Amun and Secretary, Department of Social Services (Social services second review)

[2018] AATA 299

Amun and Secretary, Department of Social Services (Social services second review) [2018] AATA 299 (20 February 2018)

Division:GENERAL DIVISION

File Number:           2017/3625

Re:Wasara Amun

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member D K Grigg

Date:20 February 2018

Place:Brisbane

The Tribunal affirms the decision under review.

.............................[SGD]...........................................

Member D K Grigg

CATCHWORDS

SOCIAL SECURITY – age pension – overpayment - whether solely attributable to administrative error – consideration of special circumstances and whether they exist – decision under review affirmed

LEGISLATION

Social Security Act 1991(Cth)

Social Security (Administration) Act 1999 (Cth)

CASES

Beadle and Director-General of Social Security (1984) 6 ALD 1

Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76

Secretary, Department of Social Security v Hales [1997] FCA 1565; (1998) 82 FCR 154

Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190

REASONS FOR DECISION

Member D K Grigg

20 February 2018

1. Mr Amun has been a recipient of the Age Pension since 9 November 2011.[1]

   [1]           Exhibit 1, T Documents, T15, page 216, Centrelink record.

2. The rates at which people are paid Age Pension is determined using the Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991 (Cth) (Act).[2] The maximum basic rate payable varies depending upon a person’s family situation. The maximum basic rate payable to a member of a couple is less than that of a person who is not a member of a couple.[3]

   [2] Section 1064, Act.

   [3] Section 1064-B1, Act.

3. As Mr Amun is married, and his partner has been employed through the relevant period, in November 2011 Centrelink recorded that Mr Amun’s partner received a regular fortnightly income of $1,592.80 and took this into account in calculating the rate of Mr Amun’s Age Pension.[4]

   [4]           Exhibit 1, T Documents, T4, pages 30-38, Letter from Centrelink to Mr Amun dated 22 November 2011.

4. In March 2012 Mr Amun ceased working and, as a result, on 11 May 2012 Mr Amun was informed that he no longer needed to report his income to Centrelink.[5] Mr Amun told the Tribunal he informed Centrelink that he was no longer working but did not tell Centrelink that his wife had ceased working. Mr Amun said that his wife was still working and as far as he was aware his wife’s earnings, as previously advised, was still being taken into account in the calculation of his Age Pension. Mr Amun said that because he no longer had to provide fortnightly updates he presumed Centrelink would calculate his wife’s earnings as they had done previously.

   [5]           Exhibit 1, T Documents, T15, page 266, Centrelink record.

5. For reasons which are not clear in the Centrelink records, Centrelink began calculating Mr Amun’s Age Pension without taking his wife’s earnings into account.

6. On 1 July 2014 Mr Amun contacted Centrelink regarding a general enquiry and was asked whether his partner was still working. Mr Amun confirmed that his partner was still working. The Centrelink officer told Mr Amun that the last report they had received from his partner’s employer was dated 2 December 2012. Mr Amun told the Centrelink Officer that he did not know he had to report his partner’s earning to Centrelink and that he did not know her current income. The Centrelink officer informed Mr Amun that, as a result of his partner’s income not being taken into account in calculating his Age Pension, there may be an overpayment in excess of $18,000. Mr Amun was then advised that he had to provide documentation verifying his partner’s earnings.[6]

   [6]           Exhibit 1, T Documents, T5, page 39, Centrelink record.

7. Mr Amun’s wife’s earnings were not taken into account by Centrelink between 3 March 2012 and June 2014.[7]

   [7]           Exhibit 1, T Documents, T15, page 249, Centrelink record.

8. On 12 July 2014 Centrelink informed Mr Amun that taking into account his partner’s earnings (based on information previously provided by Mr Amun in 2012) between 3  March 2012 and 20 June 2014, he had been overpaid Age Pension payments totalling $18,952.80[8] which was now a debt recoverable by Centrelink.[9]

   [8]           Exhibit 1, T Documents, T6, pages 40-60, Debt explanation.

   [9]           Exhibit 1, T Documents, T7, pages 61-62, Letter from Centrelink to Mr Amun dated 12 July 2014.

9. Mr Amun had not provided any information regarding his wife’s earnings to Centrelink between 3 March 2012 and 20 June 2014. Mr Amun told the Tribunal this was because nothing had changed since he first provided Centrelink with information.

10. On 15 December 2016 Centrelink requested Mr Amun provide information regarding his partner’s income between 1 July 2016 and 15 December 2016.[10] On 29 December 2016 Mr Amun provided Centrelink with his partner’s PAYG summaries for the years ended 30 June 2012, 30 June 2013, 30 June 2014, 30 June 2015 and 30 June 2016.[11] On 12 January 2017 Mr Amun provided Centrelink with his partner’s payment summaries for the period 4 July 2016 and 8 January 2017.[12]

    [10]         Exhibit 1, T Documents, T8, page 63, Letter from Centrelink to Mr Amun dated 15 December 2016.

    [11]         Exhibit 1, T Documents, T8, pages 64-68, PAYG summaries.

    [12]         Exhibit 1, T Documents, T9, pages 69-96, Payment summaries.

11. As a result of Centrelink’s decision to raise the Debt, Mr Amun sought a review by an Authorised Review Officer (“ARO”). After receiving the income documentation from Mr Amun, Centrelink recalculated the amount of Age Pension that Mr Amun should have received and the ARO determined that between 9 November 2011 and 30 December 2016 (“Debt Period”) he had been overpaid $25,841.73 (“Debt”).[13]

    [13]         Exhibit 1, T Documents, T11, pages 142-147, Authorised Review Officer’s Decision and Notes dated 18 January

    2017.

12. Mr Amun argued that he had declared his partner’s income, however the ARO found that the income actually earned by his partner had been more than Mr Amun had declared.[14]

    [14]         Exhibit 1, T Documents, T11, page 143, Authorised Review Officer’s Decision and Notes dated 18 January 2017.

13. Since November 2011, and particularly during the Debt Period, Mr Amun has received numerous letters from Centrelink which indicated the amount of income and earnings which were being used to calculate the rate of Age Pension and reminding Mr Amun that he was under an obligation to inform Centrelink within 14 days if his partner earns any income.[15]

    [15]For example, see Exhibit 1, T Documents, T4, pages 30-38, Letter from Centrelink to Mr Amun dated 22 November  2011; T16, pages 276-404, Letters from Centrelink to Mr Amun between 22 November 2011 and 13 January 2017.

14. At present Centrelink is withholding $114.02 per fortnight from Mr Amun’s Age Pension towards repayment of the Debt.[16]

    [16]         Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 25 October 2017, para 47, Attachment 4.

Claim History

1. Mr Amun lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal on 30 January 2017.[17] The SSCSD rejected Mr Amun’s claim and affirmed the ARO’s decision on 25 May 2017.[18]

   [17]         Exhibit 1, T Documents, T12, pages 148-149, Email from SSCSD dated 30 January 2017.

   [18]         Exhibit 1, T Documents, T2, pages 5-7, SSCSD’s Decision and Reasons for Decision dated 25 May 2017.

2. Mr Amun has sought a review of the SSCSD’s decision by this Tribunal.[19]

   [19]         Exhibit 1, T Documents, T1, pages 1-4, Application for Second Review of a Decision dated 19 June 2017.

ISSUES FOR DETERMINATION

1. The Tribunal has to decide whether:

   (a)Mr Amun has been overpaid his Age Pension during the Debt Period; and, if yes,

   (b)the Debt is recoverable; and

   (c)the Debt should be written off for a period or waived.

WAS MR AMUN OVERPAID AGE PENSION PAYMENTS?

1. If a person is not entitled to the social security benefit they have obtained, the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment: section 1223(1) of the Act.

2. Mr Amun’s partner’s income should have been taken into account in calculating Mr Amun’s rate of Age Pension.

3. The Tribunal finds therefore that Mr Amun owes the Debt to the Commonwealth.

IS THE DEBT RECOVERABLE?

1. Even if a debt is owed, the Secretary may write off a debt in certain circumstances set out in section 1236 of the Act which provides:

   1236  Secretary may write off debt

   (1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

   (1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:

   (a)       the debt is irrecoverable at law; or

   (b)       the debtor has no capacity to repay the debt; or

   (c)       ...; or

   (d)it is not cost effective for the Commonwealth to take action to recover the debt.

2. The Secretary must also waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt: section 1237A of the Act.

3. Further, the Secretary may exercise its discretion to waive the right to recover all or part of the debt if satisfied that:

   1237AAD Waiver in special circumstances

   The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

   (a)the debt did not result wholly or partly from the debtor or another person knowingly:

   (i)        making a false statement or a false representation; or

   (ii)       failing or omitting to comply with a provision of this Act, the

   Administration Act or the 1947 Act; and

   (b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

   (c)       it is more appropriate to waive than to write off the debt or part of the debt.

SHOULD THE AGE PENSION DEBT BE WRITTEN OFF? (S 1236)

Is the debt irrecoverable at law?

1. Section 1236(1B) sets out when a debt is taken to be irrecoverable at law:

   (1B)For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

   (a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or

   (aa)the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or

   (b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or

   (c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or

   (d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.

2. Mr Amun’s Debt is currently being repaid through withholdings of his Age Pension payments.[20] None of the circumstances set out in section 1236 (1B) of the Act exist in this case and therefore the Tribunal finds that the debt is not irrecoverable at law.

   [20]         Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 25 October 2017, para 47, Attachment 4.

3. Further, sections 123(1) and 123(3) of the Social Security (Administration) Act 1999 (Cth) (Administration Act) state as follows:

   123(1) A determination that:

   (a)       a person’s claim for social security payment is granted; or

   (b)       the social security payment is payable to a person;

   continues in effect until:

   (ba)     the payment is cancelled by section 38M of the 1991 Act; or

   (c)a further determination in relation to the payment under section 80, 81 or 82, 124H, 124M or 124NF takes effect; or

   (d)the payment ceases to be payable under section 90, 91, 93, 94 or 95; or

   (e)the end of the day immediately before the day on which the person dies.

   (3)  A determination of the rate of a social security payment continues in effect until:

   (a)a further determination in relation to the payment under section 78, 79, 81A or 85A takes effect; or

   (b)  the payment becomes payable at a lower rate under section 98, 99  or 100.

4. Pursuant to section 100(1) of the Administration Act:

   100 Automatic rate reduction—recipient not complying with subsection 68(2) notice

   Subject to subsection (2), if:

   (a)  a person who is receiving a social security payment is given a notice under subsection 68(2); and

   (b)  the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and

   (c)  the event or change of circumstances occurs; and

   (d)  the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and

   (e)  because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;

   the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.

5. Mr Amun was under an obligation to advise Centrelink of the income his partner was receiving (section 72 of the Administration Act) and was reminded in Centrelink notices of that obligation.

6. Because Mr Amun was not entitled to the total Age Pension benefit he received during the Debt Period, Mr Amun was overpaid Age Pension payments totalling $25,841.73 and that amount is a debt due to the Commonwealth which arose when he obtained the benefit of the payment: section 1223(1) of the Act.

Does Mr Amun have capacity to repay the debt?

1. Section 1236(1C)(a) of the Act provides that if a debt is recoverable by means of deductions from the debtor’s social security payment the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in “severe financial hardship”.

2. Severe financial hardship needs to involve severe or extreme financial suffering and a person’s entire financial position would need to be materially less than the current rate of their pension.[21]

   [21]         Re Lumsden and Secretary, Department of Social Security [1986] AATA 228; Stubbs and Secretary, Department

   of Family and Community Services [2003] AATA 729; L and Department of Social Security [1995] AATA 159; Secretary, Department of Family and Community Services and Birgden [2003] AATA 67.

3. On 9 March 2017 Mr Amun provided a Statement of Financial Circumstances which provides:[22]

   ·Mr Amun receives $937.00 per month from his USA pension

   ·Mr Amun’s partner earns $2,556.40 (net) per month.

   ·Mr Amun’s household expenditure is approximately $4,005

   ·Mr Amun has a 50% share in a car worth $6,000;

   ·Mr Amun and his partner have a total of $56,000 in the bank

   ·Mr Amun’s son lives with him

   [22]         Exhibit 1, T Documents, T13, pages 150-154, Statement of Financial Circumstances dated 9 March 2017.

4. While the Tribunal acknowledges that at present Mr Amun is receiving hardly any Age Pension because of the money being withheld in repayment of the Debt, there is no evidence to suggest that Mr Amun suffers from severe financial hardship.

Is it cost-effective for the Commonwealth to recover the debt?

1. There is no indication from the Secretary that it is not cost-effective for it to recover the debt.

Conclusion

1. There is no basis for the debt to be written off under section 1236 of the Act.

DID MR AMUN RECEIVE THE OVERPAYMENT IN GOOD FAITH AND WAS THE DEBT, OR A PROPORTION OF THE DEBT, ATTRIBUTABLE SOLELY TO AN ADMINISTRATIVE ERROR? (S 1237A)

Was the debt attributable solely to an administrative error?

1. If administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt. The debt “must be "attributable solely" to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes”: Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76, per Wilcox J (at [41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190.

2. Mr Amun told the Tribunal that when he first started receiving the Age Pension he was still working and had to report his income fortnightly and that this included his wife’s income and the amount he receives from his United States Pension. When he told Centrelink he was no longer working (in March 2012) he says Centrelink told him he no longer had to report fortnightly and they would handle his United States Pension. Mr Amun said no one said anything to him about his wife’s income and that it was Centrelink’s error to not include her income in the calculation until July 2014 and that after July 2014 it was Centrelink’s mistake for calculating her income at a continuous rate when it fluctuates from week to week. Mr Amun told the Tribunal it was “Centrelink’s mistake” because he was never clearly informed, he was not aware of how his Age Pension was being calculated and had no intention of getting overpaid. Mr Amun said “I’m not their bookkeeper” and as a result he “did not assume responsibility” for the debt.

3. It is not for Centrelink to make inquiries and determine on its own what amounts of income Mrs Amun is earning each fortnight. If Mr Amun knew her income fluctuated this should have been reported. There was no instruction from Centrelink to not report his wife’s income. Mr Amun has mistakenly misunderstood it was not Centrelink’s obligation to ensure the information was accurate, but his. This is outlined in the notices sent to Mr Amun. For example, the notice sent to Mr Amun when he commenced receiving the Age Pension specifically stated that:[23]

   Your future rate of payment may change depending on the amount of your earnings, other income or assets…Note that all the information in this statement is from records we hold as at the issue date of the statement…

   You must tell us if you and/or your partner:

   ·have any change to your income from employment (the amount you earn goes up or down)

   [23]         Exhibit 1, T Documents, T4, pages 30-36, Centrelink notice dated 22 November 2011.

4. Further notices similarly stated that changes to income needed to be reported and set out the amount of combined earnings that were being used to calculate Mr Amun’s Age Pension. If Mr Amun did not understand the calculations he could have contacted Centrelink. There is no evidence that he did so.

5. The PAYG payment summaries for Mr Amun’s wife for the period between 2012 and 2016 show that Ms Amun’s income varied each year.[24] This information was not provided to Centrelink at the relevant time.

   [24]         Exhibit 1, T Documents, T8, pages 64-68, PAYG summaries.

6. Mr Amun said he did not read the notices. If he had he might have noticed that fortnightly earnings were no longer being used to calculate his Age Pension.[25] It is unfortunate that Mr Amun did not check his notices carefully and make enquiries. However, Mr Amun had an obligation to keep Centrelink informed. The Centrelink notices also indicate that after Mr Amun advised he was no longer working his Age Pension had increased by approximately 40%. This should also have alerted Mr Amun to the potential that his Age Pension was not being calculated correctly. Because he did not check with Centrelink regarding his wife’s income or provide Centrelink with updates of the fluctuations in her earnings, a debt has arisen.

   [25]         For example, see the difference between notices sent in January 2012 and December 2012: Exhibit 1, T

   Documents, T16, pages 285 and 291, Centrelink notices dated 6 January 2012 and 6 December 2012.

1. The Debt arose due to a failure to comply with the relevant notification requirements. If Mr Amun had not been taken off fortnightly reporting this may not have occurred. However, the debt owed by Mr Amun was not ‘attributable solely to an administrative error made by the Commonwealth’ for the purposes of section 1237A(1) of the Act.[26]

   [26]         See Wecker v Secretary, Department of Education Science and Training[2008] FCAFC 108, at [102].

2. Even if Mr Amun was not aware of a need to notify Centrelink, “Centrelink is not required to advise claimants about their legal rights to any particular social security payment or the rate of payment”.[27]

   [27]         See Brian Murphy and Secretary, Department of Families, Housing, Community Services and

   Indigenous Affairs [2010] AATA 115, at [17]; Ivor Biddlecombe and Secretary, Department of Families,

   Housing, Community Services and Indigenous Affairs [2010] AATA 451; Barnard and Secretary, Department of Social Services [2016] AATA 436, at [47]; Scott v Secretary, Department of Social Security [1999] FCA 1774, and on appeal Scott and Another v Secretary, Department of Social Security [2000] FCA 1241

Should the Age Pension Debt be waived under section 1237AAD?

1. There are a few elements to be satisfied under section 1237AAD of the Act before a debt may be waived. First, the debt must not have arisen from the debtor, that is Mr Amun must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act. Second, there must be “special circumstances” (other than financial hardship alone) that make it desirable to waive. Third, it must be more appropriate to waive than to write off the debt or part of the debt.

2. The Act does not define what constitutes “special circumstances”.

3. However, decisions of the Federal Court make it clear that “special” denotes something different from the usual or ordinary.[28]

   [28]         Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per

   Kiefel J, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639, at [51], Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, at [37].

4. French J (as he then was) said in in Secretary, Department of Social Security v Hales[1997] FCA 1565; (1998) 82 FCR 154, at 162:

   The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion. ... The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.

5. The Administrative Appeals Tribunal has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at [12] (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[29]

   [29]         See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at [19]; Papps and      Secretary, Department of Family and Community Services [2005] AATA 660, at [37]

6. Mr Amun contends that Centrelink is in error and that the debt has resulted in him being stressed and his savings being affected. There was no medical evidence provided to the Tribunal concerning Mr Amun’s health, and while the Tribunal acknowledges that having a debt to repay is stressful, this does not constitute a special circumstance, especially in circumstances where he and his wife have funds at their disposal.[30] Further, special circumstances must relate to something other than financial circumstances alone.

   [30]         Exhibit 1, T Documents, T15, page 257, Centrelink record; T13, pages 150-154, Statement of Financial

   Circumstances dated 9 March 2017.

7. Even if Mr Amun was not aware of any need to notify Centrelink, ignorance of the legal requirements is not a special circumstance. “Centrelink is not required to advise claimants about their legal rights to any particular social security payment or the rate of payment”.[31]

   [31]         See Brian Murphy and Secretary, Department of Families, Housing, Community Services and

   Indigenous Affairs [2010] AATA 115, at [17]; Ivor Biddlecombe and Secretary, Department of Families,

   Housing, Community Services and Indigenous Affairs [2010] AATA 451; Barnard and Secretary, Department of Social Services [2016] AATA 436, at [47]; Scott v Secretary, Department of Social Security [1999] FCA 1774, and on appeal Scott and Another v Secretary, Department of Social Security [2000] FCA 1241

8. No other special circumstances have been raised for the Tribunal’s consideration. For the above reasons the Tribunal finds that no special circumstances exist within the meaning of section 1237AAD to warrant the exercise of the discretion in section 1237AAD to waive the debt.

DECISION

1. Mr Amun’s appeal fails. The decision under review is affirmed.

I certify that the preceding 52 (fifty-two) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

...........................[SGD].............................................

Associate

Dated: 20 February 2018

Date of hearing:	8 February 2018
Applicant:	By Phone
Advocate for the Respondent:	Mr Rick McQuinlan
Solicitors for the Respondent:	Department of Human Services