Are robodebts that were waived before the FCA settlement refundable?
What if a robodebt potentially subject to a refund under the terms of the yet-to-be-FCA-approved class action settlement has been waived?
At some point in the future, I will dig into the terms and law of the robodebt settlement1 in the Federal Court of Australia (FCA) in a fastidious way.
The settlement has not yet been approved by the FCA, so, for now, it is still being determined. Submissions are being solicited from robodebt class action members with respect to whether the FCA should or should not approve the settlement. The representative of the class action members opposed to the settlement will be presented by a contradictor. Contradictors tend to be appointed in circumstances where the court is concerned about aspects of the proposed settlement.
For the moment, I just want to make a few notes, and put an idea down on paper. That idea is expressed in the title to this post. The question is whether a robodebt can be refunded where that particular debt constituting the robodebt has already been subject to an AAT decision that has determined that the debt should be waived or partially waived.
I can illustrate a circumstance with an example.
A typical case: Jim the robodebtor
Jim was allegedly overpaid $10,000 Youth Allowance between 2016 and 2018 because he did not report all his income. Jim found this out when Centrelink sent Jim a debt notice in 2019 asking him to repay the alleged overpayment. Jim determined that Centrelink had made a mistake and that, if had been overpaid at all, he may have been overpaid only something like $100. Jim determined that the Agency had made a mistake. The figures just did not add up. He had not earned very much over the last three years.
After failing to have the debt reduced or waived at the ARO level (the level of internal review at Centrelink), Jim appealed to the AAT1. At the AAT1, Jim was not successful either. Jim has brought documents with him to show that the debt must be false, but they were not accepted by the ARO or AAT1. Jim then appealed to the AAT2 (general division). Before Jim’s appeal proceeding began, Jim was contacted with an offer of settlement.
A lawyer for Centrelink said that Jim would only have to pay back the $1,200 — a bit more than he suspected he could possibly owe Centrelink. In any case, Jim was willing to pay this $1,200 to the agency as it was not a lot of money compared to the $10,000 originally calculated — even if the debt was, in his opinion, wrong. Thus, over a period of some months, Jim paid the $1,200 settlement amount that was just over 10% of what Centrelink claimed he owed.
Subsequently, Jim discovered that the original $10,000 debt was calculated in a way that rendered the debt a robodebt. Although he already suspect it, this was more or less confirmed by external legal advice. The debt, Jim realised, would ordinarily be subject to a refund through the class action. However, Jim had already agreed to a partial waiver of the debt in the amount of $8,800, and he’d already paid the $1,200 amount that Centrelink claimed against him. But now Jim wants to know if he can have the waiver overturned and retrieve his $1,200. After all, now that it turns out the original debt was a robodebt, that debt is wholly invalid under the terms of the settlement.
Musings on Jim’s prospects
It was reported in the Guardian, early on in the piece, that ‘The department has already committed to reviewing existing robodebts – including those already paid back – to consider possible refunds for people whose debts were based solely on income-averaging.’
The note that the department would include alleged debts that were already ‘repaid’ would suggest that Jim’s debt would be picked up as a refundable robodebt too. After all, Jim has only repaid the debt as agreed, and this would not seem to be any worse a concession on his part than that of any other person who had repaid an alleged debt without ever having challenged it.
Another answer is suggested by the statement of claim for the plaintiff, which also featured a representative class member whose debt had already been subject to a waiver at the agency level — that is, a waiver of the otherwise applicable 10% recovery fee. This suggests that the fact of waiver on its own may not present a bar for Jim to recover under the robodebt settlement.
The purpose of this note is not to answer the questions set out at the top. The purpose is to explore it and to record it for future reference. As the settlement enters into its next stage of finalisation (the objection and contradiction process), and the FCA considers whether to approve it, just who will be included and excluded from the robodebt refund settlement will become clearer.
Katherine Prygodicz & Ors v Commonwealth of Australia, VID1252, 1 July 2020.