William and Secretary, Department of Social Services (Social services second review)
[2023] AATA 3437
•25 October 2023
William and Secretary, Department of Social Services (Social services second review) [2023] AATA 3437 (25 October 2023)
Division:GENERAL DIVISION
File Number: 2019/4102
Re:Sammy William
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member D Mitchell
Date:25 October 2023
Place:Brisbane
The Tribunal affirms the decision under review.
....................................[SGD]......................
Member D Mitchell
Catchwords
SOCIAL SECURITY – Disability Support Pension debt – overpayment – where income was not correctly reported – where no sole administrative error – where no special circumstances – decision under review affirmed
Legislation
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531
Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693; [2007] AATA 1114
Groth v Secretary, Department of Social Security (1995) 40 ALD 541; [1995] FCA 1708
Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
L v Department of Social Security [1981] AATA 57
Secretary, Department of Social Security v Hales [1998] FCA 219
Sekhon v Secretary, Department of Family and Community Services (2003) 76 ALD 105; [2003] FCAFC 190
Re Anderson and Secretary, Department of Families and Community Services (2002) 69 ALD 494
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95; [1981] AATA 57
Re Lumsden and Secretary Department of Social Security [1986] AATA 228
Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553; [2001] AATA 72
Re Stubbs and Secretary Department of Families Community Services [2003] AATA 729
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639Ward and Secretary, Department of Families and Community Services [2000] AATA 212
REASONS FOR DECISION
Member D Mitchell
25 October 2023
INTRODUCTION
The journey of Mr Sammy William’s (the Applicant) challenge of the Respondent’s decision dated 25 September 2015 to raise and recover a Disability Support Pension (DSP) debt for the period 31 March 2011 to 8 April 2015 has been a long one.[1]
[1] Exhibit 1, T Documents, T52, pages 239-240, Centrelink Notice: Account Payable.
The debt was raised on the basis that the Applicant’s correct employment income was not taken into account in calculating the DSP payments made to him.
The debt period and debt amount have been recalculated and as such, the reviewable decision relates to a DSP debt of $41,169.00 (in addition to a 10% recovery charge) in relation to the period 17 March 2011 to 15 July 2015 (the debt period).[2]
[2] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, page 7, paragraph 3.24.
The issues before the Tribunal are:
(a)Whether the Applicant was paid more than his correct amount of DSP during the debt period;
(b)If so, whether any such overpayment constitutes a debt to the Commonwealth; and
(c)If so, whether the debt is recoverable in part or in full?
BACKGROUND
The Applicant was in receipt of DSP between 18 October 2002 and 4 May 2016 (with multiple periods of suspension and cancellation).[3] He was granted Newstart Allowance on 2 August 2017 and transferred to the DSP on 16 May 2019 (with further periods of suspension or cancellation due to being overseas for more than 28 days).[4]
[3] Exhibit 1, T Documents, T71, pages 477-478, Centrelink Mainframe Screen Printouts.
[4] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, Attachment E.
During the debt period, the Applicant was employed by the South Australian Department for Education and Child Development (DECD) as a temporary relief teacher.[5]
[5] Exhibit 2, Supplementary T Documents, ST3, page 6, Government of South Australia – Department of Education Work Details Report.
Throughout the debt period the Applicant was sent 27 notices setting out his rate of DSP and outlining that he must report his earnings and any changes to his employment.[6]
[6] Exhibit 1, T Documents, T6, T8, T10-T14, T16 T18-T24, T28, T29, T31, T33-T37, T43, T46-T49 and T55, Centrelink Notices.
A Centrelink file note dated 9 February 2015 provides:[7]
“Info has been rec’d regarding an alleged fraud against a Centrelink payment/service. An assessment of compliance risk has been undertaken and a review of entitlement has been initiated regarding information received form a third party.
…
Reason for allegation as discussed with customer: Customer is working for the Department of Education.
Have there been any changes to employment? Customer states that he is a causal teacher ad his work is on and off. Customer states that he last worked in October 2014 however he has not declared since 2013. Customer states that he has not declared as he felt it was not much and he did not have to declare. Customer also was not happy that he would have to declare the income for the f/n however dept of education would not pay him for 3 weeks later which left him in hardship if he was not entitled to the pension.”
[7] Exhibit 1, T Documents, T72 pages 548-549, Centrelink customer contract file details.
The Respondent issued information requests and follow ups to DECD on 12 February 2015, 6 March 2015 and 30 March 2015.[8]
[8] Exhibit 1, T Documents, T40, pages 183-184, Letter: from Respondent to Department of Education – request for information – Applicant’s employment details; T41, pages 185-186, Letter: from Respondent to Department of Education and Child Development – request for information – Applicant’s employment details; T42, pages 187-188, Letter: from Respondent to Department of Education and Child Development – Reminder of request for information – Applicant’s employment details.
On 14 April 2015, the DECD completed a work details report for the period 4 March 1997 to 14 April 2015.[9]
[9] Exhibit 1, T Documents, T44, pages 193-202, Employment Declaration: Department of Education and Child Development attaching Work details report for period 4 March 1997 to 14 April 2015.
On the same day the Respondent sent a letter to the Applicant advising that their records showed that he may have been overpaid because of his employment for the period
7 March 2011 to 8 April 2015 and asked him to contact them.[10]
[10] Exhibit 1, T Documents, T50, pages 219-220, Centrelink notice: additional recovery fee.
A Centrelink file note dated 24 August 2015 states:[11]
“Customer rang today regarding overpayment, I advised him he declared around $20,000. But he earned around $139,000.00 since Feb 11 to Mar 15, that is why the debt now occurred and the 10% recovery fee will apply. He said he tried to declare the best he could but he said it was very hard to find out how much he earned until few week later, that is why he has to guess it. I told him even if he has to guess it but the amount was more than $100,000.00 different. He then said he got all other expenses to pay so he can’t pay this debt back. I told him we will not deduct all his Pension, we only deduct the very small amount but he needs to ring DRU after he receives the bill to make the repayment arrangement. I also informed him he has the right to appeal if he disagreed with our decision.”
[11] Exhibit 1, T Documents, T72, page 550, Centrelink customer contact file details.
On 25 September 2015, the Respondent decided to raise a DSP debt of $42,788.11 (inclusive of a $3,889.60 recovery fee) against the Applicant for the period 31 March 2011 to 8 April 2015.[12] The debt was raised on the basis that the correct amount of the Applicant’s earnings was not taken into account when calculating the amount of DSP he was entitled to.
[12] Exhibit 1, T Documents, T52, pages 239-240, Centrelink notice: Account payable.
On 19 January 2017, the Respondent recalculated the debt amount to be $45,348.74 (inclusive of a penalty charge of $4,122.60) for the period 31 March 2011 to 15 July 2015.[13]
[13] Exhibit 1, T Documents, T56, pages 249-250, Letter: Debt amount amended.
On 26 March 2019, the DECD provided details of the Applicant’s income from employment for the period 1 January 1997 to 16 July 2016.[14]
[14] Exhibit 1, T Documents, T62, pages 271-283, ARO Evidence – Department of Education and Child Development: Work Details Report for period 1 January 1997 to 16 March 2016.
The Applicant sought review of the Respondent’s decision dated 19 January 2017.[15]
[15] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, page 6, paragraph 3.19.
On 28 March 2019, an Authorised Review Officer (ARO) affirmed the decision.[16]
[16] Exhibit 1, T-Documents, T63, pages 284-290, Review Outcome.
The Applicant sought review of that decision from the Social Services and Child Support Division of the Tribunal (SSCSD).
On 19 June 2019, the SSCSD affirmed the ARO decision.[17]
[17] Exhibit 1, T Documents, T2, pages 8-11, Decision of the SSCSD.
By way of an application dated 9 July 2019, the Applicant sought a second-tier review of this matter by the General Division of this Tribunal.[18]
[18] Exhibit 1, T Documents, T1, pages 1-7, Application for Review.
On 13 September 2021, in response to an information request from the Respondent, the South Australian Department of Education provided payroll information regarding the Applicant’s employment from 27 January 2011 to 31 January 2015. That information included a work details report, statement of service and list of days worked.[19]
[19] Exhibit 2, Supplementary T Documents, ST2, page 5, Email from Shared Services South Australia Payroll Services; ST3, pages 6-10, Government of South Australia – Department of Education Work Details Report; ST4, page 11, Government of South Australia – Department of Education Statement of Service; and ST5, pages 12-19, Government of South Australia – Department of Education Claims worked as Temporary Relieving Teacher.
On 3 November 2022, the Respondent recalculated the DSP debt based on the Applicant’s verified daily earnings, to be $41,169.00 (in addition to a 10% recovery fee). The Applicant’s outstanding debt balance was $43,129.06 (which includes the recovery fee).[20]
[20] Exhibit 2, Supplementary T Documents, ST6, pages 20-21, Letter to Applicant regarding recalculation of debt.
Pursuant to section 182(2) of the Social Security (Administration) Act 1999 (Cth), the Respondent’s recalculation decision of 3 November 2022 is taken to be a decision by the SSCSD to vary the amount of the Applicant’s DSP debt.
As at 15 September 2023, the Applicant was in receipt of the DSP and received net fortnightly payments of $904.00, which was made up of his DSP basic rate of $971.50, a pension supplement of $78.40 and DSP Energy Supplement Payment of $14.10. An amount of $159.80 was being deducted for government rent.[21]
[21] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, page 8, paragraph 3.27.
Prior to May 2022, fortnightly repayments of $15.00 were withheld from the Applicant’s social security payment towards the repayment of the debt amount. The payment arrangement was paused in May 2022 due to short term hardship.[22]
[22] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, page 9, paragraph 3.28.
On 6 October 2023, a Hearing was held for this application. At the Hearing, the Tribunal provided an interpreter, the Applicant was self-represented and gave evidence under affirmation by telephone.
APPLICANTS EVIDENCE AND CONTENTIONS
On 10 August 2023, the Applicant provided a completed statement of financial circumstances in which he declared:[23]
[23] As reproduced at Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, page 7, paragraph 3.25 and source at Attachment D.
Category Fortnightly amount Income $1064.00 Household expenditure
· Rent or mortgage - $159.80;
· Electricity - $150.00;
· Telephone - $10.00;
· Internet - $32.00;
· Groceries - $350.00;
· Medical - $159.00;
· Dental - $20.00;
· Chemist - $80.00;
· Tools/books - $120.00
· Clothing and shoes - $100.00
· Entertainment - $20.00
· Other - $40.00
· Public transport fares - $50.00; and
· Taxi - $50.00
Regular payments
· Credit card - $20,000. The Applicant did not specify the amount of this regular payment, how often it is paid or the date it is to be finalised.
· Lawyer ([name redacted]) - $31,000.00. The Applicant did not specify the amount of this regular payment, how often it is paid or the date it is to be finalised.
At the Hearing the Applicant gave evidence that was consistent with the statement he provided dated 10 August 2023.[24] He told the Tribunal that:
[24] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, Attachment D.
·Since he migrated to Australia in 1993, he had worked as a contractor or causal and told Centrelink about every cent he had earned.
·Everything changed when his marriage broke down, it was like a storm went through his family and he tried to keep them together.
·He tried to find money to pay for school and keep the family together so, through out that period he was not himself.
·Things got worse day by day and he was in a situation where he was not in his own mind and could not concentrate, this was evidenced by him withdrawing his lawyer in his divorce proceedings. As a result, the judge ruled against him.
·He separated from his wife psychologically in 2011 and left the house in 2012.
·He lost everything by not attending divorce court, the judge had said if he did not attend, they would take his wife’s word.
·Because of depression he could not attend.
·He was not aware of the court’s orders until a year after they were made and his lawyer still wants outstanding fees of $31,000.00.
·The problem was he was putting savings from work into the house and when he lost the house, he lost everything.
·He lives day to day, the DSP only just meets his daily needs.
·He is suffering psychologically and physically.
·He feels that his rights were damaged or wasted because of the unfair decision of the court.
·His work was casual, not regular.
·He believed that he reported to Centrelink and was surprised that they did not know his earnings and he did not know why it took them so long to action.
·He believes that there is an error in the debt calculation by taxation or Centrelink.
·Before 2015 he was not himself.
·Because Centrelink told him that he was not reporting all of his income, that proves that he was not hiding income, his intention was to report, he just got it wrong.
·The reason he did not report his income correctly was because he did casual work, sometimes half a day or 1 to 2 days a week, it was confusing.
·There was a delay in when he got paid, sometimes he had to wait 5 weeks to be paid from work.
·Every school had a different timeframe for when they would pay him. This made it confusing to keep track of payments.
·He taught English as a second language at both primary and secondary schools.
·When asked how he went teaching when he says he was not himself, that was a good question as he was on a big doses of pain killers that got him through work but by the end of the day when they had expired he could not do anything. The pain killers made him numb through the day and because he was casual he could rest the next day.
·The pain medication was for his back and knees, for his nervous system.
·The reality or truth was that he should not have been working but he put pressure on his doctor to let him work because he needed the money badly to pay his children’s school fees and to pay for the house.
·He coped with his depression with medication.
·When taken through the Statement of Financial Circumstances outlined in paragraph 27 above, he did not move from any of the amounts disclosed.
·He travelled overseas earlier in the year to his stepson’s funeral.
·He had remarried, however is now divorced. During COVID he was stuck in Russia and Centrelink stopped his payments. During that time, he was reliant on his siblings in Canada and the US for money.
·He wants to go overseas again later this year to see his siblings They will pay for his tickets as they can afford to.
·He travelled overseas one time between 2012 and 2015 for two months to see his sister, it was for Christmas. He travelled with a member of the Church who gave him support.
·He agreed that around the time he separated from his first wife he knew he had reported his income to Centrelink. He did report all his income as far as he was able to remember.
·He does not remember specific dates and events however remembers that he did report his income.
·Alcohol and gambling were not a reason for not reporting, he had always been faithful and honest in reporting his income.
CONSIDERATION
The law in relation to the payment of the DSP and recovery of social security debts owed to the Commonwealth is found in the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act 1999 (Cth) (Administration Act).
The Tribunal must consider whether a DSP debt exists for the debt period and if so, whether the debt should be recovered in part or in full.
Does a debt exist?
How is the rate of the DSP calculated?
During the debt period, section 117 of the Act provided that a person’s rate of DSP was worked out using the Pension Rate Calculator A at the end of section 1064 of the Act. Module E of section 1064 of the Act provides a Method Statement for calculating the effect that a person’s ordinary income has on the maximum payment rate of DSP.
Ordinary income is defined by the Act to mean income that is not maintenance income or an exempt lump sum.[25] Income in relation to a person is defined to mean an income amount earned, derived or received by the person for the person’s own use or benefit.[26]
[25] Section 8(1) of the Act.
[26] Section 8(1)(a) of the Act.
Further, ordinary income includes employment income that is for remunerative work of the person as an employee in an employer/employee relationship.[27]
[27] Section 8(1A) of the Act.
Part 3.10 of the Act provides general provisions relating to the ordinary income test.
Division 1AA of Part 3.10 of the Act provides employment income attribution rules. Section 1073A of the Act provides that employment income received in respect of a period greater than a fortnight that is taken to have been earned, derived or received by a person may be taken to have been earned, derived or received over such period, not exceeding 52 weeks as the Respondent (or on review the Tribunal) determines.
Section 1073B of the Act provided that:
1If:
(a)a person is receiving a social security pension or a social security benefit; and
(b)the person’s rate of payment of the pension or benefit is worked out with regard to the income test module of a rate calculator in this Chapter; and
(c)the person has not reached pension age; and
(d)the person earns, derives or receives, or is taken, either by virtue of the operation of section 1073A or any other provision of this Act, to earn, derive or receive, employment income during the whole or a part of a particular instalment period of the person;
the person is taken to earn, derive or receive, on each day in that instalment period, an amount of employment income worked out by dividing the total amount of the employment income referred to in paragraph (d) by the number of days in the period.
As a result, once it is satisfied that a person had earned, derived or received an amount of employment income during the whole or a part of a particular instalment period, the person is deemed to have earned, derived or received an amount of employment income on each day in that instalment period, worked out by dividing the total amount of employment income by the number of days in the instalment period.[28]
[28] Section 1073B of the Act.
An instalment period for the Applicant’s purposes is taken to be a social security periodic payment that was to be paid in arrears by instalment relating to such periods (not exceeding 14 days) as the Respondent determined calculated by reference to the daily rate of payment applicable to each day.[29]
[29] Sections 23 of the Act and 43 of the Administration Act.
These provisions taken together mean that the Applicant’s gross employment income is assessed under the ordinary income test in Module E of section 1064 of the Act in order to determine his appropriate rate of DSP.
Did a debt arise?
Section 1223(1) of the Act provides that if a person receives a payment that they were not entitled to for any reason, the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
The obligation is on the payment recipient to report any changes in their circumstances, which includes their earnings.[30] This is set out in most letters sent by Centrelink to the Applicant pursuant to section 68 of the Administration Act. Section 74 of the Administration Act provides that it is an offence to fail to comply with a notice given under section 68.
[30] Section 66A of the Administration Act.
Section 100 of the Administration Act deals with circumstances where a person, who is receiving a social security payment, is given a notice under section 68(2) of the Administration Act requiring them to report a change in circumstances within a specified time. If the change in circumstances occur but the person does not inform Centrelink and the person’s rate of social security payment changes, the social security payment becomes payable to the person at the reduced rate on the day on which the change of circumstances occurred.
Section 1228B of the Act provides that a 10% penalty is added to a DSP debt due to the Commonwealth by a person where 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.
The Applicant denies that he did not report his income correctly in relation to the debt period.
The Respondent provided the following submissions:[31]
“For the purposes of these proceedings, calculations have been performed of the effect the Applicant’s ordinary income had on his rate of payment during the debt period in accordance with Module E of section 1064 of the Act (see MultiCal at ST9-ST9).
The Applicant received employment income from the DECD during the debt period, which was not correctly taken into account when calculating his rate of DSP. The Applicant’s employment income has been verified by the DECD (ST2-ST5), and the debt has been recalculated on the basis of this information (ST7-ST10).
The Secretary contends that the recalculated debt as outlined at ST7-ST10 has been correctly calculated on the basis of the best available evidence of the Applicant’s employment income, in particular, the Work Details Report, Statement of Service and days worked. In preparing the debt calculations at ST7-ST10, the Applicant’s income from DECD was calculated using his daily earnings in each instalment period. During the debt period, the Applicant was employed by DECD on a temporary basis, working variable hours, and earning income which varied between $0 to $2,927.12 per fortnight. The DECD has provided a Work Details Report, confirming the Applicant worked variable hours, and setting out the gross amounts earned per fortnight (ST3); and a list of the days worked by the Applicant during the debt period (ST5) such that the Tribunal can be satisfied of the days the Applicant earned that income during each instalment period.
The Secretary contends that the Applicant failed to declare his employment income correctly, and at times at all, for the purposes of calculating his correct entitlement to DSP during the debt period as required by section 66A and subsection 68(2) of the Administration Act.
The Applicant was entitled to $46,621.24 in DSP during the debt period. Due to the Applicant’s failure to correctly report his employment income he received $87,790.24. This amounts to an overpayment of $41,169.00. The Applicant did not dispute at the AAT1 hearing that an overpayment had occurred (T2/9).
The Secretary contends that the debt has been correctly calculated in the amount of $41,169.00 and is a debt due to the Commonwealth.
The Secretary contends that in circumstances where the Applicant failed to provide accurate information in relation to his employment income during the debt, it was open to the Secretary pursuant to section 1228B of the Act to apply a 10% penalty charge to the debt making the total quantum of the debt $45,285.90.”
[31] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, pages 15-16, paragraphs 4.32-4.38.
The Tribunal notes that while the Applicant does not agree with the DSP debt calculation for the debt period, he did not provide any evidence or make any submissions in relation to the accuracy of the verified earnings provided by his former employer, or the application of the legislative formula used.
Having reviewed the evidence before it, the Tribunal finds that the Applicant received more than his entitlement to DSP during the debt period. Further, having considered the debt calculation and the supporting evidence provided by the Respondent, the calculation method as set out above and having cross referenced a sample of the calculations, in the absence of evidence to the contrary, the Tribunal accepts the debt calculation submitted by the Respondent.
As such, the Tribunal finds that the Applicant has a DSP debt in relation to the debt period of $41,169.00.
Further, based on the evidence before the Tribunal, it is satisfied that the DSP debt arose due to the Applicant’s failure to provide information about his earnings and as such, the Tribunal finds that the recovery fee has been correctly applied.
Consequently, the Tribunal finds that the Applicant has a DSP debt in relation to the debt period of $41,169.00 (plus a 10% debt recovery charge, resulting in a total debt of $45,285.90), which constitutes a debt owed to the Commonwealth.
Is the DSP debt recoverable?
As the Tribunal has found that a DSP debt in relation to the debt period exists, it must determine whether the debt must be repaid.
It is generally expected that debts to the Commonwealth resulting from overpayments are recovered. This proposition was expressed by French J in relation to debt recovery in Secretary, Department of Social Security v Hales [1998] FCA 219 as:
“The taxpayer is entitled to expect that in the ordinary course money paid to people that they are not entitled to received will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned.”
However, there are circumstances where the recovery of debts is either put on hold for a period of time (written off) or is no longer pursued (waived). Relevant to the Applicant’s DSP debt, the Respondent, and as such on review, the Tribunal, may write off, or waive, his DSP debt if the requirements set out in sections 1236, 1237A or 1237AAD of the Act are met.
Should the Applicant’s DSP debt be written off pursuant to section 1236 of the Act?
Section 1236 of the Act applies in relation to whether the Applicant’s DSP debt for the debt period should be written off.
Section 1236(1) of the Act provides that subject to section 1236(1A), the Respondent may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise.
Section 1236(1A) of the Act allows the Respondent to decide to write off a debt 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.
Section 1236(1B) of the Act provides that for the purposes of section 1236(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.
Section 1236(1C) of the Act provides that for the purposes of section 1236(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.
The term severe financial hardship is not defined in the Act, however, has been considered by the Tribunal in a number of cases.
In Re Lumsden and Secretary Department of Social Security [1986] AATA 228, the Tribunal considered that for financial hardship to be established, a person’s entire financial position would need to be materially less than the current rate of pension.
In Re Stubbs and Secretary Department of Families Community Services [2003] AATA 729, the Tribunal remarked at [20] that:
“…Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature ….”
In L v Department of Social Security [1981] AATA 57, the Tribunal stated at [66]:
“In summary, I consider that matters relating to the personal financial hardship of the individual are always relevant in any decision as to write off under subsection 1236(1). Retrospective considerations may occasionally be relevant. The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned. Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation ….”
The evidence before the Tribunal is that the Applicant is in receipt of fortnightly payments of DSP. Further, the Tribunal has found that the Applicant’s DSP debt for the debt period exists.
In the absence of evidence to the contrary, the Tribunal is satisfied that the Applicant’s DSP debt for the debt period is not irrecoverable at law, that the Applicant’s whereabouts are known and it is cost effective for the Commonwealth to take action to recover the debt. As such, the Tribunal must further consider whether the Applicant has the capacity to repay the debt.
The Applicant’s evidence at Hearing was that he lived day to day. The Applicant did not contend that paying back the debts from withholdings from his DSP would cause him financial hardship.
The Respondent contended that the Statement of Financial Position provided by the Applicant and his evidence at Hearing in the same regard should not be accepted on the basis that the expenditure appears over inflated or to relate to discretionary spending.
The Tribunal agrees with that view. In a situation where the Applicant told the Tribunal that he has no assets in Australia or overseas and no income outside of the DSP, the level of expenditure he claims is fanciful. Expenditure in relation to takeaway and books are discretionary in nature and as such do not count towards forming an opinion of the Applicant’s true financial position.
In the absence of evidence to the contrary, the Tribunal finds that the Applicant has capacity to repay the DSP debt and such repayment would not cause him severe financial hardship.
Consequently, the Tribunal finds that the Applicant’s DSP debt for the debt period cannot be written off pursuant to section 1236(1) of the Act.
Should the Applicant’s DSP debt be waived due to sole administrative error pursuant to section 1237A of the Act?
Section 1237A of the Act applies in relation to whether the Applicant’s DSP debt for the debt period should be waived due to a sole administrative error having been made by the Respondent.
Section 1237A of the Act provides that the Respondent 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.
Selway J, in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 at paragraph [35] stated:
“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.”
Relevantly, 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”.
The Respondent comprehensively contended that the Applicant’s DSP debt is not attributable solely to an administrative error made by the Respondent in circumstances where the debt arose due to the Applicant’s failure to correctly report his employment income during the debt period. The Respondent contended that the Applicant’s DSP debt in relation to the debt period is not in any part due to administrative error on behalf of the Respondent and in any event he did not receive the payments in good faith.[32]
[32] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, pages 18-22, paragraphs 4.50-4.72.
The Applicant did not provide any evidence or make detailed submissions contending that the debt arose due to administrative error other than to say he believed the debt was wrong due to a taxation or Centrelink error and that he had reported all his income.
Based on the evidence before it, the Tribunal finds that the Applicant’s DSP debt arising during the debt period resulted from his failure to accurately report his income and as such, did not result from an administrative error, let alone a sole administrative error.
Consequently, the Tribunal finds that the Applicant’s DSP debt for the debt period cannot be waived pursuant to section 1237A of the Act.
Should the Applicant’s DSP debt be waived due to special circumstances pursuant to sections 1237AAD of the Act?
Section 1237AAD of the Act applies in relation to whether the Applicant’s DSP debt for the debt period should be waived due to the presence of special circumstances.
Section 1237AAD of the Act provides that the Respondent may waive the right to recover all or part of a debt if they are 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.
The Act does not provide a definition of “knowingly”, however it has been discussed in numerous Tribunal decisions. In Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435, it was stated 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”.
In Re Anderson and Secretary, Department of Families and Community Services (2002) 69 ALD 494, the Tribunal stated at [27]:
“… It is open for the Tribunal to infer that the applicant has actual knowledge of his obligations under the Act where there are opportunities for that knowledge to be gained and where there are no obstacles to him acquiring that knowledge. In this case, the applicant has had the opportunity to gain an understanding of his obligations under the Act through the provision of advice letters to him from the respondent. The Tribunal is not aware of any obstacles that would prevent Mr Anderson from understanding those letters and gaining that knowledge.”
In Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, Deputy President Forgie referred to her decision in Re Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72 at [74]:
… I concluded that 'knowingly' means actually knowing as opposed to the other two of the three degrees of knowledge. The first of the other two sorts is the sort of knowledge that comes from deliberately refraining to make enquiries because the enquiries will lead to answers that are not desired by the enquirer. The second is constructive knowledge in the sense that the person ought to have known the specific information or had the means of knowledge.
The Applicant’s capacity during the debt period is pivotal to whether he knowingly made a false statement or representation or failed to comply with a legislative provision during the debt period.
The Tribunal notes that throughout the merits review process this application has been delayed due to concerns about the Applicant’s capacity to participate in the proceedings. A report was prepared by Dr Elnike Brand, forensic psychiatrist dated 17 February 2020, at the request of Legal Aid Queensland. Dr Brand opined that the Applicant’s cognition “is significantly impaired, and probably was at the time of incurring the Centrelink debt ...”.
Dr Brand further opined that the Applicant’s prognosis would “remain poor with possible further cognitive decline without a definitive diagnosis in regard to his presentation and the necessary assessments and investigations, with possible appropriate treatment.”[33]
[33] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, Attachment A.
As a result, the Public Trustee was appointed to assist the Applicant.
Earlier this year, the Applicant successfully applied to QCAT to have the Public Trustee removed, providing a Health Professional Report, dated 7 November 2022, by Dr Amin Gayed, general practitioner. Dr Gayed opined that there were no factors that affected the Applicant’s ability to make decisions and that he was able to attend to his own activities of daily living and financial affairs.[34]
[34] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, Attachment B.
The Respondent sought further information from Dr Gayed, who by letter dated 21 May 2023 provided that:[35]
·He first saw the Applicant on 21 January 2022 after he returned from overseas.
·He started seeing the Applicant on a regular basis to manage his multiple medical conditions, to refer him to appropriate allied health services and to prescribe his regular medications.
·During his consults with the Applicant, he seemed to be reasonable with the ability to have a decision-making capacity.
·While completing the QCAT report he was not provide with and as such did not consider the medical report issued by Dr Brand.
·His last contact with the Applicant was on 5 December 2022.
[35] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, Attachment C.
The Respondent contended that the Applicant did have capacity during the debt period and as such, knowingly made false statements and representations and had failed to comply with a provision of the Act. The Respondent relied on the following contentions:[36]
[36] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, pages 23-24, paragraph 4.78.
(a)“The Applicant was employed by the DECD as a temporary relief teacher throughout the debt period demonstrating a capacity to make decisions, attend work on time, engage with students and colleagues and fulfil his work responsibilities, including direct responsibilities for students. The Secretary contends that this is indicative of a high level of cognitive function. While the Applicant was employed on a temporary basis, the employment records from DECD demonstrate the Applicant worked full time hours on many occasions. Whilst working, he was also able to travel significantly. During the debt period, the Applicant travelled internationally four times (for approximately a month each time) which demonstrates that he had capacity to make decisions.
Further, there is no evidence that the Applicant ceased employment at the DECD due to issues with his capacity, Rather, a letter from Rowena Toppenberg of the Spinal Physiotherapy Screening Clinic dated 8 December 2018, states that the Applicant ceased work in 2015 “when the pain (low back pain and bilateral leg pain with associated leg and foot numbness and joint pain) started to increase” (T65/300). Further, a Statement of Service from the DECD records “retired” as the reason the Applicant ceased his employment in 2015(ST4/11).
(b)The Applicant was able to report his earnings (albeit at times incorrectly) during the debt period demonstrating the Applicant knew of his reporting obligations to the Agency and knowingly chose to report inaccurately by underreporting his income. The Applicant had verified earnings of $141.551.69 during the debt period however only $16,994.23 was reported. This is a difference of $124,557.46.
(c)The Applicant was able to effectively communicate with the Agency during the debt period. Specifically:
(i) The Applicant submitted regular rent certificates to the Agency (approximately one every 8 months) to ensure he continued to receive rent assistance with his DSP. This demonstrates that he understood Centrelink processes and rules.
(ii) The Applicant submitted cohesive and comprehensive correspondence to the Agency, demonstrating his cognitive and reasoning skills. Specifically:
(A)On 16 October, the Applicant requested a tax refund from the Agency, and outlined his reasons for doing so. His attachments demonstrate that he had capacity to engage a tax agent and lawyers for his family law proceedings;
(B)In May 2016, the Applicant sent a few letters to the Agency explaining why he was unable to return to Australia within 28 days;
(C)In July 2016, the Applicant sent a lengthy letter to the Agency regarding his DSP suspension, which was comprehensive and demonstrated his reasoning skill;
(d)The Applicant engaged lawyers to represent him in the family law proceedings during the debt period. This is indicative of the Applicant having capacity to provide legal instructions. While the Order of the Federal Circuit Court of Australia (as it then was) dated 12 May 2015 noted that the Applicant had failed to participate in proceedings, the Secretary contends that this is not indicative of a lack of capacity to engage had he chosen to do so (T48).
(e)While the Applicant states in his Application for review dated 9 July 2018 that “I was working these casual days while I was in great pain physically and psychologically, having very strong dose of painkillers to be able to do one casual day, my memory was very weak and the depression started to hit me…I was not myself,” the Secretary contends that this is not indicative of a lack of capacity, as distinct from the presence of mental health issues generally, particularly in the absence of contemporaneous medical evidence confirming the presence of mental health issues.
(f)Dr Brand considered in his report dated 17 February 2020 (after the debt period) that:
I would have concerns for Mr William as I’m of the opinion that he would not be able to comply with government obligations or to accurately report his income given his level of disorganisation…Mr William was unable to give a coherent and logical explanation for the circumstances/ events that have led to him incurring the Centrelink debt. It is likely that his cognitive impairment specifically his disorganisations and memory deficits could have contributed to him incurring the debt intentionally…Mr William’s cognition is significantly impaired, and probably was at the time of incurring the Centrelink debt. He would require a full Formal Cognitive Assessment preferably a Neuropsychiatric Assessment.”
The Respondent further contended that:[37]
“The Secretary contends that while Dr Brand’s report indicates that the Applicant’s cognition was significantly impaired (in February 2020) the statement that this was likely or probably impaired throughout the debt period falls short of confirming same, especially without contemporaneous medical evidence
The Secretary contends the fact that the Applicant was issued with numerous notices making him aware of his reporting obligations during the debt period in respect of his employment income, and the incorrect information about his income being relied upon by the Agency which he failed to correct, amounts to the Applicant knowingly failing to comply with his reporting obligations under the Administration Act.
Further, in a telephone conversation with the Agency on 11 February 2015, the Applicant admitted that he had not declared his employment income since 2013 as he felt it was not much and he did not have to declare (T72/548). Similarly, in a telephone conversation with the Agency on 24 August 2015, the Applicant admitted that he tried to declare his income the best he could but found it hard to find out how much he earned until a few weeks later (T72/550). These interactions with the Agency demonstrate that the Applicant knowingly made false statements or representations to the Agency such that a finding to the contrary is not available.”
[37] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, pages 24-25, paragraphs 4.79-4.81.
At the Hearing the Respondent contended that there was reason to question Dr Brand’s opinion that the Applicant’s prognosis was poor having heard from him at the Hearing three years after the report. The Respondent contended that the Applicant did not present at Hearing like someone with cognitive deficit which is in accordance with the general practitioner report completed for QCAT.
The Tribunal notes that the Applicant’s evidence was that during his marriage break down and the years that followed he was not in his “own mind”, however during that period he remained focused on ensuring that his children’s needs were met, was able to undertake work as a relief teacher and was able to report to Centrelink.
The Tribunal accepts that the debt period would have been a difficult period in the Applicant’s life however there is no contemporaneous evidence that he lacked capacity at that time. The Tribunal agrees with the Respondent in that the Applicant did not present at the Hearing like a person who did not have capacity, he was able to answer the questions asked by him and is clearly an intelligent man.
The Applicant’s evidence is that during the debt period he had to get money to pay for the house and his children’s education. He further told the Tribunal that there were delays in being paid from his employer which would lead to hardship if he did not receive his DSP. The Applicant’s focus during the debt period seemed to be financially motivated. He said that he believes that he reported all his income to Centrelink however based on the evidence before the Tribunal that simply is not the case.
It is difficult to accept that the Applicant was not aware of the need to report his income while receiving the DSP, or that he would not have been aware that in instances where his income increased dramatically (for example where he worked a full week) that his DSP would then in turn decrease.
Further, the Applicant was provided with a large number of notices from the Respondent during the debt period outlining his reporting requirements.
While the Tribunal acknowledges the Applicant’s personal difficulties and the medical evidence before it, it considers that there is no evidence before it that indicates the Applicant was so impaired by his mental health conditions so as to not have capacity and as such actual knowledge that he was making false statements when undertaking the reporting of his income.
Consequently, the Tribunal is satisfied that the Applicant’s DSP debt in relation to the debt period resulted at least partly from the Applicant knowingly making false statements and failing to comply with legislative requirements under the Act. As such, in accordance with section 1237AAD(a) of the Act, the Tribunal is unable to waive the right to recover all or part of the Applicant’s DSP debt in relation to the debt period.
For completeness, the Tribunal has also considered whether special circumstances exist (other than financial hardship alone) that make it desirable to waive the Applicant’s DSP debt. The Act does not provide a definition of special circumstances, however the general proposition established by relevant Federal Court decisions make it clear that special means something different from the usual or ordinary.[38]
[38] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545per Kiefel J; Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639 at [51]; Boscolo v Secretary, Dept of Social Security[1999] FCA 106; (1999) 90 FCR 531 at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs[2010] FCA 1084 at [37].
In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal held at paragraph 3:
“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.”
In Re Ivovic and Director-General of Social Services [1981] AATA 57, the Tribunal stated:
“Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to “special circumstances” …., the use of the word “special” is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case … In the exercise of the discretion …., the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the …. Act.”
The Applicant has sought that his DSP debt for the debt period be waived due to special circumstances on the grounds of his personal circumstances, inability to repay the debt and health conditions.
The Respondent contended that in general there was insufficient evidence before the Tribunal that the Applicant’s physical health or mental health conditions were more severe than that of other social security recipients who have incurred a debt.[39]
[39] Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions, pages 26-28, paragraphs 4.89-4.95.
The Tribunal notes that while the Applicant raised concerns in relation to his ability to pay the DSP debt, he does receive the DSP. There is nothing before the Tribunal to indicate that there is an apparent or immediate reason that such social security benefits will not continue to be paid. Further, based on the Applicant’s evidence, there is no evidence before the Tribunal that indicates in the long term, he will not be able to repay the DSP debt through withholdings from his DSP or that doing so would cause some out of the ordinary financial hardship.
The Tribunal does not doubt that the personal circumstances of the Applicant during the debt period were extremely difficult or that the Applicant has long standing physical and mental health conditions. While the Tribunal sympathises with the Applicant and in no way intends to trivialise his past and present personal and health circumstances, there is no evidence before it that indicates his circumstances, whilst special to him, are unusual, uncommon or exceptional when compared to other social security recipients who have incurred debts or that there is any injustice in requiring him to repay the debt.
As such, based on the evidence before it, the Tribunal is not satisfied that, for the purposes of section 1237AAD(b) and (c) of the Act, special circumstances exist that make it desirable to waive the Applicant’s DSP debt in relation to the debt period.
Consequently, the Tribunal finds that the Applicant’s DSP debt in relation to the debt period cannot be waived pursuant to section 1237AAD of the Act.
DECISION
For the reasons set out above, the Tribunal finds that:
(a)
the Applicant was paid more than his correct amount of DSP for the period
17 March 2011 to 15 July 2015; and
(b)the overpayment results in a debt of $41,169.00 (in addition to a 10% debt recovery fee) being owed to the Commonwealth; and
(c)there is no basis upon which the Applicant’s DSP debt should be written off pursuant to section 1236 of the Act; and
(d)there is no basis upon which the Applicant’s DSP debt should be waived pursuant to sections 1237A or 1237AAD of the Act; and
(e)the Applicant’s DSP debt is recoverable in full.
Consequently, the Tribunal affirms the decision under review.[40]
[40] Being the decision of the SSCSD as varied by the Respondent pursuant to section 182 of the Administration Act on 3 November 2022 to raise and recover a DSP debt of $41,169.00 (in addition to a 10% debt recovery fee) for the period of 17 March 2011 to 15 July 2015.
I certify that the preceding 108 (one hundred and eight) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell
...............................[SGD]..............................
Associate
Dated: 25 October 2023
Date of hearing: 6 October 2023 Applicant: By phone
Solicitors for the Respondent: Mr Matthew Sheedy
Sparke Helmore Lawyers
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