeals Tribunal of 9 April 2001 found that there the debt did not arise solely in respect of administrative error (s 1237A(1)) and that waiver of the debt could not occur under section 1237AAD of the Act as:
“Section 1237AAD is only applicable if the debtor or another person did not knowingly make a false statement or representation or fail or omit to comply with a provision of the Act. The Tribunal finds that the debt did arise because Mr Smith made a false statement to the Department, in that he failed to declare the earnings from his casual employment with Pearce Coaches. Mr Smith acknowledged that he was aware that there was a ceiling on what he could earn in casual employment before his social security benefit would be affected. He failed to notify the Department of his casual employment when completing his application for payment of job search/newstart allowance forms (for example, N2000/1691, T4), at times when his employer has verified that he was working (for example, N2000/1691, T11).”
13. The tribunal notes that in the absence of any reparation order in the Local Court, the applicable provisions of the Act apply. Amounts paid by way of social security recoverable under the Act are dealt with in Part 5.2 (and its previous sections). Incorrectly paid amounts are relevantly provided for by s 1223(5):
"1223(5) If:
(a) an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997... ; and
(b) because the received amount had not been correctly calculated using the relevant rate calculator or other provision for calculating the amount, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment ... that should have been paid to the person;
the difference between the received amount and the correct amount is a debt due to the Commonwealth."
14. Debts arising from a recipient's contravention of the Act were relevantly provided for by s 1224(1):
"1224(1) If:
(a) an amount has been paid to a recipient by way of social security payment ... ; and
(b) the amount was paid because the recipient or another person:
(i) made a false statement or a false representation; or
(ii) failed or omitted to comply with a provision of the social security law or this Act ... ;
the amount so paid is a debt due by the recipient to the Commonwealth. ..."
15. In respect of the period prior to 1 October 1997, Section 1224 provides:
1224 (1) if:
(a) an amount has been paid to a recipient by way of Social Security payments or fares allowance; and
(b) the amount was paid because the recipient or another person:
(i) made a false statement or a false representation; or
(ii) failed or omitted to comply with a provision of the Social Security will all this act as enforce immediately before 20 March 2000, the 1947 act or the Social Security (fares allowance) rules 1998;
the amount so paid is a debt due by the recipient to the Commonwealth.
16. As this tribunal has no applicable power to enable recovery of the debt to be waived the debt must be recovered.
17. With regard to Mr Smith’s other concern, the garnisheeing of 10 per cent from his wages, this Tribunal notes that this matter was not previously fully explored by the AAT in 2001. This issue was not fully explored at that time as the Tribunal was considering a continuing $25 per week garnishee order. The Tribunal did note however that :
“…when the Court had accepted a repayment of $25 per week, the Tribunal notes that there was no notification of this amount in the letter from the DPP to Centrelink dated 18 August 1999 (N2000/1691, T29). It is not clear what the status of the $25 repayment was, although a note on file (N2000/1078, T24) records that Mr Smith’s barrister confirmed that the Court had decided that a reasonable repayment was $25 per week. In any event, Mr Smith exercised his right to seek a review of the sum garnisheed and, on appeal to the SSAT, this was reduced to $25 per week, the sum still being recovered.”
18. This Tribunal finds that there is some evidence that a reparation order was made, although it may not have been recorded. There is also evidence that Mr Smith indicated a willingness to repay the sum of $50 per fortnight. However, this Tribunal does not find that any agreement was made with the Department at this time. It appears likely that this was a matter that the Local Court considered when sentencing the applicant in respect of the Obtain Money by Deception proceedings.
19. In the submissions made by the Respondent, it was suggested that this Tribunal could not consider the rate of recovery in a garnishee notice and that this was a matter that the SSAT could not consider following the Federal Court decision of Walker v Secretary Department of Social Security (No 2) (1997) 48 ALD 512 at 523. The Tribunal has considered it unnecessary to explore this issue as it considers that the rate of recovery is appropriate in any event. The Tribunal notes that Mr Smith received a payment of some $85,000 after his mother passed away and made no attempt to repay the Department. In evidence, Mr Smith made a number of remarks to the effect that he did not consider that the debt to the Commonwealth had any priority. Rather, he decided to purchase an investment property with the money he received from his mother’s estate. The Tribunal also notes that this information was not made known to the AAT when the matter was previously before it. His application to reduce payments to $25 per week appears to be based upon his view of the Local Court decision (where he also argued that no reparation order was made) and his view that repaying the debt is not a priority. There appears to be no particular hardship suffered by Mr Smith who is in full time employment.
20. Accordingly the decisions under review are affirmed.
I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Professor Tania Sourdin, Member
Signed: .......................................................................................
AssociateDate of Hearing 7 April 2003
Date of Decision 8 April 2003
Counsel for the Applicant Self-Represented
Counsel for the Respondent Mr John Kenny
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