Editors --- "Debt: whether quantum correctly calculated; grounds for debt waiver; special circumstances" [2009] SocSecRpr 33; (2009) 11(3) Social Security Reporter, Article 11

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Debt: whether quantum correctly calculated; grounds for debt waiver; special circumstances

WYKES and SECRETARY TO THE DFHCSIA

(2008/4431)

Decided: 2nd July 2009 by N. Isenberg

Background

Wykes was paid newstart allowance (NSA) from 9 January 2003 until 5 January 2007. On April 2003 he started casual work. The forms completed by Wykes did not accurately reflect his earnings and he was overpaid.

On 11 September 2003 Centrelink raised a NSA debt of $303.45 for the period 19 June 2003 to 30 July 2003. Wykes repaid the debt in full on 13 October 2003.

On 6 September 2006 Centrelink raised a NSA debt of $6,902.83 for the period 24 April 2003 to 17 May 2006. Wykes sought internal review and then review by the SSAT of that debt. On 9 May 2007 the SSAT remitted the matter with a direction for Centrelink to recalculate the debt because Centrelink’s method of calculation may have created ‘peaks and troughs’ of earnings. Centrelink had apportioned Wykes’ income in the fortnight it was received, rather than when it was earned.

Following the SSAT decision on 9 May 2007, Centrelink recalculated the debt by apportioning income over three days per week on the basis that Wykes told the SSAT he worked three days per week (Wykes’ denied at the AAT that he ever said this occurred with regularity). The debt raised as a result of the new calculation was $7,135.55.

On 12 September 2007 a Centrelink Authorised Review Officer (ARO) recalculated the debt in two ways resulting in a debt totalling $11,174.38 or alternatively $6,478.20.

Finally, Centrelink obtained information from Wykes’ employers about the actual days worked. Based on this information the debt was recalculated to $7,214.69 minus $303.45 paid on 13 October 2003. The total net debt was found to be $6,911.24.

Wykes sought review of the SSAT decision of 25 August 2008 affirming Centrelink’s decision to recover a NSA debt of $6,911.24 for the period 24 April 2003 to 17 May 2006.

Issues

The issues in this case were:

a) did Centrelink correctly calculate the quantum of debt for the period 24 April 2003 to 17 May 2006?

b) did any grounds exist to waive all or part of the debt?

Quantum of the debt

The AAT interrogated Centrelink’s final method of calculation thoroughly because the main thrust of Wykes’ submissions was that he had no con-fidence in the way the debt was calculated. The AAT was satisfied that the ARO had ‘diligently applied the correct approach’ and had correctly calculated the debt using the more complete information from Wykes’ employers.

Waiver

The AAT considered ‘write off’ pursuant to s1236 (1A) of the Social Security Act 1991 (‘the Act’) not applicable and turned to a consideration of sole administrative error for the purposes of waiver under s.1237A (1). Wykes argued that the debt would have been reduced if Centrelink had correctly cross-referenced his earnings with his Centrelink payments. Wykes agreed that he did not correctly state his earnings. He argued, however, that he was told by Centrelink that he could ‘overstate’ his income in a fortnightly pay period to correct an ‘understatement’ in the previous fortnight. However, a finding was made that the debt did not arise solely from Centrelink’s error.

The discussion then turned to ‘special circumstances’ under s.1237AAD and whether waiver was precluded by s. 1237AAD (a) in relation to ‘knowingly’ making false statements. Centrelink argued that Wykes had intentionally manipulated the statements of earnings so that he only overstated his income when he was already over the permissible level of income. The AAT did not accept that there was evidence that Wykes ‘intentionally or deliberately failed to comply with his obligations’ and relied on Saunders and Secretary, Department of Family and Community Services [1999] AATA 952; (1999) 57 ALD 495 at 499 that inadvertent or unintentional failure does not constitute ‘knowingly’.

The next point was whether there were ‘special circumstances’ in Wykes’ case that warranted waiver in full or in part. The AAT noted that financial hardship would not suffice to waive the debt. The AAT then looked for guidance as to the meaning of ‘special circumstances’ canvassing Beadle and Director-General of Social Security (1986) ALD 1 where it was said at p. 3 that the term was ‘incapable of precise or exhaustive definition’. Groth v Secretary, Department of Social Security (1995) 40 ALD 451 was cited at p. 545 where it states that: ‘.....if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.’

The AAT found that Wykes’ personal circumstances were special. It accepted that this matter had caused him considerable stress and that the medical evidence showed that ‘this matter is largely responsible for his psychological problems’ (Reasons, para. 40). It might also have caused his loss of employment and his relationship breakdown.

The AAT went on to say that ‘Centrelink beneficiaries are entitled to be confident that the information provided to them by Centrelink is accurate’. Wykes did not deny the debt and consistently said he would repay it. It was only through Wykes’ persistence that there could be any confidence in the amount as finally calculated by Centrelink.

The AAT noted that Wykes had paid much of the debt and as at 12 June 2009 the debt was in the amount of $2,162.22. The AAT decided to waive $1,081.11 which was half of what Wykes had left to pay.

Formal decision

The decision under review was set aside. The debt of $6,911.24 was waived to the extent of $1,081.11, and therefore reduced to $5,830.13.

[M.O’H.]