Camilleri and Secretary, Department of Social Services (Social services second review)
[2019] AATA 236
•27 February 2019
Camilleri and Secretary, Department of Social Services (Social services second review) [2019] AATA 236 (27 February 2019)
Division:GENERAL DIVISION
File Number(s): 2018/2797 and 2018/2801
Re:Joseph and Patricia Camilleri
APPLICANTS
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Chris Puplick AM, Senior Member
Date:27 February 2019
Place:Sydney
The decision under review is affirmed.
.........................[sgd]...............................................
Chris Puplick AM, Senior Member
CATCHWORDS
SOCIAL SECURITY - lump sum compensation payment - compensation affected rate of payment – age pension - preclusion period - debt to commonwealth - administrative error - payments received in good faith - special circumstances – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Beadle and Director-General of Social Security [1984] AATA 176
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114
Groth and Secretary Department of Social Services [1995] FCA 1708
Ivovic and Director General of Social Services [1981] AATA 57
Neuendorf and Secretary, Department of Social Services [1998] AATA 868
Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76
Snodgrass and Secretary, Department of Social Security [2016] AATA 185
SECONDARY MATERIALS
Peter Sutherland and Allan Anforth: Social Security and Family Assistance Law (Federation Press, 3rd edition, 2013)
Guide to Social Security Law
REASONS FOR DECISION
Chris Puplick AM, Senior Member
27 February 2019
Mrs Patricia and Mr Joseph Camilleri (the Applicants) appeal to the Tribunal to set aside a determination by the Secretary of the Department of Social Services to raise a debt for both Applicants owed to the Commonwealth, for overpayment of their age pension.
Both Applicants are eligible for payment of the age pension. Mr Camilleri has been in receipt of the age pension since 31 July 2011 and Mrs Camilleri since 11 May 2012.
The facts in this matter are relatively straightforward, however the application of the relevant law to those facts is far less so.
NARRATIVE OF EVENTS
On 29 January 2014 the NSW District Court handed down a decision by which it awarded Mrs Patricia Camilleri the sum of $301,725.00 by way of damages resulting from an injury which she had sustained on 27 January 2011. Included in those damages was a sum of $10,000 for “future economic loss.”[1]
[1] Section 37 T Documents at [67]-[103].
There was apparently some revision of the sum awarded due to a miscalculation of certain elements of the compensation calculation by the Court and the sum in question was reduced to $ 282,427.00.[2] From this a sum of $2,854.45 was deducted by way of payment to Medicare and, after what the Tribunal assumes were other disbursements, Mrs Camilleri received an eventual lump sum payment of $280,015.19 which she deposited with the Westpac Bank.
[2] Applicant’s Evidence at [A1] letter from Solicitors (Brydens) to Applicant dated 2 May 2014.
The Department of Human Services was advised by the Applicant’s solicitors, by letter of 3 March 2014 that the Applicant had been awarded lump sum compensation, enclosing a copy of the Court Judgement which, at that stage, showed the higher (original) figure of $301,725.00.[3]
[3] Section 37 T Documents at [67].
This advice caused Centrelink to write to the Mrs Camilleri on 10 March 2014 stating that they were aware that she was to receive a lump sum compensation payment and confirming that receipt of this “attracts no Centrelink charge and no future preclusion period.”[4]
[4] Applicant’s Submission at Tab [2].
On the same day Centrelink advised the solicitors that: “While there is no Centrelink charge, your client’s compensation money may affect their rate of payment in the fortnight they receive their settlement under the ordinary income test provisions.”[5]
[5] Idem.
On 25 April 2014, the Department issued an Income and Assets Update form to Mrs Camilleri who completed it on 6 May 2014. In completing that form Mrs Camilleri appended a note to the effect that she had been awarded lump sum compensation (at that stage still using the figure of $301,725.00) but that payment had not yet been received and that [I] “still have no idea of when I will be in receipt of any money.”[6]
[6] Section 37 T Documents at [104] –[116].
A digression – the letter of 23 June 2014
Mrs Camilleri states that she sent a letter to the Centrelink Office at its Blacktown address on 23 June 2014 advising them that the sum she had received was $280,015.19.[7]
[7] Section 37 Tribunal Documents at [323].
This letter plays a significant role in the discussion of this application and so the Tribunal must make a digression to address this issue.
A copy of the letter in question is in the Tribunal Documents. Mrs Camilleri attests that the letter was written and Mr Camilleri attests that he posted it at a post box in walking distance of their home. The letter is properly addressed to an address listed on formal Centrelink correspondence for the return of mail.[8]
[8] Centrelink correspondence of 10 March 2014, Applicant’s Submission at Tab [2].
The Secretary, in her Statement of Facts, Issues and Contentions maintains:
“The debts arose in this case due to the judgement money not being recorded as an asset following Mrs Camilleri’s receipt if it. As was noted above, the Secretary has no record of the Department having received notification from Mrs Camilleri when the judgement sum was received by her. While Mrs Camilleri provided the AAT1 with a letter dated 23 June 2014, which was addressed to a Centrelink Office in Blacktown, NSW, stating that the amount of $280.015.19 had been received following the court judgement and had been deposited with the Westpac Bank, the Department has no record of this being received. As a result, no update was made to the applicant’s assets as recorded by the Department at that time, with the effect that the age pension rate was not reduced to take into account that additional asset.”[9]
[9] Respondent’s Statement of Facts, Issues and Contentions at [41].
In terms of the evidence presented to the Tribunal and in the light of the Tribunal’s observation of the meticulous and detailed record keeping by the Applicants, together with its assessment of their credibility and integrity, the Tribunal is confident in its opinion that the letter was written and posted as asserted by the Applicants. What became of it and what might be the issue with its non-receipt or non-actioning by the Department will be discussed at a later stage.
To return to the narrative
In November 2017 the Department initiated a random review of certain social security payments, included in which was a review of the Applicant’s payments.[10] In response to a request for an updated Income and Assets statement Mr Camilleri submitted a response which showed him to be holding two bank accounts with one bank: an ESaver account ($368.00) and a Reward Saver account ($272,825) together with two other accounts with another financial institution which had been listed on all previous such statements.
[10] Section 37 Tribunal Documents at [158].
In evidence, Mr Camilleri stated that he disclosed the ESaver and reward Saver accounts because he believed that in an “audit” it was necessary for the recipient to declare all their assets whereas in previous statements he had declared only those which he thought relevant to pension rate calculations and that he was of the genuine belief that this did not include monies received by way of lump sum compensation payments.
The Secretary then obtained copies of the Applicant’s bank statements in the period 18 June 2014 to 18 December 2017 direct from the bank in question. These records were forwarded by the Bank “under compulsion of law, on a confidential basis.”[11]
[11] Ibid at [196].
After due consideration of these statements the Department issued the Applicants with a notice (dated 12 February 2018) to the effect that due to overpayment of their pensions from 19 June 2014 to 12 November 2017, they had each incurred a debt to the Commonwealth of $19,120.97. On the next day (13 February 2018) the Department revised this advice and notified the Applicants that their debt was $18,026.64 being for the period of 19 June 2019 to 17 December 2018.[12] Each notification explained that this calculation of overpayment was based on the fact that; “the correct amount of your combined investments from savings was not taken into account for the payments made to you”.
[12] Ibid at [288]-[289] and [292]-[293] respectively.
On 26 February 2018 Mrs Camilleri sent the Department a letter drawing attention to her letter of 23 June 2014 and claiming that the Department had been made aware of her receipt of the compensation payment (in the sum of $280,015.19).[13]
[13] Ibid at [296]-[299].
On 13 March, an Authorised Review Officer (ARO) reviewed and affirmed the debt decision and indicated that there were no grounds for such debts being waived. The Applicants appealed that decision to the Social Services and Child Support Division of this Tribunal (AAT1) which, on 27 April 2018 affirmed the decision of the ARO.[14]
[14] Ibid at [300]-[305], [306]-[311] and [7]-[13] respectively.
On 15 May 2018 the Applicants appealed the AAT1 decision to this Tribunal which heard the parties on 13 February 2019.
The Applicant’s contentions
The Applicants appeared before the Tribunal and Mrs Camilleri gave a detailed explanation of their position in the form of a statement which was comprehensive, well researched, and which provided a forensic examination of the Applicant’s dealings with the Department over a period of many years. It contained significant details and evidence which was not otherwise before the Tribunal and which, in some instances, appeared unknown to the Respondent.
The Tribunal wishes to place on record its thanks to the Applicants, and Mrs Camilleri in particular for the quality and value of their submission.
In essence the Applicants case is as follows:
(a)Relying on their reading of section 8(11)(d) of the Act, taken together with the Determination made by the Secretary under that section, they believe that the lump sum compensation should not be taken into consideration either as income or as an asset for the purpose of calculating their pension entitlement;
(b)They conceded that that portion of the lump sum settlement awarded for “economic loss” ($10,000) may in fact be brought within the provisions of the Act for pension calculation purposes;
(c)The initial advice from their solicitor of the pending payment, together with Mrs Camilleri’s letter of 23 June 2014 provided the Department with all the information which was necessary for them to have in order to make assessment of the Applicant’s pension entitlement;
(d)There was never any formal indication from the Department that they were required to give notice of the actual receipt of the lump sum payment, given that its existence was on record via the advice of the solicitor and the letter from Mrs Camilleri indicating that it had not yet been paid but was pending payment;
(e)Any failure of the Department to use this information for this purpose is a matter for which the Department is solely responsible and to the extent it failed to act this was an “administrative error” on its part;
(f)They had a genuine belief that the lump sum in question was excluded from pension calculations and that as a result there was no need for them to report details of it over and above what they had already provided both personally and via their solicitor;
(g)In the event that their case fails and they are taken to have a debt to the Commonwealth this debt should be set aside or waived under section 1237A of the Act as it arises from administrative error on the part of the Department and is compounded by the stress and inconvenience which has been visited upon the Applicant’s by the Department’s actions.
It should be noted that the Secretary concedes without reservation that there is no suggestion that the Applicants sought to act dishonestly or that the beliefs upon which they acted were anything but genuine and sincere.[15] The Tribunal concurs with that assessment.
[15] Respondent’s Statement of Facts, Issues and Contentions at [51].
The Respondent’s contentions
The Respondent’s case is, in summary:
(i)The Applicants are mistaken about what the Act provides in terms of treatment of their lump sum payment which, although not assessed as income for the purposes of determining pension entitlement, is nevertheless, under section 11 of the Act, defined as an asset;
(ii)This means that the Applicants were required to make a full disclosure of the Bank deposits in which this money was held on each of their Income and Asset Update statements to the Department, and they failed to do this on a number of occasions;
(iii)The letter of 23 June 2014 cannot be located in any departmental files or records;
(iv)Even if there were some “administrative error” on the part of the Department arising from the failure to update the Applicant’s records, then this administrative error cannot be held to be “solely” responsible for any associated failures of pension entitlement calculations as required by section 1237A of the Act;
(v)As a result of the Applicant’s failure to disclose their asset, overpayments were made to them and these now constitute a debt to the Commonwealth which needs to be repaid;
(vi)There are no “special circumstances” in this case which would justify a cancellation or waiver of this debt.
LEGISLATIVE PROVISIONS
The following are the relevant legislative provisions to which reference has been or will be made.
Social Security Act 1991
SECT 8
Income test definitions
(1) In this Act, unless the contrary intention appears:
(11) An amount received by a person is an exempt lump sum if:
………..
(d) the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.
SECT 11
Assets test definitions
(1)In this Act, unless the contrary intention appears:
"asset " means property or money (including property or money outside Australia).
SECT 55
How to work out a person's age pension rate
A person's age pension rate is worked out:
(a) if the person is not permanently blind--using Pension Rate Calculator A at the end of section 1064 (see Part 3.2);
SECT 1064
Rate of age, disability support, wife pensions and carer payment (people who are not blind)
(1) The rate of:
(a) age pension; ….
is, subject to subsection (2), to be calculated in accordance with the Rate Calculator at the end of this section.
Module G -- Assets test
Effect of assets on maximum payment rate
1064-G1 This is how to work out the effect of a person's assets on the person's maximum payment rate:
Method statement
Step 1. Work out the value of the person's assets.
Note 1: For the treatment of the assets of members of a couple see point 1064-G2.
Note 2: For the assets that are to be disregarded in valuing a person's assets see section 1118.
Note 3: For the valuation of an asset that is subject to a charge or encumbrance see section 1121.
Step 2. Work out the person's assets value limit (see point 1064-G3 below).
Note: A person's assets value limit is the maximum value of assets the person can have without affecting the person's pension rate.
Step 3. Work out whether the value of the person's assets exceeds the person's assets value limit.
Step 4. If the value of the person's assets does not exceed the person's assets value limit, the person's assets excess is nil.
Step 5. If the value of the person's assets exceeds the person's assets value limit, the person's assets excess is the value of the person's assets less the person's assets value limit.
Step 6. Use the person's assets excess to work out the person's reduction for assets using points 1064-G4 to 1064-G7 below.
SECT 1223
Debts arising from lack of qualification, overpayment etc.
(1) 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.
(9) In this section, unless the contrary intention appears, a reference to a social security payment includes a reference to a part of a social security payment.
SECT 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) 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.
(1B) For the purposes of paragraph (1A)
(a), a debt is taken to be irrecoverable at law if, and only if:
(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.
(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor's social security payment; or
(b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999 ; or
(c) setting off under section 84A of that Act;
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) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision--on the day on which the decision is made; or
(b) if a day is specified in the decision--on the day so specified (whether that day is before, after or on the day on which the decision is made).
(3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.
SECT 1237
Power to waive Commonwealth's right to recover debt
Secretary's limited power to waive
(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 and, if the debt is an assurance of support debt, subject to section 1237AAE.
When waiver takes effect
(2) A waiver takes effect:
(a) on the day specified in the waiver (whether that day is before, after or on the day on which the decision to waive is made); or
(b) if the waiver does not specify when it takes effect--on the day on which the decision to waive is made.
Note: If the Secretary waives the Commonwealth's right to recover all or part of a debt, this is a permanent bar to recovery of the debt or part of the debt--the debt or part of the debt effectively ceases to exist.
SECT 1237A
Waiver of debt arising from error
Administrative error
(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.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
(1A) Subsection (1) only applies if:
(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
Underestimating value of property
(2) If:
(a) a debt arose because the debtor or the debtor's partner underestimated the value of particular property of the debtor or partner; and
(b) the estimate was made in good faith; and
(c) the value of the property was not able to be easily determined when the estimate was made;
the Secretary must waive the right to recover the proportion of the debt attributable to the underestimate.
Proportion of a debt
(3) For the purposes of this section, a proportion of a debt may be 100% of the debt.
SECT 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.
Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt.
SOCIAL SECURITY (ADMINISTRATION) ACT 1999
SECT 66A
General requirement to inform of a change of circumstances etc.
Person who has made a claim
(2) If:
(a) either:
(i) a social security payment (other than utilities allowance or energy supplement under Part 2.25B of the 1991 Act) is being paid to a person; or
(ii) a person holds a concession card; and
(b) an event or change of circumstances occurs that might affect the payment of that social security payment or the person's qualification for the concession card;
the person must, within 14 days after the day on which the event or change occurs, inform the Department of the occurrence of the event or change.
SOCIAL SECURITY GUIDE
4.13.1.30 Effect of Compensation on Compensation Affected Payments
Compensation as an assessable asset
All lump sum payments of compensation, including those subject to the provisions of Part 3.14, are regarded as an asset of the person and their partner.
Compensation for personal injury non-economic loss
The following table shows the assessment of non-economic loss (1.1.N.110) compensation payments.
Non-economic loss compensation that is paid…
Is assessed as ordinary income for …
periodically,
BOTH pensions AND allowances/benefits.
in a lump sum,
benefits in the fortnight it is received; BUT ignored for pension.
The Determination referred to in the Applicant’s submission is the Social Security (Exempt Lump Sum – Payments Compensatory in Nature for Non-Economic Loss) Determination 2017. The Tribunal notes that although the Applicants draw attention to this Determination in their submissions and seek to place considerable weight upon it, its terms are in fact, not favourable to the Applicants. It states, in part:
“The effect of this Determination is that a person who receives non-economic loss lump sum payments specified in the Determination, and who also receives a social security payment, will not have their social security payments reduced as these lump sum payments will not be regarded as income for the purposes of the social security income test.
The exemption of these payments from the income test on receipt does not alter the fact that any ongoing income generated by the lump sum is counted under the income test, and any assessable asset produced from the lump sum is counted under the social security assets test. This is consistent with the treatment of other lump sum payments exempted under paragraph 8(11)(d) of the Act.”
ISSUES FOR DETERMINATION
It seems to the Tribunal that there is a series of fundamental questions to be asked, and that by working through each of them sequentially, the Tribunal will be guided to the correct and preferable decision in this matter.
Question 1
Should the compensation payment made to Mrs Camilleri:
(a)in whole, or
(b)in part
be considered to be either
(a)income, or
(b)assets
for the purpose of calculating either or both of the Applicant’s pension entitlements under the provisions of the Social Security Act?
Question 2
Did the Applicants supply to the Respondent the information necessary for the Respondent to make the required calculations of their pension entitlements?
Question 3
If the answer to any part, or parts of Question 1 is in the affirmative, was the correct test applied to determining the pension entitlement for one or both of the Applicants?
Question 4
In the event that the determination of the Applicant’s pension entitlement resulted in an outcome which differed from the actual payments which had been made to them:
(a)was that an overpayment,
(b)if so does a debt from the Applicants to the Commonwealth arise,
(c)in the event that it does, what is that debt, and
(d)is that debt to be apportioned equally between each of the Applicants?
Question 5
In the event that overpayments were made to the Applicants,
(a)was this overpayment the result of an “administrative error” on the part of the Respondent,
(b)and if there were such an error, was it the “sole” cause of the overpayments being made?
Question 6
In the event that the Applicants are found to have a debt to the Commonwealth are there any “special circumstances” which would justify that debt being cancelled or waived, in whole or in part?
ANSWERS
Question 1: Income or Asset?
There has been no attempt by the Respondent to treat any part of the lump sum payment as income for the purposes of the pension entitlement calculations, although it would have been so treated in the first fortnightly payment made after its receipt. The Secretary makes it clear by stating:
“The Secretary does not dispute that the money paid to Mrs Camilleri resulting from the court judgement was not to be assessed as ordinary income under s 8 of the Act, other than in the fortnight in which it was received.”[16]
[16] Respondent’s Statement of Facts, Issues and Contentions at [26].
Interest on investments is counted as income.
The Applicant had a sum of money, from the compensation payment, invested in a series of bank accounts. The Respondent asserts that, under section11 of the Act this “money” is legislatively defined as an asset. The Respondent notes that the asset is available for the use of the Applicants and makes the further point that the Act does not recognise, so as to distinguish, different sources of “money”. By this test the money from the compensation payment is clearly an asset.
For these purposes there is no separate treatment of the compensation awarded for economic loss and that awarded for non-economic loss.
Section 1118 of the Act lists “certain assets to be disregarded in calculating the value of a person’s assets”. The principal exclusion is the family home, but nowhere in the list of items in this section is payment by way of compensation listed as being excluded from the definition of asset.
Answer: the money from the compensation payment is an asset for the purposes of the Act.
Question 2: Failure to Notify
Although there is no direct legal obligation on the Applicants to inform the Department of the date of the receipt of the compensation payment, nor was any direction or correspondence to this effect sent to them, they had an obligation to declare the amounts held in the various bank accounts on their regular statements of Income and Assets Update provided to the Department on 2 February 2016, 10 November 2016 and 12 December 2016[17] but failed to do so.
[17] Section 37 Tribunal Documents at [326], [330], and [124]-[165] respectively.
Nor did the Applicants inform the Department of their change in circumstances in response to notifications of their pension payments, as is required,[18] on at least 14 separate occasions.[19]
[18] Social Security (Administration) Act 1999 section 66A(2).
[19] Dates are provided at Respondent’s Statement of Facts, Issues and Contentions at [43].
The narrative included in these update forms states:
“You must tell us within 14 days … if any of the changes listed below happen or are likely to happen to you and/or your partner.”
The items listed thereafter include (inter alia)
·“financial investments” which attracted deemed income where there is a change of $2,000 or more
·“assets” if the value of you or your partner’s combined assets change by $1,000 or more.
The Applicants failed to inform the Department, as they were obliged to do, of their change of circumstances, change of financial investments or change of assets on numerous occasions.
As the Applicants explained to the Tribunal, and as both the Tribunal and the Respondent accepted, this was not through any deliberate attempt on their part to mislead or deceive. It was occasioned by their sincere belief that it was not necessary for them to do so, in the belief that this payment was exempt.
Unfortunately their sincere belief is also an erroneous belief.
Answer: Yes. The Applicants failed to notify the Department in relation to their change of circumstances arising from the receipt of the compensation payment when they were obliged to do so.
Question 3: The correct test
Once it has been determined as to what each pension applicant’s income and assets are, the legislation provides a mechanism whereby a calculation of their rate of payment is made. This is set out in section 1064 of the Act which brings into operation a Calculator, also set out in the Act in section 1064 – G1. The process involves is outlined clearly in Snodgrass and Secretary, Department of Social Security[20] as follows:
[28] The Rate Calculator contains a series of Modules with Module A establishing the overall rate calculation process and the remaining Modules providing for the calculation of the component amounts used in the overall rate calculation.
[29] Steps 5 and 8 of the Module A method statement require a calculation to be made of “the income reduction” calculated under Module E and for that amount to be taken away from the maximum pension amount. The net figure is the income reduced rate.
[30] Steps 9 and 10 of the Module A method statement require a calculation to be made of “the reduction for assets” calculated under Module G and for that amount to be taken away from the maximum pension amount. The net figure is the assets reduced rate.
[31] Step 11 of the Module A method statement requires a comparison to be made between the income and the assets reduced rates and the lower of the two rates becomes the rate of pension (after some other adjustments are made at step 12 none of which are relevant for present purposes).
[20] Snodgrass and Secretary, Department of Social Security [2016] AATA 185.
The Tribunal is in no position to check all the internal calculations of this matter independently, however it accepts that, once the issue of the Applicant’s assets was settled, the calculations made thereafter are accurate.
Answer: Yes, the correct test has been applied to calculate the applicant’s pension entitlement.
Question 4: Overpayment and Debt
During the hearings Mrs Camilleri raised the question of whether or not, given that the compensation payment arose from an injury sustained by her and that payments were made directly to her, this should not impact upon Mr Joseph Camilleri’s pension entitlement.
The answer to this question is found in section 1064 – G2 of the Act (above) which provides that in relation to assets, their value is to be apportioned 50%/50% between each member of a couple. As there is no doubt as to the Applicant’s status as a couple this means that a 50/50 apportionment of the assets held between them is correct.
The calculations made using the module/formula set out in the Act demonstrates that, from 19 June 2014 to 17 December 2017 Mrs Camilleri’s assets were not used to calculate pension entitlement for either applicant. They should have been. When they were retrospectively assessed it was found, properly, that there was an overall debt to the Commonwealth which, once divided equally resulted in each of the applicants owing $18,026.64.
Answer: An overpayment has been made to the Applicants and as a result each has incurred a debt. The debt falls equally upon each partner on a 50/50 split and is in the sum of $18,026.64 for each.
Question 5: Administrative error
The Tribunal is satisfied that the Applicants made arrangements to notify the Department of the receipt of the compensation payment and that a letter dated 23 June 2014 was properly posted to the correct Centrelink address.
The Tribunal cannot conclusively state that this was received and the Department claims to have no record of it. However on the balance of probabilities (no higher) the Tribunal believes that the letter would have been received and that there followed an error on the part of the Department in failing to enter the notified details into its records.
If it were to be accepted (which the Respondent does not) that an error had occurred, being an “administrative error”, the question which must be asked is whether or not such an error was the “sole” cause of certain subsequent decisions being made.
There is considerable judicial guidance on this matter which does not need to be canvassed in detail.[21] Suffice to say that the statement by the Federal Court in Sekhon is clear enough:
“[I]t 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.”[22]
[21] Peter Sutherland and Allan Anforth: Social Security and Family Assistance Law (Federation Press, 2013, Third Edition) pages [6722] – 676].
[22] Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76 at [41].
Even if an administrative error on the part of the Department in or around June 2014 resulted in a deficient record, this deficiency would have caught the attention of the Department had the Applicant’s complied with the requirement (section 66A(2) of the Act) to notify the Department of a change in their assets status either following the receipt of pension rate statement notices after June 2014[23] or in their own declarations, including that of February 2016.
[23] For both applicants this would have been 16 March 2015. See Respondent’s Statement of Facts, Issues and Contentions at [43].
Answer: There may well have been an administrative error by the Department which led to a delayed recalculation of the Applicant’s pension entitlement, but that error was not the “sole” cause of the incorrect calculation being made.
Question 6: Waiving of debt
There is no disagreement with the proposition that the Secretary has the power to waive debts due to the Commonwealth (section 1237) but this discretion is confined by the legislation.
Section 1237A provides the framework for this. As has already been discussed, the Tribunal accepts that there may well have been an element of administrative error tainting the proceedings but it is more certain in finding that the Applicant’s “received in good faith the payment or payments that gave rise to that proportion of the debt” (section 1237A(1)). There is no doubt as to the honesty of the Applicants in this regard and no suggestion that they failed to act in good faith throughout, including in receiving pension payments to which they believed they were entitled. The Tribunal recognises that this was their “state of mind”[24] in relation to receipt of their pension payments and that their state of mind (not some external, objective test) is what should be taken into account.
[24] Neuendorf and Secretary, Department of Social Services [1998] AATA 868 at [31].
However for a debt to be waived in situations such as this the Applicant’s need to demonstrate that “special circumstances” exist to justify such a waiver.
As with other terms such as “public interest”, “good character”, “fit and proper person”, it is unfortunate that there is no definition in the relevant legislation of the precise meaning of “special circumstances”. Once again the Tribunal must rely upon judicial guidance in the matter and once again there is ample authority.
Judicial authority recognises that the term is “by its very nature incapable of precise or exhaustive definition”[25] but that it requires something to distinguish it from other cases in a way “to take it out of the usual or ordinary case”.[26]
[25] Beadle and Director-General of Social Security [1984] AATA 176 at [12].
[26] Groth and Secretary Department of Social Services [1995] FCA 1708 at [12].
Furthermore, the recovery of debt must be regarded as the “dominant principle”[27] upon which public authorities must act while still requiring “a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system.”[28]
[27] Ivovic and Director General of Social Services [1981] AATA 57 at [45].
[28] Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 at [80].
There is no evidence before the Tribunal is relation to any matters of financial hardship in relation to the Applicants, although this alone would not be sufficient to qualify for a waiver (section 1237 AAD (b)) but the Tribunal accepts that Mrs Camilleri has suffered from chronic lymphocytic leukaemia since late 2008[29] and that the whole process involved with this dispute has been highly stressful for both applicants.
[29] Section 37 Tribunal Documents at [324].
The Tribunal accepts that argument advanced by the Respondent that no special circumstances which take this case out of the ordinary have been demonstrated.
Answer: There are no special circumstances demonstrated which would entitle the Applicants to a waiver of the debt.
CONCLUSION
Having worked through each of the questions which the Tribunal regards as critical to answer, it must be concluded that the lump sum payment, being an asset under the assets test in the legislation, should have been declared by the Applicants on several occasions other than simply in their letter of 6 June 2014. Their failure to do so has led to an overpayment which the Act requires to be recovered and since any error on the part of the Department was not the sole cause of this debt arising and since there are no special circumstances in this case justifying a waiver of that debt, the decision of the Secretary remains effectively unchallenged.
The Tribunal however feels it appropriate to place on record its finding that there was clearly no attempt by the Applicants to deliberately mislead anybody or falsify anything. They acted at all times in good faith, albeit on a false premise. They had every reason to rely on their letter of June 2014 being received and acted upon by the Department and they had every reason to conduct their affairs as they did accordingly. Their current situation is an unfortunate result of both misunderstandings and miscommunications.
DECISION
The decision under review is affirmed.
I certify that the preceding 74 (seventy - four) paragraphs are a true copy of the reasons for the decision herein of Chris Puplick AM, Senior Member
.............................[sgd]...........................................
Associate
Dated: 27 February 2019
Date(s) of hearing: 13 February 2019 Applicants: In person Solicitors for the Respondent: Dr S Thompson, Department of Human Services
0
3
0