Calo and Anor and Secretary, Department of Family and Community S Ervices

[2003] AATA 598

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 598

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/29, Q2003/30

GENERAL ADMINISTRATIVE DIVISION		)
Re		TONY CALO SYLVIA DA COSTA

Applicants

And

SECRETARY, DEPARTMENT

OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr RG Kenny, Member

Date27 June 2003 

PlaceBrisbane

Decision The Tribunal affirms the decisions under review. 

(Sgd) RG Kenny
  Member 

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements - overpayment of newstart allowance – overpayment of parenting payment partnered – notification of earnings – waiver of debt due to administrative error – waiver of debt due to special circumstance

Social Security Act 1991 ss 503, 643, 1068, 1068B, 1222A, 1223(1), 1236, 1237, 1237A, 1237AAD

Family and Community Services and Veterans’ Affairs Legislation Amendment (Debt Recovery) Act2001

Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 1 AAR 362
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

27 June 2003  Mr RG Kenny, Member      

1.      On 18 July 2002, a delegate of Centrelink on behalf of the Secretary,  Department of Family and Community Services (“the respondent”) determined that, under the Social Security Act 1991 (“the Act”), Tony Calo had been overpaid an amount of $660.63 by way of newstart allowance, that Sylvia Da Costa had been overpaid an amount of $2,733.08 by way of parenting payment partnered and that, in each case, the amount was a debt due by each of them, respectively, to the Commonwealth (see T45 and T46). 

2.      On 21 October 2002, an authorised review officer varied the decision in respect of Mr Calo by reducing the amount of the debt to $296.43 and affirmed the decision in relation to Ms Da Costa (see T61-T64).  Those decisions were, in turn, affirmed by the Social Security Appeals Tribunal on 26 November 2002 and, on 13 January 2003, Mr Calo and Ms Da Costa (“the applicants”) lodged an application for review of the decision by the Administrative Appeals Tribunal (“the Tribunal”) (see T1).

3.      At the hearing, the respondent was represented by Mr T Ffrench. The applicants attended the hearing but were not represented.  In evidence were the following:

§Exhibit 1       “T” Documents (T1–T81)

§Exhibit 2       Gastroenterology Report, dated 29 April 2003, from Dr B Devereaux

§Exhibit 3       Medical Report, dated 7 April 2003, from Dr B O’Sullivan

§Exhibit 4       Medical Report, dated 30 April 2003, from Dr N O’Sullivan

§Exhibit 5       Medical Certificate, dated 3 March 2003,

from Dr B O’Sullivan

§Exhibit 6       Medical Certificate, dated 7 April 2003, from Dr B O’Sullivan

§Exhibit 7       Medical Report, dated 15 May 2003, from Dr B O’Sullivan

§Exhibit 8       Income estimate details for S Da Costa

Issues and Legislation

4.      It is not disputed that Mr Calo was paid newstart allowance in 1998 until 29 June 2001 and that Ms Da Costa was in receipt of the parenting payment partnered from 20 April 2001. In the decision under review, the respondent determined that the applicants were overpaid in the period from 20 April 2001 to 27 December 2001 because reliance was placed upon incorrect income levels that the applicants earned during that period.

5. The relevant provisions of the Act which relate to the raising of the debts and to the writing off or waiver of any debt are sections 1222A, 1223, 1236, 1237, 1237A and 1237AAD. Insofar as relevant, these read:

“1222A  If an amount has been paid by way of social security payment under this Act or the 1947 Act, or by way of fares allowance under the Social Security (Fares Allowance) Rules 1998, the amount is a debt due to the Commonwealth if, and only if:

(a)a provision of this Act, the 1947 Act, the Social Security (Fares Allowance) Rules 1998 or the Data-matching Program (Assistance and Tax) Act 1990 expressly provided that it was or expressly provides that it is, as the case may be; or

(b)       the amount:

(i)        should not have been paid; and

(ii)       was paid before 1 January 1991; and

(iii)was not an amount to which subsection 245B(2) of the 1947 Act applied.

…

1236(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.

1236(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)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

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

1236(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.

…

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.

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.

…

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.”

6.      The issues for the Tribunal to determine are whether there is a newstart allowance debt in the case of Mr Calo or a parenting payment partnered debt in relation to Ms Da Costa, what the amounts of any such debt are and whether any such debts are to be written off or waived.

Applicants’ Evidence

7.      Mr Calo and Ms Da Costa gave the following evidence to the Tribunal.

8.      They are members of a couple and have two children aged 2 years and 4 months, respectively.   In July 2001, Mr Calo commenced employment on a casual basis with Woolworths.  He continued in that employment until 12 December 2001.  About two days after he started work, he contacted Centrelink by telephone and advised the officer to whom he spoke that he was now in employment and he also advised what the income details were.  He asked the officer what he needed to do in relation to the lodgement of fortnightly forms concerning his income and was told by the officer that he should contact Centrelink by telephone each fortnight and provide the relevant income details, in particular, what his gross earnings were. Mr Calo did that each fortnight by reading from his pay slip what his gross income was until December when his work finished.  On one such call, he was told by the officer that they did not have the relevant information for current or the two previous fortnights and he told the officer that he would provide it.  He did so by immediately retrieving his pay slips and again contacting Centrelink by telephone where he spoke to a different officer and gave the relevant information. 

9.      Mr Calo said that this only happened on one occasion and that every other occasion involved his reporting by telephone his gross earnings on a fortnightly basis.  He said that he may have been offered a receipt by the operator but he did not realise that he would need any number to establish the fact of the phone calls and so he declined to accept a receipt number.  He said that he could not recall receiving regular letters from Centrelink about the need to give income details except that he could recall one letter to that effect in December 2001.

10.     He ceased working for Woolworths because he was transferred to a store which involved him in driving a significant distance and he was also working a nightshift which made him feel very tired during the day.  At times, he felt like falling asleep whilst driving and so he ceased employment and went back on to newstart allowance.  Before he ceased, he arranged to have an interview with a Centrelink officer and he thought that this might have been in late November.  On that occasion, he recalled being told by the officer that he may have been under-paid his entitlements by way of newstart allowance.  He was also told that he would receive any such amount at the end of the financial year.  After ceasing work, he and Ms Da Costa went to the Centrelink office and, instead of being advised that they had been under-paid, they were told that there was an overpayment because they had been paid an excessive amount of newstart allowance and parenting payment partnered, respectively. 

11.     Mr Calo said that since the debts had been raised, there had been much friction between him and Ms Da Costa and that this had resulted in his being treated for depression by his local doctor, Dr O’Sullivan, and also in his seeing a counsellor.  He said that he is currently taking Zoloft for his depression and that his local doctor has recommended that he see a psychiatrist.  He said that, on one occasion, he had lost his temper and had assaulted Ms Da Costa and that, as a result of this, Ms Da Costa had obtained a domestic violence order which was still in force. The order required him to be of good behaviour towards Ms Da Costa.

12.     In relation to Ms Da Costa’s earnings, he said that he could recall that she received an amount of holiday pay in May or June 2001 and he could also remember that she contacted Centrelink by telephone and advised Centrelink that the moneys had been received and what that amount was.

13.     Mr Ffrench referred Mr Calo to a Centrelink record dated 4 September 2001 (T18/66).  There, a record is made of earnings in three fortnightly periods:  fortnight ending 26 July 2001 - $548; fortnight ending 9 August 2001 - $989; and fortnight ending 23 August 2001 - $487.  He was also referred to an employee earnings history provided to the respondent by Woolworths (T35/127) which showed the earnings for those periods as being $1249.30 (gross) and $989.30 (net);  $1202.71 (gross) and $956.71 (net);  and $1033.02 (gross) and $832.22 (net), respectively. Mr Calo was also referred to copies of employee pay advices, the originals of which had been provided to him by his employer for the first two of those periods (T36).  He conceded that the amounts on the employee pay advice were the same as in the employer’s earnings history and that these amounts differed from those which were recorded by the Centrelink officer on 4 September 2001.

14.     Mr Calo was also referred to a Centrelink record dated 9 October 2001 where fortnightly earning amounts for the period ending 16 September 2001 in the amount of $338.88 and for the period ending 30 September 2001 in the amount of $956.00 were recorded (T25/75).  He was again referred to the employer’s record of his earnings where, for those periods, the entries are $403.28 (gross) and $338.88 (net) for the first period and $956.75 (gross) and $779.95 (net) for the second period (T35/127).  He was also referred to employee pay advice sheets which record the same amounts as provided by the employer (T36). Again, he conceded that the amounts on the employee pay advice were the same as in the employer’s earnings history and that these amounts differed from those which were recorded by the Centrelink officer on 9 October 2001.

15.     In relation to those documents, the applicant could provide no explanation as to the discrepancies in the amount recorded as having been advised to the Centrelink officer on 4 September 2001 and 9 October 2001 but again stated that he had always provided, by reading directly from his pay slip, what his gross earnings were.  Further, he said that there was only one occasion when he provided information for more than one fortnight and that was when he was asked to provide information for three fortnights.  He could not explain why the Centrelink records revealed that, on two occasions, information for more than one fortnightly period had been recorded.  He said that he had always done what he needed to do and that he was not accountable for the way in which the information was processed by Centrelink officers.

16.     In relation to his present situation, Mr Calo said that he was not employed and that he and Ms Da Costa were just able to cope financially.  In part, this was achieved by reducing the frequency with which they were able to obtain medical assistance and counselling services.  He said that the debt alleged against him had now been repaid. 

17.     Ms Da Costa ceased work in February 2001 because she was pregnant with her second child.  At that stage, she was uncertain as to whether she would return to her work so she was on unpaid maternity leave.  She was owed holiday pay and this was paid to her towards the end of May 2001 in the amount of $2,412.42.  She said that, shortly thereafter, she contacted Centrelink by telephone and advised them of the payment.  She could not recall the date upon which this was done and did not receive any receipt number in relation to the call.

18.     Mr Ffrench referred Ms Da Costa to a pay slip from her former employer, Brig-o-doon Retirement Village, which showed that there was a direct payment dated 5 June 2001 to the applicant in the amount of $2,412.42 (T34/128).  She was also shown a copy of a Commonwealth Bank account statement in her name which showed a deposit in that amount on that same date (see T32/91).  She conceded that the moneys may have been paid to her at around that time rather than in May but confirmed that, shortly after being paid, she advised Centrelink. 

19.     Ms Da Costa said that she was currently repaying the amount alleged as a debt against her as deductions from her present social security benefits in the amount of $20 per fortnight.  She also said that she and Mr Calo were just able to manage financially and that she is currently being treated for depression.

Respondent’s Submission

20. Mr Ffrench submitted that the respondent had relied upon income details provided by Mr Calo in the period from 20 April 2001 to 27 December 2001 in order to calculate the level of his newstart allowance and the level of Ms Da Costa’s parenting payment partnered. He submitted that calculations were based upon gross income of Mr Calo and that the information he provided to Centrelink did not correctly reflect his income. This meant that he had been overpaid newstart allowance and that Ms Da Costa had been overpaid parenting payment partnered. He submitted that these constituted debts under the Act.

21. Mr Ffrench referred to the provisions of the Act relating to writing off the debt and waiving the debt and said that these were not applicable in the present case. In relation to Mr Calo, the debt could not be written off because it had been repaid and, in the case of Ms Da Costa, it was currently being repaid by her as a deduction from her present social security payments. In relation to the waiver of the debts, Mr Ffrench submitted that they had arisen for reasons that could not be solely attributed to the Commonwealth and also that the circumstances of the applicants were not so unusual, uncommon or exceptional to justify waiver of the debt in this case.

Applicants’ Submission

22.     Mr Calo submitted that he and Ms Da Costa had provided information to Centrelink which was accurate and which was provided, in his case, fortnightly in relation to his gross earnings and, in the case of Ms Da Costa, within a few days of the receipt of her holiday pay.  He submitted that, in the event that error had occurred, it was on the part of Centrelink officers.

23.     He submitted that he and Ms Da Costa were not in a position to repay the still outstanding debt and that, to do so, would place more pressure on their relationship and on their health.

Consideration

24. Sections 643 and 503 of the Act provide that the rate for payment of newstart allowance and parenting payment partnered, respectively, are to be determined in accordance with the terms of section 1068 and section 1068B of the Act. Under those provisions, the ordinary income of the applicants is to be taken into account in calculating the levels of those respective payments.

25.     It is not disputed that Mr Calo was employed by Woolworths from the period from 8 July 2001 until 12 December 2001 or that, during that period, he received newstart allowance.  On the basis of the payment records of Woolworths and the records of the respondent, I am satisfied that, in the pay periods shown in column 1 of the following table, Mr Calo earned the gross amounts in column 2 of that table, that the amounts of income declared by him are those in column 3 of that table and that the dates on which these were declared are those in column 4 of that table.

Fortnightly pay period	Gross earned	Amount declared/assessed	Date declared
08/07/2001	614.46	612.00	16/07/2001
22/07/2001	1,249.30	548.00	04/09/2001
05/08/2001	1,202.71	989.00	04/09/2001
19/08/2001	1,033.02	487.00	04/09/2001
02/09/2001	833.37	0.00	09/10/2001
16/09/2001	403.28	338.88	09/10/2001
30/09/2001	956.75	956.00	09/10/2001
14/10/2001	999.58	138.00	19/10/2001
28/10/2001	843.84	advised amount of $138 continued	-
11/11/2001	865.58	advised amount of $138 continued	-
25/11/2001	550.65	advised amount of $138 continued	-
09/12/2001	499.79	416.00	14/12/2001
23/12/2001	592.60	0.00	21/12/2001
Total	10,644.93	4,484.88

26.     Also, based on the records of Centrelink concerning payment to Mr Calo, I am satisfied that reliance was placed upon the income amounts declared by him and that, in the result, he was overpaid the amount of $296.43. 

27.     On the basis of the Brig-o-doon Retirement Village pay slip and the Commonwealth Bank record of Ms Da Costa, I am satisfied that she was paid the sum of $2,412.42 on 5 June 2001.  I am also satisfied that this income amount was not taken into account by the respondent in calculating the level of her parenting payment and that the incorrect income amounts provided by Mr Calo were also utilised by the respondent in calculating the level of her parenting payment partnered.  On the basis of the Centrelink records, I am satisfied that she was overpaid the amount of $2,733.08 in the period from 20 April 2001 to 27 December 2001.

28. Section 1222A of the Act provides that an amount can be considered to be a debt to the Commonwealth only if a provision of the Act expressly so provides. Prior to 1 July 2001, subsection 1223(5) did so provide, in the following terms:

“If:

(a)an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997 or by way of fares allowance; and

(b)because the received amount had not been correctly calculated using the relevant rate calculator or other provision for calculating the amount, or for any other reason, the received amount is greater than the amount (the  correct amount) of social security payment or fares allowance that should have been paid to the person;

the difference between the received amount and the correct amount is a debt due to the Commonwealth.”

29.     That provision was repealed by the Family and Community Services and Veterans’ Affairs Legislation Amendment (Debt Recovery) Act 2001 and replaced with subsection 1223(1) of the Act which reads:

“Subject to this section, if:

(a)       a social security payment is made; and

(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

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.”

30.     On the application of those provisions to Ms Da Costa, the overpayment amount of $2,733.08 is a debt due by her to the Commonwealth.  On the application of the latter provision, the amount of overpayment of $296.43 to Mr Calo is a debt due by him to the Commonwealth.

31. Section 1236 of the Act enables a debt to be written off. The provision is set out above and applies if the debt is irrecoverable at law, if the debtor has no capacity to repay the debt, if the debtor’s whereabouts are unknown or if it is not cost effective for the Commonwealth to take action to recover the debt. Those requirements are not met in this case. In particular, in order for a debt to be irrecoverable at law, it must not be able to be recovered by means of deductions. Mr Calo has already repaid his debt and Ms Da Costa is making repayments of her debt by deductions from her current social security payments. I am satisfied that the write-off provision is not applicable in this case.

32. A debt may be waived, under section 1237A of the Act if it were attributable solely to an administrative error made by the Commonwealth. On the basis of my finding above that the applicant gave incorrect details of his income to the respondent, I am satisfied that the debts, to the extent that they are referable to that incorrect information, were not due solely to an administrative error made by the Commonwealth.

33.     I am also satisfied that Ms Da Costa did not provide the correct information concerning her income to the respondent and that, to the extent that the debt is attributable to that failure on her part, the debt was not solely related to administrative error made by the Commonwealth. 

34. It follows that I am satisfied that the debts cannot be waived under section 1237A of the Act.

35. An alternative waiver provision is in section 1237AAD of the Act which is set out above. It requires that there be special circumstances to justify that action. The Act does not provide guidance as to the meaning of the term “special circumstances” in that provision.  In Beadle v Director-General of Social Security (1985) 7 ALD 670, the Full Court of the Federal Court, in dealing with the phrase, stated that it was not possible to lay down precise limits or precise rules for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss”  (at 674).  There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security (1984) 1 AAR 362) where (at 364) the Tribunal had acknowledged that the term was “incapable of precise or exhaustive definition” and that, to be special, the circumstances must be “unusual, uncommon or exceptional” and must have a “particular quality of unusualness that permits them to be described as special”.

36.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court’s decision in Beadle’s case, observed (at 545) that special circumstances:

“would require something to distinguish…[the] case from others, to take it out of the usual or ordinary case… It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

37. In this case, the applicants have given evidence that they have suffered stressful effects as a result of the debts that they have incurred, that they are undergoing treatment for depression and that Mr Calo is receiving counselling. They also experience some financial difficulties in that they are only just able to cope in that sense. They also have the additional responsibility associated with the care of young children. However, I am satisfied that none of those factors can be described as being unusual, uncommon or exceptional in typical Australian households and, therefore, I am satisfied that there are no special circumstances in this case which would justify the waiver of the debt under section 1237AAD of the Act.

Decision

38.     The decisions under review are affirmed.

I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed: ...................................................................................
  Associate

Date of Hearing  20 June 2003
Date of Decision  27 June 2003
The Applicants appeared in person
Solicitor for the Respondent     Mr T Ffrench, Departmental Advocate