Wykes and Secretary, Department of Education, Employment and Workplace Relations
[2009] AATA 496
•2 July 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 496
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2008/4431
GENERAL ADMINISTRATIVE DIVISION )
ReTerry Milton WYKES
Applicant
AndSecretary, Department of Education, Employment and Workplace Relations
Respondent
DIRECTION
TRIBUNAL: Ms N Isenberg, Senior Member
DATE: 10 August 2009
PLACE: Sydney
1. The Tribunal published its Decision in this matter on 2 July 2009;
2. The Tribunal wishes to amend the decision to rectify an error and directs that the
Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal
1975, alter the text of the decision as follows:
The Respondent name in the decision should appear as Secretary
Department of Education, Employment and Workplace Relations
..........[sgd].........................................................
Ms N Isenberg
Senior MemberDECISION
TribunalMs N Isenberg, Senior Member
Date2 July 2009
PlaceSydney
DecisionThe decision under review is set aside and in substitution therefor the Tribunal decides that the debt of $6,911.24 is waived to the extent of $1081.11, and is therefore reduced to $5,830.13.
...........[sgd]...................................
Ms N Isenberg
Senior Member
CATCHWORDS
SOCIAL SECURITY – Newstart allowance – debt due to the Commonwealth – quantum of debt -– whether debt should be waived – “special circumstances” – decision under review is set aside.
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RELEVANT ACT/S:
Social Security Act 1991: ss 1223(1), 1236(1A), 1237A(1), 1237AAD
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CITATIONS:
Saunders and Secretary, Department of Family and Community Services (1999) 57 ALD 495
Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Davy v Secretary, Department of Employment & Workplace Relations (2007) 94 ALD 693
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REASONS FOR DECISION
2 July 2009
Ms N Isenberg, Senior Member
decision under review
1. The decision under review is a decision of the Social Security Appeals Tribunal (SSAT) dated 25 August 2008, which affirmed Centrelink’s decision to recover a Newstart allowance debt from Mr Wykes totalling $6,911.24 for the period 24 April 2003 to 17 May 2006.
2. There had been a previous decision of the SSAT dated 9 May 2007. That Tribunal decision in principle determined that there is a debt of newstart allowance for the period 24 April 2003 to 17 May 2006. It, however, decided to remit the matter to Centrelink with directions that it recalculate the debt. The Respondent’s Statement of Facts and Contentions refers to the occasions and reasons for the recalculation of the debt due.
issues before the tribunal
3. The issues in this case are:
(a)Whether Centrelink correctly calculated the debt incurred by Mr Wykes in the period 24 April 2003 to 17 May 2006 totalling $6,911.24?; and
(b)Whether there any grounds as to why all or part of the debt should be waived?
background
4. Mr Wykes was paid Newstart Allowance (NSA) from 9 January 2003 until 5 January 2007. Each fortnight Mr Wykes was obliged to complete an Application for Payment for Newstart Allowance form that required him to declare if he had worked during the relevant period and the amount he earned in the period covered by the notice. The form further advised, “You must tell us what you will get even if you have not been paid yet”.
5. On 28 April 2003, Mr Wykes started casual work through Ready Workforce, an employment agency and worked for Weathertex Pty Ltd and Statewide Traffic Control on a casual basis.
6. The forms completed by Mr Wykes did not accurately reflect his earnings and Mr Wykes concedes that he was overpaid NSA. However, he takes issue with the amount of the debt. Since a debt was first raised it has been calculated to be several different amounts and he has no confidence that the amount now claimed is any more accurate than before. Further, he contends that irrespective of quantum he has been so distressed by the ongoing dispute that he now suffers a psychological problem.
evidence
7. l had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 (“the T-documents”), which I took into evidence. The following documents were also tendered:
(a)Statement of Terry Wykes dated 25 May 2009 (Exhibit A1);
(b)Respondent’s Statement of Facts and Contentions dated 29 May 2009 (Exhibit R1);
(c)Centrelink Printout – Earnings History - Ready Workforce – Earnings as Reported at 7 May 2003 to 14 June 2006 (Exhibit R2);
(d)Centrelink Printout – Earnings Record – Ready Workforce – Earnings as Reported at 11 June 2009 (Exhibit R3);
(e)T documents (T1-T99 pp1-425) (Exhibit T1);
(f)Supplementary T documents (ST1-ST11 pp426-457) (Exhibit T2); and
(g)Report of Belynda Stephen dated 16 April 2009 (Exhibit A2)
8. Mr Wykes gave evidence as did Ms L Roberts, the Authorised Review Officer who was responsible for the final calculation of Mr Wykes’ debt.
consideration of evidence and findings
Calculation of the debt
9. The main thrust of Mr Wykes’ submissions was that he had no confidence in the way the debt was calculated. The debt had been recalculated at least three times, and on each occasion Centrelink had come up with a different figure.
10. On 11 September 2003, Centrelink raised a Newstart Allowance debt of $303.45 because the correct amount of Mr Wykes’ earnings had not been taken into account when calculating his Newstart Allowance between 19 June 2003 and 30 July 2003. Mr Wykes repaid this debt in full on 13 October 2003.
11. In 2006, Centrelink again reviewed Mr Wykes’ Newstart Allowance entitlement during the period he was employed by Ready Workforce, and on 6 September 2006 decided Mr Wykes had been overpaid $6,902.83 in the period 24 April 2003 to 17 May 2006. Mr Wykes sought internal review and then review by the SSAT. The SSAT remitted the matter to Centrelink with a direction to recalculate the debt by assessing Mr Wykes’ employment income over the periods contained in a table at paragraph 25 of the Tribunal’s decision (SSAT decision of 9 May 2007). In deciding Mr Wykes,’ appeal the SSAT noted that the employer records did not indicate the actual days Mr Wykes’ earned income, and because there was no better information available, Centrelink had calculated Mr Wykes’ debt by apportioning his income in the fortnight it was received, rather than when it was earned. The SSAT concluded that Centrelink’s method of calculating the debt may have affected the quantum of it by creating “peaks and troughs” of earnings (T61 p239).
12. Mr Wykes told the SSAT that he worked 3 days a week, and when Centrelink recalculated Mr Wykes’ debt by apportioning income over three days of the week this resulted in a debt of $7,135.55. At the Tribunal hearing before me, Mr Wykes denied that he had ever said he worked 3 days a week with any regularity.
13. On 12 September 2007, a Centrelink Authorised Review Officer recalculated Mr Wykes’ Newstart Allowance debt in two ways, resulting in a debt totalling $11,174.38 or alternatively, $6,478.20.
14. Ultimately, Centrelink obtained information from Mr Wykes’ employers about the days he worked. Centrelink recalculated Mr Wykes’ Newstart Allowance debt based on the new information and this resulted in a new debt of $7,214.69 which, when reduced by the $303.45 repaid by Mr Wykes on 13 October 2003, produced a net debt of $6,911.24.
15. Ms Roberts gave evidence about the process she had engaged in to satisfy herself about the correct quantum of the debt. She relied on the Centrelink computer program and also undertook some aspects of the process manually. She took me to various claim forms completed by Mr Wykes. For the corresponding period she also took me to the records of employers as to amounts paid to Mr Wykes and the exact days he worked to which the payments related. This then facilitated a direct comparison between the amounts declared by Mr Wykes in each form and the amount actually earned during each period.
16. Tables were also produced to demonstrate the effect of earnings on entitlement to Newstart allowance. I was also referred to the calculator which demonstrated the earnings level above which no Newstart allowance was payable at all.
17. I was then referred to calculations reconciling the entitlement to Newstart allowance against what was actually paid. The end result was a demonstrable overpayment of Newstart allowance of $7,214.69.
18. I am satisfied that Ms Roberts had diligently applied the correct approach to the calculation of Mr Wykes’ debt and see no reason not to accept that the debt has been correctly calculated at $7,214.69, which was reduced by the $303.45 repaid by Mr Wykes. Previous calculation of the debt had relied upon the best evidence then available. The information now available is more complete. That leaves a debt balance of $6,911.24. I therefore find there is a recoverable debt under subsection 1223(1) of the Act in that amount.
should the debt be recovered?
19. The Act makes provision in limited circumstances for debts not to be recovered. Pursuant to s1236(1A) of the Act a debt may be written off in very specific circumstances, 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.
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None of these apply to Mr Wykes.
20. A debt may be waived under s 1237A(1):
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Subject to subsection (1A), 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.
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21. For a debt to be waived under section 1237A, two conditions must be met, namely that the debt arose solely because of administrative error and, secondly that payments were received by the debtor in good faith.
was the debt solely attributable to an administrative error by the commonwealth?
22. Mr Wykes contended that the debt would not have been so large if Centrelink had properly managed his payments by correctly cross-referencing his earnings with his Centrelink payments.
23. He agreed that some fortnights he did not correctly state his earnings and, other than an explanation that he might be called late in the day to work after he had lodged his form, he did not have a satisfactory explanation for the errors.
24. He has consistently said though that he had been told by officers at Centrelink that he could “overstate” his earnings in a subsequent fortnight as a means of correcting “understatement” in the preceding fortnight. From the records, this appears to have occurred only twice out of 80 forms lodged.
25. I therefore find that the debt did not arise solely from Centrelink’s error.
26. Having come to this view it was not necessary for me to consider if the payments were received in good faith.
are there special circumstances as to why the remainder of the debt should be waived?
27. Section 1237AAD of the Act is a further provision that allows for waiver of debts in “special circumstances”:
(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.
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28. Before considering Mr Wykes’ circumstances I must be satisfied that he is not precluded from consideration by s1237AAD(a). Centrelink submitted that Mr Wykes had intentionally manipulated the statements of his earnings so that he had only overstated his income on occasions when he was already over the permissible level, and further earnings would not in those circumstances cause him further detriment. I do not accept that there was evidence that he intentionally or deliberately failed to comply with his obligations: inadvertent or unintentional failure does not constitute “knowingly” (Re Saunders and Secretary, Department of Family and Community Services (1999) 57 ALD 495 at 499).
29. Financial hardship alone will not suffice to amount to special circumstances that make it desirable to waive the debt. The Act however provides no guidance as to the meaning of the term “special circumstances” in that provision. In Beadle v Director-General of Social Security (1985) 7 ALD 670, the Full Federal Court stated that it was not possible to lay down precise limits or precise rules (at p 674) for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss” (at p674). There the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security (1984) 6 ALD 1) where (at p3) the Tribunal had acknowledged that the term was “incapable of precise or exhaustive definition” and that, to be special, the circumstances “must have a particular quality of unusualness that permits them to be described as special” (at p3). See also Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 per Besanko J at [33].
30. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle’s case, observed (at p545) that special circumstances:
… would require something to distinguish... [the] … case from others, to take it out of the usual or ordinary case. …It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
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31. Evidence was given about several aspects of Mr Wykes’ personal circumstances that were said to be “special”.
32. Mr Wykes has been in receipt of Newstart Allowance again since 25 January 2009. He is repaying his Newstart Allowance debt at the rate of $50 per fortnight while he was working, and now by way of withholdings of $15 each fortnight from his Newstart Allowance. To date Mr Wykes has repaid $4,749.02. Mr Wykes owns his own home and car and has no dependants.
33. Mr Wykes produced a report from his treating psychologist, Belynda Stephen, to the effect that he was diagnosed with depression in December 2008 with symptoms that have increased over the last three years. He is currently taking medication and engaging in fortnightly psychological counselling. A Job Capacity Assessment report completed on 12 May 2009 to the same effect was also available. Mr Wykes has been advised to reduce his intake of alcohol, which has now decreased to four to six drinks per day.
34. The Respondent acknowledged that this matter has a long history, however it is clear that Mr Wykes has been overpaid Newstart Allowance, and it has taken some time obtain accurate information about Mr Wykes’ income from his employers.
35. Centrelink contended that although Mr Wykes is currently incapacitated for work, he is receiving Newstart Allowance payments and so while receiving less income than he is used to, his situation is not noticeably different from that of other social security recipients.
36. Mr Wykes said that he has been disadvantaged because he followed the instructions of Centrelink staff to complete his fortnightly Application for Payment of Newstart Allowance forms by declaring his income when he received it rather than when he earned it. The Respondent points out that the fortnightly Application for Payment of Newstart Allowance forms all ask, “What were your earnings BEFORE tax or other deductions? (“You must tell us even if you have not been paid yet”). The Respondent submits that the information on the forms is clear as to how income is to be declared.
37. Mr Wykes was questioned by the SSAT about obvious discrepancies between the income he earned and the income he declared in the fortnight 11 August 2005 and Wednesday 24 August 2005 (T61/236, paragraph 16, SSAT decision of 9 May 2007). Mr Wykes’ Application for Payment for Newstart Allowance form for this fortnight is at T93/384-385 and information about Mr Wykes’ pay is at T85/342. Mr Wykes did not declare any income and it is clear that this was not the result of Mr Wykes declaring his income when it was received rather than when it was earned. For example, Mr Wykes’ pay fortnight ended on 21 August 2005 (T85/342). If it was the case that he had not been paid for the fortnight ending 21 August 2005 when he lodged his fortnightly form on 24 August 2005, one would expect him to have declared the income he earned the previous week, ending 14 August 2005 (Mr Wykes worked 22 hours in the week ending 14 August 2005). It is the Respondent’s contention that Mr Wykes’ claim that he was completing his fortnightly forms in the way he was told to by Centrelink staff cannot be accepted as a special circumstance warranting some or all of this debt being waived. Mr Wykes failed to declare income in fortnights in which it was clear that he would have received payment from employment. On other occasions Mr Wykes both under and over declared income.
conclusion
38. Each matter is different.
39. On the one hand, the starting premise is that taxpayers are entitled to expect that, in the ordinary course, money paid to Centrelink beneficiaries to which they are not entitled will be recovered: Secretary, Department of Social Security v Hales (1998) 82 FCR 154. That approach was adopted in Davy v Secretary, Department of Employment & Workplace Relations (2007) 94 ALD 693 at 716.
40. On the other hand, I accept that Mr Wykes has had a long and frustrating period of time trying to ascertain precisely where he stands with Centrelink. I accept that this has caused him considerable stress and I accept the medical evidence that this matter is largely responsible for his psychological problems. It may even have contributed to his loss of employment and the recent breakdown of his relationship, as he contended. I accept that he has no confidence in the way the debt was calculated, especially because it had been recalculated at least three times and on each occasion the figure had varied. While there may have been a logical explanation, such a course does not inspire confidence. Centrelink beneficiaries are entitled to be confident that the information provided to them by Centrelink is accurate. It was only through his perseverance that there can now be any confidence that the amount currently identified as the debt amount is correct. Mr Wykes did not deny he had been overpaid by Centrelink and consistently stated his preparedness to repay the debt. It is unfortunate that his true indebtedness was not identified sooner.
decision
41. I have come to the conclusion that Mr Wykes’ circumstances, taken together, are sufficiently unusual or unfair that would justify a waiver of some of the debt under s1237AAD of the Act. The debt of $6,911.24 is waived to the extent of $1081.11, and is therefore reduced to $5,830.13. I am informed that as at 12 June 2009 Mr Wykes‘ debt to Centrelink is in the amount of $2,162.22. The effect of this decision is to reduce the amount presently to be repaid by Mr Wykes to Centrelink by half.
I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member.
Signed: .............................[sgd]...............................................
Renee Wallace, AssociateDate of Hearing 15 June 2009
Date of Decision 2 July 2009
Appearance for the Applicant Mr TrappelAdvocate for the Respondent Ms H Schuster, Centrelink Legal Services
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