Truman and Secretary, Department of Social Services (Social services second review) - [2019] AATA 1396

Truman and Secretary, Department of Social Services (Social services second review) [2019] AATA 1396 (21 June 2019)
Division: GENERAL DIVISION
File Number: 2018/7140
Re:Jonathan Truman
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member C Edwardes
Member S Barton
Date:21 June 2019
Place:Perth

The Tribunal sets aside the decision under review and in substitution decides that:
(a)the debt of $167.05 relating to the Applicant’s period of employment with West Tyre Force (30 July 2012 to 30 November 2013) be waived on the basis that the Applicant satisfies s 1237A of the Social Security Act 1991 (Cth);
(b)the remaining debt for the period 1 December 2013 to 8 July 2015 is a validly raised debt due to the Commonwealth; and
(c)a 10 per cent penalty should be added to the debt on the basis of the Applicant’s understatement of his reported income.

..................................[sgd]......................................
Member C Edwardes
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance –failure to disclose employment – NSA overpayment – waiver of debt – administrative error – special circumstances – write off debt – decision set aside and substituted
LEGISLATION
Social Security Act 1991 (Cth) – ss 1223(1), 1228B, 1236, 1237A, 1237A(1), 1237AAD, Part 5.4
Social Security (Administration) Act 1999 (Cth) – s 179(1)
CASES
Angelakos and Secretary Department of Employment and Workplace Relations (2017) 100 ALD 9; [2007] FCA 25
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693
Gerhardt and Department of Employment, Education and Training [1996] AATA 173
Groth v Secretary, Department of Social Services (1995) 40 ALD 541
REASONS FOR DECISION
Member C Edwardes
Member S Barton
21 June 2019
THE APPLICATION

This is an application for a review of a decision of the Social Services and Child Support Division of the Tribunal (AAT1) dated 25 October 2018 (R2, T2/3-88).
Between 2011 and 2015 the Applicant was in receipt of a Newstart Allowance (NSA) and also worked for a number of employers. After a review of information from the Australian Taxation Office (ATO), the Department of Human Services (the Department) formed the view that the Applicant had under-declared his income and required that he pay a debt of $3,975.88, which was later reduced to $3,881.10, with a 10 percent penalty.
On 31 August 2018 the Applicant appealed the decision of the Department (AAT1)
(R2, T2/4). On 25 October 2018 the AAT1 set aside the decision of the Department.
In substitution, the AAT1 decided that:
(a)
any debt arising from overpayments of NSA to the Applicant in the period

30 July 2012 to 30 November 2013 must be waived pursuant to s 1237A of the Social Security Act 1991 (Cth) (the Act); and
(b)
the matter be remitted to the Department to recalculate the debt, if any, arising from overpayments of NSA to the Applicant between 29 November 2014 and

19 February 2015; having regard to his earnings as extracted in the payroll advice recorded by Crest Labour Pty Ltd (Crest Labour) and referred to at paragraph [18] of the AAT1’s reasons for decision.
On 21 November 2018 the Department implemented the decision of the AAT1, waiving $167.05 from the total debt and confirming that the Applicant’s earnings from Crest Labour had been accurately recorded on the customer record.
The Applicant is currently repaying the debt by way of $15.00 per fortnight.
BACKGROUND
The Applicant has periodically been in receipt of NSA since April 1997 (R2, T22/214). However, the period from 2 August 2012 to 8 July 2015 is under contention. During this period the Tribunal notes the Applicant had various periods of employment (R2, T21).
On 13 June 2012 the Applicant was sent a notice by the Department advising him of the requirement to report his earnings from 14 June 2012 to 5 September 2012

(R2, T4/69-70). On three occasions, 11 and 25 July 2012 and 8 August 2012, the Applicant advised the Department that he had no income to declare (R2, T23/239, 241, 243).
On 9 August 2012 the Applicant subsequently reported $1,320.00 in earnings for the previous fortnight (T23/244). On 15 August 2012 the Department wrote to the Applicant seeking further information on his circumstances (T4/76-77). The Applicant failed to respond and his NSA was cancelled.
The Applicant contacted the Department in December 2013 claiming the NSA, which was granted with effect from 1 December 2013 (T5/98). On 6 January 2015 the Applicant advised the Department that he was employed with Taldara Industries Pty Ltd (Taldara) from 22 September 2014 to 6 October 2014. He also stated he currently had no other earnings outside of his NSA (R2, T23/300).
The Applicant reported no income for the period 26 December 2014 to 8 January 2015 (R2, T23/302).
On 16 August 2017 the Department wrote to the Applicant advising that ‘We have information from the Australian Taxation Office (ATO) that we need your help to confirm or update’ (R1, T9/169). The information related to the following companies: Birla Nifty Pty Ltd (Birla Nifty); Western Tyre Force Pty Ltd (Western Tyre Force); and Crest Labour.
The earnings against each of the companies are (R1, T9/171):
·Birla Nifty – $1,805.00 – 1 July 2011 to 30 June 2012;
·Western Tyre Force – $42,843.00 – 30 July 2012 to 30 June 2013; and
·Crest Labour – $8,251.00 – 29 November 2014 to 30 June 2015.
On 9 February 2018 the Applicant received a notice advising him that he had a debt of $4,344.27, which was reduced to $4,269.29 (including the 10 per cent penalty)

(R1, T14/183).
The Applicant sought a review of this decision by an Authorised Review Officer (ARO) of the Department. The ARO made the following findings on 24 August 2018

(R1, T20/201-207):
•Between the period 13 April 2012 to 19 July 2015, the department sent you letters which said that you were required to notify the department, by your reporting day if you started work, or your income changed.
•A PAYG (Pay As You Go) data match with the ATO on 15 August 2017 triggered a review of your Newstart Allowance.
•During the debt period, you were working for Birla Nifty Pty Ltd, Western Tyre Force and Crest Labour Pty Ltd.
•You did not advise the department of your earnings from Birla Nifty Pty Ltd and Crest Labour Pty Ltd.
•During the period 2 August 2012 to 8 July 2015 you received Newstart Allowance totalling $3975.88.
•You were entitled to receive $94.69.
•On 9 February 2018 the department raised and sent you a notice of a debt of $4269.29 for the period 2 August 2012 to 8 July 2015, consisting of an overpayment amount of $3881.19 and a 10 per cent penalty of $388.10.
On review by the AAT1, the AAT1 made the following determination against each of the companies the Applicant was employed by (T2/4-7):
Birla Nifty Pty Ltd
6.Mr Truman told the Tribunal that he worked full-time for Birla Nifty Pty Ltd as a trainee driver for two to three months in 2011 before he sustained a serious injury around Christmas time. He fell and broke his back whilst cleaning the gutters at home. He was incapacitated for work for the next six or seven months but returned for light duties after that for about two weeks but was then terminated (around June 2012).
7.The information from the ATO confirms that employment with Birla Nifty was in the 2011/12 financial year (Tribunal Papers, page 7). The Department has erroneously found that this employment occurred in the subsequent financial year (ie during the debt period – Tribunal Papers, page 4). The Department has also averaged Mr Truman’s earnings from Birla Nifty across the whole 2011/12 financial year (at $69 per fortnight – Tribunal Papers, pages 59- 58), when he was in fact only working for a fraction of that year. Since no debt is sought to be recovered for any part of the 2011/12 financial year, it is not clear whether his Birla Nifty earnings ($1,805 gross) actually generated an overpayment. No Centrelink records from 2011 have been included in the Tribunal Papers.
8.It is not necessary for the Tribunal to enquire further into this aspect of the matter because no debt is sought to be recovered in respect of the period of employment with Birla Nifty. To the extent that the Department may have calculated any alleged overpayments during the debt period of 2 August 2012 to 8 July 2015 by including income earned from Birla Nifty, the calculation is erroneous and the debt not validly raised, because that income was not derived in that period. Again, it is not necessary for the Tribunal to determine whether that is the case because the Tribunal is satisfied:
•that the whole of that portion of the alleged debt which relates to the period of employment with Western Tyre Force (30 July 2012 to

29 November 2013) must be waived for administrative error in any event; and
•any portion of the alleged debt which relates to the period of employment with Crest Labour Pty Ltd must be remitted for recalculation, in any event.
9.The Tribunal will deal with each of these findings in turn, but for the sake of completeness, the Tribunal should report Mr Truman’s evidence that when he commenced employment with Birla Nifty around September 2011, he was on monthly reporting with Centrelink and reported that he was employed

full-time. He did not check his bank account and was not aware that he was continuing to receive newstart allowance. When his accident occurred, he reported that fact to Centrelink, and was told that he was still on the system, and was advised of his next payment date. He was not then told of any error and had no reason to suspect one. He continued to receive newstart allowance while he was recuperating, as he was back for only a fortnight around June 2012 before he was terminated. The absence of Centrelink records from 2011 makes it difficult to evaluate this evidence but, for the reasons given, the Tribunal need not do so.
Western Tyre Force
10.Mr Truman obtained full-time employment with Western Tyre Force from

30 July 2012. He told the Tribunal that he filled out a letter detailing his employment with the assistance of a female officer of his employment service provider, who filled out a letter of her own which she attached to it. He saw her put them in the same envelope and post the envelope. This is corroborated by Centrelink’s record of 8 August 2012 (Tribunal Papers, page 88). The fact of new employment with Western Tyre Force is also recorded on Centrelink’s file at Tribunal Papers, pages 89-91, which also show reported income for the ‘first period’ of $1,320.
11.Nothing follows in Centrelink’s file between August 2012 and November 2013, when Mr Truman lost his job as a delivery driver with Western Tyre Force because his driver’s licence had been suspended. He did not report his income to, and received no notifications from Centrelink, which is consistent with his understanding that he was no longer receiving newstart allowance. Again, he did not check his bank statements and was not aware of any extra income. His employment came to an end on 30 November 2013. The Centrelink file (Tribunal Papers, page 98) records Mr Truman’s report of losing his job (having worked for the last 12 months) as well as Centrelink’s own request to Western Tyre Force to provide an employment separation certificate. The faxed request dated 2 December 2013 from Centrelink and the completed response dated 4 December 2013 is found at Tribunal papers, pages 11 and 12. The certificate shows that Mr Truman worked for Western Tyre Force between 30 July 2012 and 29 November 2013 and detailed his final payout.
12.Thus, from August 2012, the Department was aware that Mr Truman was employed and earning fortnightly income. The Centrelink record shows nothing between August 2012 and November 2013. It may be that newstart payments stopped during this time (see Tribunal papers, page 198 which refer to his newstart allowance having been cancelled). If so, then, there can have been no overpayment for that period. If not, and if Mr Truman was still receiving newstart allowance during this time (because the Department had failed to record his employment), then he should still have been under a reporting obligation as far as the Department was concerned, and when Mr Truman failed to report his income, then the Department should have cancelled his newstart allowance for failure to report. Instead, nothing happened, and Mr Truman was never put on notice of any error.
13.Moreover, it is clear from the record that, at least by 4 December 2013, the Department was put on notice that Mr Truman had been working for Western Tyre Force for the previous year and ought to have realised that it did not have any record of his having reported his income. The Department again failed to act upon its own knowledge. That was an administrative error which was not in any sense caused, or contributed to, by any failure on Mr Truman’s part. It is purely an administrative failing. Five years later, the Department now seeks to rectify that error.
14.The Tribunal is satisfied that the payment of newstart allowance between

30 July 2012 and 30 November 2013 was solely attributable to administrative error, that Mr Truman did not fail in his reporting obligations and received the payments in good faith, not being separately aware of them. Accordingly, it finds that that part of the debt which comprises overpayments of newstart between 30 July 2012 and 30 November 2013 (being more than six weeks old) must be waived pursuant to section 1237A of the Act.
Crest Labour Pty Ltd
15.Mr Truman worked for Crest Labour on a casual basis for two months between December 2014 and February 2015. He says that he routinely reported his earnings by filling in a form at his local Centrelink Office.

The Department relies on information obtained through the ATO to prove that Mr Truman derived certain income during that period. The information obtained from Crest Labour is a business record extracted from its payroll which records fortnightly payments to Mr Truman. There is no record of these having been declared.
16.There is also a record that Centrelink contacted Mr Truman on

6 January 2015 (Tribunal Papers, page 147) and had a discussion with him about a brief period of employment with another company, Taldara Industries Pty Ltd, for a month in September to October 2014, which was not at that time recorded. The file goes on to record his negative response to the questions whether there were any other recent or new employers. This was at a time when he had been working for Crest Labour for some weeks, and he ought then, at least, to have reported his current employment. In those circumstances, the Tribunal finds that it is more likely than not that Mr Truman failed to report his income during this time.
17.The Tribunal is mindful that the record shows that Mr Truman denied not reporting his employment with Taldara Industries on that occasion. The Tribunal is also mindful that Mr Truman was not taken to page 147 and given an opportunity to explain his version of that conversation. For that reason, the Tribunal is not prepared to find that the failure to report was deliberate.
18.On the other hand, Mr Truman does not merely dispute the fact of reporting his earnings in this case, but also the actual amounts paid to him by Crest Labour. He told the Tribunal that he did not think he worked more than 24 hours a week for them. The payments recorded by Crest Labour are detailed and matched with cheque numbers. If this dispute were genuine, then the appropriate thing for Mr Truman to do would be to provide the Department or the Tribunal with copies of his bank statement covering the relevant two or three months.
19.In the absence of such evidence, the Tribunal finds, on the evidence before it, that Mr Truman earned the amounts recorded as paid to him by Crest Labour Pty Ltd at Tribunal Papers, pages 18 to 21.
20.The Tribunal is satisfied that so much of the overpayments of newstart as relate to the period of Mr Truman’s employment with Crest Labour, and are calculated by reference to the abovementioned earnings, are validly raised as a debt due to the Commonwealth. The Tribunal finds that the overpayments are not the product of administrative error and that, even [if] they were, Mr Truman’s incorrect report in January 2015 that he did not have any other recent of current employer would have contributed to any such error, so as to take the case out of the waiver provisions of section 1237A of the Act.
(Original emphasis.)
On 6 December 2018 the Applicant made an application for a second review of the decision.
ISSUES FOR DETERMINATION
The issue to be determined in this case is whether there was an overpayment of NSA made to the Applicant between 2 August 2012 and 8 July 2015; and if so,
(a)whether the Applicant is required to repay the overpaid amounts; and
(b)whether an additional 10 per cent penalty should be imposed if the Applicant was overpaid.
RELEVANT LEGISLATION
The legislation relevant to this review is contained in the Act.
Section 1237A of the Act states that:
… 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.
Section 1237AAD of the Act states:
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.
Section 1236 of the Act states:
(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
(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.
(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
(1C)For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a)deductions from the debtor’s social security payment; or
(b)deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c)setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
Section 1228B of the Act states that:
1228B Additional 10% penalty for understatement etc. of income
(1)An amount by way of penalty is added to a debt due to the Commonwealth under this Chapter by a person in relation to a social security payment if:
(a)at the time the payment was made, the person:
(i)     had attained the minimum age for youth allowance as defined by section 543A; and
(ii)    had not reached pension age; and
Note:      For pension age see subsections 23(5A), (5B), (5C) and (5D).
(b)the payment was:
(i)     a social security benefit; or
…
(v)    …; and
(c)the debt arose wholly or partly because the person had:
(i)     refused or failed to provide information in relation to the person’s income from personal exertion; or
(ii)    knowingly or recklessly provided false or misleading information in relation to the person’s income from personal exertion;
when required, under a provision of the social security law, to provide information in relation to the person’s income from personal exertion.
Note:      For income from personal exertion see subsection 8(1).
(2)The amount added by way of penalty is an amount equal to 10% of so much of the debt as arose because the person refused or failed to provide the information or provided the false or misleading information.
(2A)To avoid doubt, the amount added by way of penalty is part of the debt.
(3)An amount worked out under subsection (2) must be rounded down to the nearest 5 cents.
(4)This section does not apply if the Secretary is satisfied that the person had a reasonable excuse for refusing or failing to provide the information.
…
EVIDENCE

The Tribunal received the following evidence:
·the Secretary’s statement of facts, issues and contentions dated 27 February 2019 (Exhibit R1);
·the T-documents (T1-T23 1-335) (Exhibit R2); and
·the supplementary T-documents (ST1 336-337) (Exhibit R3).
The Tribunal has reviewed all of the material before it. The Tribunal is satisfied that all relevant evidence was before it and that both parties were provided an opportunity to address the evidence and the matters in issue, either orally or in writing. The Applicant did not provide a written submission.
Relevant aspects of the evidence and material before the Tribunal will be analysed and referred to below.
Hearing
The application for review was heard in Perth on 13 May 2019. The Applicant appeared in person. The Respondent was represented by Mr Christopher Bishop of Mills Oakley Lawyers.
The Tribunal would like to thank both the Applicant and the Respondent for their assistance during the hearing.
CONSIDERATION
There are three issues the Tribunal is required to turn its attention to. Firstly, was an overpayment of NSA made to the Applicant between 2 August 2012 and 8 July 2015? Secondly, if so, is the Applicant required to repay the overpaid amounts? Thirdly, should an additional 10 per cent penalty be imposed if the Applicant was overpaid?
Was an overpayment of NSA made to the Applicant between 30 July 2012 and

8 July 2015?
The Respondent submits that the Applicant received payments in excess of his entitlements (R1):
27.Section 643 of the Act provides that a person’s rate of NSA is to be worked out using the Benefit Rate Calculator B at the end of section 1068. Section 1068 requires the income and assets of a person to be taken into account in calculating the rate of NSA payable. NSA payable may be reduced if a person’s income or assets are above specified thresholds.
28.Income is defined in section 8 of the Act as an income amount earned, derived or received by the person for the person’s own use or benefit.
…
30.During the period 2 August 2012 to 8 July 2015, the Applicant was in receipt of NSA at a rate which did not take into account his income received from employment. A summary of the Applicant’s total employment income for the debt period can be found at T22/230-232. He was therefore paid NSA in excess of his correct entitlement.
31.The Secretary contends that the overpayment of $3,881.19 constitutes a legally recoverable debt, which has been correctly calculated by the Department with reference to information received from the ATO and payroll advice recorded by Crest Labour.
With regard to whether the Applicant is required to repay the overpaid amounts, the Respondent submits (R1 [33]):
There are only two mechanisms available under the Act that allow for a properly raised overpayment of social security payment not to be recovered: waiver and write off under Part 5.4 of the Act.
It is clear from the evidence presented to the Tribunal, that the Applicant was in receipt of NSA for periods between 2 August 2012 to 8 July 2015. It is also clear that the Applicant was occasionally employed during this period.
The Tribunal notes that the Secretary does not dispute the finding of the AAT1,

with regard to the period from 30 July 2012 and 30 November 2013 which relates to the Applicant’s employment with Western Tyre Force, that the NSA was paid in error by the Department and therefore was required to be waived on the basis of sole administrative error.
The Tribunal accepts the finding of the AAT1 that the Applicant failed to disclose fortnightly payments from Crest Labour, because the evidence of the Applicant to this Tribunal was that on the one hand in his own mind he claimed he had advised Centrelink and yet in the same breath he says to the best of his recollection and that he ‘can’t remember that far back’ (Transcript, p-9). The Centrelink record indicates the Applicant made contact on 6 January 2015 about employment with Taldara Industries and in response to questions relating to other employment he appeared to be evasive. He clearly in the Tribunal’s view had the opportunity to have disclosed his employment with Crest, however there is no compelling evidence to persuade the Tribunal that this occurred (T23/300; R2).
The following exchange with the Tribunal is relevant (Transcript, p-5):
APPLICANT:   Yes. Well, I back in – when the first Member spoke to in the tribunal, he said to me three times – because I asked him three times – because I said had dyslexia, anxiety and he said yes, look, all matters will be wiped from 2012, 2013 and 2014 and now I’ve got them going for ‘15 which is completely odd, especially when it is that far back and I don’t see it fair, especially when I’ve been – always been honest to the government, especially when I flew out – because my brothers decided to buy a ticket and accommodation for me to go to Bali for four days on my birthday and I also got penalised there for four days, even though two of the days were Saturday and Sunday. They’ve lost other paperwork before as well and I’m getting to the point that I am absolutely sick to death of the way they treat me.
MEMBER:      You’re saying, Mr Truman, if I am correct, you’re saying that the first hearing dismissed everything?
APPLICANT:   The first guy, he said that everything from 2013 – well, ‘12, ‘13, ‘14 would be wiped and now this guy to me – next to me obviously is a government worker for Centrelink is now pushing – trying to push 2015 as well so I don’t see it very fair when they can’t keep their paperwork in order.
MEMBER:        Right. Anything else?
APPLICANT: No. That’s actually pretty much – lucky I had my family to keep me alive because I’ve (indistinct) to live lately but I’m still on Centrelink.
Essentially the Applicant is seeking a review of the decision of AAT1 because he believed that the Tribunal had determined in his favour the matters raised by the Respondent.

This demonstrates to the Tribunal that the Applicant had a clear misunderstanding of what the AAT1 found.
The Tribunal notes the Department confirmed that the Applicant’s earning information from Crest Labour had been accurately recorded (R1). The Applicant commenced casual employment in the week beginning 24 November 2014, as a forklift driver. Excluding the period of 21 December 2014 to 5 January 2015, the Applicant received a weekly payment until the pay period of 16 February 2015 to 22 February 2015. During this period of employment, the Applicant was paid $8,251.90 in wages, of which $1,220 was withheld for income tax (R2, T17/189-196).
The Tribunal notes that on 6 January 2015 the Applicant was contacted by the Department regarding a review of his entitlement and advised he had a period of employment with Taldara from 22 September 2014 to approximately 6 October 2014.

The Applicant advised the Department that he had no other earnings in the previous six months (R2, T23/300).
The Tribunal finds the Applicant provided this advice despite his then employment with Crest Labour.
The Tribunal notes from the AAT1 (R2, T2/7) that:
The Tribunal is satisfied that so much of the overpayments of newstart as relate to the period of Mr Truman’s employment with Crest Labour, and are calculated by reference to the abovementioned earnings, are validly raised as a debt due to the Commonwealth.
The Tribunal accepts this finding from the evidence available that the Applicant was in receipt of overpayments of NSA during the time he was employed by Crest Labour..
The Tribunal notes that Centrelink calculated that the Applicant owes the Commonwealth $3,881.19 as a result of Newstart Allowance overpayments for the debt period

1 December 2013 to 8 July 2015.
Mr Bishop advised the debt had been recalculated and was found to be $3,714.14, explaining that the original figure of the debt ($3975.88) had been ‘reduced by the approximately $94’ because of an amendment to correctly distribute the Applicant’s income, and then, ‘on the result of the AAT1 decision, it was reduced further as a result of the waiver of $167.05.’ (Transcript, p-16).
Is the Applicant required to repay the overpaid amounts?
Is there any basis to write off the debt?
The Respondent submits that, ‘section 1236 has no application in the matter on the basis that none of the circumstances described in paragraphs 1236(1A(a)-(d) exist.
The debt is currently being repaid by way of $15.00 fortnightly withholdings from the applicant’s NSA’ (R1, 9]).
The Applicant submits that he is paying $5 fortnightly withholdings from NSA (Transcript, p-16). Whether it is $5 or $15 the Tribunal determines there is no basis to write the debt off because there is very little evidence before it which indicates it is not recoverable at law, that the Applicant has no capacity to pay, that the debtor’s whereabouts are unknown or that it is not cost effective for the Secretary to recover the debt.
The Tribunal notes that Part 5.4 of Chapter 5 of the Act deals with the non-recovery of debts. The Tribunal finds that, generally, all debts incurred must be recovered

(see French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at [1]).
Can the debt be waived due solely to administrative error of the Commonwealth?
The Respondent submits (R1):
35.The existence of an administrative error is not sufficient to meet the requirement and the debt must arise from administrative error to the exclusion of all else (see Re Gerhardt and Secretary, Department of Employment and Training (1997) FCA 815).
36.Selway J in the Full Federal Court decision of Sekhon and Secretary, Department of Family and Community Services [2003] FCAFC 190 at [35] said:
The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words 'a debt attributable solely to an administrative error' can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error...
37.In Ward and Secretary, Department of Families and Community Services (2000) AATA 212, Deputy President Forgie held at [47]:
This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor.
38.In this instance, the AAT1 was satisfied that the debt which related to the Applicant’s period of employment with Western Tyre Force (30 July 2012 to 29 November 2013) was required to be waived on the basis of sole administrative error. In particular, the AAT1 found that the Applicant and his employer had correctly notified the Department of his employment on

8 August 2012 and 4 December 2013 respectively. The Department therefore failed to act upon its own knowledge and the debt arose purely due to an administrative failing.
39.The implementation of the AAT1 decision by the Department resulted in a waiver of $167.05 of the total debt amount (T23/335). The reason for the nominal figure is due to the Applicant not being in receipt of NSA between the period 6 September 2012 and 1 December 2013, being a similar period to the one in which the Applicant was employed by Western Tyre Force (T4/79; T5/98). The Secretary does not seek to dispute the AAT1’s findings in this regard.
40.For the remaining debt period, 1 December 2013 to 8 July 2015, the Secretary contends that sole administrative error on the Department’s part cannot be established. The debt arose due to the Applicant failing to declare his employment with Crest Labour during the period 29 November 2014 to 30 June 2015, and the income received. This is notwithstanding a number of notices issued to the Applicant during the debt period, which notified him of the obligation to advise the Department of changes to his circumstances; particularly, if he recommenced employment and received income.

The notices also provided information used to calculate the Applicant’s rate of NSA, including his earnings of $0.15 per fortnight (for example, T8/153).
41.Further, the Applicant was provided with a number of opportunities to advise the Department of him commencing employment with Crest Labour and receiving regular income. For example:
(a)
On 11 December 2014, 12 December 2014, 15 December 2014,

6 January 2015, 16 February 2015, 4 May 2015 and 15 June 2015, the Applicant initiated contact with the Department to make various enquiries in relation to his NSA (T23/295-307). At no time did he advise the Department of his employment with Crest Labour. Further, the file note of 6 January 2015 records the Applicant as responding “no” to the questions of whether he had any new employers and whether he was expected to receive earnings in the next reporting period (T23/300).

At that stage, the Applicant had been employed by Crest Labour for more than one month.
(b)On 21 January 2015, the Applicant reported his earnings, declaring no income for the period 26 December 2014 to 8 January 2015 (T23/302);
(c)On 11 June 2015, the Applicant reported his earnings, declaring no income for the period 29 May 2015 to 11 June 2015 (T23/306); and
(d)On 25 June 2015, the Applicant reported his earnings, declaring no income for the period 12 June 2015 – 25 June 2015 (T23/308).
42.Further, in light of the above information, the Secretary contends that the Applicant did not receive in good faith the payments that gave rise to the proportion of the debt relating to his period of employment with Crest Labour. The term ‘good faith’ has been discussed by the Federal Court in the following cases:
(a)Secretary Department of Employment Education Training and Youth Affairs and Prince (1997) 152 ALR 127:
... Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received –

ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith...
(b)Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 242 at [40]-[41]:
Prima facie, s 1237A(1) is concerned with actual personal receipt by the debtor of the payment or payments which give rise to the debt. The issue of good faith is, for the purpose of the section, to be determined when the debtor commences to exercise control over the payment by retaining it. It is at this time that the recipient must act with the requisite good faith. A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when he or she receives the payment and decides to exercise control over it by retaining it.
A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists...
(c)Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529 at [16]-[17]:
Consistently with what his Honour said in the Prince case, want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient. That proposition is quite consistent with the view that the existence of such facts may support an inference that the recipient disbelieved or doubted or was suspicious about his or her entitlement. "Reason to know" as Finn J used that term in Prince does not necessarily import a criterion of imputed as distinct from actual want of good faith as I have described it.
… None of these findings go to the state of mind and whether he had a belief, doubt or suspicion as to entitlement which would require a recipient acting in good faith to make an inquiry. Concern, puzzlement, upset and a perception of unusual circumstances, coupled with absence of further inquiry, are not enough themselves to constitute want of good faith...
43.In Re McKnight and Secretary, Department of SocialSecurity (1994) 83 SSR 1212, the AAT accepted that “naïve” and “wilful[ly] blind” conduct contributing to a debt precluded the finding of administrative error waiver.
The Applicant submitted that the debt arose as a result of administrative failure on behalf of the Commonwealth (Transcript, p-9). He has produced no evidence for this proposition. In fact the Tribunal finds from the evidence available he was given a number of opportunities to advise Centrelink about his various forms of employment but failed to do so. The file notes at (T23/302, 306, 308) (R1) indicate he reported ‘no earnings’.
The Tribunal finds there is no compelling evidence that Centrelink solely contributed to the debt he has incurred.
The Tribunal accepts there is provision within the Act to waive recovery where it is not in dispute that a debt arose solely as a result of administrative error by the Department.

For this to occur the Tribunal would have to find that the Applicant in no way contributed to the administrative error.
Sole administrative error has been found by AAT1 to apply to those periods the Applicant was employed by Birla Nifty and Western Tyre Force. The Tribunal accepts this and notes it is not disputed by the Department.
The Tribunal after having considered all the evidence before it is satisfied that the debt incurred did not arise solely as a result of administrative error by the Department for the period he worked for Crest Labour.
In relation to the meaning of the word ‘solely’ in s 1237A(1) of the Act, the Tribunal notes in Re Gerhardt and Department of Employment, Education and Training [1996] AATA 173 where Deputy President Forgie states at [40]:
There is nothing ... which indicates that any meaning should be given to “solely” other than its ordinary meaning. Applying those ordinary meanings to the sub-section mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth’s administrative error.
The Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth’s administrative error (i.e. they are incidental to the Commonwealth’s error), then it may be that the debt is attributable solely to the Commonwealth’s administrative error. Whether it is or is not attributable in that situation to the Commonwealth’s administrative error will be a question of fact.
The Tribunal finds that the Applicant should have provided the Department with all the information necessary in order for it to make the correct assessment and does not support his contentions raised at the hearing that he reported his earnings and that he did not work more than 24 hours per week. The Tribunal finds no evidence to sustain this proposition.

The Tribunal finds no evidence available to persuade the Tribunal to waive the debt for the period that the Applicant worked at Crest Labour.
Can the debt be waived for special circumstances?
The Respondent submits (R1):
45.The term ‘special circumstances’ is not defined in the Act however it has been extensively considered in case law.
46.The Federal Court has indicated that a finding of special circumstances requires something unfair or unjust that, in the circumstances, makes the case unusual or uncommon (Groth and Secretary, Department of Social Services (1995) 40 ALD 541, 545 per Kiefel J; Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25, [33] per Besanko J). In making that assessment, it is relevant to consider how the overpayment came about (Dranichnikov and Centrelink (2003) 75 ALD 134, [66]).
47.Beadle and Director-General of Social Security (1984) 6 ALD 1 states:
… An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances; that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special...
48.Timothy Davy and Secretary, Department of Employment and Workplace Relations 2007 AATA 1 [sic], at [80], states, in part:
... “special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances ... that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it...he has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement… the system of administration of the Social Security Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act...
49.The Secretary contends that the Applicant’s circumstances are not sufficiently out of the ordinary such that they could be considered special for the purposes of section 1237AAD of the Act. In any event, on the basis of the evidence noted at paragraph 41 above, the Secretary contends that the Applicant cannot satisfy subsections 1237AAD(a)(i) and (ii) of the Act. That is, there is evidence of the debt arising wholly from the Applicant knowingly making a false statement and failing or omitting to comply with provisions of the Act, and therefore section 1237AAD cannot apply.
50.There is no definition of “knowingly” in the Act. However, a number of Tribunal decisions have considered the meaning of the word in this context. Deputy President Forgie in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 commented at [48]:
There is nothing in section 1237AAD which suggests that the word “knowingly” should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.
51.In Cox and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 350, the Tribunal cited Re Callaghan and concluded at paragraph [38]:
Whilst it is clear from this passage that actual (as compared to) constructive knowledge is required, the Tribunal has recognised that the presence of actual knowledge may be inferred from the circumstances where a debtor had the opportunity to gain that knowledge, and there were no obstacles preventing him acquiring that knowledge: see also Anderson and Department of Family and Community Services [2002] AATA 239; (2002) 68 ALD 494, Secretary, Department of Family and Community Services and Temesgen [2002] AATA 1290; (2002) 72 ALD 563 at 564-565 and Balancio and Secretary, Department of Family and Community Services [2003] AATA 466; (2003) 74 ALD 204 at 209.
The Tribunal is also guided by the following cases which have dealt with the concept of ‘special circumstances’:
(a)Angelakos and Secretary Department of Employment and Workplace Relations (2017) 100 ALD 9, 18; [2007] FCA 25 where the Federal Court stated:
... There is less risk of overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.
(b)Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693 where Deputy President Forgie stated in part at [80]:
...“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances … that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it ... He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement ... The system of administration of the SS Act [the Act] does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act.
The Applicant did not directly argue the case for special circumstances that would warrant waiving the debt. He told the Tribunal that he suffered from dyslexia and anxiety and claimed he did everything he was supposed to do and that he was ‘sick to death of the way they treat me’ (Transcript, p-5).
The Applicant did not provide the Tribunal with evidence to support his assertions. There is no evidence before the Tribunal to suggest that the circumstances of the Applicant

‘are out of the ordinary’ such that they fall within the term ‘special circumstances’.
The Tribunal notes that the Applicant has now entered into an arrangement with Centrelink to repay the debt at $15.00 per fortnight.
Having reviewed the evidence before it, the Tribunal finds the circumstances are such that they are not ‘special’.
Whilst the Tribunal is sympathetic to the position the Applicant finds himself in,

the evidence before the Tribunal does not show the Applicant’s circumstances as falling into the category of being circumstances that are unusual, uncommon, exceptional, markedly different, special or out of the ordinary that they represent ‘special circumstances’ as that expression is understood to mean.
Conclusion
The Tribunal finds it inconceivable that that the Applicant did not know the requirements for disclosing earnings. He did so in the past and is currently doing so. The evidence shows he stated to Centrelink that he did not have any income whilst he was knowingly employed by Crest. He stated to the Tribunal that he was able to use the app and did so on many occasions. The Tribunal is therefore not persuaded that special circumstances exist.
Should an additional 10 per cent penalty be imposed if the Applicant was overpaid?
With regard to whether an additional 10 per cent penalty should be imposed upon the Applicant, the Respondent submits (R1):
54.Section 1228B of the Act states that a 10% penalty is added to a debt if, relevantly, a person, without a reasonable excuse, refuses or fails to provide information, or knowingly or recklessly provides false or misleading information, when required to provide information about income from personal exertion.
55.Consistent with the findings of the ARO of the Department, the Secretary contends that the 10% penalty should be applied in the Applicant's case.

The evidence noted at paragraph 38 above indicates that the Applicant failed to provide the Department with information concerning his employment with Crest Labour, and knowingly provided false information concerning his income from personal exertion.
The Applicant’s submissions did not offer any evidence which might be construed as a reasonable excuse for failing to provide the necessary information to Centrelink. Whilst the Tribunal noted at the hearing the demeanour of the Applicant in terms of his lack of basic rigour, it does not have any medical evidence before it corroborating the medical conditions he claims to have.
The Tribunal finds on this basis that given his past record of reporting income, there is the likelihood he well knew his obligations to disclose his income from Crest to Centrelink and failed to do so for his own reasons. This is not a case where he was relying on another person to declare his earnings, this responsibility was his and his alone and for that reason the Tribunal finds the penalty should be imposed.
DECISION
For the reasons outlined above, the Tribunal sets aside the decision under review and, in substitution, decides that:
(a)the debt of $167.05 relating to the Applicant’s period of employment with West Tyre Force (30 July 2012 to 30 November 2013) be waived on the basis that the Applicant satisfies s 1237A of the Act;
(b)the remaining debt for the period 1 December 2013 to 8 July 2015 is a validly raised debt due to the Commonwealth; and
(c)a 10 per cent penalty should be added to the debt on the basis of the Applicant's understatement of his reported income.

I certify that the preceding 65 (sixty -five) paragraphs are a true copy of the reasons for the decision herein of Member C Edwardes, Member S Barton

..................................[sgd]......................................
Associate
Dated: 21 June 2019

Date(s) of hearing: 21 June 2019

Applicant: In person

Representative for the Respondent: Mr C Bishop

Solicitors for the Respondent: Mills Oakley Lawyers

Date(s) of hearing:	21 June 2019
Applicant:	In person
Representative for the Respondent:	Mr C Bishop
Solicitors for the Respondent:	Mills Oakley Lawyers