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

XSYY and Secretary, Department of Social Services (Social services second review) [2019] AATA 3942 (17 September 2019)
Division:GENERAL DIVISION
File Number(s): 2018/7295
Re:XSYY
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Mr S Evans, Member
Date:17 September 2019
Place:Sydney

The decision under review is affirmed.
...................................[sgd].....................................
Mr S Evans, Member
CATCHWORDS
SOCIAL SECURITY – Newstart payments – whether the applicant was overpaid Newstart – income incorrectly declared – whether the debt is recoverable – whether the debt should be waived or written off in part or full – no sole administrative error – applicant informed of income reporting obligations numerous times – whether special circumstances exist – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth) ss 8, 1068, 1223, 1236, 1237A, 1237AAD
Social Security (Administration) Act 1999 (Cth) ss 68, 72
CASES
Gerhardt and Department of Employment, Education and Training [1996] AATA 173
Groth v Secretary, Department of Social Security [1995] FCA 1708
Secretary, Department of Social Services v Garvey (1982) 22 FCR 132
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Skehon v Secretary, Department of Family and Community Services [2003] FCAFC 190
REASONS FOR DECISION
Mr S Evans, Member
17 September 2019
OVERVIEW

The applicant, XSYY, began receiving the Newstart Allowance (NSA) from 15 April 2011. The Secretary of the Department of Social Services (“the respondent”) has calculated that XSYY was overpaid NSA between 27 March 2012 to 8 April 2016 (the “relevant period”) and consequently owes a debt of $14,398.96 to the Commonwealth.
XSYY seeks review of a decision made by the Social Services and Child Support Division of the Tribunal (AAT1), which affirmed a decision of the respondent. He contends he was unaware he needed to declare certain types of income, that Centrelink is at fault and that the debt should be waived.
For the reasons that follow, the Tribunal affirms the decision under review.
BACKGROUND
XSYY immigrated to Australia in February 2009 and joined members of his family including his mother and brother.
He arrived as the holder of a visa which entitled him to work but payment of Centrelink benefits was subject to a two year waiting period. He testified at the Tribunal hearing that he established his eligibility for income support by attending a Centrelink office shortly after arriving in Australia. At that time he was advised to mark the date he became eligible for income support payments in his calendar. XSYY did so and was granted NSA on 15 April 2011.
On 14 June 2011 Centrelink wrote to XSYY informing him the amount of his fortnightly NSA payment, being $474.90. Amongst other information relating to his NSA, the correspondence also stated[1]:
Income has a very broad meaning for social security purposes. Some examples of income are earnings from employment …
…Did you do any work in the period? ... have you started work or your hours increased? … What work did you do? … Please complete details of all work you have done in this period. What were your earnings BEFORE tax?
[1] T-documents, p. 593.
Many letters containing the same and similar reminders accompanied by calls to action to report information were sent regularly during the period that XSYY was receiving NSA. XSYY also regularly received Income Statement letters from Centrelink which prominently displayed details of his income and assets with the instruction ‘if you believe any of these details are incorrect, please contact us.’[2]
[2] T-documents, p. 896-897.
XSYY was also sent regular requests for information titled ‘Your Reporting Statement’ during the period he was in receipt of NSA. One such letter contained in the T-documents references the period Saturday 26 November 2011 to Friday 09 December 2011[3]. It states:
1Did you do any work in the period Saturday 26 November 2011 to Friday 09 December 2011? …
2What work did you do? Please complete details of all work you have done in this period.
[3] T-documents, p. 898-891.
On 7 March 2012, XSYY started working for a university (“the university”) as a casual tutor. He would continue to do so through the relevant period.
Whilst he was receiving NSA XSYY was also the recipient of Research Training Program scholarships (“RTP scholarships”) from the university – one for the calendar year 2013 and another for 2014. In 2013 the scholarship amount was $8,000.00 and $16,006.79 the following year.
In April 2013 the Department learned through a data match that XSYY had been employed by an adult disability care facility (“the care facility”) and contacted him to confirm his employment status. During a telephone call on 10 April 2013[4] XSYY confirmed to Centrelink that he was employed by the care facility for three days in total, that he had no other employers, did not have a new employer, was not employed and understood his reporting obligations.
[4] T-documents, p. 295
On 2 January 2018 a debt was raised against XSYY for his undeclared income during the debt period and he was notified on 20 July 2018 in writing. On 20 September 2018 the debt was increased on internal review after Centrelink took into account all income from the university including the work as a causal tutor and the RTP scholarships.
During the relevant period XSYY received NSA payments totalling $55,084.07. The respondent maintains that if XSYY had declared all this income at that time he was entitled to receive $40,685.11.
The hearing
XSYY requested an interpreter be present at the hearing and one was provided but not required until proceedings were well advanced. The interpreter also provided assistance when XSYY’s mother provided evidence to the Tribunal at his request.
XSYY has provided the Tribunal with a number of character references. Character is not a consideration under the Act and the Tribunal is concerned only with assessing the applicant’s circumstances against the rules relating to NSA.
ISSUES FOR DETERMINATION
The issues for determination are whether or not:
(a)XSYY has been overpaid his entitlement to NSA between 27 March 2012 to 8 April 2016; and, if yes
(b)is the NSA Debt recoverable; and
(c)if the NSA Debt should be waived due to administrative error pursuant to section 1237A of the Social Security Act 1991 (Cth) (“the Act”); or
(d)“special circumstances” exist such that the NSA Debt should be waived pursuant to s 1237AAD of the Act.
Was XSYY overpaid his entitlement to NSA during the relevant period?
NSA is means tested via an income and an assets test in accordance with its underlying purpose as confirmed in Secretary, Department of Social Security v Garvey (1982) 22 FCR 132 at 136 ‘to maintain a basic level of income for those who are unable to receive sufficient income to provide for themselves’.
There are strict rules around the provision of NSA. The rate of NSA payable to a person is calculated using a benefit rate calculator in s1068 (Module A) of the Act.[5] Section 1068 (Module G Income Test) of the Act provides a method statement for working out the effect of the person’s income on their maximum pay rate (“Income Reduction Amount”). It is worthwhile noting in relation to Module G:
(a)The income test takes into account a person’s “ordinary income” on a fortnightly basis for the purpose of determining the person’s rate of NSA;
(b)Section 1068-G7A provides that ordinary income is to be taken into account in the fortnight in which it is first earned, derived or received; and
(c)Section 1068-G8 provides for the averaging of income where income is regularly received over periods greater than a fortnight.
XSYY’s income during the relevant period
[5] Section 643 of the Act.
“Income” within the meaning of s1068(1)(a) of the Act includes ‘an income amount earned, derived or received by the person for the person’s own use or benefit’.
XSYY was the recipient of RTP scholarships from a university in the calendar years 2013 and 2014. Of relevance here is the possible exemptions that exist in ss8(4), 8(5) or 8(8) of the Act. Section 8(8)(zjd) provides that ‘excluded amounts’ include:
(zjd) ‘a payment of a scholarship to a person during a calendar year
(i) for the person to study, or to undertake research, at an educational institution; or
(ii) for the person’s achievement in studying, or in undertaking research, at an educational institution;
to the extent that the payment does not exceed the person’s threshold amount for that year’.
As mentioned, in 2013 the awarded scholarship amount was $8,000 and $16,006.79 the following year. The threshold amount, that is the amount that can be awarded without counting as a payment (or income) under the Act under 8(8)(zjd) was $7,310.00 in 2013 and $7,485.00 in 2014.
In addition, XSYY earned ordinary income from his position as a tutor at a university where he was employed on a casual basis. The payslip history from a university[6] confirms his income from tutoring during the relevant period.
[6] T-documents, p. 254-256
The respondent contends, and the Tribunal agrees, that during the relevant period XSYY received NSA payments totalling $55,084.07 and he was entitled to receive $40,685.11. The reasons why are detailed in the Centrelink letter entitled ‘Your Review Outcome’.[7] In that letter XSYY was advised the following which I will reproduce in its entirety as it provides a comprehensive but straightforward summation of the debt and its origins in the context of his income:
The amount of income a person earns each fortnight can reduce the amount of Newstart Allowance payable for that fortnight. While you [XSYY] were working for [the university] you initially did not report your earnings and therefore your payments were not decreased. From 4 September 2013 you commenced reporting your earnings and your payments were reduced according to amounts you reported. However, according to the information now available to the department you earned more than you reported and your payments should have been reduced to a lower amount than was paid to you.
In addition to your earnings from employment with [the university] you also received Research Training Program scholarships from [the university] for the 2013 and 2014 years.
These scholarships are considered to be Equity and Merit based scholarships and therefore are partially exempt from the income assessment of Newstart Allowance. A threshold is set for each relevant year and only the amount of the scholarship paid to a person that exceeds the threshold is assessed as income and spread equally over the 12 month period.
With regard to the 2013 calendar year the threshold for exemption was $7,310.00. You received a total of $8,000.00 paid to you in two lump sums of $4,000.00 on 11 April 2013 and 12 September 2013. This means that $690.00 is required to be assessed for the period 1 January 2013 to 31 December 2013. This amount was not included in the calculation of your rate of Newstart allowance at this time.
With regard to the 2014 calendar year the threshold for exemption was $7,485.00. You received a total of $16,006.79 paid to you in fortnightly instalments for the period 1 January 2014 to 31 December 2014. This means that $8,521.97 is required to be assessed for this period. This amount was not included in the calculation of your rate of Newstart Allowance at this time.
From 17 March 2012 to 8 April 2016 you were paid a total of $55,084.07. Based on your actual earnings, I have worked out that you should have been paid $40,685.11. This means you have a debt of $14,398.96.
[7] T-documents, p. 285
As XSYY did not report his income correctly to the Department, his rate of NSA was incorrectly calculated, causing him to be paid a higher rate of NSA than what he was entitled under the Act. Based on the calculations provided by the Department I am satisfied that the amount of overpayment received by XSYY in respect to the relevant period is $14,398.96.
I have considered this issue in detail and note that XSYY contends that $5,206.88 should be deducted from the debt amount because he claims that Centrelink has made errors in its calculations. XSYY is an accountant and during the hearing he was provided an opportunity to explain to the Tribunal why he believes this amount should be deducted from the debt. Based on the evidence before the Tribunal I am not satisfied that there was an error and consequently no deduction is required.
Section 1223 of the Act provides:
(1) Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
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.
If an individual has received payments that they are not entitled to, the amount of the payments will become a debt owing to the Commonwealth. As XSYY was overpaid, I will turn to the question of the debts arising in accordance with s1223 of the Act after considering the central issue of why XSYY did not report his income as required.
XSYY’s income reporting during the relevant period
If a person becomes aware of circumstances which may affect his payment, they have a duty to advise the Department of those circumstances. If the Department requests information regarding a change in circumstances which may affect a person’s payment, including a person’s income, the person must provide that information.
Section 68 of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) provides that the Department can issue a notice to a person requiring them to notify the Department of any circumstances which may affect the payment of the Social Security benefit. The section states:
(1)Subsection (2) applies to a person to whom a social security payment (other than utilities allowance or energy supplement under Part 2.25B of the 1991 Act) is being paid.
(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a)inform the Department if:
(i) a specified event or change of circumstances occurs; or
(ii) the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c)….
Section 72 of the Administration Act provides that the person must comply within 14 days. The Tribunal agrees with the respondent that XSYY did not comply with his reporting obligations under s68(2) to the extent that he did not disclose his reportable income.
XSYY contends that he did not report all of his income during the relevant period because he was of the understanding that only income derived from ‘full time employment’ needed to be reported. He also testified that he was of the understanding that ‘casual work’ and scholarships for ‘educational purposes’ were exempt from the reporting requirements.
At the hearing XSYY testified that he maintained the misunderstanding regarding the income reporting requirements until he spoke to Centrelink on 10 April 2013. A record of this conversation is provided in the T documents.[8] XSYY was called after data matching by the Department identified that he had completed three days of work at a care facility. As referenced above, the conversation record indicates that XSYY confirmed at that time he was aware he needed to report earnings fortnightly, that he was not employed as of 10 April 2013, was aware of notification obligations and had declared his earnings correctly.
[8] T-documents, p. 295
XSYY contends that during that phone call he also asked if income derived from scholarships needed to be reported because he was expecting to receive a scholarship. He contends that he was informed that income from scholarships did not need to be reported provided it was for educational purposes.
At the hearing XSYY concurred that the record of the conversation in the T-documents was an accurate reflection of the phone call that took place on 10 April 2013 with the exception that it does not record his question and the subsequent advice provided about the scholarship income.
Some months later, on 4 September 2013 XSYY reported to the Department that he commenced employed work tutoring on 21 August 2013 on a part time or casual basis and that he had earned gross income for a fortnightly period amounting to $1099.88. He continued to report some of his income on an irregular basis from that time.
XSYY maintains that the overpayment of NSA and subsequent debt was entirely the result of his misunderstanding of his income reporting requirements and consequently the debt should be waived. He writes in his submission ‘… I was sure that any other type of work (such as part-time and casual work) is not considered full-time work and therefore should not be considered “normal work” and hence cannot be reported as income to Centrelink.”
He contends that his record of non-payment up until the phone call with Centrelink on 10 April 2013, and subsequent reporting after, should be accepted by the Tribunal as proof that he did not understand what income needed to be reported to Centrelink. Centrelink notified XSYY of his reporting requirements on many and multiple occasions prior to and throughout the relevant period. Beginning, notably, with the letter that was send to him on 14 June 2011 (p. 591) which stated, amongst other things:
Income has a very broad meaning for social security purposes. Some examples of income are earnings from employment…
XSYY says he cannot recall receiving that letter but many such reporting letters were sent to XSYY during the reporting period, including on 16 November 2011 in which his ‘Total Fortnightly Income’ is prominently displayed as $0.31. Shortly after, in November, XSYY was sent correspondence titled ‘Your Reporting Statement’ which asks ‘did you do any work in the period Saturday 12 November 2011 to Friday 25 November 2011?’ and states ‘You must tell us if … you got any other money from any other source’.
As mentioned previously XSYY received similar notifications on many occasions from Centrelink prior to and during the relevant period. He claims that his understanding of what constitutes reportable income and what does not was formed in part by his time in Egypt where, he says, there is no comparable system of income support.
XSYY writes in a submission to the Tribunal[9]:
I believe I have provided significant and powerful evidence that support[s] that… the debt is attributable solely to an administrative error made by the Commonwealth… as evidenced by the calculations that shows my consistent reporting of income form casual work, not reporting scholarship [sic] at [a university]… All this proves that I was given wrong information by a Centrelink representative…
Also the debt is attributable solely to an administrative error, because it has been the responsibility of Centrelink staff to explain to me as an immigrant from non-English background that casual work should be reported exactly like full-time as how can I acquire this knowledge by myself?
[9] Submission A1, p. 4-5
It may be the case that XSYY had some misconceptions about Australia’s income support and social security system. XSYY presents as a resourceful individual who confirmed he is qualified as an accountant. He also had the good sense to engage with Centrelink soon after he arrived in Australia and was able to navigate his way through the system including the period where he was ineligible for Centrelink benefits. When considered in the context of the many, clearly stated requests for him to meet the well-established and orthodox requirement to report his income to Centrelink, I find it remiss that he did not meet this obligation.

The Tribunal finds that it was as a consequence of XSYY’s failure to meet the income reporting requirements, possibly abetted by a failure to investigate the many clear indicators that he may have misunderstood those requirements, that he was overpaid NSA.
SHOULD THE DEBT BE WAIVED OR WRITTEN OFF, IN PART OR IN FULL?
There are provisions in the Act which ensure that there is room to avoid unfair or harsh outcomes including allowing for non-recovery of debts in prescribed circumstances.
In Secretary, Department of Social Security v Hales (1998) 82 FCR 154, at 155, Justice French (as he then was) stated:
From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.
Justice French identifies that the starting point for matters where payments have been made to which the recipient is not entitled is the expectation that the money will be recovered.
Section 1236 of the Act provides that a debt may be written off in the following circumstances:
(1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
There is no evidence before the Tribunal to suggest that the debt is irrecoverable and should be written off in accordance with s1236.
Waiver for sole administrative error
Section 1237A of the Act provides that the Tribunal must waive a debt when there is an administrative error if certain requirements are met:
(1)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.
Note:Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
(1A)Subsection (1) only applies if:
(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
The respondent contends that there was no administrative error on the respondent’s part. XSYY argues that the debt did arise solely due to administrative error by the Commonwealth. Specifically he contends that the error was a lack of guidance which caused him to under report his income.
In Skehon v Secretary, Department of Family and Community Services [2003] FCAFC 190, the Full Court said of “solely” in section 1237A(1):
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 and 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…
The applicant has not identified any error and there is no evidence before the Tribunal of administrative error on the part of the respondent. Ample evidence was provided, however, that XSYY did not meet his reporting requirements over an extended period of time. The applicant, in turn, argues that the cause of his error was ‘solely’ attributable to his lack of understanding of his reporting obligations and he places the blame for his lack of understanding on Centrelink.
I do not accept this argument for a variety of reasons but primarily because to do so is to disregard the information and calls to action which featured prominently in regular correspondence from Centrelink and was flagged in many customer interactions between the applicant and Centrelink.
As there is no evidence of administrative error, the debt cannot be waived under s1237A(1) of the Act.
Waiver for special circumstances
Section 1237AAD of the Act provides for waiver in special circumstances in which the Tribunal may waive the right to recover all or part of a debt. It provides:
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
In summary, s1237AAD of the Act gives the Secretary the discretion to waive a debt if there are special circumstances, other than financial hardship alone, which make it appropriate to do so. Additionally, the debtor must not have contributed to the debt by making a false statement, representation or by otherwise failing to comply with the Act or the Administration Act.
With respect to special circumstances, neither the Act nor the Administration Act defines “special circumstances”, however, the meaning has been considered by the Federal Court and the Tribunal in numerous decisions.
In Gerhardt and Department of Employment, Education and Training [1996] AATA 173 at [47], Deputy President Forgie stated:
The words ‘special circumstances’ have been considered in a number of cases in a number of contexts. These include Beadle v Director-General of Social Security (1985) 60 ALR, Secretary, Department of Social Security v Hulls (1991) 22 ALD 570, Trimboli v Secretary, Department of Social Security (1989) 86 ALR 64 and Secretary, Department of Social Security v Smith (1991) 13 AAR 454. The essence of cases such as these is that a consideration of whether or not there are special circumstances must be undertaken in the context in which the discretion is given. It is clear from Division 15 of Part 8 of the Act [Student Assistance (Youth Training Allowance) Amendment Act 1994] that the purpose of the provisions is to ensure the recovery of amounts paid under the Act to persons who are not entitled to be paid those amounts. What are special circumstances must be considered against that background. There will be special circumstances if the circumstances are such that it is unreasonable, unjust or inappropriate to recover the amount paid bearing in mind that the provisions are intended to ensure the recovery of amounts incorrectly paid…
In Groth v Secretary, Department of Social Security [1995] FCA 1708, Justice Kiefel (as she then was) stated, at [12]:
The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle’s case... and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this 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…
For the debt to be waived XSYY would need to satisfy all three criterial in s1237AAD (a), (b) and (c).
XSYY received numerous letters from the Department during the relevant period advising him of his obligations to report his income I find that XSYY does not satisfy section 1237AAD(a)(ii). Therefore this discretionary power to waive the debt on the basis on special circumstances does not apply.
CONCLUSION
XSYY maintains that the overpayment of NSA and subsequent debt was entirely the result of his misunderstanding of his income reporting requirements and consequently the debt should be waived. He writes in his submission to the Tribunal:
‘… I was sure that any other type of work (such as part-time and casual work) is not considered full-time work and therefore should not be considered “normal work” and hence cannot be reported as income to Centrelink.’[10]
[10] Submission, A2
The Tribunal does not agree. I find that XSYY failed to declare his income as required and as a consequence he was overpaid NSA and has incurred a debt to the Commonwealth of $14,398.96.
Further, I find that no special circumstances exist which would allow the debt to be waived, written off or reduced.
DECISION
The decision under review, being the decision of the Social Services and Child Support Division made 28 November 2018 confirming the debt owed by XSYY to the Commonwealth for overpayment of Newstart allowance and requirement that the debt be repaid, will be affirmed.

I certify that the preceding 64 (sixty -four) paragraphs are a true copy of the reasons for the decision herein of Mr S Evans, Member

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Associate
Dated: 17 September 2019

Date(s) of hearing: 2 August 2019

Date final submissions received: 8 May 2019

Applicant: In person

Solicitors for the Respondent: Department of Human Services

[2019] AATA 3942

17 September 2019

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Appeal

Jurisdiction

Remedies

Date(s) of hearing:	2 August 2019
Date final submissions received:	8 May 2019
Applicant:	In person
Solicitors for the Respondent:	Department of Human Services