Editors --- "Debt recovery: garnishee" [2010] SocSecRpr 58; (2010) 12(4) Social Security Reporter, Article 13

• SECRETARY TO THE DEEWR and NOLAN
• Background
• Issue
• Relevant legislation
• Discussion
• Formal decision

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Debt recovery: garnishee

SECRETARY TO THE DEEWR and NOLAN

(2010/769)

Decided: 14th September 2010 by M. Carstairs

Background

In 2007 and 2009, Centrelink raised debts against Nolan, which arose from a failure by Nolan to declare the full amount of her earnings from employment to Centrelink. The debts were being recovered by way of withholdings of $25 per fortnight from Nolan’s ongoing social security benefits.

On 17 September 2009, Nolan settled a compensation claim against Wool-worths Limited, from which she was to receive $90,000. From that sum, Centrelink decided to recover the bal-ance of the debts owing by Nolan ($10,339.81) by way of a garnishee.

Nolan appealed this decision to the SSAT. The SSAT affirmed the correctness of the debts, but concluded that Centrelink’s action to garnishee some of the settlement monies was wrongly taken. The SSAT set aside the decision and, in effect, directed Centrelink to return the monies recovered by the garnishee notice to Nolan. The Secretary applied to the AAT for a review of the SSAT’s decision.

Issue

The issue in this case was the extent of the SSAT and AAT’s powers of review of a decision to issue a garnishee notice.

Relevant legislation

Sections 1230C, 1233, 1234 of the Social Security Act 1991 Section 151 of the Social Security (Administration) Act 1999

Discussion

The AAT found that, having regard to s.151 of the Social Security (Administration) Act 1999 and the decision of the Full Federal Court in Walker v Secretary, Department of Social Security (1997) 75 FCR 493 at 505-6, the powers of the SSAT and AAT to review a decision to issue a garnishee notice are limited. The tribunals cannot substitute their own decision on a review, as their powers are limited to reviewing whether the power was validly exercised. The AAT considered that the SSAT’s decision that the Secretary should return the garnisheed monies to Nolan, even if couched in the language of ‘sending the matter back for reconsideration’, exceeded the Tribunal’s limited review powers and amounted to the substitution of a binding decision for the decision under review.

However, the Secretary had not argued the matter on this basis and the Tribunal proceeded to consider the Secretary’s arguments as to the validity of the decision to issue the garnishee notice.

The AAT concluded that, once Nolan’s settlement monies were due, the existing withholding arrangement (of $25 per fortnight) was no longer a ‘reasonable arrangement’ for the repayment of the debts, as it would take over 16 years to recover the debts pursuant to this arrangement. As the withholdings arrangement was not a ‘reasonable arrangement’, the AAT found that the power to issue a garnishee notice was validly exercised pursuant to s.1230C(2) (b)(i).

Whilst not deciding the issue, the AAT made some observations about whether an arrangement to recover a debt by way of withholdings from a recipient’s ongoing payments is an arrangement to repay the debt by instalments for the purposes of ss.1230C(1)(c) and 1234 of the Social Security Act 1991.

The AAT considered that there is a distinction being made in ss.1230(1) (a) and 1230(1)(c) of the Act between recovery of debts by way of withholdings from ongoing benefits and recovery by an instalment arrangement. The AAT considered that the reference in s.1230(1) (c) to s.1234 could be interpreted as an intention to distinguish withholding arrangements from other payment arrangements. On such an interpretation, the Secretary could terminate or alter a withholding arrangement without being bound by the requirements of s.1234(4) (which include a requirement to give notice of the termination or alteration to the arrangement).

Formal decision

The AAT set aside the decision of the SSAT in relation to the return of the garnished monies.

[S.O.]