Raising debts associated with civil and criminal action 107-04130010

This is where civil action is used to pursue recovery. The customer has the capacity to repay but has failed to do so:

• refer the debt to a Legal Panel Provider (LPP) to issue a letter of demand
• if there is no response:
• issue a summons
• refer the debt to a court of competent jurisdiction

The court makes the Judgement against the debtor. This can include an order for interest to accrue on the balance of the debt.

Following the entering of a Judgement:

• the debt is 'in the public domain'
• the debt is published in a Gazette, and
• the debtor receives a bad credit rating which must be disclosed to financial lenders, real estate agents in rental applications etc

Once Judgement has been entered, additional steps can include:

• bankruptcy to recover the amount owing, or
• a court officer determines the ownership of the debtor's goods and chattels. This enables seizure of property/assets to the value of the debt(s), or
• taking out a voluntary mortgage (Bill of Encumbrance) on the primary property owned by the debtor

The types of Public Governance, Performance and Accountability Act 2013 (PGPA) debts which occur through civil action can include:

• court costs
• court fees
• judgement interest
• costs associated with the seizure of property etc. or a voluntary mortgage

This is where the Commonwealth Director of Public Prosecutions (CDPP) prosecutes the debtor for offences committed under:

• the Social Security Act, or
• one of the administered Acts

Prosecution action occurs when customers fraudulently obtain money where they have no entitlement.

Outcomes include:

• jail sentence for the offender
• reparation order made by the court:
• the amount paid to the department is equal to the amount of the provable offences
• in most cases this will be less than the total debt
• this is because the onus is on the amounts provable and obtained through fraud
• the reparation order is usually for a different amount to the balance of the debt(s) pecuniary penalty order
• forfeiture order
• good behaviour bond, or
• a combination of the above

This is an order that requires the customer to repay an amount that arose from the offence/s they committed.

Reparation orders:

• may not always cover the full amount of the debt
• relate to the offences relating to the prosecution

The debt balance not covered by the reparation order remains recoverable. The agency's preferred option is to leave the order open ended. This ensures the debt remains recoverable even if the court imposes a custodial sentence upon the customer for non-payment.

The Commonwealth Department of Public Prosecutions (CDPP) has responsibility for registering the order in appropriate civil jurisdiction. This is in case enforcement is necessary.

If the reparation order specifies a repayment date, legal enforcement action cannot start until after this date. The agency currently records the amount of the reparation on IMS and DMIS. This is when the court makes a reparation order against a customer.

Reparation orders for debts come under section 21B of the Crimes Act 1914. This applies to debts under:

• the Social Security Act, and
• other Administered Acts

Appeals against reparation orders are through the court system. The agency has no appeal function for reparation orders.

Reparation order under the Proceeds of Crime Act.

Reparation may also be ordered under the Proceeds of Crime Act 2002 (PoC). Recovery of this type of reparation order is not currently the agency's responsibility.

Following the issue of a PoC order, recovery and disbursement becomes the responsibility of the CDPP. Payment Assurance Operations have the responsibility of reducing the debt by the amount of the order/s. This is according to instructions from the CDPP. Services Australia should not continue to record amounts recoverable once the CDPP have advised of the PoC order.

A Forfeiture Order means assets become the property of the Commonwealth. This happens when:

• the Commonwealth Department of Public Prosecutions (CDPP) prosecutes a customer for an indictable offence, and
• they consider the customer holds assets acquired as a result of committing the offence

If a forfeiture is for a non-liquid asset, the order will specify the value of the asset.

The Commonwealth cannot dispose of the assets until:

• the customer has a conviction recorded for the offence/s and
• the appeal period has elapsed

This order is for the balance of the proceeds of the offence. The balance is when you deduct the value of any forfeiture order. You normally impose the forfeiture and pecuniary penalty orders together.

If the customer does not repay/comply and there has been a reparation order:

• The Commonwealth Department of Public Prosecutions (CDPP) registers the order in appropriate civil jurisdiction if enforcement is necessary
• This results in a Judgment order without the need to issue a Summons

Once this has been 'converted', recover the money using further steps. This includes debts incurred through successful civil action.

Prosecution can lead to debts raised under:

• Public Governance, Performance and Accountability Act 2013 (PGPA)
• Financial Management and Accountability Act 1997 (FMA)

Types of PGPA/FMA debts incurred through prosecution can include:

• court costs
• court fees, and
• fines

This is where the debtor disputes the debt and has appealed to the Administrative Review Tribunal (ART). The ART does not cost the customer anything. If there is no ART option, the dispute can go to the Federal Court or higher. This action will incur costs.

When debtors lose appeals at the Federal Court, the costs incurred by the agency are debts under the Public Governance, Performance and Accountability Act 2013 (PGPA).

These are quite separate to the original social security or administered Act debt that gave rise to the appeal.

The types of PGPA debts incurred through appeal to a higher court can include:

• court costs
• court fees

Associated legal costs are awarded to the Commonwealth.

The Resources page contains a link to:

• the Accountable Authority Instructions (AAIs) and Instrument of Financial Delegation listings and information, and
• a table of debt types for legal costs/fees