Costantini and Secretary, Department of Employment and Workplace Relations

[2006] AATA 1088

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 1088

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2006/65

GENERAL ADMINISTRATIVE DIVISION

Re:         PAUL COSTANTINI

Applicant

And:         SECRETARY,

DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             15 December 2006

Place:            Melbourne

Decision:The Tribunal affirms the decision under review. 

(sgd) Regina Perton

Member

SOCIAL SECURITY – Disability support pension – failure to inform Centrelink of changes in earnings – overpayment – waiver of debt – whether special circumstances exist – decision under review affirmed

Data-matching Program (Assistance and Tax) Act 1990 s11

Social Security Act 1991 ss 117, 1066A, 1223(1), 1237AAD

Beadle v Director-General of Social Security (1985) 7 ALD 670

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

15 December 2006  Regina Perton, Member

1.      Paul Costantini is 24 years old.  He is a passionate supporter of the Western Bulldogs AFL team.  His enthusiasm for football is matched by his strong work ethic.  Notwithstanding his intellectual and physical disabilities, he worked part time at McDonalds for several years.  Paul has been receiving a disability support pension (DSP) since 1999.  He, like others who rely on a social security benefit for income support, is allowed to earn a limited amount of extra income without it affecting his rate of payment.  However, once earnings exceed a specified amount, the rate of DSP is reduced by a complex formula.  The calculations are done in such a way that they are difficult to reconcile with daily or weekly earnings. 

2.      Paul’s earnings from his job at McDonalds varied from day-to-day and week-to-week.  His mother, Julie Costantini, is Paul’s correspondence nominee due to Paul’s difficulties with literacy and financial matters.  She too receives DSP due to multiple medical conditions.  Julie believes she informed Centrelink in a timely manner of the commencement of Paul’s employment; its temporary suspension for medical reasons and of its resumption.  She also believes that she advised Centrelink of his changes of income.  Centrelink disagrees that it was kept informed of all changes on a regular basis within the stipulated timelines. 

3.      In February 2003, Centrelink informed Paul that he had been overpaid DSP.  On 19 February 2003, a debt of $5,355.78 was raised, being the overpayment between 21 June 2000 and 2 July 2002.  Following an internal review, that debt was reduced to $4,817.11.  A second debt of $3,978.26 was raised on 3 March 2005 for overpayments between 3 July 2002 and 20 April 2004.  Following an internal review, the period of the overpayment was varied to between 3 July 2002 and 19 April 2005 and the amount of the debt increased to $5,505.07. 

4.      On 6 June 2005, an authorised review officer (ARO) from Centrelink reviewed the decisions to raise the debts and affirmed the earlier decisions as varied.  On 21 December 2005, the Social Security Appeals Tribunal (SSAT) affirmed the decisions concerning both debts.   

5.      The issues to be considered by the Tribunal are:

·Does Paul owe a debt to the Commonwealth?

·Is the amount of the debt correct?

·Should the debt be waived due to administrative error?

·Should the debt be waived due to special circumstances?

Does Paul have a debt to the Commonwealth?

6.      Paul started receiving DSP payments on 4 February 1999.  Centrelink wrote to him on 18 January 1999 telling him about the amount he would be paid and what his obligations were.  These included informing Centrelink within 14 days if he started working.  Paul started working with McDonalds on 20 June 2000. 

7.      Centrelink records indicate that, on 3 July 2000, a letter was sent to Paul in relation to an advance he had received.  He was informed of the requirement to inform Centrelink within 14 days if he commenced work or if his income went up or down. 

8.      On 11 September 2000, Centrelink wrote to Paul to tell him that the Australian Tax Office (ATO) had informed Centrelink that he had signed an Employment Declaration Form.  He was asked to provide his employment details to Centrelink if he had not already done so.  A Centrelink file note dated 14 September 2000 stated:

Employment is confirmed.  No discrepancy found.  Confirmed Employer as NORTH WEST INVESTMENTS PTY. LTD.

earnings under income limits but still coded…

9.      Centrelink sent letters to Paul on 16 January 2001, 3 July 2001, 24 January 2002 and 25 June 2002, reminding him of the requirement to inform Centrelink of any increase in income.  In its Statement of Facts and Contentions Centrelink indicated that it had recorded earnings of $45.00 per week for Paul.  However, in its correspondence to Paul, Centrelink only provided the annual income of $2,340.00.

10.     On 9 November 2002, a data‑matching exercise between Centrelink and the ATO for the 2000/2001 and 2001/2002 financial years revealed a difference between the two bodies as to Paul’s income.  Centrelink’s records showed Paul’s income to 30 June 2001 as $1872; but the ATO record for the financial year ending 30 June 2001 indicated a salary of $7923.00.  Centrelink wrote to Paul explaining the differences between the two sets of records and invited him to provide further information.  On 25 November 2002, Julie contacted Centrelink stating that she had informed Centrelink when Paul started work and what his income was.  As requested by Centrelink, Julie provided copies of Paul’s group certificates and some payslips on 8 January 2003.  These records showed that Paul was earning more than Julie realised.  Centrelink undertook investigations with McDonalds to check on the earnings revealed in the group certificates.  It raised the level of Paul’s income used to calculate his DSP entitlements to $5,057.00 per annum from 8 January 2003 and wrote to Paul to advise him of this.

11.     On 10 January 2003, during a discussion with Centrelink about Paul’s income, Julie informed Centrelink that Paul would not be working the following week and that his hours of work would decrease once he turned 21.  On 10 January 2003, Paul’s income was reduced in Centrelink’s records.  Julie was advised to inform Centrelink when Paul resumed work.

12.     During February 2003, Centrelink made contact with the franchisee running the McDonalds store at which Paul worked.  It also received further information from the ATO.   

13.     On 19 February 2003, Centrelink determined that Paul had been overpaid $5,355.78 in DSP and raised a debt for that amount.  Julie requested a review of the debt on 31 March 2003.  On 25 June 2003, she advised that she was seeking further details of Paul’s earnings from his employer.  This proved more time-consuming than expected.  Following the supply of further information and a further request for review made on 20 September 2004, the debt was reduced to $4,817.11. 

14.     A second debt of $3,978.26 was raised on 3 March 2005.  This debt was for overpayment of DSP between 3 July 2002 and 20 April 2004.  Julie requested a review of the second debt on 16 March 2005.  Further details were obtained from Paul’s employer.  As a result, the period of the debt was varied to between 3 July 2002 and 19 April 2005 and the debt increased to $5,505.07.

15.     An ARO and the SSAT reviewed both debts and determined that the amounts as varied were correct and that they had to be paid. 

16. Section 1223(1) of the Social Security Act 1991 (the Act) allows the Commonwealth to raise a debt if a person is paid a social security payment to which he is not entitled. 

17.     The Tribunal is satisfied that Paul was overpaid DSP over a period of almost four years and that he owes a debt to the Commonwealth as a result.

Is the amount of the debt correct?

18.     Julie believes that the debt has not been calculated correctly.  This view arises largely because of the complex formula used by Centrelink to calculate income and the way it is expressed in its documentation.  The table initially presented to the Tribunal appeared to show that Paul worked on Christmas Day when both he and Julie were adamant that he had not.  On the first day of the hearing of this matter, the Tribunal also found the calculations difficult to follow, particularly as the figures in the tables did not appear to reflect Paul’s actual earnings.  At the Tribunal’s request, Ms Julia Hume, the Centrelink advocate, agreed to have the amounts recalculated and to arrange for a Centrelink officer to explain the figures to Julie. 

19.     On the resumption of the case several weeks later, Centrelink presented a recalculation in an easier to follow format.  Explanations were provided of the provisions used to calculate the amount (ss 117 and 1066A of the Act).  One of the difficulties is that Paul’s pay weeks did not coincide with the periods of DSP.  Ms Hume’s description of the problem in a letter dated 24 July 2006 accompanying the recalculations was as follows:

…

At the [first] hearing, it was noted that many of the “Earnings” figures shown on the spreadsheets appeared to be substantially higher than Mr Costantini’s actual earnings.  As explained in the enclosed document, this is because up until 20 September 2003, earnings figures were entered into spreadsheets as fortnightly earnings, not actual earnings…

20.     Julie was still not satisfied with the calculations but was unable to provide an alternative calculation of the impact of Paul’s income on his DSP and hence the size of the debt.  The Tribunal is satisfied that Centrelink has now checked the figures several times.  In the absence of evidence to the contrary, the Tribunal is satisfied that Centrelink’s calculations are correct.  Paul was overpaid DSP due to having a higher income than that used by Centrelink to calculate his entitlement.  He therefore owes debts to the Commonwealth of $4,817.11 for the first period (which has been repaid) and $5,505.07 for the second (which is being repaid by withholdings from DSP).       

Should the debt be waived due to administrative error? 

21.     Section 1237A(1) of the Act provides for waiver of a debt arising from solely from administrative error:

Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

22.     Julie believes that she kept Centrelink informed at all times of Paul’s income and when he was working.  Centrelink records do not reflect this.  She also pointed to errors in group certificates.  However, Centrelink documents indicate that these have now been taken into account.  

23.     Centrelink sent numerous letters to Paul in which his annual income was cited and in which he was reminded of the need to keep Centrelink informed of changes.  It is unfortunate that the income figures in the letters were expressed in annual amounts rather than fortnightly figures.  It can be difficult to relate an annual figure to casual income earned by a young person on a weekly basis.  Nonetheless, Centrelink did advise Paul of the need to provide it with information about changes in income.  There is no record of this being done regularly.  Even if Julie provided some information in person to Centrelink staff at her local office that was not recorded, Centrelink nonetheless informed Paul that he was to advise it if the figures were wrong and/or if his income changed.  The Tribunal is satisfied that the overpayment was not due to administrative error on the part of Centrelink and therefore waiver of the debt due to administrative error is not available.

Should the debt be waived due to special circumstances?

24. Section 1237AAD of the Act provides for waiver of the debt 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.

25.     The term special circumstances is not defined in the legislation.  For the Tribunal to use its discretion to determine that Paul’s situation constitutes special circumstances, it must be satisfied that there is something to make the case stand out from the usual or the ordinary.  In Beadle v Director-General of Social Security (1985) 7 ALD 670, it was held that the special circumstances, as referred to in s 1237AAD(b) of the Act, must be unjust, unreasonable or exceptional as to distinguish the case from the usual case.  In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases.  Branson J stated that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case.

26.     The Tribunal accepts that Paul has health problems as does his mother.  The Tribunal also accepts that he is in a poor financial position, with accumulated debts.  However, the Tribunal is not satisfied that the situation that Paul finds himself is vastly different from other social security recipients who have incurred debts due to either misunderstanding or overlooking legislative requirements.  Paul remains on a social security benefit and is able to repay the debt in instalments taken out of his fortnightly payments.  The amount to be withheld per fortnight is negotiable. 

27.     The Tribunal is not satisfied that the circumstances in this case constitute special circumstances (other than financial hardship alone). Hence, the waiver provisions of s 1237AAD of the Act do not apply.

28.     The Tribunal finds that Paul owes a debt to the Commonwealth for the overpayment of DSP.  The debts comprise $4,817.11 for overpayments between 25 October 2000 and  2 July 2002 and $5,505.07 for overpayments between 3 July 2002 and 19 April 2005. 

DECISION

29.     The Tribunal affirms the decision under review.

I certify that the twenty-nine [29] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Ursula Noyé

Clerk

Dates of hearing:  26 June 2006, 10 October 2006

Date of decision:  15 December 2006
Advocate for applicant:                Ms Julie Costantini
Advocate for respondent:            Ms Julia Hume, Centrelink Legal Services