In 2019, a class action was commenced by Katherine Prygodicz and five other applicants against the Commonwealth of Australia, the legal entity responsible for Centrelink.

The six Applicants were represented by Gordon Legal. They were people from many different walks of life who had a debt raised against them after obtaining social security benefits through Centrelink to which they were entitled.

They included former students who were on Austudy when finishing their degrees and who were subsequently working professional jobs (like teachers and nurses), people who were between jobs, or in casual work and needed unemployment benefits to tie them over for a period of time, and single parents who were trying to get their children through school and needed some financial support to do so.

All of them had a Robodebt raised against them. They worked together to challenge the lawfulness of those debts through the Courts through the first class action.

That class action was known as the Robodebt Class Action or the Prygodicz Proceeding and was the first class action in relation to Robodebt.

Amongst other things, the first class action alleged that the Commonwealth had wrongly asserted that the Applicants and Group Members had received an overpayment of their social security payments, which was recoverable as a debt. The amount of that alleged debt had been calculated based upon averaged Australian Taxation Office (ATO) income information instead of evidence of what those people had actually earned in the relevant period.

Group Members reacted differently when they had a Robodebt raised against them. Some paid the alleged debt back, some made part payments, and some did not pay anything at all. Centrelink sold some people’s alleged debts to debt collectors. For other people, their tax returns were garnished by the ATO.

The six Applicants alleged that Centrelink had no right to demand or recover any part of these Robodebt-raised Debts, and that in doing so, the Commonwealth had been unjustly enriched, and/or had been negligent.

In 2020, the parties to the first class action agreed to settle the proceeding without a trial. The Court approved the settlement of the Robodebt Class Action on 11 June 2021. Settlement payments were made to eligible Group Members in 2022.

In 2024, Nathan Knox and David Mandell applied to the Court on behalf of Group Members, seeking an extension of time to commence an appeal from the settlement of the first class action. Gordon Legal are Nathan and David’s lawyers.

The Applicants in the Appeal class action argued that the settlement of the first class action did not adequately compensate victims for the harm caused by the Robodebt Scheme in light of what had become known after the first settlement had been agreed.

At the time of the settlement of the first class action, Group Members (and their lawyers) did not have access to important new evidence that was produced to the Royal Commission into the Robodebt Scheme. Having regard to this further evidence, the Appeal Applicants believed that the settlement of the first class action was not fair and reasonable, and that it should be set aside so that the class action could be re-opened.

The purpose of the Appeal class action was to obtain orders from the Court setting aside the settlement of the first class action which would allow new claims to be made in that proceeding. If those new claims were successful, additional compensation might have been payable to Group Members.

That appeal has now settled. The settlement is subject to Court approval.

If you were a Group Member in the first class action you are very likely to be a Group Member in the Appeal class action.

• Group Members in the first class action should have received a letter from Centrelink in May 2020, enclosing a document called an “Opt Out Notice”.
• Group Members in the first class action would also have received a letter from Centrelink in January 2021 called a “Notice of Proposed Settlement”.

If you recall receiving either of these letters, or if you have kept a copy of them, you are very likely to be a Group Member in the Appeal class action.

You do not have to do anything now.

If you have not kept copies of these letters, don’t worry.

If the settlement is approved, eligible Group Members in the Appeal class action will receive a further notification from Centrelink, which will first be approved by the Court, providing them with information about their options and what they need to do to participate in the settlement. That notice may not be sent out to people until late 2025.

In addition, if you are a person who was in a close personal relationship with someone who died as a result of their Robodebt, and their Robodebt materially contributed to their death, you may be an eligible Group Member in the Appeal class action, even though you were not eligible for compensation in the first class action. This is a new category of eligibility that applies to the appeal.

Not everybody who had a Centrelink debt was an eligible Group Member in the first class action, and those people will also not be eligible Group Members in the Appeal class action settlement. Centrelink debts arise for a variety of reasons, and not every debt is a Robodebt.

For example, if you received a debt because Centrelink decided that you were not eligible for the payment you were receiving, this is not a Robodebt and you would not have been a Group Member in the first class action, and you will not be a Group Member in the appeal.

Categories 1 through to 4 of eligible Group mMmbers in the appeal are the same as categories 1 through 4 in the first class action. 

If you were a Group Member in the first class action you should have received a letter in around 2022 which told you what category you were in. 

If you can’t find that letter now, don’t worry.  

If the settlement is approved, eligible Group Members in the appeal class action will receive a further notification from Centrelink, which will first be approved by the Court. That letter will tell eligible Group mMembers what their options are and what they need to do. 

 The categories are as follows: 

• Category 1 Group Member: means a Group Member whose Asserted Overpayment Debt(s) were partly or wholly a Robodebt-raised Debt, no part of which Asserted Overpayment Debt has been received or recovered by the Commonwealth.
• Category 2 Group Member: means a Group Member whose Asserted Overpayment Debt(s) were wholly a Robodebt-raised debt, part or all of which has been recovered or received by the Commonwealth.
• Category 3(a) Group Member: means a Group Member whose Asserted Overpayment Debt(s) were initially Robodebt-raised Debt(s), were then recalculated other than on the exclusive basis of averaged ATO income information, and the recalculated debt was less than the amount recovered or received by the Commonwealth.
• Category 3(b) Group Member: means a Group Member whose Asserted Overpayment Debt(s) were initially Robodebt-raised Debt(s), were then recalculated other than on the exclusive basis of averaged ATO income information, and the recalculated debt was equal to or more than the amount recovered or received by the Commonwealth.
• Category 4 Group Member: means a Group Member whose only Asserted Overpayment Debt(s) was neither wholly nor partly a Robodebt-raised debt but which was determined and asserted by the Commonwealth based upon income information provided by or on behalf of the Group Member in response to a Robodebt Notification.

There will be a new category if the settlement of the appeal is approved:

Category 5 Group Member: means a person who:

• was in a close personal relationship with a Category 1 Group Member, Category 2 Group Member, Category 3(a) Group Member or Category 3(b) Group Member (but not a Category 4 Group Member) who has died, where the assertion of a Robodebt-raised Debt materially contributed to the death of that Group Member;
• has suffered a recognised psychiatric illness or condition that was materially contributed to by the death of that Group Member; and
• completes a Registration Form.

For Group Members other than Category 5 Group Members, the Scheme Administrator will use information provided by the Commonwealth to confirm that each person who registers to participate in the Settlement Scheme is an eligible Group Member.

Category 5 Group Members will be required to complete a Registration Form and to demonstrate to the Scheme Administrator that they fall within the terms of that category.

The proposed settlement includes a “Settlement Scheme” and a process for “Scheme Administration”.

The Scheme Administration process is run by a ‘Scheme Administrator’ who is responsible for making sure that the scheme administration is conducted in accordance with the Court’s orders.

The process of Scheme Administration involves:

• identifying Group Members;
• determines their eligibility to participate in the settlement scheme;
• making payments to Group Members who have elected to receive a fixed payment;
• assessing the claims of Group Members who have elected to participate in the individualised assessment process set out in the settlement scheme and, if appropriate making payments to those Group Members.

It is expected that tens of thousands of individual Group Members will register to participate in the settlement scheme. This means that the Scheme Administration process will take some years to complete and will be expensive to undertake.

This is why the settlement includes provision for up to $60 million to be set aside to cover the costs of the administration of the settlement scheme. This amount is also subject to approval by the Court.

Eligible Group Members will need to tell the Scheme Administrator whether they want to request a “Fixed Payment” or want to have their claim assessed individually by the Scheme Administrator.

A Group Member’s category will affect the type of Fixed Payment they are eligible for.
Category 5 Group Members will not be eligible for a Fixed Payment. Their claims will be individually assessed.

It is too early to tell when settlement amount will be distributed to eligible Group Members.

The timing of payments will also depend on whether, and how many eligible Group Members participate in the settlement scheme and how many decide to take a Fixed Payment or decide to have their claims individually assessed.

The payment amounts will be different for different people. Payment amounts will vary depending on how the Robodebt Scheme affected people. People were negatively affected in different ways – and the settlement payments to be made will reflect this.
Eligible Group Members will be asked to choose between a Fixed Payment or an Individualised Assessment process.

Fixed Payments will be assessed according to set compensation amounts and will be paid within a shorter amount of time. The precise amount of the Fixed Payments will not be determined until approval by the Court when the number of Group Members who have registered to participate in the Settlement Scheme is known.

However at this stage, it is proposed that Category 1 and 3(b) Group Members will be entitled to a Fixed Payment of between $350 – $1000 and that Category 2 and 3(a) Group Members will be entitled to a Fixed Payment of between $750 – $1750.

Eligible Group Members who choose the Individualised Assessment process, will have their claims assessed by reference to the claimants’ individual circumstances and will be paid following the finalisation of all Individualised Assessments from the settlement amount paid by the Commonwealth plus any interest which has accrued on that amount whilst the scheme is being administered.

An amount of up to $13.5 million (including out-of-pocket expenses and GST) has been set aside to cover the legal costs incurred by the Applicants in the conduct of appeal, including seeking approval of the class action settlements.

This represents less than 2.5% of the Settlement Sum.

No Group Member will be required to directly pay any amount towards the legal costs incurred on behalf of the Applicants and Group Members from any amount they receive as part of the settlement distribution process.

The Court will also be asked to approve an amount of up to $60 million (including out of pocket expenses incurred by the Scheme Administrator and GST) for settlement administration costs.  This includes all the costs involved in administering the Settlement Scheme and distributing settlement monies to  eligible Group Members. 

The legal fees incurred in the Appeal class action, the potential adverse costs liabilities and potential recoupment liabilities from the first class action, were jointly funded by Gordon Legal on a ‘no-win-no-fee’ basis and a litigation funder, Omni Bridgeway (Fund 5) Lion Pty Ltd (Omni Bridgeway) .

Under the Agreement entered into by the Applicants and Omni Bridgeway, Omni Bridgeway is entitled to be paid a funding commission of 20% of any settlement or judgment sum.

Notwithstanding that Omni Bridgeway is contractually entitled to claim 20% of the settlement sum at the settlement approval hearing, the Court will be asked to make an order that provides it with a commission of not more than 17.5%. The type of order that Omni Bridgeway will seek is called a “Common Fund Order”.

The purpose of that order is to compensate Omni Bridgeway for partly funding the legal costs of the Appeal class action and the settlement approval process. The Court will decide whether it considers a Common Fund Order to be appropriate and, if so, the amount to be paid to the Omni Bridgeway.

Omni Bridgeway and Gordon Legal have also entered into an agreement which requires Omni Bridgeway to pay 20% of the of the commission it receives following approval by the Court to Gordon Legal in consideration of the legal costs and other costs risks that Gordon Legal has taken on in running the case. This agreement does not result in any additional amount being deducted from the settlement sum payable to Group Members than the amount the Court considers it is appropriate for Omni Bridgeway to be paid.

In coming weeks, eligible Group Members will receive a notice which explains how they can opt out of the proceedings.

That notice will also tell Group Members who wish to do so, how they can object to the settlement.

You will have to make these objections on your own behalf and submit them to Gordon Legal .

We recommend you seek independent legal advice if you wish to object to the settlement or you would like to opt out.

In coming weeks, eligible Group Members will receive a notice which explains how they can register to participate in the proposed settlement and when registrations must be completed by.

In the meantime, you can register your interest with Gordon Legal so that you can be updated on the progress of the settlement.

If you register with us, we may contact you in the future to seek information about your personal case. Until then, we do not require any information from you

If you have a problem that relates to your Centrelink benefits, or a debt due to Centrelink which was not part of the Robodebt Scheme, you should contact Centrelink directly.

If you have another issue with Centrelink that is not about a Robodebt, we recommend that you consult the social security rights legal service operating in your state. 

Social security legal services provide free assistance over the phone to people who have issues with Centrelink payments, debts, and other problems. To find your relevant service, refer to the Economic Justice Australia webpage: http://ejaustralia.org.au/legal-help-centrelink/. Select your state here ACT NSW NT QLD SA TAS VIC WA

Details for the Victorian, Queensland and NSW services are listed here:

• VICTORIA: SOCIAL SECURITY RIGHTS, VICTORIA (03) 9481 0355 | [email protected]
• QUEENSLAND: BASIC RIGHTS QUEENSLAND INC. (07) 3847 5532 | 1800 358 511 | [email protected]
• NEW SOUTH WALES: WELFARE RIGHTS CENTRE (NSW) (02) 9211 5300 | 1800 226 028 TTY (02) 9211 0238 | [email protected]