Catanzariti and Secretary, Department of Social Services (Social services second review)
[2021] AATA 2878
•12 August 2021
Catanzariti and Secretary, Department of Social Services (Social services second review) [2021] AATA 2878 (12 August 2021)
Division: GENERAL DIVISION
File Number(s): 2018/4581 & 2018/4582
Re: Sam Catanzariti Carolyn Catanzariti
APPLICANTS
And Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal: Senior Member Dr N A Manetta
Date: 12 August 2021
Place: Adelaide
The Tribunal sets aside the decision under review in each matter and substitutes decisions as follows:
(a)the total overpayment of Mr Catanzariti’s benefits under the Social Security Act 1991 from 12 February 2005 to 18 November 2013 is $52,354.08, but part of this debt should be waived so that he is taken to have owed the respondent the sum of
$30,655.91; and
(b)the total overpayment of Ms Catanzariti’s benefits under the Social Security Act 1991 from 12 February 2005 to 31 January 2014 is $55,296.51, but part of this debt should be waived so that she is taken to have owed the respondent the sum of
$30,037.31.
..........................[Sgnd]..............................................
Senior Member Dr N A Manetta
SOCIAL SECURITY – overpayment of social security benefits – income earned from betting activities – whether power to waive under section 1237AAD of the Social Security Act 1991 (Cth) should be exercised – whether special circumstances exist –practical unfairness in the operation of the Act – decision under review set aside - total overpayments owing to the respondent recalculated and partly waived.
Legislation
Social Security Act 1991 (Cth) Cases
Re S and C Catanzariti and the Secretary Dept of Social Services [2017] AATA 268
REASONS FOR DECISION
Senior Member Dr N A Manetta 12 August 2021
1.These are applications, brought by Mr Sam Catanzariti and Ms Carolyn Catanzariti, a married couple, seeking a review of a Level 1 decision of this Tribunal. The applications concern the level of recovery, if any, that ought to be allowed in respect of the overpayment of social security benefits by the respondent to each of them. The underlying issues have had a considerable history in the Tribunal.
2.At the hearing before me, Ms Catanzariti appeared for both her husband and herself. As they were not legally represented, I shall set out my decision as plainly as possible.
ESSENTIAL FACTS
3.I first set out the essential facts in this matter. The relevant time-frame in this review concerns certain years from February 2005 to late 2013 (or to early 2014 in Ms Catanzariti’s case). During these years, Ms Catanzariti was receiving a disability support pension under the Social Security Act 1991 (Cth). Mr Catanzariti was receiving a carer payment. He was
also receiving a parenting allowance in respect of the couple’s children. It is agreed that during this period Mr Catanzariti was a member of a ten-person syndicate of gamblers that would meet periodically. The syndicate pooled resources, and bets were made, and made again on multiple occasions, in the course of betting sessions. Some bets in a session were successful, others were not.
4.Centrelink’s investigation into the couple’s affairs revealed income had been earned from the betting activities that had not been declared. A debt was raised against both Mr and Ms Catanzariti in respect of overpaid social security benefits. The amounts that were raised at the time are detailed in the 2017 reasons of the Tribunal (Level 2) which determined applications by the Catanzaritis in respect of the debts said to be owed by them.1
5.As the Tribunal noted (at [41] of its reasons) it is a feature of this case that a record of individual bets was available. It was, therefore, possible for Centrelink to ascertain the income earned from individual bets.
TRIBUNAL’S EARLIER DECISION
6.The Tribunal’s key conclusions may be summarised as follows. As Mr Catanzariti was part of a ten-member syndicate, only one tenth of the proceeds of betting should be attributed to him. Secondly, only successful bets were to be counted as income. Thirdly, the amount bet was to be deducted from the proceeds of a successful bet to determine the syndicate’s income from that bet. Fourthly, no deduction was to be made for unsuccessful bets: income derived from each successful bet was to be counted irrespective of losses from earlier or later bets in a betting session. This meant that it was possible for the syndicate (and Mr Catanzariti individually) to have earned income even though the syndicate may have made no overall profit, or even a loss, over the course of a betting session (that is, after losses were set off against profits in a session).
7.This fourth proposition was not contradicted by the applicants before the Tribunal, and it was further decided to be the correct approach: see [49]. In the event, the Tribunal set aside the decision under review and required the recalculation of the debts according to certain orders which appear at [53] of the Tribunal’s reasons.
1 The citation for the Tribunal’s decision is [2017] AATA 268.
8.The Tribunal, with the agreement of the parties, did not address the issue of debt-waiver at that point in the proceedings since it would be more appropriately considered after quantum was determined: see [7].
9.The debts were recalculated, and new debts were raised against Mr and Ms Catanzariti. Mr and Ms Catanzariti applied for an internal review of the calculation decision, but it was affirmed.
APPLICANTS’ SUBMISSIONS
10.Mr and Ms Catanzariti have applied to the Tribunal (at Level 2) again. They have raised a number of issues concerning the recalculations, and of course, the residual issue of waiver that was deferred by the earlier Tribunal needs to be considered.
11.Before me, Ms Catanzariti first raised her disagreement with the Tribunal’s earlier decision. She submitted in essence that the decision was unfair and illogical. How could it be, she asked, that a social-security recipient can be taken to have received income from a single bet, when the entire betting session may have resulted in a substantial loss? The logic of the Tribunal, she submitted, would see a person potentially indebted to Centrelink because of a single bet notwithstanding the person had no additional moneys available as a result of other losses from the betting session.
12.I have decided that it is not a proper part of my review to consider afresh the Tribunal’s earlier decision. Mr and Ms Catanzariti were represented before the Tribunal on that occasion. The Tribunal reached a decision in which it noted, at [49], that “[i]t was never contended by the applicants that the income generated from gambling receipts should be reduced by the amount of those failed bets”. In my opinion, the argument that Ms Catanzariti wishes to raise was one that could have been, and ought to have been, put to the Tribunal on the earlier occasion. Moreover, the Tribunal reached a clear decision that not deducting losses from bets was “the correct approach” (at [49]).
13.I note that if the result of that decision was unsatisfactory, an appeal to the Federal Court on a question of law might have been brought. No such action was taken. I appreciate that it may sound somewhat unreasonable, or even cavalier, to suggest that appeals be taken
to the Federal Court given the extreme costs of litigation. But that was the appropriate forum for the question of law that Ms Catanzariti now wishes me to consider afresh.
14.In this regard, I should say that whilst, so far as I am aware, there is no principle of res judicata or issue estoppel formally applying to the decision-making functions of this Tribunal− since these are common-law doctrines applicable to courts of law− I think the Tribunal must decide what the scope of its review ought to be in any individual case to meet its duty of fairness to both parties. I do not believe it is appropriate for me to revisit the Tribunal’s earlier decision as part of my review in this case. I do not express a view as to whether I do, or do not, agree with the decision of the earlier Tribunal: that would not be appropriate. Rather, I take the view that the issue was decided, and no appeal was brought. My review in this matter should be confined to the issues of the appropriateness of the recalculated debt and of waiver.
15.Ms Catanzariti next queried a number of payments that were said by her not to have been demonstrated to be “income”. She said that she could not go back so far in her banking records to determine what the amounts were. She said there was a basic unfairness in the approach of Centrelink, which decided in 2014 to raise a debt going back as far as 2005. I reject this argument for a number of reasons. First, it seems clear that the Social Security Appeals Tribunal (SSAT), whose decision was considered by the Tribunal on 1 March 2017, was the proper forum to raise questions of the inclusion or exclusion of income appearing on bank accounts. It is clear from paragraph [1], bullet point [3] of the decision rendered by the SSAT (as quoted in the Tribunal’s earlier decision of 1 March 2017 at [6]) that the issue of bank account deposits was raised and certain exclusions in favour of the Catanzaritis were made on that occasion. The Tribunal noted at [8] that “[t]he applicants do not take issue with those parts of the directions in paragraph one of the decision relating to the exclusion of income.” Secondly, it does not seem to me to be unfair for Centrelink to have acted in the way it did. The definition of “income” in s 8 of the Social Security Act, 1991 is very broad and is subject to few exclusions. Thirdly, this is a case where, in my opinion, the Catanzaritis failed to engage with Centrelink when they ought to have done so. I do not accept that Mr and Ms Catanzariti reasonably took the view that when Mr Catanzariti earned sums of money from a session’s betting, he did not need to declare those to Centrelink. The couple ought, in my opinion, to have spoken with Centrelink to ascertain Centrelink’s attitude to winnings from betting. They chose not to do so. Ms Catanzariti put to me that they, or at least she, thought winnings would not affect the payment of social
security benefits. That view was not reasonably held in that it did not follow from independent advice or advice from Centrelink itself. In my opinion, a reasonable social- security recipient with no firm understanding of the social security system would appreciate that the benefit he or she was receiving might be income-tested, as a social welfare benefit is usually designed to assist those in financial need. Money derived from any source might, therefore, be relevant to the calculation of a benefit. All in all, therefore, I reject this argument.
WAIVER
16.In my opinion, the Catanzaritis should succeed partly, but partly only, on the question of waiver. The conditions for waiver are set out in the Act. Section 1237AAD of the Act contains three preconditions to the exercise of the discretionary power of waiver, set out in paragraphs (a), (b) and (c). Mr D’Assumpçao, for the respondent, indicated that there was insufficient evidence for me to draw the conclusion that the debt resulted from a knowingly false statement or representation or from a knowing failure to comply with a provision of the Act. In light of that concession by the respondent, I shall act on the basis that paragraph
(a) is satisfied. Paragraph (c) is also satisfied in my opinion; namely, that it is more appropriate to waive the debt (or part thereof) than write it off.
17.This effectively leaves paragraph (b). There must be “special circumstances” making it desirable to waive the debt (apart from financial hardship alone). In my opinion, such special circumstances do exist in this case. My reasoning in brief is as follows.
18.I am indebted to the respondent who filed a helpful written outline of submissions on “special circumstances”. It contained excerpts from leading decisions. The word “special” is not a term of art, but is, rather, an ordinary word. In these circumstances, there is no need for me to set out my understanding of the term. There has been a great deal written about the test of “special”. It is clear that circumstances need not be exceptional to be “special”. Beyond that, I do not wish to add to anything that already appears in decisional law on this subject. It does not always help, in my opinion, to set out dictionary definitions when one is dealing with a common word. I note that there is a danger, when one construes a word with an ordinary meaning, of substituting synonyms from a dictionary for the precise word chosen by the legislature when it is not necessary to do so. A dictionary elucidates the meaning of a word by reference to other words (that are themselves defined). But these
other words, which are only synonyms, merely shed light on meaning− or, better, a range of meanings− and should not be used as substitutes for the word used by the legislation.
19.In my opinion, unless the debt is waived in part, there will be a severe practical unfairness in the operation of the Act for the Catanzaritis. The result of the Tribunal’s earlier decision is that the net result of each betting session is legally irrelevant. Rather, each bet must be analysed, and each successful bet must be imputed to Mr Catanzariti as income in the manner decided by the Tribunal; namely, one tenth of the return less one tenth of the initial amount bet. Losses on earlier or later bets in a session are, as I have said, irrelevant.
20.I have already indicated that I do not believe that it is appropriate for me to consider afresh the appropriateness of this decision. That does not prevent me, however, from considering the practical results of the legal operation of the Act. I think the practical effect of the decision is harsh. Any particular betting session involved the syndicate in pooling financial resources and using those resources over the session. At the end of the session, there was either a net profit to be distributed or a net loss to be borne (or, less likely, there was an exact break-even).
21.But the imputation of income to Mr Catanzariti on a per-bet basis without any offset for unsuccessful bets results in a reduction of an entitlement to a pension in a way that seems to involve practical unfairness. At the risk of oversimplifying matters, I note that a social- security benefit is properly reduced to take account of other income that the benefit recipient derives, and this reduction occurs precisely because there is available to the recipient other money to which recourse may be had as a substitute for the benefit. In other words, the benefit, which is intended to provide money when recourse to other funds is insufficient, is reduced on account of the availability of other money. The practical operation of the earlier Tribunal’s decision leads, however, to a reduction in the payment of a benefit whether or not there has been an increase in Mr Catanzariti’s financial resources at the end of each betting session.
22.I asked the respondent to recalculate the level of indebtedness of each of Mr and Ms Catanzariti on the assumption that only daily net gains were required to be reported to Centrelink. This resulted in a reduction of Mr Catanzariti’s aggregate debt in the period 12 February 2005 to 18 November 2013 from $52,354.08 to $30,655.91, a reduction of approximately 41.4%. Ms Catanzariti’s aggregate indebtedness from 12 February 2005 to
31 January 2014 fell from $55,296.51 to $30,037.31, or some 45.7%. These results are impressive.
23.I believe that the harshness or practical unfairness of the operation of the Act constitutes a “special circumstance” in this case. I have further decided that a proper exercise of my discretion makes it desirable to waive part of the debts and to reduce them to the levels I have just quoted.
24.To make matters clear, this is not a case in my opinion of “financial hardship alone”. The harshness or practical unfairness in the operation of the Act I have found to exist in this case does not depend on any estimation of the resources presently available to any person to discharge his or her debt. Such a person may or may not have sufficient resources to do so. Rather, the harshness or practical unfairness of the operation of the Act results from the disconnection between the legal result required by the Act in respect of the imputation of “income” to an individual and the actual monies that individual has in his or her pocket at the end of a betting session.
25.I have decided that “special circumstances” exist. I also conclude that the proper exercise of my discretion is to waive part of the debt. I did not receive evidence of the financial impact on the Catanzaritis of repayment of their debts. Even on the assumption that they might be able to discharge them over time with gradual repayments, the appropriate result, in my opinion, is to require them to repay only monies they would not have received if they had reported daily net winnings. Had the Catanzaritis known of the obligation to report winnings from each successful bet, then paragraph (a) of s 1237AAD, to which I have earlier applied, would have prevented any waiver at all. But in the absence of a knowingly false statement or a knowing omission of income, I think the appropriate exercise of my discretion is as I have indicated.
26.In deciding whether special circumstances exist and in weighing my discretion, I have taken into account what I have found to be the failure of the Catanzaritis to engage with the Department and to make reasonable inquiries of how they should disclose the income Mr Catanzariti was deriving from his betting activities. I accept that this was an inappropriate choice by them. But, as noted, the respondent has not argued that the Catanzaritis knowingly omitted to disclose the income Mr Catanzariti derived from his betting. In the
circumstances, I have decided that it is appropriate to waive part of the debt in the manner I have indicated.
27.There is, finally, the question of interest payable. The respondent has very fairly accepted that in this case no interest will be charged to the Catanzaritis up to and including the date of my decision. I also note that the sheet provided to me by Mr D’Assumpçao records that Ms Catanzariti was underpaid her benefit from 1 February 2014 to 20 November 2015. This underpayment is required to be taken into account.
FORMAL DECISION
28.The formal decision I would make in this case is as follows. I shall set aside the decision under review and substitute a decision that the total overpayment of Mr Catanzariti’s benefits under the Act from 12 February 2005 to 18 November 2013 is $52,354.08, but that part of this debt should be waived so that he is taken to have owed the respondent the sum of $30,655.91. In Ms Catanzariti’s case my decision shall be that the total overpayment of her benefits under the Act from 12 February 2005 to 31 January 2014 is $55,296.51, but that part of this debt should be waived so that she is taken to have owed the respondent the sum of $30,037.31. In Ms Catanzariti’s case, it is further noted that there are amounts of underpaid pension to which she is entitled (as referred to in the respondent’s submissions) which should be taken into account and offset. I note also that the Catanzaritis have been making repayments, and these must also be accounted for.
29.To avoid confusion, I have annexed to this decision the recalculation sheet provided by Mr D’Assumpçao on behalf of the respondent to which I have referred.
I certify that the preceding 29 (twenty- nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr N A Manetta.
..............[Sgnd]....................
Administrative Assistant Legal Dated: 12 August 2021
Dateofhearing: 10, 11, 29 June & 24 August 2020 AdvocatefortheApplicant:
Self-represented
AdvocatefortheRespondent:
Paul D’Assumpçao, HOWARD ZELLING CHAMBERS
Recalculations pursuant to the directions of Senior Member Manetta made on 29 June 2020, on the assumption that Mr Catanzariti was obliged to report daily net gains from his betting activities
Sam Catanzariti
FROM
TO
RATE APPLIED
PAID
OVERPAID
12 Feb 2005
20 Sept 2007
n/a
$25,207.85
$23, 745.93$19, 691.5621 Sept 2007
11 Mar 2010
Transitional
$31,075.58
$17, 321.25$5,309.3412Mar2010
21 Jun 2013
New
$42,247.48
$9, 584.67$4,720.0322 Jun 2013
18 Nov 2013
New
$6,589.29
$1, 702.23$934.98Total Overpayment
$52, 354.08$30,655.91
Carolyn Catanzariti
FROM
TO
RATE APPLIED
PAID
OVERPAID
12
Feb2005
20 Sept 2007
n/a
$28,748.68
$22, 518.01$15,160.1621
Sept 2007
11 Mar 2010
Transitional
$31,087.42
$17, 246.84$5,243 .7312
Mar 2010
21 Jun 2013
Transitional / New
$49,838.66
$12, 612.22$6,927.1222
Jun 2013
31 Jan 2014
New
$10,961.10
$2, 919.44$2,706.30Total Overpayment
$55, 296.51$30 ,037.31Arrears (1 February 2014 to 20 November 2015)
$15, 901.97$13, 019.24
Updated figures of the Applicants' indebtedness
As at 31 July 2020, Sam Catanzariti has repaid $6,650.00 towards his debts and is currently repaying
$150.00 per week through BPay payments.
As at 31 July 2020, Carolyn Catanzariti has repaid $10,371.12 towards her debts and is currently repaying $20.00 per fortnight through BPay payments.
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1
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