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It is an offence under Section 135.2 of the Criminal Code Act (Cth) 1995 to obtain a financial advantage by deception from a Commonwealth Entity. This section is normally relied upon by the Commonwealth Department of Prosecutions to support criminal action being taken against people who wrongly declare information to Centrelink and receive an overpayment of entitlements.

Section 135.2 sets out that a person is guilty of an offence if:

  1. the person engages in conduct;
  2. as result of that conduct, the person obtains a financial advantage for himself or herself from another person;
  3. the person knows or believes that he or she is not eligible to receive that financial advantage; or
  4. the other person is a Commonwealth entity.

In many cases, people receiving Centrelink benefits are required to report their income on a fortnightly basis. If they wrongfully report their income then this can satisfy the “conduct” required under Section 135.2.

The High Court challenge relates to cases where a person is not required to report fortnightly.  In many cases Centrelink does not require a person to report unless there is a “change in their circumstances”.

This means the “conduct” giving rise to the offence does not normally involve actively giving false information. It will normally involve the omission, or failure to call Centrelink and report a change.

Generally speaking, there are only limited circumstances where a criminal conviction can be committed by an omission, that is the failure to do something.

On 26 October 2011, the High Court delivered a decision in the matter of CDPP v Poniatowska (2011) HCA 43. The High Court in that matter determined that it is an offence under Section 135.2(1) of the Criminal Code Act 1995 if a person by an omission has obtained a financial advantage. However, and very importantly, that omission must be an omission to perform an act that the person is under a legal obligation to perform.

The Majority stated at paragraph 29 “that the Code incorporates the general law principle that criminal liability does not attach to an omission, save the omission of an act that a person is under a legal obligation to perform”.

Before the decision of the High Court in Poniatowska there was not a clear legal obligation to inform Centrelink of a “change in circumstances”.

This meant that ultimately the High Court found that as the obligation to inform Centrelink was not a clear legal obligation, people could not be prosecuted for the failure to perform this obligation.

The High Court decision in Poniatowska meant that the law, as it stood at that time, was that Centrelink could not validly prosecute people for overpayments of entitlements that came from the failure to report a change in circumstances.

Not to be outdone, the Government, having realised that the law was inadequate, simply changed the law. Seeing the writing on the wall, the Government even moved to change the law before the High Court had made their decision.

In a dissenting judgment, Heydon J noted:

“It is common for the decisions of courts to be reversed by the legislature after they have been delivered.  It is less common for this to take place even before they have been delivered”.

Interestingly, and very importantly, the legislature not only changed the law, but backdated those changes to cover up the past inadequacies in Centrelink prosecutions.

On 4 August 2011, Centrelink introduced retrospective amendments to the Social Security (Administration) Act 1999 which inserted a legal obligation under Section 66A of that Act.

The new section 66A of the Social Security (Administration) Act creates a legal obligation for Centrelink recipients to inform Centrelink within 14 days of events or changes of circumstances that might affect their payment.

The changes to the legislation came into effect from 4 August 2011. This means there is likely to be no difficulty with prosecuting offences which occur after that date.  This is because from 4 August 2011 there is a clear legal obligation to report changes under Section 66A of the Social Security (Administration) Act 1999.

However, the government also sought to enact the changes retrospectively. This means they were backdated to 2000 to capture previous Centrelink prosecutions.

The backdating of these changes was challenged in the High Court matter of CBPP v Keating.

In that case the High Court held that the retrospective enactment of section 66A of the Social Security (Administration) Act were not constitutionally valid. This means that Centrelink prosecutions which were reliant on section 66A of the Social Security (Administration) Act may be in jeopardy.

However, one final twist was added by the High Court.

Under section 67(2) of the Social Security (Administration) Act, Centrelink may give a notice in writing to a claimant for a social security payment requiring the person to inform the Department if a specified event or change of circumstances occurs, or if the claimant becomes aware that a specified event or change of circumstances is likely to occur. There are a number of requirements set out in the legislation as to what also needs to be included in the notice.

The High Court held that if a valid notice was served under Section 67(2) of the Social Security (Administration) Act then this could still create a legal obligation that could lead to prosecution if breached.

The effect of the recent High Court decision is that many Centrelink prosecutions before August 2011 remain in doubt. If a valid notice was issued under Section 67(2) of the Social Security (Administration) Act then a criminal offence may arise from the failure to notify Centrelink of a change in circumstances. However, in the absence of such a notice being provided, it is likely that many previous prosecutions may become invalid.

This article was written by the Kells Criminal Law Team.