Clarke and Secretary, Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2002] AATA 1330

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2002/578

GENERAL ADMINISTRATIVE DIVISION       )
           Re      PATRICK CLARKE
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr S Webb, Member

Date23 December 2002
PlaceSydney

Decision The Tribunal determines to set aside the decision under review and, in substitution therefor, decides that the Commonwealth's right to recover a debt in the amount of $6,594.25 from the Applicant is waived. The matter is remitted to the Respondent to assess the correct rate of pension that is payable to the Applicant.

[SGD] Mr S Webb, Member
CATCHWORDS
SOCIAL SECURITY – disability support pension – retrospective payment of Canadian pension – overpayment of Australian pension – debt to the Commonwealth - delay in raising debt - waiver – special circumstances

LEGISLATION
Social Security Act 1991 ss 8, 1223, 1236, 1237A, 1237AAD, Schedule 5
Social Security (Administration ) Act 1999 ss 8, 72, 196, 237
Social Security (International Agreements) Act 1999 Schedule 4
Acts Interpretation Act 1901 ss 28A, 29

AUTHORITIES
Re Jonauskas and Secretary, Department of Family and Community Services [2001] AATA 72
Secretary, Department of Family & Community Services v Allan [2001] FCA 1160
Re Beadle and Secretary, Department of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Zaleski and Secretary, Department of Social Security (AAT N7154, 11 July 1991)
Secretary, Department of Social Security v Sevel & O'Connell (1992) 28 ALD 626
Secretary, Department of Social Security v Hales (1998) 51 ALD 695

REASONS FOR DECISION

23 December 2002 Mr S Webb, Member

This application by Mr Patrick Clarke ("the Applicant") seeks review of the decision of the Social Security Appeals Tribunal ("the SSAT") on 11 March 2002 (T2) to affirm the decision of an authorised review officer ("ARO") on 14 January 2002 to recover a debt in the amount of $6,594.25 (T9). The ARO had affirmed an earlier decision dated 22 October 2001 to raise the debt.
The Tribunal convened a hearing in this matter on 18 November 2002 in Sydney, at which the self represented Applicant gave oral evidence. Ms Cheryl Collis, an advocate from Centrelink's Advocacy and Administrative Law Team, represented the Secretary, Department of Family and Community Services ("the Respondent").
BACKGROUND
The following information is provided by way of background and is not in contention between the parties.
The Tribunal finds:

(a)The Applicant was born on 28 November 1937 and was granted Australian disability support pension ("Australian pension") on 4 July 1991.
(b)In October 2000 the Applicant was granted Canadian disability pension ("Canadian pension") from 1 April 1998.
(c)Centrelink was advised of the grant of Canadian pension on 2 October 2000 by the Canadian authorities (T8) and, in response to requests for further information, received details of the historical rates of Canadian pension payable to the Applicant on 14 May 2001 (T4 and T5).
(d)On 22 October 2001, Centrelink informed the Applicant that he owed a debt to the Commonwealth in the amount of $6,594.25 (T8).

ISSUES BEFORE THE TRIBUNAL

The issues before the Tribunal are:

(a)whether the decision to raise and recover from the Applicant a debt to the Commonwealth in the amount of $6,594.25 was the correct and preferable decision; and if so
(b)whether there are sufficient grounds to write off or waive the debt.

LEGISLATION

The relevant legislation in this matter is the Social Security Act 1991 ("the Act"), in particular sections 8, 1223, 1236, 1237A and 1237AAD and Schedule 5; the Social Security (Administration) Act 1999 ("the SSA Act"), in particular sections 8, 72, 196 and 237; and the Social Security (International Agreements) Act 1999 ("the SSIA Act"), in particular Schedule 4.
EVIDENCE BEFORE THE TRIBUNAL
The Tribunal had before it the following documents.

EXHIBITDESCRIPTION
T1-T10Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975.
A1Letter from B J Crisp, Customer Service Officer, Centrelink to Mr Clarke dated 7 January 2002.
A2Medical reports concerning Mr Clarke by Dr M Wierna (unsigned), dated 18 October 2001, Dr A le Roux, dated 16 August 2002, and Dr P Lee, dated 24 August 2001, and Hunter Oncology Unit medical appointment card for 7 April 2003.
R1Respondent's Statement of Facts and Contentions dated 13 November 2002 with Annexures A-I.

evidence of the applicant

The Applicant told the Tribunal he applied for a Canadian disability pension in late 1999. He recalled the Canadian authorities informed him on 2 October 2000 that pension would be granted from 1 April 1998 and that he received a cheque for approximately $15,000 on or about 22 October 2000, but was not able to access the funds for approximately three weeks.
The Applicant told the Tribunal he understood that the grant of Canadian pension would affect the amount of his Australian pension. He gave evidence that Centrelink reduced his Australian pension by approximately $90 per fortnight in early October 2000, which he presumed was as a consequence of the grant of the Canadian pension. He stated that he did not hear anything from Centrelink about the reduction in his pension and he did not contact Centrelink to confirm the reason for the reduction, recalling that his sister's pension had been reduced in similar circumstances.
The Applicant gave evidence that Centrelink did not inform him of any debt arising from the payment of Canadian pension until advising him that he owed a debt to the Commonwealth in the amount of $6,594.25 in a letter dated 22 October 2001.
The Applicant stated that he expended the lump sum payment of Canadian pension on household appliances and a holiday, recalling he had never had so much money before. He gave evidence that he spent all of the money from the lump sum payment by mid 2001, without any knowledge of a debt. The Applicant stated that he would have repaid the debt from the lump sum payment, had he known about it at that time.
The Applicant told the Tribunal he lives rent-free in a house owned by an elderly woman in return for which he does chores, such as cleaning, shopping and walking the dog. He stated that he pays the woman $100 per fortnight for food and can live on his reduced pension. The Applicant gave evidence that Centrelink is recovering the debt by deducting $85 per fortnight from his disability support pension. He noted, however, that the recovery of $85 per fortnight means that his quality of life is reduced and he is not able to afford to socialise with his mates at the club as often as he would like or otherwise do. He stated that he can only afford to do this on his reduced pension once each fortnight. He acknowledged that Centrelink had reduced the rate of recovery of the debt from $170 per fortnight to $85 per fortnight, because deduction of $170 per fortnight made his life extremely difficult.
The Applicant informed the Tribunal that he has cancer, which is currently in remission, and he gets pain from crushed vertebra in his lower back, for which he takes two Panadene Forte each day. His back problem, he noted, restricts him from performing heavy tasks, such as gardening, but does not prevent him from carrying out other daily activities, such as driving, cleaning or shopping. He related being diagnosed with dementia, whereby he has some difficulties with his short-term memory, forgetting where he has put things, for example.
With regard to his obligation to notify Centrelink of any increase in his income, the Applicant stated that Centrelink knew about the grant of Canadian pension before he did in October 2000. He told the Tribunal he understood that he must inform Centrelink if he earned any income, but did not realise that the Canadian pension would be considered income in that regard. In any event, he did not consider it necessary to inform Centrelink about the grant of Canadian pension, as they had already been informed about it by the Canadian authorities and had reduced his pension accordingly.
With regard to being informed about the debt by Centrelink, the Applicant vigorously denied receiving a letter from Centrelink dated 6 December 2000 alerting him to the overpayment since 1 April 1998. He stated that he recalled receiving other letters, over time, from Centrelink, but definitely did not receive any letter from Centrelink in December 2000 about the overpayment. He stated clearly that had he known of a debt, or of the possibility of a debt, he would have paid it from the lump sum payment, noting he has no other means with which to repay a debt.
ISSUES, SUBMISSIONS AND FINDINGS
The Tribunal finds the Applicant to be a witness of truth.
does the Applicant owe a debt to the Commonwealth?
The Tribunal finds the Applicant has been paid Australian and Canadian disability pensions from 1 April 1998 and ongoing. The concurrent payment of Australian and Canadian pensions is covered by the Reciprocal Agreement on Social Security between the Government of Australia and the Government of Canada ("the reciprocal agreement") at Schedule 5 of the Act and Schedule 4 of the SSIA Act.
The Tribunal finds the Applicant received payment of Canadian pension from 1 April 1998 which was not taken into account when calculating the his Australian disability support pension during the same period. This being the case, the Tribunal finds the Applicant owes a debt to the Commonwealth pursuant to section 4 of Article 14 of the reciprocal agreement, which relevantly provides:
"RECIPROCAL AGREEMENT ON SOCIAL SECURITY BETWEEN THE GOVERNMENT OF AUSTRALIA AND THE GOVERNMENT OF CANADA
…
Article 14 Determination of Claims
…
4. Where:
(a)the competent authority of Canada pays a benefit to a person in respect of a past period;
(b)for all or part of that period, the competent authority of Australia has paid to that person a benefit under the legislation of Australia; and
(c)the amount of the Australian benefit would have been varied had the Canadian benefit been paid during that period,
then
(d)the amount that would not have been paid by the competent authority of Australia had the Canadian benefit been paid on a periodical basis from the date to which the arrears of benefit referred to in subparagraph (a) were paid shall be a debt due by that person to Australia; and
(e)the competent authority of Australia may determine that the amount, or any part, of that debt may be deducted from future payments of a benefit to that person.
5.In paragraph 4, "benefit" means, in relation to Australia, a pension, benefit or allowance that is payable under the Social security laws of Australia."

The Tribunal finds that the Canadian pension is income for the purposes of the Act, which relevantly provides:
"8 Income test definitions
8.(1) In this Act, unless the contrary intention appears:
…
income", in relation to a person, means:
(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;
but does not include an amount that is excluded under subsection (4), (5) or (8);
income amount means:
(a)       valuable consideration; or
(b)       personal earnings; or
(c)       moneys; or
(d)       profits;
(whether of a capital nature or not);
…
Earned, derived or received
8.(2) A reference in this Act to an income amount earned, derived or received is a reference to:
(a)       an income amount earned, derived or received by any means; and
(b)an income amount earned, derived or received from any source (whether within or outside Australia)."

This being the case, the Tribunal finds the amount of disability support pension overpaid is a debt pursuant to subsection 1223(1) of the Act, which provides:

"1223 Debts arising from lack of qualification, overpayment etc.
1223(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."

The amount of the overpayment, and the debt arising therefor, was not in dispute between the parties. The Tribunal finds the Applicant owes a debt to the Commonwealth in the amount of $6,594.25 pursuant to section 4 of Article 14 of the reciprocal agreement and subsection 1223(1) of the Act.
should the debt be written off or waived?
In order to address this question the Tribunal must determine whether or not the debt was caused by the sole administrative error of Centrelink and received in good faith by the Applicant, in which case, if found, the debt must be waived pursuant to section 1237A of the Act. If the debt was not solely attributable to Commonwealth administrative error and was not received in good faith, the Tribunal must consider sections 1236 and 1237AAD of the Act and determine whether there are grounds to write off the debt, or to waive the debt on the basis of special circumstances.
sole administrative error
Section 1237A of the Act provides:
"1237A Waiver of debt arising from error
Administrative error
1237A.(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
1237A.(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."
The Applicant contended that the debt had not arisen through any fault on his part and was solely attributable to Centrelink. The Tribunal does not agree with this submission and finds that the debt arose, pursuant to section 4 of Article 14 of the Agreement and subsection 1223(1) of the Act, as a consequence of the payment of Canadian pension arrears for a period during which the Australian pension had been calculated and paid to the Applicant without the Canadian pension being taken into account. The Tribunal finds, therefore, that the debt, comprised of overpayments of Australian disability support pension to the Applicant between 1 April 1998 and 10 October 2000, was not caused by administrative error of the Commonwealth.
The parties made submissions regarding the twelve-month delay in raising the overpayment debt. The Tribunal is mindful, in some cases, that a significant delay may constitute an "administrative error". In the case at hand, the evidence reveals the Respondent was informed Canadian pension had been granted to the Applicant on 2 October 2000. The Tribunal finds the Respondent determined to reduce the Applicant's Australian pension on the basis of his Canadian pension income on 10 October 2000, thereby limiting further overpayment. Ms Collis submitted the Respondent was unable to calculate the amount of the overpayment without additional information from the Canadian authorities concerning variations in the rate of Canadian pension payable to the Applicant, contending the information was requested on 7 November 2000 but was not received until 14 May 2001. The Tribunal finds, therefore, that the Respondent was not able to accurately calculate the overpayment of Australian disability support pension until 14 May 2001 as a consequence of the delay in the provision of information necessary for that purpose by the Canadian authorities. The Tribunal finds the delay in provision of this information meant that the Respondent was not informed about an increase in the rate of Canadian pension on 1 January 2001 until 14 May 2001, as a consequence of which the Applicant was overpaid an amount of $29.43. It is a fact, however, that the Respondent did not finalise its calculations, nor inform the Applicant of the amount of the debt thus raised for recovery, until 22 October 2001. Ms Collis submitted the delay did not have any material effect of significance on the amount of the debt because Centrelink had reduced the Applicant's Australian disability support pension on 10 October 2000 on being notified of the grant of Canadian pension. The Tribunal accepts this submission, noting that an additional debt in the amount of $29.43 is attributable to the delay caused by the Canadian authorities.
The Applicant's contention that the debt, in whole or in part, was solely attributable to an administrative error of the Commonwealth is not, therefore, made out and the Tribunal so finds. This being the case, it is not necessary to consider or make findings concerning the related question of "good faith" pursuant to section 1237A of the Act.
write off
The Tribunal turned to consider section 1236 of the Act, which provides:
"1236 Secretary may write off debt
1236.(1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
1236.(1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)       the debt is irrecoverable at law; or
(b)       the debtor has no capacity to repay the debt; or
(c)the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
…
1236.(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."

There is no evidence before the Tribunal that recovery of the debt at the current rate is causing the Applicant severe financial hardship, even though his financial circumstances are somewhat straitened. The Tribunal finds that the Applicant's financial position is unlikely to improve in the future and the necessary grounds to consider writing off the debt are not made out on the facts.
special circumstances
Section 1237AAD of the Act provides:
"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 false representation; or
(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt."
Ms Collis submitted that the Applicant failed or omitted to notify Centrelink of an increase in his income from 1 April 1998, in accordance with the obligations specified in a notice dated 22 January 1998 (T3 folio 11):
"Total Income $0.06
…
Under sections 132 and 133 of the Social Security Act 1991 you must tell us within 14 days…if any of these things happen, or may happen. …
Income (income means your gross income before payment of any tax…)
If your income, not including financial investments or maintenance, increases;
If your income as shown above is incorrect;
…"

The Applicant submitted that he had not "knowingly" failed or omitted to comply with a provision of the Act. He stated that he did not inform Centrelink about his increased income because he had received information from the Canadian authorities about the grant of Canadian pension on 2 October 2000 and Centrelink reduced his pension accordingly on 10 October 2000. Centrelink sought detailed information about the historical rates of the Canadian pension from the Canadian authorities which, the Applicant contended, was information he did not have and could not therefore provide.
The Applicant submitted he could not provide Centrelink with information he did not possess and did not know that he was required to provide Centrelink with information that had already been provided by the Canadian authorities on the basis of which had already acted on the information and reduced his Australian disability support pension. The Tribunal accepts the Applicant's submission, interpreting "knowingly" to have an actual rather than constructive meaning; Re Jonauskas and Secretary, Department of Family and Community Services [2001] AATA 72.
The Tribunal finds that the Applicant did not knowingly make a false statement or fail or omit to comply with a provision of the Act and his failure to notify the Respondent about the grant of Canadian pension, in strict compliance with his notification obligations, had no material effect on the amount of the debt. For the purposes of subsection 1237AAD(a) of the Act, the Tribunal finds that the debt arose as a consequence of the payment of Canadian pension arrears and not as a result of any failure or omission on the part of the Applicant.
The Tribunal is mindful of the authorities in relation to "special circumstances" pursuant to subsection 1237AAD(b) of the Act and notes the conclusions of Heerey J in Secretary, Department of Family & Community Services v Allan [2001] FCA 1160 at paragraph 17:
"It is not sensible to lay down precise limits or precise rules as to what may constitute special circumstances: Beadle v Director General of Social Security (1985) 60 ALR 225 at 228. Ill health, financial circumstances and the unfairness of a strict application of the Act are some matters which may in an individual case, constitute special circumstances: Kirkbright v Secretary, Department of Family and Community Services (2000) 32 AAR 120 at 123, 127; see also Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 at 71."

Toohey J in Re Beadle and Secretary, Department of Social Security (1984) 6 ALD 1 said that circumstances must be unusual, uncommon or exceptional for them to be considered "special circumstances". Keifel J commented in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545:

"The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case (at ALR 229; ALD 674), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied."

The Applicant submitted that the delay in Centrelink advising him of the debt was a special circumstance. He submitted that the debt should be waived because Centrelink failed to inform him of the overpayment in a timely manner, as a consequence of which he expended monies that would, otherwise, have been used to repay the debt. He submitted this was not his fault and reducing his pension to recover the debt was extremely unfair and had a significant adverse impact upon his quality of life.

Ms Collis submitted that Centrelink despatched a letter on 6 December 2000 to the Applicant (Exhibit R1, Annexure A), informing him of the overpayment and that further information was being sought from the Canadian authorities. No evidence was placed before the Tribunal regarding the sending of this letter. Ms Collis submitted that the letter was sent in accordance with Centrelink's routine procedures and is therefore taken to have been served: Re Zaleski and Secretary, Department of Social Security (AAT N7154, 11 July 1991); Secretary, Department of Social Security v Sevel & O'Connell (1992) 28 ALD 626.
The Tribunal is mindful of the authorities in relation to this issue and notes the 6 December 2000 letter states:
"This is a notice given under section 196 of the Social Security (Administration) Act 1999."

Section 196 of the SSA Act relevantly provides:

"196 Written notice of requirement
196.(1)A requirement under this Division must be made by written notice given to the person of whom the requirement is made.

196.(2) The notice:
(a)may be given personally or by post or in any other manner approved by the Secretary; and

(b) must specify:
(i)how the person is to give the information or produce the document to which the requirement relates; and
(ii)the period within which the person is to give the information or produce the document to the Department; and
(iii)the officer (if any) to whom the information is to be given or the document is to be produced; and

(iv) that the notice is given under this section."

The letter, however, does not require the Applicant to provide any specified information within a specific timeframe and does not, therefore, comply with subsection 196(2) of the Act. There is a question whether the letter is a notice as contemplated by section 72 of the SSA Act, as contended by Ms Collis, or a notice as contemplated by section 237 of the SSA Act:

"72 Provisions relating to notice
72.(1) A notice under this Subdivision:
(a) must be given in writing; and
(b)may be given personally or by post or in any other manner approved by the Secretary; and
(c)must specify how the person is to give the information or statement to the Department; and
(d)must specify the period within which the person is to give the information or statement to the Department; and
(e)must specify that the notice is an information notice given under the social security law.

72.(2)A notice under this Subdivision is not invalid merely because it fails to comply with paragraph (1)(c) or (e).

237 Notice of decisions
237.(1) If notice of a decision under the social security law is:
(a) delivered to a person personally; or
(b)left at the address of the place of residence or business of the person last known to the Secretary; or
(c)sent by prepaid post to the postal address of the person last known to the Secretary;

notice of the decision is taken, for the purposes of the social security law, to have been given to the person."

The Tribunal finds that the letter does not require any information from the Applicant but provides notice of Centrelink's decision regarding overpayment of the Applicant's Australian disability support pension, pending provision of further information by the Canadian authorities, in the following terms (Exhibit R1, Annexure A):
"Although the receipt of a retrospective pension was only recently advised,,[sic] the pension is deemed to have been received since the date of grant. As your Canadian pension is income affecting, you have been overpaid Australian pension since 1/4/1998.
We have requested the Canadian authorities to supply us with further details and will proceed with the overpayment calculation on receipt of this information."

Thus, the Tribunal finds the letter is a notice pursuant to section 237 of the SSA Act.

This being the case, a letter sent by prepaid post to the Applicant's postal address as recorded by Centrelink, is taken to have been given to the Applicant at the time at which it would have been delivered in the ordinary course of the post unless the contrary is proved. This finding is consistent with sections 28A and 29 of the Acts Interpretation Act 1901 which provide as follows:
"28A Service of documents
(1) For the purposes of any Act that requires or permits a document to be served on a person, whether the expression "serve", "give" or "send" or any other expression is used, then, unless the contrary intention appears, the document may be served –
(a) on a natural person –
(i) by delivering it to the person personally; or
(ii) by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document; or
(b)on a body corporate - by leaving it at, or sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate.

29 Meaning of service by post
(1)Where an Act authorizes or requires any document to be served by post, whether the expression "serve" or the expression "give" or "send" or any other expression is used, then unless the contrary intention appears the service shall be deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post."

In the absence of evidence to the contrary, the Tribunal finds, therefore, that the letter from Centrelink dated 6 December 2000 is deemed to have been given to the Applicant. This being the case, the Tribunal finds the Respondent sought to inform the Applicant of the overpayment of his Australian pension on 6 December 2000, after a short delay of two months. The Tribunal notes, however, the Applicant's strenuous denial of ever receiving the letter and his recollection of receiving other Centrelink letters over time. The Tribunal accepts that the Applicant remained in ignorance of the overpayment of his Australian pension and his liability to repay a debt thus raised to the Commonwealth until Centrelink raised the debt on 22 October 2001.
The absence of a mechanism within the reciprocal agreement for the embargo of retrospective Canadian pension payments, pending assessment of any overpayment of Australian pension during the relevant period, means that any such overpayment must be recovered by way of raising a debt for which the recipient is liable. In the circumstances of person receiving a retrospective lump sum payment of Canadian disability support pension, it is reasonable to expect that the Respondent would take appropriate steps to ensure the recipient is made aware of their liability and repayment options in a timely manner, thereby enabling the efficient recovery of the overpayment debt. Ms Collis submitted that the delay in raising the debt after notification by the Canadian authorities on 2 October 2000 was caused, in the first instance, by a delay in receiving detailed information about the applicable historical rates of Canadian pension from the Canadian authorities and, in the second instance, having received that information on 14 May 2001, by Centrelink's heavy workload which prevented the debt being raised until 21 October 2001. While these reasons may be true, the Tribunal does not accept that the Respondent took appropriate steps to inform the Applicant of the effect of the grant of Canadian pension on his Australian disability support pension.
The Tribunal finds the Respondent made a determination to reduce the Applicant's Australian pension on 10 October 2000. There is no evidence before the Tribunal that the Applicant was notified of this determination and the reasons for it. The Applicant's evidence, which the Tribunal accepts, is that he understood his pension would be affected by the Canadian pension and believed that his Australian pension was reduced on 10 October 2000 for this reason.
The Tribunal finds, in the circumstances, that there was not sufficient communication between the parties and the obligation to notify placed upon each under the Act was not properly addressed. While the Applicant failed to strictly comply with his notification obligations concerning the grant of Canadian pension, this failure had no material effect upon the amount of the overpayment as Centrelink was already in possession of the information that would otherwise have been notified, and had acted upon it within the notification period.
The Respondent, however, is required to have regard to the special needs of disadvantaged groups in the community pursuant to subsection 8(b) of the SSA Act. In this regard, in the case of persons receiving disability support pensions who are disadvantaged by reason of disabling health conditions, it is necessary to ensure that such people are provided with adequate and timely information about decisions under social security laws that directly affect them. In the case at hand, evidence is and the Tribunal finds:
(a)the Respondent failed to inform the Applicant of a determination to reduce his pension on 10 October 2000 and the reasons for it;
(b)on 6 December 2000, two months later, the Respondent sought to inform the Applicant that he had been overpaid as a result of the retrospective payment of Canadian pension, but the letter made no mention of the determination to reduce his pension;
(c)on 22 October 2001, more than twelve months after the Respondent's original determination to reduce the Applicant's pension, the Respondent raised a debt against the Applicant.
The Tribunal finds the Respondent did not at any stage inform the Applicant of the determination to reduce his Australian disability support pension on 10 October 2000 or the reasons for it.
The Tribunal accepts Ms Collis' submission that the Respondent acted promptly upon receipt of information about the grant of a Canadian pension to reduce the Applicant's Australian pension in order to limit the amount of any overpayment, which he would be liable to repay. The Tribunal finds, however, that the Respondent's action had an unintended consequence. The Applicant was not properly informed of the reasons for the decision to reduce his Australian pension and no effort was made by the Respondent to inform him of the effect of the Canadian pension payments on his Australian pension until 6 December 2000. The Applicant gave evidence that he received payment of the lump sum by cheque on or about 22 October 2000, but was not able to draw upon those monies until "about 3 weeks later", whereupon he purchased household appliances and went on a holiday to the Gold Coast, expending the remaining monies from the lump sum payment by "mid 2001". The Tribunal finds, as a direct consequence of this and the delay in raising the debt, the Applicant was denied the opportunity to repay the debt when he could afford to do so from his lump sum payment in October or November 2000 and now faces the prospect of the debt being recovered by deduction from his pension over a period of years. The Tribunal notes that the Applicant remained in ignorance of any overpayment until the debt was raised for which he is liable on 22 October 2000, by which time he had expended the entire lump sum payment and his only sources of income were the Australian and Canadian pensions.
Applying the dictum of Keifel J in Groth (supra) the Tribunal finds these unintended consequences and circumstances to be out of the ordinary, setting the Applicant's case apart from others, whereby the circumstances may be considered to be "special circumstances".
The Applicant contended that his financial circumstances and health conditions contributed to special circumstances, and that the effect of the debt, at his age, is reducing his quality of life. The Applicant conceded and the Tribunal finds that his health conditions do not prevent him from carrying on his normal daily activities. His medical conditions include dementia that adversely affects his memory, ulceration of the stomach and duodenum, penile cancer (in remission) and crushed vertebra. The Tribunal finds, however, his cancer is currently in remission, he is able to manage his ulcerous condition with medication, he is able to manage his back pain with analgesics and his dementia is mild, but he is forgetful and misplaces things. The Tribunal finds that these conditions, alone, do not constitute "special circumstances".
The Tribunal finds that the Applicant has no investments or assets and no prospect of improving his financial circumstances through employment or other means, his sole sources of income being the Australian and Canadian pensions. The Applicant conceded that he received approximately $339 per fortnight in Canadian pension and approximately $348 per fortnight in Australian pension, and was "not starving", although he could not engage in the social pursuits he had previously enjoyed. The Tribunal finds the Applicant's financial circumstances, as they stand, are straitened but not exceptional and are therefore not "special circumstances". The Tribunal notes, however, that the Applicant is without family or other support and has an uncertain medical prognosis, relying, in financially straitened circumstances, upon an arrangement with his aged landlady regarding the provision of his labour in lieu of rent.
The Tribunal is mindful of the comments made by French J in Secretary, Department of Social Security v Hales (1998) 51 ALD 695 at pp 695-696:
"From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth. This case primarily concerns the proper construction of a section of the Social Security Act1991 (Cth) which provides for the waiver of debts where special circumstances are found to exist. There is a tension in the construction of such provisions between the needs for certainty of application and flexibility of response to the situations that may arise from time to time."

Special circumstances having been found, it must be determined, therefore, whether or not the delay in raising the debt renders its recovery either unfair or harsh to the extent that it is desirable to waive the debt.

The Tribunal accepts that the Applicant has no investments or assets of significance and has no other sources of income than his pension payments. The Applicant is 64 years of age and has disabling physical and psychological conditions, whereby he is precluded from improving his financial situation through paid employment. The Tribunal finds the Applicant has no realisable assets, other than household appliances on which he relies, or financial resources with which to repay the debt other than by deduction from his Australian pension over a period of years.
The Tribunal accepts the Applicant's assertion that he would have repaid the debt when he could afford to do so from the lump sum payment had he been informed of the debt in a timely manner. Ms Collis contended the Applicant failed to properly inform himself about the effect of his Canadian pension on his Australian pension, and the Tribunal agrees. This failing, however, must be viewed in the context of the relationship between the parties, whereby the Applicant, in the circumstances in which he finds himself, being disabled and dependent on Centrelink since 1991, places his trust and reliance in the organ of government on which he relies for his income support. In this context, the Tribunal finds the Respondent's failures to be of greater material significance. The Respondent failed to inform the Applicant of the determination to reduce his pension on 10 October 2000 and the reasons for it and did not attempt to inform the Applicant of any overpayment of his Australian pension until 6 December 2000, subsequently delaying raising a debt to recover the overpayment until 22 October 2001. The Respondent's failings precluded the Applicant from repaying his debt when he could afford to do so, in October and November 2000, as a consequence of which he must now repay the debt in instalments deducted from his Australian pension over a period of years.

The Applicant submitted that this has an adverse effect on his quality of life and is unfair. The Tribunal agrees with this submission and finds these factors, in combination, are circumstances that are out of the ordinary, where strict application of the debt recovery mechanisms in the Act, in consequence of the actions and failings of the Respondent, would be unfair.
The Tribunal finds, accordingly, there are special circumstances that make it desirable to waive the debt. The question whether it is more appropriate to waive or write off all or a part of the debt remains pursuant to subsection 1237AAD(c) of the Act. However, there is no foreseeable prospect of the Applicant's financial position improving in the future, and the Tribunal so finds. The Tribunal has found that the debt should not be written off pursuant to section 1236 of the Act for the reasons already stated and finds, therefore, that it is more appropriate to waive the debt.
This being the case, the Tribunal is satisfied that the circumstances of the Applicant's case are sufficient "special circumstances" to enliven the discretion set out in section 1237AAD and finds it is desirable to waive the full amount of the debt.
The Tribunal determines to set aside the decision under review and, in substitution therefor, decides that the Commonwealth's right to recover a debt in the amount of $6,594.25 from the Applicant is waived.
The matter is remitted to the Respondent to assess the correct rate of pension that is payable to the Applicant.

I certify that the 55 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S Webb, Member
Signed: H Sim         .....................................................................................
  Associate
Date of Hearing  18 November 2002
Date of Decision  23 December 2002
Representative for the Applicant Self represented
Advocate for the Respondent       C Collis

[2002] AATA 1330

23 December 2002

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Social Security Act 1991

Social Security (Administration) Act 1999

Retrospective Payment

Overpayment

Debt to the Commonwealth

Waiver of Debt

Special Circumstances