Andrew and Secretary, Department of Family and Community Services
[2004] AATA 168
•20 February 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 168
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q1999/986
GENERAL ADMINISTRATIVE DIVISION ) Re DAVID ANDREW Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr I R Way, Member Date20 February 2004
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
....................(Sgd).....................
Member
CATCHWORDS
SOCIAL SECURITY – benefits and entitlements – invalid pension – overpayment – waiver of debt – whether special circumstances exist
Social Security Act 1991 ss 1223, 1237, 1237A, 1237AAD
Beadle v Director-General of Social Security (1985) 7 ALD 670
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Director-General of Social Services v Hales (1983) 47 ALR 281
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Secretary, Department of Social Security v Hales (1998) 153 ALR 259
Re Secretary, Department of Social Security and McAvoy (AAT 11263, 26 September 1996
REASONS FOR DECISION
20 February 2004 Mr I R Way, Member 1. This is an application by David Andrew for review of a decision of the Social Security Appeals Tribunal (SSAT) made on 21 July 1999, which affirmed a decision of the Department of Social Security to raise and recover an overpayment of invalid pension to Mr Andrew in the amount of $23,131.20, in respect of the period 8 August 1985 to 1 January 1990.
2. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 and other documentary evidence as follows:
§Exhibit A1 Letter from applicant to AAT dated 20 January 2000 with attachments
§Exhibit A2 Letter to applicant from Commissioner of Superannuation dated August 1982
§Exhibit A3 Two letters from Department to Social Security dated 10 August 1982 and 27 October 1982
§Exhibit A4 Discharge Summary – Richmond Clinic dated 10 March 1980
§Exhibit A5 Report of Dr David Roland dated 19 September 2002
§Exhibit R1 Respondent’s Statement of Facts and Contentions
§Exhibit R2 Bundles of letters from Department to applicant
3. Ms H Wallis Dunn represented the respondent. The applicant was self-represented and gave oral evidence.
Background
4. There is no dispute about the general background facts in this matter and on the material before it the Tribunal finds as follows:
(a)The applicant applied for invalid pension on 6 August 1985.
(b)The applicant was granted invalid pension at the maximum standard rate from 8 August 1985.
(c)From 26 November 1987, the assessment of the applicant’s rate of pension changed as he was classified as “Single regarded as Married” and his rate then became the maximum general rate.
(d)On 11 May 1988, the applicant claimed Supplementary Assistance on the basis he was paying rent of $65 a week.
(e)From 1 September 1988, the applicant was regarded as a single person and his rate increased. He was also paid rent allowance (T19, p68). From 26 October 1989, the applicant was paid as a married person with his partner’s name being recorded as Susan (T19, p72).
(f)On 19 May 1997, a data match review showed that the applicant was in receipt of superannuation from ComSuper and that his date of exit was 8 April 1982 (T26).
(g)On 1 July 1997, details of rates of superannuation paid between 1 January 1990 and 3 July 1997 were received from ComSuper (T29).
(h)On 29 August 1997, both the applicant and his wife were advised of debts of $28,202.30 each in respect of the period 18 January 1990 to 29 May 1997 (T32).
(i)A file note dated 29 September 1997 shows that the overpayments were re-calculated taking into account details of children. This resulted in the applicant’s overpayment being reduced to $21,450.70 and his wife’s overpayment increased to $32,942.90 (T35). The applicant was advised accordingly on 29 September 1997.
(j)On 23 February 1998 the applicant and his wife were advised that amounts of $17,000 and $26,000 would be regarded as full payments of the debts (T38 & T39).
(k)Those debts were repaid in March 1998 (T40).
(l)On 3 August 1998, ComSuper advised details of the applicant’s superannuation rates from 8 April 1982 to 29 June 1990 (T45).
(m)On 27 August 1998, an overpayment in respect of the period 8 August 1985 to 4 January 1990 was calculated. This calculation was broken up into 6 periods based on the applicant’s marital status at the different times. The total of the overpayment was $23,131.20 (T46), the subject of this review.
Issues and Legislation
5. It is common ground between the parties that the applicant has been paid a Social Security payment of $23,131.20 during the period 8 August 1985 to 1 January 1990 to which he was not entitled, because he was in receipt of superannuation payments during that period which were not taken into account in determining his pension payments. In view of this and on the material before it the Tribunal is satisfied that pursuant to sub-section 1223(1) of the Social Security Act 1991 (the Act) there is a debt due to the Commonwealth by the applicant in the amount of $23,131.20.
6. The issue before the Tribunal is whether this debt should be recovered or waived.
7. The Act relevantly provides as follows:
“Power to waive Commonwealth's right to recover debt
Secretary's limited power to waive
1237.(1) On behalf of the Commonwealth, the Secretary may waive the Commonwealth's right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD.
…
Waiver of debt arising from error
Administrative error
1237A(1) Subject to subsection (1A), the Secretary must 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.
….
Waiver in special circumstances
1237AAD 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 false representation; or
(ii)failing or omitting to comply with a provision of this 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.”
Applicant’s Evidence and Submissions
8. In his application for review by the SSAT the applicant gave reasons why he believed the decision to be wrong, as follows:
“Because I was only asked to repay from 1990 up to 1997 & I repaid this in full. Now they reckon they have to go back to 1985. Even the original officer who did this the 1st time said he must have overlooked it (an oversight). This is not good enough. I never deliberately set out to deliberately defraud anyone & all the hardship I’ve been through.”
9. The applicant also said:
“Because of my fire in ’93 I should not have to repay anything. Because it caused hardship to us.”
10. In his application dated 31 August 1999 to this Tribunal for a review of the decision the applicant stated:
“They say I knowingly knew about my payment was superannuation. This is incorrect. I never knowingly did anything wrong. These debts should be waved (sic) because of my circumstances & mental evidence to back it up. Why didn’t they take more care when deciding this. Also about my house burning down & everything destroyed. Also second debt should never been raised. They knew of my ComSuper in 1988 as my second wife found out and told them.”
11. In a letter to the AAT dated 13 August 1999 the applicant stated:
“My psychiatrist said I would not have known that this other payment I was getting from my last Govt job was to be told to C/link.
I made an honest mistake as I never knowingly knew I was doing the wrong thing. I always thought this was my own money & I never needed to tell anyone as this was an invalidity pension from my Govt job as my uncle who was the clerk in my Govt jobs office has explained it all to me. I was with T/com & was invalided out because of a nervous breakdown because of my first marriage failing & my wife took kids.
…
I suffer from a problem of diminished responsibility & paranoia & forgetfulness. I don’t have any paper-work now as my house in ’93 was completely burnt out & destroyed…”
12. In the same letter the applicant also made the point that in paying the first debt he did so without admitting guilt and that he considered that Centrelink had treated him badly and unfairly in raising another debt when he had requested a review of the first debt and he reinforced his view that he “never knowingly did anything wrong to defraud anyone”.
13. In his oral evidence the applicant told the Tribunal he was born on 9 March 1945, left school at age fifteen years and started employment with the PMG in 1962 (at age 17). He said he contributed 5% of his salary to the Commonwealth superannuation scheme for approximately 20 years until he was invalided out in about 1981.
14. It was the applicant’s evidence he had a mental breakdown in 1979 which he attributed to the breakdown of his first marriage. He was first married in 1970 and divorced from this marriage in 1981. He remarried in 1987 and this marriage ended in divorce in 1989. In that same year he remarried and that marriage is still in place.
15. He said he had three children from his first marriage (aged 25, 30 and 32) and two stepsons presently living at home (aged 17 and 19, both on the dole).
16. In respect of his medical condition, the applicant said he had first seen Dr Freeman, Psychiatrist in 1978 and that his mental condition had stayed with him to the 1990s. He said he had been admitted to hospital for a short period in August 2003 in a catatonic state. The applicant drew the Tribunal’s attention to the letter from Dr Freeman dated 18 February 1988 (T42/125) where Dr Freeman stated:
“I write regarding David Andrews whom I have known for many years and who has major personality problems.
His life has been a succession of misfortunes, but I have never found him to be deliberately duplicitous and I understand his financial arrangements have become problematic.
I hope you can give him some special consideration regarding his current situation on the basis of his considerable personal limitations.”
17. The Tribunal notes that Dr Freeman opined that the applicant’s condition was such that his impairment would rarely affect his understanding (T56/182).
18. The applicant also referred the Tribunal to a discharge summary dated 10 March 1980, from the Richmond Clinic, Lismore where it is recorded that the applicant spent one week in the clinic with a diagnosis of personality disorder with a question as to whether the applicant was an ambulant schizophrenic (Exhibit A4).
19. The Tribunal notes that the applicant was seen by Dr D Roland, Clinical Psychologist, on 18 September 2002 who produced a written report dated 19 September 2002 (Exhibit A5). This report was in relation to the applicant being sentenced on charges relating to Social Security benefits.
20. Dr Roland stated that it appeared that the applicant had suffered from psychological and psychiatric problems for a long time including personality disorder and anxiety disorder. Dr Roland opined:
“At the time of the initial offences, it appears that Mr Andrew was in a state of mind that would have made it difficult for him to think clearly and to fully understand what was being asked of him. He appears to have had a genuine misunderstanding over the nature of his superannuation benefit, namely thinking he was only redrawing money that he and his employers had contributed in the past. It appears that Mr Andrew’s state of mind had improved sufficiently by the late 1980s to the extent that he had some appreciation that he was withholding information from Centrelink. It appears that his anxieties to some degree prevented him from revealing this information. These anxieties included a fear of opening government mail that is a feature of his Obsessional-Compulsive Disorder and later developing into a fear of the consequences of his actions.”
21. In essence the applicant is contending because of his mental state he was not fully in control of his own actions. The applicant was taken to numerous forms and documents where the applicant had responded to questions about his income by saying he was not in receipt of income from any other source or by saying he was not receiving superannuation and where in many of the documents it was clearly stated that income includes superannuation (T4/35, T5/38-39, T14/58, T25/85-87, Exhibit R2).
22. The applicant’s various explanations were that he did not know what he was doing, signed without realising what he was signing, could not remember details back that far, signed incomplete documents leaving it to others to complete the documents including having a bad headache on at least one occasion, signing declarations without reading what he was declaring. He also said that he would not have seen any definition that superannuation was income.
23. The Tribunal notes the Disability Support Pension Review Form (T25) has been signed by the applicant and that the interviewing officer, designated ASO3 compliance, was a senior officer who would be experienced in conducting interviews and that the applicant in cross-examination agreed that the answers to question 23 (effectively the last question on the Review Form) were given by him whereas he asserted because of his headache he was unable to complete the form including the earlier answer of “No” to question 21 about superannuation.
24. A further significant contention of the applicant is that the Department of Social Security was the paying agent for his superannuation and as such should have known he was receiving superannuation and this fact not only put the onus on the Department for any error in not noting that he had superannuation but also explained why he had not been concerned about declaring his superannuation payments.
25. The Tribunal notes that the applicant received a letter from the Commissioner for Superannuation dated August 1982, informing him that the Department of Social Security would act as the Commissioner’s paying agent for his superannuation (Exhibit A2); and received letters from the Department of Social Security (10 August 1982 and 27 October 1982 – Exhibit A3) giving details of the superannuation payments that they would pay to him.
26. The Tribunal also notes that a Departmental Claim Index Sheet, in respect of the pension of the applicant’s second wife (T15/60 – dated 17 May 1988) recorded the applicant as being in receipt of Commonwealth Superannuation, reference number 869867 (the same reference number as shown on Exhibit A3). It was the applicant’s submission that this further supported his contention that the respondent made an inexcusable mistake in failing to take into account his superannuation payments. He said he always believed the respondent knew he was getting superannuation and this coupled with his mental instability and foggy mind explained why he answered “No” to questions about superannuation. He also highlighted his difficulties in not liking to open official mail up until the 1990s.
27. It became apparent at the hearing that the respondent was not in a position to make submissions in respect of the applicant’s contention of administrative error. There being no objections from either party, the Tribunal directed the respondent to make subsequent written submissions on this point and that the applicant be given the opportunity to respond to any such submissions. On 19 December 2003 the respondent made written submissions as directed and on 30 January 2004 the applicant responded in writing to the respondent’s submission.
28. The applicant’s response, in summary, reiterated much of what he had previously stated or said, and in respect of the question of administrative error reinforced his point of view that the Department must have been aware of his superannuation payment, as evidence by the documentation regarding payment to his second wife Jennifer on her claim index, and had the Department not ignored this information and taken proper notice of it, he would not be in debt to the Commonwealth. It was the respondent’s Submission that he is “truly sorry that I never ever told DSS on my own account about my pension but also DSS is as much blame as myself cause they were paying this pension to me until Comsuper took over.”
29. In respect of the other matters raised by the applicant in his written submission the Tribunal notes the applicant’s comments about his legal fees, his medical condition, his financial position and his family circumstances.
30. In respect of his financial circumstances, the applicant (at Exhibit A1) set out his financial details. In his oral evidence the applicant amended some of the figures given in Exhibit A1 such that his expenditures totalled approximately $1,450 per fortnight including mortgage repayments, credit card payments, solicitor payments and storage shed rentals.
31. In the same document the applicant listed his total fortnightly income as approximately $900 per fortnight, excluding any contribution from the social security benefits being paid to his children or any deemed income. He listed his assets at approximately $160,000 including his family home, furniture and effects, motor vehicles and investments. It was the applicant’s evidence that he had twelve credit cards and that all up, he owed a very large amount on these cards. He told the Tribunal that several months ago he sold a unit he owned outright (at Marilyn Avenue), for $84,000 and had used the money to help his mother (now deceased), pay solicitors and barristers (approximately $40,000) and to pay some bills (approximately $20,000-$30,000). The Tribunal notes that the applicant included a figure of $100 per fortnight in his expenditure statement (referred to above) for payment to solicitors James-Fuggle and that the applicant was unable to clarify what were his current expenditures for solicitors’, barristers’ bills.
32. The Tribunal also notes the applicant had not told Centrelink about selling his unit, which he said he had bought for $79,000 in 1996/97 from money he had in various accounts. He said he was very aware of the assets limits in respect of pension payments.
33. In answer to questions in cross-examination, the applicant said he currently worked for two hours per week with the Salvation Army and this involved him answering phone calls and writing down names. He said he was not trained to counsel people. He said he also worked as an announcer for a local radio station for five hours per week and had done this for the past twenty years. He said that he received no remuneration for either of these activities. Apart from these jobs and some pamphlet delivery work in the late 80s, the applicant did not provide any evidence of other jobs since leaving Commonwealth employment. The Tribunal notes that the SSAT records the applicant as saying he was a radio announcer for about ten hours per week.
Respondent’s Submissions
34. It was submitted for the respondent that while it was correct that the DSS was a paying agent for the Commissioner for Superannuation for many years and up to October 1988, the information received from the Commissioner was directed towards payments of superannuation to be paid and was given in confidence and not shared with other sections of the DSS or with other Government Departments. In any event, it was submitted that at the relevant time computer systems were not as they are now, and there was no automatic transfer of data between Government Departments.
35. With respect to the record of the applicant being in receipt of “Comsuper” shown on Mrs Jennifer Andrews’ application for wife’s pension, the respondent, in the subsequent written submission, provided a very detailed analysis of the procedures in place at the relevant time as they applied to the applicant. The respondent submitted that, with hindsight, it may be reasonable to expect that given the claims index sheet (at T15), an officer would check that the superannuation payments were being taken into account in the assessment of a person’s pension rate. However, it was submitted that was not the case at the relevant time and the procedures in place at that time were followed.
36. In respect of section 1237AAD of the Act, the respondent submitted that the applicant knowingly made false statements and representations to the Department of Social Security about his superannuation payments and did not disclose ownership and sale of his unit at Marilyn Avenue. Furthermore, it was submitted that there were no special circumstances in this matter that would make it desirable to waive the debt. In this respect it was submitted that there were no current medical reports about the applicant and the report of Dr Freeman, provided well over five years ago, while diagnosing dependent personality disorder, also stated that this impairment rarely effects understanding.
37. As such it was submitted that the applicant’s medical condition could not be categorised as special and this view was supported by the fact that the applicant continued to work as a radio announcer for at least five hours a week and undertakes volunteer work on a regular basis with the Salvation Army.
38. Insofar as the applicant’s financial circumstances are concerned, it was submitted that the applicant’s financial circumstances are better than those of many people receiving social security payments and his financial circumstances are not special and that recovery of the debt is easily possible by withholdings from the applicant’s current social security payments.
39. In considering special circumstances, the Tribunal was referred to Beadle v Director-General of Social Security (1985) 7 ALD 670, Groth v Secretary, Department of Social Security (1995) 40 ALD 541 and Director-General of Social Services v Hales (1983) 47 ALR 281.
Consideration
40. As has already been found there is a debt due to the Commonwealth by the applicant in the sum of $23,130.20.
41. The issue is whether this debt should be waived because of administrative error or because of special circumstances.
42. The central two questions before the Tribunal are:
§ Is the debt attributable solely to an administrative error made by the Commonwealth and did the applicant receive the overpayments in good faith (section 1237A of the Act);
§ Did the applicant knowingly make a false statement or a false representation; or did he falsify or omit to comply with a provision of the Act; and are there special circumstances other than financial hardship alone, that make it desirable to waive; and is it more appropriate to waive than to write off the debt (section 1237AAD of the Act).
43. In respect of the first question, the Tribunal notes the respondent’s submission that, with hindsight it might be reasonable to expect that there may have been cross checking of the applicant’s circumstances such that superannuation payments were taken into account in the assessment of his pension. However, be that as it may, any such action does not, in the Tribunal’s view, release the applicant from his responsibility to correctly answer questions directed to him about superannuation (as set out in the T documents – see paragraph 21 above). The Tribunal is not satisfied that the reasons given by the applicant for not providing correct answers (as set out in paragraph 22 above) absolve him from being responsible for the incorrect calculations of his pension which the Department made. In arriving at this view, the Tribunal has also taken into account that the applicant, on his own evidence, thought the Department were taking into account, or should have been taking into account his Superannuation payments since they knew all about them. The Tribunal therefore has considerable difficulty in accepting that the applicant was not in a position to answer properly the question put to him about Superannuation being paid to him. Nor is the Tribunal satisfied that the applicant’s medical condition was such as to preclude him from understanding the questions put to him. The Tribunal is satisfied that the applicant’s debt is not attributable solely to an administrative error made by the Commonwealth and so finds. That being so, section 1237A of the Act is not available to the applicant.
44. Turning then to the second question as set out above.
45. With respect to special circumstances, the Tribunal notes that although special circumstances are not defined in the Act, the approach to be taken in interpretation and application of the discretionary provisions of the Act have been dealt with by the Tribunal and the Federal Court in numerous cases. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 it was said:
“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”
46. This decision was generally affirmed on appeal by the Full Court of the Federal Court of Australia in Beadle v Director-General of Social Security (1985) 7 ALD 670, where it was said:
“the phrase ‘special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss.”
47. Furthermore the Tribunal is mindful that all of the circumstances in a particular case must be considered and the Tribunal should adopt a flexible response to such circumstances bearing in mind the need to consider community interest in the recover of public monies.
48. In this respect the Honourable Justice French in Secretary, Department of Social Security v Hales (1998) 153 ALR 259 said:
“The evident purpose of section 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 constraint 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.”
49. Furthermore, to waive the debt under this provision, it must be more appropriate to waive rather than write off the debt. In these circumstances, the applicant has the capacity to repay the debt. In Re Secretary, Department of Social Security and McAvoy (AAT 11263, 26 September 1996) the Tribunal referred to the need to balance the competing interests in the burden of repayment for the individual over a period of time against the community interest in recovery of public moneys. Further, in Hales (supra), the Federal Court said:
“From time to time in the administration of social security benefits, overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned.”
50. The Tribunal is also mindful that Her Honour Justice Keifel in Groth (supra) stated, in respect of special circumstances, that it would require something to distinguish an applicant’s case from others, to take it out of the usual or ordinary case.
51. The Tribunal notes the respondent’s submission that the applicant knowingly made false statements and representations about his superannuation and his assets. Without making a finding on this issue at this stage, the Tribunal has directed its consideration in the first instance to the question of special circumstances.
52. The applicant has put forward his medical circumstances and his financial circumstances as special circumstances.
53. With respect to his medical condition, the Tribunal is not satisfied that the applicant’s medical circumstances are special. In arriving at this view the Tribunal has taken into account the opinion of Dr Roland as well as the somewhat equivocal reports about the applicant’s medical condition many years ago. The Tribunal has weighted the medical reports, such as they are, against the applicant’s evidence and presentation, particularly in respect of his continuing work with local radio and the Salvation Army.
54. With respect to his financial circumstances, the Tribunal accepts the respondent’s submission that the applicant’s financial circumstances are better than those of many people receiving social security payments in that he receives a fortnightly pension, he receives superannuation which is not insignificant and he has substantial assets. Financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include suffering of an extreme nature. The Tribunal is of the view, that the applicant’s financial circumstances are such that he does not suffer financial hardship and that the debt he owes to the Commonwealth can be paid by withholdings from his current payments.
55. The Tribunal has considered all of the material before it and in the light of this consideration and its findings above, finds there is nothing unusual, uncommon or exceptional in the applicant’s circumstances which allows his circumstances to be treated as special.
56. That being so, it is not necessary for the Tribunal to consider further sub-sections 1237AAD(a) and (c) of the Act.
57. The Tribunal is satisfied that the applicant does not meet the requirements of section 1237AAD such that his debt cannot be waived because of special circumstances.
58. The Tribunal affirms the decision under review.
I certify that the 58 preceding paragraphs are a true copy of the reasons for the decision herein of Mr I R Way, Member
Signed: Kirsten Donnelly
AssociateDate/s of Hearing 29 October 2003
Date of Decision 20 February 2004The Applicant appeared in person
For the Respondent Ms H Wallis-Dunn, Departmental Advocate
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