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

Vance and Secretary, Department of Social Services (Social services second review) [2024] AATA 3024 (28 August 2024)
Division:GENERAL DIVISION
File Number: 2023/8439
Re:Kaitlyn Vance
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member P Ranson
Date:28 August 2024
Place:Brisbane

Pursuant to section 43(1) of the Administrative Appeals Tribunal Act, the decision under review is affirmed
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Member P Ranson
Catchwords
Where Applicant was receiving JobSeeker payments – where Applicant received lump sum compensation for work injury from CityCover – where applicant was later precluded from receiving JobSeeker payments due to a preclusion period– where Applicant received corona virus supplement without requesting it- supplement paid automatically by operation of the law – where applicant was ineligible for corona virus supplement once she lost entitlement to JobSeeker – whether there is a debt due to the Commonwealth – whether debt due to commonwealth should be waived
Legislation
Privacy Act 1988 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Secondary Materials
Social Security Guide
REASONS FOR DECISION
Member P Ranson
28 August 2024
BACKGROUND

Miss Vance worked for many years as a horticulturist for the Gold Coast City Council (GCCC). In 2017 she sustained an injury and was later awarded compensation for that. In 2020, she was in receipt of Jobseeker Payment (JSP) from Services Australia (Centrelink), which was around the time lockdowns were beginning due to the outbreak of COVID-19.
In April 2020, she received lump sum compensation for the work injury she suffered in 2017. The purpose of JSP is to provide income support for eligible individuals who are looking for work. Where compensation payments includes an amount for loss of income, there is a preclusion period by which the person is deemed disentitled to compensation affected payments, such as JSP, for a period of time stipulated by a formula imbedded in the law.[1] The law requires part of the amount received to be regarded as compensation for loss of earnings and a formula imbedded in the law creates the preclusion period.
[1] Section 17 of the Act.
Unbeknown to Miss Vance, the Australian government decided to provide a coronavirus supplement (CVS) to all recipients of JSP, being four payments of $550 each. Miss Vance was not required to apply for the supplement. It was automatically paid to all those entitled to receive Jobseeker at that time. By the operation of the preclusion period, she was not entitled to the CVS as her JSP had been cancelled. The JSP she had received was reclaimed as a debt and deducted from the lump sum settlement paid to her in respect of her compensable injuries. Regrettably, the supplement was not also recovered and as she was not entitled to it, Centrelink raised a debt for the CVS paid of $2,200 for the period 1 May 2020 to 12 June 2020.
Miss Vance agrees she received the CVS into her bank account and says she did not ask for it so why should she have to repay it. She also says the debt raised by Centrelink had adversely impacted her credit rating, which caused her difficulty in obtaining credit.
Centrelink says it doesn’t matter the Miss Vance did not apply for the CVS and that it wasn’t wanted. The payment was paid and received in good faith at the time and was later found Miss Vance was not entitled to it, so it must be repaid. They also say they do not report debts they raise to credit reporting agencies.
Miss Vance sought initial review of Centrelink’s decision and on 6 October 2023, the Social Security and Child Support Division of this Tribunal (AAT1) affirmed the decision. She then applied to the General Division of this Tribunal for a second review.
As there is no dispute the supplement was paid and received, albeit not requested by Miss Vance, the first issue is whether she was entitled to it given her JSP had been cancelled retrospectively because of the preclusion period, and if so, is it a debt due to the Commonwealth.
Commonwealth debt can be written off (meaning payment deferred) or waived (meaning some part of or all the debt is not recovered) if special circumstances apply. Miss Vance says she should not have to repay the supplement because she did not ask for it and did not want it so the error must be on the part of Centrelink. Centrelink says there was no error on their part as they were implementing the law as it was at the time. However, Centrelink made multiple offers to waive the debt in full and repay the amount Miss Vance had repaid. She rejected those offers.
If Miss Vance is found to have a debt due to the Commonwealth, the next issue is whether the debt should be written off or waived in whole or part.
For the following reasons, the decision under review is affirmed.
THE LAW
In the Respondent’s Statement of Facts, Issues and Contentions (RSFIC), the Secretary refers to the laws relevant to this decision, being the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act 1999 (Cth) (the Administration Act). The SFIC also refers to the Privacy Act 1988 (Cth) (the Privacy Act).
The Social Security Guide (the Guide) sets out the Secretary’s views on how the law should be applied and is useful to the Tribunal standing in the Secretary’s shoes to ensure consistency in the administration of social policy law.
A note about the Guide and social security policy
The Tribunal is charged with determining the correct and preferable decision based on an independent assessment of the facts before it and is entitled to treat policy as a relevant factor in that determination. The Full Federal Court has found that where a policy exists to guide the decision maker in exercising its powers, the Tribunal may apply that policy in reviewing a decision where it "makes it clear that it has considered the propriety of the particular policy and expressly indicates the considerations which have led it to that conclusion”.[2]
[2] Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409, 420.
To the extent the Tribunal has considered policy in this case, it has not applied it inflexibly and has only considered it to the extent the policy is consistent with the requirements as set out in the legislation.
Section 17 of the Act: Compensation part of a lump sum
Section 17(1) of the Act confirms that JSP is a compensation affected payment.[3] Where a person receives a compensation affected payment, and receives a lump sum compensation payment, the compensation affected payment is not payable to the person during the lump sum preclusion period.[4]
[3] Section 17(1) of the Act.
[4] Section 1169 of the Act.
In circumstances where a payment has been made (regardless of whether liability has been admitted) in respect of a settled claim that is in whole or in part, related to a disease, injury or condition, 50% of the overall payment received is deemed to be the compensation part of a lump sum compensation payment.[5]
[5] Section 17(3) of the Act.
Section 1170 of the Act: Lump sum preclusion period
If a person receives both periodic compensation payments and a lump sum compensation payment, the preclusion period begins on the day following the last day of the periodic payments period and finishes at the end of the number of weeks worked out under a formula as discussed below.[6]
[6] Section 1170 of the Act.
The number of weeks in the lump sum preclusion period is determined by dividing the compensation part of the lump sum by the income cut-out amount, rounded down to the nearest whole number.[7]
[7] Section 1170(4) and (5) of the Act.
According to department policy, the income cut-out amount is determined at the time the lump sum is received. The income cut-out amount is the amount above which no pension is payable to a single person under the ordinary income test.[8] The RSFIC identifies the income cut-out amount in August 2019 as $1,031.30 and Miss Vance did not dispute that.
CONSIDERATION OF CLAIMS AND EVIDENCE
[8] The Guide at 4.13.2.60 Lump Sum Preclusion Period – General.
What happened?
On 15 May 2020, Miss Vance received lump sum compensation of $303,656.74 for the work injury she suffered 27 November 2017.[9] This amount comprises $190,000 lump sum plus $113,656.74 for statutory benefits already paid (from CityCover) which the insurer was not entitled to recover.[10]
[9] T12, page 92.
[10] T6, pages 58 to 60.
Miss Vance had been receiving JSP from 23 March 2020. Social security benefits usually come with reporting requirements attached. Centrelink notifies recipients of this obligation in their correspondence and an example of this is contained in a letter to her dated 8 April 2020. Miss Vance does not dispute the receipt of this letter so she is deemed to be aware of her reporting requirements. On page two of that letter, it says:
‘You must tell us within 14 days about events or changes in circumstances affecting your payment. If you get a Reporting Statement (Application for Payment), report your changes in circumstances with your earnings on your reporting day.
For a list of changes that you need to tell us about, including more information about how to tell us, please go to humanservices.gov.au/notifychanges’
The Tribunal searched the website of Services Australia and found under the heading ‘What you need to tell us’ then ‘If your employment changes’:[11]
‘Tell us if any of these things happen: … you get compensation, leave or redundancy payments.
[emphasis added]
[11] Change of circumstances when you get JobSeeker Payment - JobSeeker Payment - Services Australia
As discussed later, part of a lump sum compensation payment is deemed to be for loss of earnings and by a formula in the Act, a preclusion period is determined during which no entitlement to income support benefits exists. The Secretary calculated the period as 20 August 2019 (being the day after statutory benefits ceased) to 18 October 2021.
According to the RSFIC, Miss Vance had been in receipt of periodic payments of statutory compensation (CityCover payments) up to 19 August 2019.[12] However there is a file note in Centrelink’s records which says weekly compensation ceased on 16 September 2019.[13] For present purposes, it is unnecessary to make a finding relating to the correct date of the start of the preclusion period because it does not change the fact that Miss Vance received JSP payments which she was not entitled to.
[12] T9, page 67.
[13] T13, page 100.
Miss Vance had been receiving JSP from 23 March 2020 however her injury claim was not settled until 15 May 2020, so Centrelink did not know about any undeclared income derived from the statutory benefits that Miss Vance’s insurer was not entitled to be refunded following her 15 May settlement. Given the operation of the preclusion period, the amount of $3,257.49 was raised and recovered as a debt by deducting it from the lump sum compensation payment.
By 8 April 2020, the Applicant had already received the unrefunded statutory compensation (WorkCover) and by then, her solicitors had lodged the claim for the compensation payment which was not received until 5 May 2020. That means it was not correct for Miss Vance to say on her JSP application that she had never claimed or received compensation, insurance and/or damages due to personal injury.[14] Miss Vance may not have realised she was in error in her answer to this question.
[14] See T3, Page 46.
Starting on 27 April 2020, the Australian government decided to pay a CVS to JSP recipients. Four payments of $550 were made to Miss Vance on 1 May, 15 May, 29 May and 12 June 2020 amounting to $2,200 in total. She agrees she received these extra payments. For the same reason she was not entitled to JSP, she was not entitled to the CVS. [15] That is how the debt of $2,200 arises. Regrettably, Centrelink did not seek to recover this amount from the lump sum before it was remitted to Miss Vance, as they did with the JSP.
[15] Section 646 of the Act.
Centrelink raised a debt for $2,200,[16] which Miss Vance appealed to the Social Security Division of this Tribunal (AAT1) when her objection to it was dismissed by an Authorised Review Officer (ARO) of Centrelink. AAT1 affirmed the decision of the ARO.
[16] T8.
On 10 November 2023, Miss Vance applied for a second review of the decision with the General Division of this Tribunal. Meanwhile, Centrelink began deducting payments from herdisability support pension (DSP) which by then had been granted. Those deductions were paused pending the outcome of this appeal. The pause did not happen as quickly as it should have and by recent evidence filed by Miss Vance, the deductions of $157.40 recommenced in July 2024.
On 27 February 2024, Services Australia wrote to Miss Vance with a ‘with prejudice’[17] offer to settle the matter. The letter said in part:
The effect of this settlement offer, should you accept is that:
·Your Coronavirus Supplement debt (Debt ID 98644411) of $2,200.00 for the period 1 May 2020 to 12 June 2020 will be waived in full, resulting in a credit of $1,142.60. This would be applied to any other debt you have with Services Australia before being refunded to you.
[17] With prejudice means the offer can be made publicly available.
Miss Vance declined the offer which was repeated after the telephone directions hearing on 1 May 2024.
The compensation part of the lump sum
The lump sum included partial and total incapacity payments of $68,987.36.[18] This amount is deducted from the lump sum of $303.656.74 leaving $234,669.38. 50% of the reduced amount is $117,334.69 and is used to determine the preclusion period.
[18] T7, page 63.
Applying the formula described above, the preclusion period is 113 weeks ($117,334.69 divided by $1,031.30, rounded down). Miss Vance does not dispute the calculation of the preclusion period.
What does Miss Vance say?
On 30 May 2024, Miss Vance helpfully prepared a handwritten document entitled ‘Applicant’s Response/Rebuttal too’ (ASFIC). It sets out her response to some of the paragraphs in the RSFIC starting with the Facts at paragraph 3.
Miss Vance disagrees she had a change of circumstances requiring notification within 14 days. The change of circumstances mentioned by the Secretary refers only to the upcoming receipt of the lump sum compensation payment and not whether she was still an employee of the GCCC. The compensation lump sum was received on 7 July 2020.
She notes the agency paid the CVS directly into her bank account off their own volition and says the agency did not tell anyone or advise of what they had done. That is correct and it is also the way the law operated at that time. It was the federal government who introduced the CVS and it was Centrelink’s responsibility to implement it according to the law. The law provided that Centrelink did not have a responsibility to notify the recipient of the payment and Centrelink possessed no right to change it.
Miss Vance complains that Centrelink staff had no idea what the CVS was when she called them on 14 July 2021. That may well be so and it doesn't alter the fact the payments were made according to law, and she does not challenge receipt of them.
Miss Vance has a valid point when she says Centrelink did not raise the debt until July 2021, which is more than a year after the payments were made in May and June 2020. It is regrettable that Centrelink often takes a long time to identify overpayments and raise a debt for their recovery. She says she became aware of the debt raised against her on 13 July 2021 in a telephone call with a customer service officer regarding management of the overpayment.[19] The record of that conversation shows Miss Vance stated she was sure the $2,200 had been taken from the settlement through her solicitors. She called Centrelink on 14 July 2021 to discuss the overpayment. The file note records:
‘Customer called back to discuss overpayment of CVS [coronavirus supplement]. Advised that due to system limitations it was not recovered from her settlement as it was not included in the amount sent to the insurer.’
[19] T14, page 108.
As we now know, the JSP previously paid to Miss Vance was deducted from the settlement and remitted to Centrelink. The SFIC says, and Mr Harvey agreed, the omission by Centrelink to include the supplementary payments of $2,200 was a system limitation at the time.
Recipients of social security benefits should reasonably expect the payments they receive to be correct and if not, they are advised of errors on a timely basis. That does not alter the fact the CVS was paid by Centrelink, it was received by Miss Vance, and she was not entitled to it because she was not entitled to the JSP at that time.
In the ASFIC, Miss Vance states Centrelink had not offered to waive the debt in full. That is not the case. As discussed above, Miss Vance was offered full waiver of the debt on a ‘with prejudice’ basis,[20] and she refused to accept it. Had she done so, the deductions from her disability support pension (DSP), would have been refunded and repayment of the debt would no longer be required. Following a telephone directions hearing on 1 May 2024, Centrelink again offered to waive the debt in full and refund the payments she had made and again Miss Vance refused the offer.
[20] With prejudice means the offer can be made publicly available.
Miss Vance believes Centrelink acted in bad faith because they began deducting payments from her DSP whilst the appeal process was underway. Centrelink is required to take action to recover debts and the repayment arrangement was legitimate action on their part. Agreement was reached for the deductions from her DSP to be paused pending the review process. The pause did not happen on a timely basis, which was eventually corrected, and the deductions stopped until July 2024.
The ASFIC concludes by stating Miss Vance has never had a debt nor been in arrears with Centrelink before and because of the debt raised by them for the CVS, she has lost her credit rating. As Mr Harvey (representing the Secretary) explained at the hearing, that is not the case because Centrelink is precluded by law, principally the Privacy Act, from disclosing debts they raise to credit reporting agencies. Therefore, any detriment to her credit rating must be due to other factors.
The Tribunal finds Miss Vance was not entitled to the CVS of $2,200 notwithstanding she did not request it, and this amount is a debt due to the Commonwealth.
CAN THE DEBT BE WRITTEN OFF OR WAIVED?
Write off or waiver?
The Act includes provisions by which a debt due to the Commonwealth can be either written of,[21] or waived.[22] Written off means recovery of the debt is paused for an agreed period and then recovered later. Waiver means recovery of the debt in whole, or part, is not pursued by Centrelink.
[21]Section 1236 of the Act.
[22] Section 1237A of the Act.
Under section 1237A of the Act, the Secretary must waive the right to recover a debt if it can be attributed to a sole administrative error and the debtor received in good faith the payments giving rise to the debt. Notwithstanding the error in the Centrelink’s systems, it cannot be said the Applicant received the CVS payments in good faith in circumstances where there is a deemed duty to disclose the compensation payments, where the Applicant was aware of such a duty, and where the Applicant failed to do so. It is possible Miss Vance did not appreciate the consequence of answering the question as she did. Yet, this decision does not turn on an intention to mislead because at the hearing, Miss Vance agreed she had received the CVS and that she was not entitled to it because she lost her entitlement to JSP due to the preclusion period. She conceded the amount of $2,200 is a debt due to the Commonwealth and there are no grounds to write off or waive the debt.
Mr Harvey pointed out at the hearing, Centrelink’s inability to include the CVS with the JSP when requesting they be deducted before the lump sum is paid, due to system limitations, is a failure to recover the debt rather than an error in the calculation or payment of the supplementary amounts.

At the hearing, Miss Vance agreed she had received the CVS and that she was not entitled to it because she lost her entitlement to JSP due to the preclusion period. She conceded the amount of $2,200 is a debt due to the Commonwealth and there are no grounds to write off or waive the debt. Accordingly, the Tribunal will not consider the application of the write off and waiver provisions to the debt for overpaid CVS.
The Tribunal finds there are no grounds to write off or waive the debt of $2,200 due to the Commonwealth because Miss Vance concedes there are no such grounds.
CONCLUSION
As mentioned above, Centrelink offered to waive the debt of $2,200 for overpaid CVS owing by Miss Vance. If she had accepted the offer, which was made more than once, this matter would be over, and she would have received a refund of the deductions already made. Instead, the Tribunal, like previous decision makers, has found there is a debt due to the Commonwealth and there are no grounds to write it off or waive it. That means the balance of the debt must now be paid and the Tribunal understands deductions from her DSP have recommenced.
At the hearing, Miss Vance was asked why she refused to accept the offer from Centrelink and her explanation appeared to be that doing so would somehow tarnish her professional reputation and qualifications. She did not explain how that would be so.
She did say she wanted to be heard and she achieved that at the hearing.
DECISION
The Tribunal affirms the decision under review.

I certify that the preceding 53 (fifty-three) paragraphs are a true copy of the reasons for the decision herein of Member P Ranson

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Associate
Dated: 28 August 2024

Date of hearing: 10 June 2024

Date final submissions received: 25 July 2024

Applicant: Self-represented litigant

Solicitor for the Respondent:
Ms Gillian Gehrke

Services Australia

[2024] AATA 3024

28 August 2024

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Judicial Review

Jurisdiction

Procedural Fairness

Standing

Statutory Construction

Date of hearing:	10 June 2024
Date final submissions received:	25 July 2024
Applicant:	Self-represented litigant
Solicitor for the Respondent:	Ms Gillian Gehrke Services Australia