Ministers and officials named in updated robo-debt class action claim

The class action lawsuit brought on by Gordon Legal against the Commonwealth of Australia in relation to the Centrelink Online Compliance Intervention (OCI) scheme, colloquially known as robo-debt, was scheduled to begin 21 September 2020, but the trial was pushed out to allow the applicants to file an amended statement of claim.

In the amended statement of claim, Gordon Legal has alleged two Australian ministers and a handful of government officials had knowledge robo-debt was causing harm to vulnerable Centrelink customers.

The Department of Human Services, now Services Australia, kicked off the data-matching program of work in 2016, which saw the automatic issuing of debt notices to those in receipt of welfare payments through the Centrelink scheme. 

From 1 July 2016 through 31 August 2019, Centrelink's OCI program saw 1,159,662 assessments be initiated using the automated data-matching technique.

The amended statement alleges that former Minister for Human Services Alan Tudge was aware robo-debt notifications contained errors on the department's part.

The amendment also alleges that the Commonwealth knew about the vulnerability status of its customers as the knowledge could be inferred from the eligibility criteria for receiving financial assistance. It added that any recovery by the Commonwealth of an asserted overpayment could cause significant financial hardship.

In addition, the claim alleges that the department knew its fortnightly averaging practices were erroneous back in February 2015 and that in March 2017, Tudge was told 33% of robo-debts "were changed to AU$0 on review".

According to the applicants, two department officials -- Social Services chief operating officer Annette Musolino and Malisa Golightly, who is currently Deputy Secretary Immigration and Settlement Services at the Department of Home Affairs -- were allegedly made aware in March 2017 of a draft recommendation by the Ombudsman in relation to the OCI system that the Commonwealth "should … give further consideration as to how to mitigate the risk of possible over-recovery of debts".

The claim said the two officials allegedly never sought to dispute or qualify that recommendation, and neither did Tudge, when he was told of the same in April.

The claim further accuses the department of being told on 76 occasions by the Administrative Appeals Tribunal (AAT) that Centrelink robo-debts had been set aside on the basis that the fortnightly income assumption could not lawfully support the existence of a debt. The applicants allege the Commonwealth acted unlawfully in determining and asserting any debt overpayment, in requesting or demanding repayment, and recovering the asserted debt.

"The Commonwealth had and has no statutory or other power to raise and recover or seek to recover any Asserted Overpayment Debt, or impose any penalty thereon, in respect of any Applicant or Group Member," the claim reads.

"The Commonwealth knew of these matters (including their unlawfulness) because: It was party to Administrative Appeals Tribunal reviews in which Asserted Overpayment and which it elected not to appeal or have reviewed (AAT Unlawful Debt Decisions), including the 76 decisions," it adds.

The amended claim lists dozens of situations where customers were threatening self-harm or even suicide in response to receiving a debt letter. It also alleges that Tudge in July 2017 was told a "DHS recipient took their own life" following receipt of a robo-debt notification.

Tudge ended his tenure as Human Services minister in December 2017 and is currently Minister for Population, Cities and Urban Infrastructure.  

The claim also accuses former Minister for Families and Social Services Paul Fletcher of having knowledge that a certain ATO payment differential was not an overpayment.

Gordon Legal launched the robo-debt class action in November last year on behalf of five representative applicants and hundreds of thousands of people who are included in the case as group members.

The essence of the applicants' case is that debts raised by robo-debt are unlawful, and all recipients should be compensated by the federal government. Gordon Legal was previously seeking interest payments and damages, but is now asking for exemplary damages due to the government's continued running of the scheme in light of its new claims.

Instead of the class action kicking off on Monday, another case management hearing was heard instead to discuss the amended claim. The Commonwealth, represented by Michael Hodge QC, said the applicants were "trying to run a case which is outside the pleaded case".

"They haven't pleaded either knowledge or reckless indifference in relation to actual unlawfulness. They pleaded knowledge of other things in relation to minister Tudge," Hodge said.

During the hearing, Justice Bernard Murphy said that given Hodge's strong focus on the allegations made against Tudge, over the other new claims, the judge noted that "likely there was some substance in the complaint, otherwise [Hodge] wouldn't have pushed it as hard as [he did]".

"I'm becoming frustrated with the pleadings fight in this case. I'm frustrated with both sides … on the applicants' side, the pleading has moved around; it wasn't adequately particularised … I suspect when you are confronted with Mr Hodge's complaints about your submissions that you'll find some of them are outside the pleaded case," Murphy said.

"From Mr Hodge's side, there's a fair bit of strategy going on in all of this … my focus is on giving both parties a fair opportunity to put their case and to make sure the respondent understands the case that's being brought against it.

"This affects hundreds and thousands of people."

Representatives for the Commonwealth will have until Friday to provide a list of issues it has regarding the amended statement of claim, while the applicants will have until October 2 to respond. In the interim, another case management hearing has been set for Thursday.

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