Caudell v Secretary, Department of Education, Employment and Workplace Relations
[2008] AATA 196
•10 March 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION 2008 AATA 196
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2007/1096,1097
GENERAL ADMINISTRATIVE DIVISION ) Re COLIN and SUZANNE CAUDELL Applicants
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Dr K S Levy, RFD, Senior Member Date10 March 2008
PlaceBrisbane
Decision The Tribunal decides :
(1) In view of the bankruptcy of Mr Colin Caudell and the advice from the Trustee in Bankruptcy, the application by Mr Caudell is incontestable at the present time before the Tribunal; and
(2) The decision of the Social Security Appeals Tribunal dated 27 February 2007 in relation to Mrs Suzanne Caudell is set aside; and
(3) The questions put to the Tribunal in relation to Mrs Caudell’s debt be answered as follows:
(i)The income of Mr Caudell for the period under review must be regarded to be that of an “employee”; and
(ii) Mrs Caudell owed a debt to the Commonwealth of $3,750.74; and
(iii) That the amount of the arrears payment for the fortnight ending 27 March 206 be waived; and
(iv) That there are no “special circumstances” or other grounds to write off or waive any other part of the debt (other than that specified in 3(iii) above); and
(v) The matter should be referred to Centrelink to recalculate Mrs Caudell’s debt taking account of the waiver of the amount of arrears payment specified in 3(iii) above.
.................[Sgd].............................
Senior Member
CATCHWORDS
SOCIAL SECURITY – Pensions, Benefits and Allowances – applicant owed a debt to commonwealth – applicant bankrupt – whether applicant conducting an independent business or employee - debt to be waived – whether part of the debt should be waived – not entitled to benefit from overpayments - no ‘special circumstances’ to waive part of debt – matter to be referred to Centrelink to recalculate debt.
Social Security Act 1991 ss 8(1), 1223(1), 1236, 1237A(1), 1237AAD Bankruptcy Act 1966 ss 58(1), 60(2)
Cook v Secretary, Department of Employment and Workplace Relations [2007] AATA1690
McCallum v Federal Commissioner of Taxation (1997) 75 FCR 458
Federal Commissioner of Taxation v Barrett [1973] HCA 49; (1973) 129 CLR 395Harris v Director General Social Security [1985] HCA 1; (1985) 57 ALR 729
Ralph v Secretary, Department of Families, Community Services and Indigenous Affairs (2007) AATA 1301
Sekhon v Secretary, Department of Families and Community Services [2003] FCAFC 190; (2003) 132 FCR 126Beadle v Director General Social Security (1985) 60 ALR 325
Jess v Scott (1986) 12 FCR 187
Dranichnikov v Centrelink [2003] FCAFC 133REASONS FOR DECISION
10 March 2008 Dr K Levy, RFD, Senior Member INTRODUCTION
1. Mr Colin Caudell and Mrs Suzanne Caudell had, for a period up to early 2006, qualified for Newstart Allowance. From 6 February 2006, Mr Caudell commenced working as a real estate sales person on the Sunshine Coast in Queensland. He was paid a retainer together with commission on sales made. This affected the amount of Newstart Allowance to which he was entitled. As a consequence, his earnings also affected the entitlements of Mrs Suzanne Caudell from that date.
2. Because of the amounts earned and timings of advices to Centrelink, together with some processing issues within Centrelink, it was determined by Centrelink that the following debts should be raised:
I.In respect of Mr Caudell – a Newstart Allowance debt of $539.43 for the period 31 January 2006 to 27 February 2006;
II.In respect of Mrs Caudell – a Newstart Allowance debt of $745.82 for the period 14 February 2006 to 27 March 2006. This amount was later varied to $3,750.74 for the period 31 January 2006 to 23 October 2006.
3. These debts were affirmed by an internal review. The initial decisions were also affirmed by the Social Security Appeals Tribunal on 9 June 2006. The decisions of Centrelink of 23 October and 27 January 2006 were subsequently affirmed by the Social Security Appeals Tribunal on 27 February 2007.
4. The applicants applied for review of those decisions to this Tribunal on 27 March 2007. Both applicants appeared before the Tribunal on their own behalf. The respondent was represented by Mr Bob Hamilton, departmental advocate.
ISSUES
5.The Tribunal is asked to determine the following questions:
I.What was the basis of “income” of Mr Caudell during the relevant period?, i.e. was he carrying on an “independent” business as a real estate agent or was he an “employee” for the purposes of Social Security law; and
II.Whether Mr and Mrs Caudell each owed debts to the Commonwealth?; and
III.Subject to the decision in II. above, whether the debts should be written off, waived or recovered?; and
IV.If any or all of the debts should be recovered as a matter of law, are there any “special circumstances” which would justify an amelioration of those decisions?
EVIDENCE
6. Both oral and documentary evidence was received before the Tribunal. Twenty (20) documentary exhibits were admitted into evidence.
7. At the outset, the Tribunal was informed that since the making of the application, the first applicant (Colin Caudell) had been declared bankrupt and did not have standing before the Tribunal. The evidence of the first applicant was nevertheless, the same evidence upon which the application by the second applicant, Mrs Caudell, depended. That evidence was received. Extensive evidence was provided both in the Section 37 documents (T documents) as well as through other exhibits and oral submissions by the applicants and the respondent.
8. It was evident that a number of retainers were paid on a fortnightly basis by the real estate agency to Mr Caudell. Periodically, commissions received were offset against that income. This is conveniently summarised in a statement by Henzells Agency Pty Ltd which shows all amounts received and earned by Colin Caudell from 22 April 2006 through to 21 October 2006. Those amounts are an independent record of retainers paid, sale values and commissions, earned together with superannuation and PAYE tax amounts. However, there is evidence that Mr Caudell was first paid a retainer on 11 February 2006 in the amount of $493. He was subsequently paid retainer amounts of $986.00 per fortnight. These increased to $1,024.80 per fortnight from September 2006.
9. Mrs Caudell notified the respondent of Mr Caudell’s earnings. She notified firstly the income of $493.00 earned by Mr Caudell but that was reported on 27 February 2006. Mr Caudell notified the respondent of his income on 13 March 2006. Mr Caudell advised Centrelink that he earned $1,479.00 for the period 31 January 2006 to 13 March 2006. Centrelink then determined that Mr Caudell was not entitled to further Newstart Allowance payments from the fortnight ending 13 March 2006. However, Mrs Caudell had numerous contacts with Centrelink and endeavoured to assist them. She reported commissions earned by Mr Caudell for various periods from the end of February and reported in March, April and May 2006 amounts earned by Mr Caudell. As a result, she was paid various fortnightly amounts of Newstart Allowance.
10. From 5 June 2006 to 14 August 2006 her reports to Centrelink recorded Mr Caudell’s commission payments but did not record his retainers. Her fortnightly payments of Newstart Allowance then increased by over $250 per fortnight. She subsequently advised Centrelink on 14 August 2006 that Mr Caudell was paid a retainer on 29 July 2006. She also declared a commission amount of $15,021.25 received by Mr Caudell on 29 July 2006. In that notification, she did not include the amount of the retainer. Subsequent notification forms included commission payments but not all retainer payments, and there were some timing difficulties with the notifications being received after the cut off dates for payment of the Centrelink amounts paid to Mrs Caudell.
11. There was no real dispute about the factual evidence. There were, however, different submissions relating to the degree of confusion or culpability of Centrelink in the administration process on the one hand. On the other hand, there were submissions about the differences in defining the character of Mr Caudell’s earnings. That is, Mr Caudell claimed to be an independent real estate agent and should therefore have been entitled to deduct various expenses from the income amounts. Centrelink has defined his income amounts as being that of an employee and that according to Social Security law, that he was not so entitled to make those deductions.
CONISIDERATION
12. I have taken into account all of the evidence presented and carefully considered both the factual evidence and the submissions relating to the various legal points. In particular, I have had regard to the statutory provisions as well as the various case authorities provided by the parties, as well as authorities which the Tribunal has considered independently.
13.At the outset, the Tribunal has made the following findings of fact:
(1) Both Mr and Mrs Caudell were witnesses of truth before the Tribunal and Mrs Caudell had clearly endeavoured to be cooperative with Centrelink in the provision of information.
(2) Mr Caudell entered into an “employment contract” on the 6 February 2006 with Henzells Real Estate Agency.
(3) The reporting history shows that there were some timing delays in reporting to Centrelink, resulting in Centrelink’s payment system not being able to prevent some payments being made to Mrs Caudell.
(4) There was some confusion within Centrelink as to the characterisation of Mr Caudell’s income and this led to the raising of a debt in July 2006. Part of this delay was due to Centrelink’s deliberations and partly due to Mr Caudell’s failure to declare income correctly in February 2006[1].
[1] (see for example, T50 folio 164)
bankruptcy of mr caudell
14. At the commencement of the hearing, the Tribunal was informed that subsequent to the application being made, the first applicant, Colin John Caudell was declared bankrupt on 20 April 2007[2]. It was submitted that Mr Caudell did not therefore have standing before the Tribunal. A brief adjournment was made during the hearing to consider the legal position in relation to the applicant. On resuming the hearing I indicated that I considered the decision of Deputy President Hack SC in Cook v Secretary, Department of Employment and Workplace Relations[3], submitted by the respondent. It was apparent that the circumstances of Mr Caudell were very similar to the decision in Cook and that the right to seek review is conferred upon any person or persons “….whose interests are affected by the decision” under review. The question therefore is whether Mr Caudell’s bankruptcy makes him still a person who is affected by the decision under review, that is, the decision of the Social Security Appeals Tribunal.
[2] Exhibit 11
[3] [2007] AATA 1690 (24 August 2007)
15. While at the time of the decision of the Social Security Appeals Tribunal (9 June 2006) Mr Caudell was certainly affected by the decision, the question of whether his bankruptcy has affected that position since that time must be determined with reference to the Bankruptcy Act 1966. Section 58(1) of that Act states that property of the bankrupt (including “after acquired” property) “vests forthwith” in the official trustee or a registered trustee.
16. The rationale for the application of those provisions for Mr Caudell is as explained by Whitlam J in McCallum v Federal Commissioner of Taxation[4], his Honour stated that:
[4] (1997) 75 FCR 458 at 470 - 471
“…in either case he can have no interest to minimise his liabilities. The trustee, on the other hand, plainly does have such an interest. (Section 177 of the Assessment Act affects the trustee to the same extent as the bankrupt). Whatever may be the correct characterisation of a taxation objection for the purposes of s134(1)(j) of the Bankruptcy Act (a question which was not argued in the present appeal), I agree with Lehane J for the reasons he gives that a review of an objection decision under part IV C of the Administration Act is a ‘legal proceeding’ that the trustee is empowered to institute.”
The fact that the Secretary contends Mr Caudell’s debt remains extant does not alter that position[5].
[5] See Cook (Supra) at paragraph 12
17. It was therefore apparent that the applicant was also affected by s 60(2) of the Bankruptcy Act 1966. That subsection states:
“(2) an action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.”
18. It seemed to me that the hearing could therefore proceed no further until the Trustee in Bankruptcy of Mr Caudell’s estate was given an opportunity to advise in writing, whether or not he wished to prosecute or continue in the place of Mr Caudell. There was no objection to the Tribunal’s proposition that the matter should be adjourned until advice was received in that regard. Consequently, the Tribunal then made the following orders:
(1) Pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975, the Tribunal orders that as the applicant, Colin Caudell, has become a bankrupt, the application by that applicant is stayed in accordance with s 60(2) of the Bankruptcy Act 1966, until the Trustee makes election, in writing, to prosecute or discontinue that application; and
(2) This application in respect of both applicants is adjourned to a date to be fixed, pursuant to s 40(1)(c) of the Administrative Appeals Tribunal Act 1975.
19. During the period of the adjournment, the Trustee responded on 7 February 2008, indicating that as there would be no commercial benefit to the estate. As well, the trustee did not wish to become a party to the matter[6].
[6] Exhibit 16
20. The adjourned hearing was resumed on 13 February 2008 on the basis that the debt decision of Mr Caudell remained extant but was not contestable, and that the only decision in dispute before the Tribunal was that of Mrs Caudell. Of course, Mrs Caudell’s entitlement to Newstart Allowance is dependent upon the same evidence as Mr Caudell’s debt, i.e. Mr Caudell’s earnings of retainer and commission from Henzell’s Real Estate Agency. His evidence was admissible for that purpose.
issue 1
was mr caudell conducting an independent business or was he an ‘employee’?
21. This is a most critical issue in determining this matter. The most appropriate legal decision in answering this question in effect would determine whether or not there is a debt owing by Mrs Caudell. The critical facts are that Mr Caudell was paid a retainer of $986 per fortnight; he was paid commissions after settlement monies of sales had been cleared; and any commissions paid were all set off against the retainers received. Therefore, Mr Caudell was paid the net amount of commissions, that is, gross amounts of commission less outstanding amounts of retainer.
22. The applicant claims that Mr Caudell was an “independent” real estate agent. Mr Caudell, on behalf of Mrs Caudell, submitted a profit and loss account for the period July 2007 to January 2008 as being indicative of his income. Mr Caudell is paid by commission (albeit net commission after offsetting retainers) and from which there are car and other expenses for which he is personally responsible. The initial impression is that from a commercial point of view, it would appear incongruent for Mr Caudell to have his retainer regarded as income when it is in fact a loan to him, or in any event, a liability which he would be responsible to repay regardless of whether he ever earned any income.
23. Is this consistent with the use of the term “income” in Social Security laws? Section 8(1) of the Social Security Act 1991 defines “income” to mean:
“(a) an income amount earned, derived or received by the person for the person’s own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance….”
24.An “income amount” is defined also in s 8(1) to mean:
“income amount means:
(a) valuable consideration; or
(b) personal earnings; or
(c) moneys; or
(d) profits;
(whether of a capital nature or not).”
25. Section 4.3.20 of the guide to Social Security Law deals with income from employment or independent contracting and reveals “commissions received by self employed people” and “commission-only real estate sales people” also maybe caught as ‘employees’ under Social Security Law. It is said there that commission- only real estate sales people have been regarded as employees since the decision of the High Court Of Australia in Federal Commissioner of Taxation v Barrett[7]. Mr Caudell also referred me to paragraph 6 of that decision concerning a “master-servant” relationship. He also referred to the reference in that case to the Queensland Station Case[8] where “control” was said to be not absolute in that case because of various conditions of employment which existed. However, I note that in Barrett’s case (supra), which involved the question of whether a real estate agent was an employee, Stephen J said:
“There do, however, appear to me to be a number of circumstances which point to the conclusion that these salesmen are employees. They are not engaged for a limited time or to perform one specific task but as more or less permanent representatives of the firm, thus they participate as beneficiaries, albeit in respect of small sums only, in the firm's non-contributory superannuation scheme, the relative permanency of their employment being thereby recognized; turnover of land salesmen was described as "very, very small". They may not, by statute, act as land salesmen for any other agents nor act in any way in connexion with land dealings on their own account so long as they represent the respondents; they accurately enough describe themselves as representatives of the respondents. Their basis of remuneration, by commission, is attained only because of their proved experience and proficiency as land salesmen; until they "become sufficiently experienced and competent to go on full commission" they are unquestionably employees, paid by a salary plus some commission; their progression to a pure commission basis is regarded as promotion, yet they do not thereby cease to be an integral part of the firm's organization, in fact quite the contrary;...... For every sale effected by a salesman he is required to complete and submit a questionnaire to the respondents, the purpose of which is to provide them with a quite detailed knowledge of the circumstances of the sale which has been negotiated and of the facts leading up to its conclusion, so that they may ensure that salesmen are acting as they would wish them to........... (see paragraph 21).”
[7] [1973] HCA 49; (1973) 129 CLR at 395
[8] [1945] 70 CLR 552
26. In Harris v Director General Social Security[9] 1985 [HCA] 1, the High Court said that depending on the employment arrangements, that different approaches may be appropriate and that earnings from work may be treated as a continuing source of income and averaging those earnings may be appropriate, while in other cases a more discreet source of income should be found.
[9] [1985] HCA 1
27. The alternative evidence to be assessed is based on Mr Caudell’s employment agreement[10]. That contract refers to “employer” and “employee”. It also has the following characteristics –
· A base salary of $986 per fortnight,
· Hours of work for full time employees,
· Remuneration pay of commission less salary retainer,
· Employee undertaking referring to control of aspects of work by the employer,
· Leave entitlements – eight days paid sick leave; four weeks paid annual leave,
· The employer is to make superannuation contributions as per the Superannuation Guarantee (Administration) Act 1992,
· Conditions of employment include that the employee is to provide a car for his duties,
· The employer is to provide professional indemnity insurance for the employee.
[10] Exhibit 2
28. Therefore, as alluded to earlier, there is an initial appearance of commission payments and a more normal accounting treatment would seem to me to require assessment of income based on net income after each commission payment, not before the commission is received. However, as stated by the High Court, each case will depend on its own circumstances and, there can be convincing evidence that salesmen are employees[11]. In this case, the basis of payments and expenses for car etc. which have characteristics of a non-employee, are ameliorated by other terms of the contract, particularly those characteristics which tend to show a lesser degree of control because of the standard employment conditions concerning hours of work, leave, and entitlements paid by the employer (sick leave and recreation leave, superannuation payments and professional indemnity insurance). On that basis, there is a strong argument that the employment basis under which Mr Caudell was employed more closely approximates that of an employee.
[11] (see paragraph 21 of FCT v Barrett above).
29. The respondent also submitted that the Department’s policy is contained in the Guide to Social Security Law at paragraph 4.3.20 and that the policy that such income is to be treated as income held for 52 weeks. Conceptualized that way, the retainer might well be viewed merely as income in advance as it is net income only that is used by the department, any retainer being apportioned weekly over the following 52 weeks.
30. This situation arose in Ralph v Secretary, Department of Families, Community Services and Indigenous Affairs[12] where, I said the approach there (similar to that urged by Mr Caudell in this case), that defining Mr Caudell’s employment relationship as an agent rather than as an employee, has some appeal on the basis of normal commercial principles and because of some of the expenses which he bears directly. But I am satisfied that, as I was in Ralph’s case, that the Department’s approach is an appropriate one and that its policy is not for the Tribunal to review unless it is plainly wrong in law. I can find no evidence that the policy is wrong in law or unfair to the applicant, even though there are alternative ways to treat it from an accounting point of view. Indeed, the treatment of retainer over the 52 weeks following payment of that retainer, minimises the impact of that assessment and is not unreasonable. For that reason also, it is differentiated from normal commercial accounting principles. The basis adopted by the Department therefore, as a matter of policy, should be adopted in this case. That approach is, in my view, consistent with the principles also set out in FCT v Barrett (supra) and in Harris v Director General of Social Security (supra). I am satisfied that the arrangements applying to Mr Caudell are “income” for the purposes of s 8(1) of the Social Security Act 1991.
[12] [2007] AATA 1301
31. That being the case, together with the evidence of Mr Ewer (a Manager of Centrelink) which indicated that the calculations had been verified, I am satisfied that compared to Mrs Caudell’s entitlements for that period, the amounts alleged by the respondent are overpayments.
issue 2
does mrs caudell owe a debt to the commonwealth?
32. Section 1223(1) of the Social Security Act 1991 (The Act) states that:
“(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. “
33. That section is worded strictly and where a person obtains the benefit for which they were not entitled for any reason, then the amount will be a debt due to the Commonwealth. As I have found that the amounts alleged by the respondent ($3750.74) are overpayments, I find that they are debts due to the Commonwealth under s 1223(1) of the Act.
issue 3
should this debt be written off or waived?
write off:
34. Section 1236 of the Act provides for write off only in certain circumstances. Specifically, s 1236 (1A) and (1B) provide as follows:
“(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:
(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.
(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.”
35. From evidence submitted by the respondent. I am of the view that the debt is not irrecoverable at law. Even though the applicant is in difficult circumstances since her husband has been declared bankrupt, there is nevertheless, evidence that Mr Caudell is being re-established as a real estate agent and his prospects are promising. I can therefore find no basis for writing off the debt under the above provisions.
waiver due to administrative error:
36. Section 1237A(1) of the Act provides for a debt to be waived where there has been administrative error. Where it has been the sole administrative error of the Commonwealth and where the debtor received the amount in good faith, then it is obligatory for the Secretary to waive the right to recover the portion of the debt which is attributable to the sole administrative error. But that is not obligatory where it is not the sole administrative error of the Commonwealth.
37. In this case, the actions of the applicant have contributed to the debt. It is also true that the Commonwealth has been partially responsible for the timing of the debt. However, so has the applicant, as she provided information which was either an understatement of the earnings of Mr Caudell or because there was not timely lodgement of the notification forms[13]
[13] (See also Sekhon v Secretary, Department of Families and Community Services [2003] FCAFC 190 (2003) 132 FCR 126
38. In balancing the degree of culpability by each party for the amount of the debt, the file note from Centrelink shows that the arrears payment to the applicant for the fortnight ending 27 March 2006 was received in good faith[14]. While the payments of the 13 February 2006 and 27 February 2006 were within that period, they were made because Mr Caudell did not declare income correctly or in a timely way. It appears Mrs Caudell communicated diligently but not always in a sufficiently timely way. But given the multi-factorial nature of the causes of the errors and that both Centrelink and the applicant must bear some responsibility for this situation (as well as being affected by inaccurate reporting by Mr Caudell), it is difficult to interpolate the figures and apportion responsibility accurately for that period. I think it would be unfair however to ignore the circumstances which, if the coding decision had been made by Centrelink earlier and the coding input had been performed accurately, together with the inaccurate reporting by Mr Caudell, the arrears debt for the fortnight ending 27 March 2006, would not have arisen.
[14] See (T 50 Folio 164).
39. I therefore find that in the applicant’s circumstances at the time (which would have been extremely difficult emotionally for her in the time leading up to Mr Caudell’s bankruptcy), and the fact that there is evidence the applicant endeavoured to comply with Centrelink’s requirements diligently, together with the acknowledgement by the respondent that Mrs Caudell received the arrears payments in good faith for the fortnight ending 27 March 2006, those circumstances are sufficient in my view to be regarded as justification to waive that arrears payment.Therefore, I determine that the debt for the arrears payment for the fortnight ending 27 March 2006 only, must be waived.
issue 4
“are there grounds to waive the debt due to special circumstances”?
40. The statutory provision dealing with waiver in special circumstances is dealt with in s 1237AAD as follows:
“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. “
41. There have been various decisions of the Federal Court showing that to demonstrate “special circumstances”, the case must be extraordinary or somehow unusual in order to distinguish it from other cases[15]. More recently, in Dranichnikov v Centrelink[16], the Court in that case said that in determining special circumstances, one must also consider how the error occurred[17]. In this case in considering how the error occurred it is clear that there was no dishonesty; and there was some apparent confusion or inefficiency on behalf of the Centrelink office. There is also some failure to report in a timely way by the applicant. I determine that they are not “special circumstances” and this case cannot be set apart from other cases.
[15] Beadle v Director General Social Security [1984] 60 ALR 325; Jess v Scott (1986) 12 FCR 187
[16] [2003] FCAFC 133
[17] see paragraph 66 of Dranichnikov.
42. The balance of the debt (that is, apart from the finding in Issue 3 that the amount of debt up to 27 March 2006 should be waived), cannot be waived due to “special circumstances”.
CONCLUSION
43. In determining the application by Mrs Caudell, I have taken into account Mr Caudell’s submissions of the financial circumstances of himself and Mrs Caudell, and the fact that Mrs Caudell may require some knee surgery. She may therefore not be able to work for quite a period of time. However, the respondent submitted the anticipated commission of Mr Caudell on sales which had been made recently (and which would settle by 30 June 2008) would be of the order of $25,000. I cannot find there are any special circumstances in waiving the balance of the debt. If circumstances changed in the future, Centrelink has sufficient flexibility in its practices to be able to make administrative arrangements to adjust to any change in future circumstances of Mrs Caudell.
44. In view of the consideration and findings in relation to the questions submitted to the Tribunal, I determine as follows:
(1) In view of the bankruptcy of Mr Colin Caudell and the advice from the Trustee in Bankruptcy, the application by Mr Caudell is uncontestable at the present time before the Tribunal; and
(2) The decision of the Social Security Appeals Tribunal dated 27 February 2007 in relation to Mrs Suzanne Caudell is set aside; and
(3) The questions put to the Tribunal in relation to Mrs Caudell’s debt be answered as follows:
(i)The income of Mr Caudell for the period under review must be regarded to be that of an “employee”; and
(ii) Mrs Caudell owed a debt to the Commonwealth of $3,750.74; and
(iii) The amount of the arrears payment for the fortnight ending 27 March 2006 is waived; and
(iv) There are no “special circumstances” or other grounds to write off or waive any other part of the debt (other than that specified in 3(iii) above); and
(v) The matter should be referred to Centrelink to recalculate Mrs Caudell’s debt taking account of the waiver of the amount of arrears payment specified in 3(iii) above.
I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K Levy, RFD, Senior Member
Signed: .....................................................................................
E. Young, Research AssociateDate/s of Hearing 5 February 2008
Date of Decision 10 March 2008
Applicants Unrepresented
Respondent Mr B Hamilton, departmental advocate
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