Nolan; Secretary, Department of Education, Employment and Workplace Relations and [2010] AATA 769 (14 September 2010)

Last Updated: 7 October 2010

Administrative Appeals Tribunal

ORAL DECISION AND REASONS FOR DECISION [2010] AATA 769

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/2162

GENERAL ADMINISTRATIVE DIVISION		)
	Re		SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

And

CORAL NOLAN

Respondent

ORAL DECISION

TRIBUNAL: M J Carstairs, Senior Member

DATE: 14 September 2010

PLACE: Brisbane

DECISION

The Tribunal sets aside that part of the Social Security Appeals Tribunal decision that sent the matter back for reconsideration and directed that the Secretary refund to Coral Nolan $10,339.81 previously recovered under garnishee notice.

.......................[Sgd]............................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Parenting payment – Overpayment – Applicant failed to enter into reasonable arrangement to repay debt – Garnishee of settlement moneys – Garnishee action appropriate in circumstances – Decision under review set aside in part.

JURISDICTION – Social Security – Overpayment – Garnishee powers – Social Security Appeals Tribunal has limited powers of review – Review powers of Administrative Appeals Tribunal therefore similarly limited – Legality of garnishee action reviewable – Merits review of garnishee action not allowed – Binding direction of Social Security Appeals Tribunal beyond power.

Social Security Act 1991 (Cth), ss 1230, 1230C, 1233, 1234

Social Security (Administration) Act 1999 (Cth), ss 151, 179

Walker v Secretary, Department of Social Security (No 2) (1997) 75 FCR 493

REASONS FOR ORAL DECISION

7 October 2010

M J Carstairs, Senior Member

1. Coral Nolan was employed while being paid parenting payment. Centrelink raised debts against her, in 2007 and 2009, because her full earnings from employment were not taken into account when determining the rate of her parenting payment. That is, she was overpaid. Recovery of the debts was effected by withholdings (most recently at the rate of $25 per fortnight) from Ms Nolan’s social security payments.
2. Ms Nolan settled a compensation claim against Woolworths Limited on 17 September 2009, from which she would receive $90,000. From that sum, Centrelink decided to recover the balance of the debts owing ($10,339.81) by way of garnishee.
3. The Social Security Appeals Tribunal confirmed the correctness of the debts raised against Ms Nolan, but concluded that Centrelink’s action to garnishee some of her settlement moneys was wrongly taken, not being in accordance with the provisions of the Social Security Act 1991 (“the Act”). The effect of the Social Security Appeals Tribunal decision was to direct Centrelink to return to Ms Nolan the money recovered under the garnishee order.
4. The Secretary now challenges the Social Security Appeals Tribunal decision, contending that that Tribunal erroneously set aside the garnishee order. The correctness of the debts is not in issue.
5. As the terms of the Social Security Appeals Tribunal decision are pivotal here, it is appropriate to set out what was said. The Social Security Appeals Tribunal decision, having affirmed those matters that went to the raising and recovery of the two debts, then:

... set aside the third decision under review and ... [sent] the matter back for reconsideration in accordance with a direction that the amount of $10,339.81 previously recovered by way of garnishee be refunded to Mrs Nolan.

6. The Social Security Appeals Tribunal decision, requiring the refund to Ms Nolan, has been stayed pending the hearing and determination of the matter here.
7. The Secretary raises two grounds in seeking review of that decision:
   • Firstly, that the Secretary was not impeded from proceeding to issue a garnishee notice, having terminated the existing arrangement that was in place for recovery from Ms Nolan (under s 1234(4)(c) of the Act); and
   • If this was not the case (and an effective arrangement continued), Ms Nolan had failed to enter into a “reasonable arrangement” to repay the debt (s 1230C(2)(b)(i) of the Act) and so the power to garnishee was activated.
8. This application for review squarely raises the proper application of these provisions of the Act, so it is as well to set out the legislation in some detail.

LEGISLATION

9. As a first matter, it is important to appreciate that the Social Security Appeals Tribunal (and, accordingly, this Tribunal)[1] has a limited power of review of the Secretary’s decisions exercising the garnishee powers under s 1233 of the Act. The limitations imposed on the exercise of the review power have the consequence that the review is not one of full merits review. So much is made plain by s 151(1) and (2) of the Social Security (Administration) Act (1999):

(1)  Subject to subsection (2), the SSAT may, for the purpose of reviewing a decision under the social security law, exercise all the powers and discretions that are conferred by the social security law on the Secretary.
(2)  The reference in subsection (1) to powers and discretions conferred by the social security law does not include a reference to a power or discretion conferred by:
...
(c) section 1233 of the 1991 Act;

10. Ms Hamilton, for the Secretary, submitted that it was open to the Social Security Appeals Tribunal to examine the legality of the garnishee but not to trespass on the merits. She suggested that by directing the refund of the garnishee moneys, the Social Security Appeals Tribunal may have been trespassing on to merits review. However Ms Hamilton did not put this as the Secretary’s primary submission.
11. I would simply observe here that I would have set aside the decision under review based solely on the view that I take of the Social Security Appeals Tribunal’s powers. It seems to me that the Full Federal Court decision in Walker v Secretary, Department of Social Security (No 2) (1997) 75 FCR 493 at 505-6 makes that plain:

This suggests that, in reviewing a decision to which s 1253(4) applies, the SSAT can properly determine that a power or discretion conferred by s 1233 has been erroneously exercised and can, accordingly, set that decision aside pursuant to s 1253(1)(c). But insofar as s 1253(4)(f) denies the SSAT power to exercise for itself the powers and discretions conferred by s 1233 on the original decision-maker, the SSAT could not substitute a new decision of its own for a decision determined by it to have been erroneous. Nor can s 1253(4)(f) be interpreted as permitting the SSAT to send a matter back for reconsideration with "directions", that is, binding directions; that, as the learned primary judge said, would be to permit the SSAT to do indirectly what s 1253(4) prevents it doing directly. See also Minister for Immigration and Ethnic Affairs v Pochi [1981] HCA 58; (1981) 149 CLR 139 at 142. The next question is whether the SSAT could send the matter back for reconsideration with "recommendations", that is, non-binding recommendations. The position of a decision-maker to whom a matter is remitted for consideration with non-binding recommendations under a provision such as s 1253(1)(c)(ii) can, we think, be taken to be that which the High Court in Pochi at 143 said the Minister was in, when the AAT remitted a matter for his reconsideration in accordance with its recommendations under the legislation then in force governing migration appeals to that tribunal:
"Although the Minister would be obliged to reconsider the matter, he would not be bound to exclude from his consideration evidence which the Tribunal ... considered was of insufficient probative value, or to give weight to material which the Tribunal ... considered to be of decisive importance. He would not be required to accept as correct any views as to the facts, or as to the weight of the evidentiary material, expressed by the Tribunal ... he would merely be required to have regard to the Tribunal's recommendation."
If the SSAT were to set aside a decision under s 1233 and send it back to the Secretary for reconsideration in accordance with non-binding recommendations, that would not, we think, involve anything prohibited by s 1253(4): if the SSAT did that, it could not be said to be exercising any of the powers or discretions conferred on the original decision-maker. Pochi shows that such a limited power cannot be dismissed as lacking any utility. There is therefore no good reason why s 1253(3) and (4) should not be read as conferring such a power on the SSAT.

 

12. It does not seem to me that there has been any relevant amendment to the review powers of the Social Security Appeals Tribunal or this Tribunal to detract from the correctness of the Court’s observations above. As I read the wording of the Social Security Appeals Tribunal decision, the direction to return the garnished money to Ms Nolan was a direction binding on the Secretary—and so in breach of the limited review power, even if couched in the language of “sending the matter back for reconsideration” which, taken on its own, would be acceptable.
13. However in deference to the Secretary’s submissions, I will turn to the nub of the argument as pressed by Ms Hamilton. It went roughly thus:
    • Ms Nolan’s financial circumstances changed substantially when she became entitled to the settlement moneys.
    • Centrelink carried out the necessary attempts to contact her on the day of the garnishee but was unsuccessful. In the event the garnishee notice was issued by letter to Ms Nolan, and to Woolworths under s 1233 of the Act.
    • By garnisheeing a proportion of the compensation money all the debt was recovered. In contrast, if Centrelink had continued to withhold $25 per fortnight from Ms Nolan’s social security payments, it would have taken some 16 years to recover the money.
14. I heard evidence from Mr Roger Bishop, a recovery officer within the Centrelink Debt Recovery Unit. He said that Centrelink expects debts to be repaid within a minimum time and that there are several mechanisms for ensuring this occurs, including by withholdings and voluntary reductions. Where withholdings are taken from ongoing payments, it would most usually be at the rate of 15% of the payment due. Mr Bishop explained that people are informed that if their circumstances change then they must tell Centrelink. Mr Bishop also said that withholdings are considered to be “an arrangement”.
15. Mr Bishop also explained that if a compensation action is on foot then the Centrelink Debt Recovery Unit is notified, and must then make two “genuine” efforts to contact the person on whatever phone numbers that person has provided. He said that if the person, once contacted, raised matters such as severe financial hardship then such matters would be taken into account. If they owed other major debts, that too would be taken into account. As Mr Bishop put it, Centrelink does not stand ahead of other creditors and an attempt would be made to work out a suitable repayment rate.
16. Mr Jamie Foulston, another debt recovery officer, also gave evidence, in which he stated that Centrelink policy requires a garnishee action with respect to compensation settlements to be taken quickly, within four hours of the decision to do so. This urgency is accounted for by the fact that, after four hours, the notice to the insurer to release the funds must be sent or the opportunity for the garnishee will have passed. In addition to using the phone numbers that Centrelink has on record for a particular recipient, Centrelink officers are required to carry out an online search through Telstra’s White Pages telephone directory to confirm that there is no other phone number available on which the customer could be contacted. In Ms Nolan’s case, these checks were carried out.[2] Mr Foulston also said that Centrelink practice is not to allow a request for review of a decision to delay recovery action.

MS NOLAN’S EVIDENCE

17. Ms Nolan gave evidence that Centrelink had only raised the second debt in August 2009, a month before the garnishee action, and that she had asked Centrelink to review not only that debt but the earlier one as well. She said she wanted a full review.
18. According to Ms Nolan, she had been told by Centrelink that the recovery action would be put on hold until the review was carried out. However, the officer who was to conduct the review went on leave. Ms Nolan was clear that this review officer was well aware that she had a compensation matter outstanding. That is, she was not withholding that information from Centrelink. She gave evidence that she told her lawyers that she had never intended to simply continue repaying at the low rate of $25 per fortnight, once she had some money. Her intention was to pay $3000, and then $100 per fortnight. She was quite prepared to pay the first debt out of the settlement moneys immediately.
19. This is supported by the letter of Ms Nolan’s solicitor to Centrelink where the solicitor questioned whether there was “any garnishee or other charge owing”.[3] It seems to me that the solicitor would only raise this point at Ms Nolan’s instigation. The garnishee action, Ms Nolan says, pre-empted her right to review of the debts.
20. In her oral evidence, Ms Nolan told me that setting the recovery amount at $25 per fortnight was worked out with a Centrelink officer over the telephone. She said that she had no idea that her compensation claim was going to settle on the day that it did. She thought the matter would go to a hearing but it settled after many hours of “wrangling” on the day of the hearing. Ms Nolan also acknowledged in cross-examination that when she had an arrangement with Centrelink to repay $60 per fortnight from the end of 2008, she had defaulted on that arrangement.

APPLICATION OF THE LAW

21. Section 1230C of the Act provides:

(1) Subject to subsection (2), a debt due to the Commonwealth under this Act is recoverable by the Commonwealth by means of one or more of the following methods: 
(a) if the person who owes the debt is receiving a social security payment–deductions from that person's social security payment;
(b) if, in respect of the debt, section 1234A applies to another person who is receiving a social security payment–deductions from that other person's social security payment;
(c) repayment by instalments under an arrangement entered into under section 1234;
(d) legal proceedings;
(e) garnishee notice.
(2) Subject to subsection (3), a debt due to the Commonwealth under this Act ... is recoverable by means of a method mentioned in paragraph (1)(d) or (e) only if the Commonwealth: 
(a) has first sought to recover the debt by means of a method mentioned in paragraph (1)(a), (b) or (c); and
(b) can establish that the person who owes the debt: 
(i) has failed to enter into a reasonable arrangement to repay the debt; or
(ii) after having entered into such an arrangement, has failed to make a particular payment in accordance with the arrangement.
 

22. The Secretary submitted that pivotal to what happened here was the operation of s 1234 of the Act, which provides:

(1) The Secretary may, on behalf of the Commonwealth, enter into an arrangement with a person under which the person is to pay a debt, owed by the person to the Commonwealth, or the outstanding amount of such a debt, in a way set out in the arrangement.
(2) An arrangement entered into under subsection (1) has effect, or is taken to have had effect, on and after the day specified in the arrangement as the day on which the arrangement commences (whether that day is the day on which the arrangement is entered into or an earlier or later day).
...
(4) The Secretary may terminate or alter an arrangement entered into under subsection (1):
(a) at the debtor's request; or
(b) after giving 28 days' notice to the debtor of the proposed termination or alteration; or
(c) without notice, if the Secretary is satisfied that the person has failed to disclose material information about his or her true capacity to repay the debt.

23. The Secretary submitted that the “arrangement” for recovery at $25 per fortnight was not reasonable in all the circumstances (s1230C(2)(b)(i) of the Act). According to the Secretary’s submission, Ms Nolan had incurred significant Centrelink debts and yet failed to initiate any contact in advance of the settlement to negotiate repayment. It was further submitted that had the recoveries continued at the rate of $25 per fortnight, it would have taken some 16 years to finalise the debt and, therefore, these were the circumstances in which the garnishee action was appropriate as providing a better balance between the interests of the taxpayer in recovering the overpaid money and any private interests of Ms Nolan.
24. I would make plain here that I do not agree that Ms Nolan failed to make contact with Centrelink when the settlement was pending. Centrelink were on notice of the compensation action: her solicitor had written mentioning possible garnishee actions, and I accept Ms Nolan’s evidence that she had discussed the debt and her pending compensation with the authorised review officer. That is, I do not agree that Ms Nolan was at fault here. However this does not alter the outcome. I regard the matter as determined by s 1230(C) of the Act, not, as the Secretary submitted, by s 1234(4)(c) of the Act.
25. As I interpret s 1230C(1)(a) and (1)(c) of the Act, there is a distinction being made between deductions by way of withholdings (from ongoing pension) under 1(a) and an instalment arrangement under (1)(c). The latter seems less apt to describe the more automatic withholdings procedure evident in Ms Nolan’s case reducing pension paid to her by Centrelink. This is reinforced by the reference in s 1230C(1)(c) to s 1234 of the Act.
26. However it is not necessary for me to decide that point. It is not necessary to enquire here whether there was “an arrangement” of the kind referred to in s 1234 of the Act, and whether that arrangement had been terminated or altered appropriately in accordance with s 1234(4) of the Act. Rather, the matter here is answered within s 1230(C)(2) of the Act without any further reference to s 1234. That is, the Commonwealth could establish—once the settlement money was due—that there was “no reasonable arrangement” to repay the debt. I was satisfied that the terms of s 1230C(2)(b)(i) were met in that Ms Nolan had failed to enter into a “reasonable arrangement” to repay the debt. (The term “arrangement” may well be used in two different senses in these sections.)
    

DECISION

27. The Tribunal sets aside that part of the Social Security Appeals Tribunal decision that sent the matter back for reconsideration and directed that the Secretary refund to Coral Nolan $10,339.81 previously recovered under garnishee notice.
    

I certify that the 27 preceding paragraphs are a true copy of the reasons for the oral decision herein of M J Carstairs, Senior Member.

Signed: ...............................[Sgd].....................................

Mátyás Kochárdy, Associate

Dates of Hearing 8 & 14 September 2010

Date of Oral Decision 14 September 2010

Date of request for Written Reasons 21 September 2010

Date of Written Reasons 7 October 2010

Solicitor for the Applicant Ms Karen Hamilton, Centrelink Advocacy Unit

The Respondent was self-represented

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[1] See Walker v Secretary, Department of Social Security (No 2) (1997) 75 FCR 493 per Drummond and Mansfield JJ at 505-6, discussing the scope of the power now to be found s 179 of the Social Security (Administration) Act 1999.
[2] Confirmed at T53, page 325.
[3] T50, page 224.