Culina and Secretary, Department of Employment and Workplace Relations
[2006] AATA 261
•17 March 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 261
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2005/1270
| GENERAL ADMINISTRATIVE DIVISION | ) | ||
| Re | IVAN AND ZLATICA CULINA | ||
Applicant
| And | SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS |
Respondent
DECISION
| Tribunal | Senior Member Robin Hunt |
Date17 March 2006
PlaceSydney
| Decision | The tribunal affirms the decision under review. |
..............................................
[Sgn]Ms R Hunt
Senior Member
CATCHWORDS
SOCIAL SECURITY – Disability support pension – Partner allowance - Overpayment of pension to husband and overpayment of allowance to wife – Debts raised and recovered – Request for waiver - No special circumstances for waiver of debts – decisions affirmed
legislation
Social Security Act 1991, ss 1223, 1236, 1237, 1237AAD.
case law
Re Beadle and Director General of Social Security (1984) 6 ALD 1
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Re Ivovic and Director-General of Social Security (1981) 3 ALN 95
Re Secretary, Department of Family & Community Services and Jonauskas (2001) 65 ALD 553
REASONS FOR DECISION
| 17 March 2006 | Senior Member Robin Hunt |
SUMMARY
The applicants, Mr and Mrs Culina, applied to the tribunal for review of a decision by Centrelink to raise and recover debts in respect of overpayments of disability support pension (DSP) to Mr Culina and of partner allowance to Mrs Culina. Mr and Mrs Culina claimed they were unaware they had been overpaid and believed that, at all times, Centrelink was aware of their financial circumstances. I have found no ground for writing off the debts. Nor am I satisfied that Mr and Mrs Culina did not knowingly fail to comply with the requirement that they notify Centrelink of changes to their income. As well, I am not satisfied that they are in circumstances that are so special, as to warrant exercise of the discretion to waive their debts for this reason. This means that Mr and Mrs Culina have not succeeded in their application.
CONSIDERATION OF THE EVIDENCE AND SUBMISSIONS
Mr and Mrs Culina, applied to the tribunal for review of a decision by Centrelink to raise and recover debts of $9,598.18 for overpayment of the disability support pension to Mr Culina and $17,412.71 for overpayment of the partner allowance to Mrs Culina respectively. These debts were due to the overpayment of the pension to Mr Culina for the period 30 October 2001 to 22 June 2004 and the overpayment of the allowance to Mrs Culina for the same period. Mr and Mrs Culina claimed they were unaware of any mistake throughout the relevant period they had been overpaid. They believed that, at all times, Centrelink was aware of their financial circumstances. Mr Culina told the tribunal that he thought the Australian Taxation Office and Centrelink communicated and that if he told the tax office about his earnings, Centrelink would know as well.
Mr and Mrs Culina both have applied for social security allowances from time to time. Mr Culina told the tribunal, at a hearing for the review, that he worked at irregular intervals depending on when he was offered a contract and on, factors such as weather and his health. When he was not working, he and his wife depended on social security payments. He was unable to say exactly what days he had worked.
Centrelink records before the tribunal include copies of completed forms lodged by Mr and Mrs Culina since 2001 and later dates. The records show Mr Culina lodged a claim for disability support pension on 30 October 2001. On 6 November 2001, Centrelink granted Mr Culina the pension with effect from 30 October 2001, following a medical assessment. Centrelink notified Mr Culina of the grant on 6 November 2001. In the notice of grant, Mr Culina was told that he was required to notify Centrelink within 14 days if certain events occurred whereby his and his wife’s combined income increased. For example, if he or his partner started work or recommenced work or started any form of profession, trade, business or self employment, he was to notify Centrelink.
Mrs Culina also lodged a claim for parenting allowance, on or about 3 September 2001. Centrelink granted her the allowance with effect from 10 October 2001. She was notified of the grant on 5 September 2001. The notice of grant informed her that she was required to notify Centrelink within 14 days if, among other things, she or her partner started paid work or any form of profession, trade, business or self employment or their income changed from the rate last notified or the income shown in the Centrelink letter was incorrect. The fortnightly income shown in the letter was $180.41.
Centrelink computer records before the tribunal show that, in June 2002, Mr and Mrs Culina notified Centrelink that Mr Culina had resumed self employment. Mr Culina’s pension was suspended and he was notified accordingly on 14 June 2002. Mrs Culina’s allowance was cancelled due to the change in Mr Culina’s income and she was notified accordingly on 14 June 2002.
Centrelink computer records further indicate that Mr Culina’s pension was restored with effect from 2 September 2002 because he advised that he had ceased work in August 2002. Mrs Culina lodged a further claim for the partner allowance on or about 9 September 2002 and it was granted to her again from 2 September 2002. On 8 September 2003, Mrs Culina lodged a Partner Allowance Six Monthly Entitlement Review form in which she indicated, among other things, that her partner was not currently employed and that he had not worked in the last six months.
On 8 March 2004, Mrs Culina lodged a new Partner Allowance Six Monthly Entitlement Review form in which she indicated, among other things, that her partner was not currently employed and that he had not worked in the last 6 months. On 19 August 2004, Mr Culina lodged a Medical Service Update - Disability Support Pension form in which he indicated he was not currently employed. On 7 September 2004, Mrs Culina lodged a Partner Allowance Six Monthly Entitlement Review form in which she indicated, among other things, that her partner was not currently employed and that he had not worked in the last 6 months.
Mr Culina was selected for a Rolling Random Sample Review and he and Mrs Culina were interviewed on 21 October 2004. During the interview, Mr Culina indicated that he had undertaken self employment work during the past 12 months. In the light of this, he was requested to provide additional information, including completion of a Centrelink form (Mod F - Business Details), profit and loss statements and income tax returns. On 1 November 2004, Mr Culina lodged a Mod F - Business Details form in which he indicated he was self employed as a sole trader and that the name of his business was Mario’s Roofing. He disclosed that the business commenced operating on 12 January 2002 and that the nature of the business was roof plumbing. He also indicated that the business was still operating and that it was generating income.
On 24 November 2004, Centrelink received copies of income tax returns for Mr Culina for the income years ending 30 June 2002, 2003 and 2004. A Centrelink officer then determined, on 24 November 2004, that Mr Culina had been overpaid an amount of $10,181.27 of DSP for the period 30 October 2001 to 22 June 2004 as income from self employment had not been taken into account. As well, on 29 November 2004, a Centrelink officer determined that Mrs Culina had been overpaid an amount of $17,725.28 for the period 10 October 2001 to 22 June 2004 because her partner’s earnings from self employment had not been taken into account.
Centrelink computer records indicate that, after they were notified of these debts, Mr and Mrs Culina were interviewed on 4 November 2005 and the debts were reduced to $9,598.18 for Mr Culina and $17,412.71 for Mrs Culina. Debt recalculations took into account business expenses which had not been included in the first calculations. Mr and Mrs Culina were notified of the recalculated debt amounts by letters dated 21 December 2004 at T 80. The debts were paid in full. Mr Culina told the tribunal that his wife had been frightened and upset when she received a phone call from Centrelink about the situation and paid these amounts without his knowledge at the time.
ISSUES AND LEGISLATIVE PROVISIONS GOVERNING
The issues to be determined by the tribunal are as follows:
(a)Whether Mr Culina has a debt in the amount of $9,598.18 for the period from 30 October 2001 to 22 June 2004 and, if so, whether this debt should be recovered.
(b)Whether Mrs Culina has a debt in the amount of $17,412.71 for the period from 30 October 2001 to 22 June 2004 and, if so, whether this debt should be recovered.
Section 1223 (1) of the Social Security Act 1991 (the Act) provides that an overpayment is a debt recoverable by the Commonwealth if a social security payment is made to a person not entitled to obtain that benefit. Section 1236 of the Act permits some debts to be written off. Where a debt is written off, an administrative decision is made that the debt is not currently recoverable for a variety of prescribed reasons. The debt still exists, however, and recovery may proceed at a later time. Section 1236 (1A) of the Act prescribes the circumstances in which a debt may be written off. In the present case, however, as the debts have already been repaid, write off is not available. Section 1237 of the Act explains that the Secretary may waive the Commonwealth’s right to recover the whole or a part of a debt from a debtor in some circumstances. Where recovery of a debt is waived the debt effectively ceases to exist and recovery is not pursued. There is no need for recovery to be made in this case as the debts have been repaid.
Mr and Mrs Culina ask that section 1237AAD of the Act apply in their case. This provision allows waiver of a debt where the Secretary (or Tribunal) 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.
Did Mr and Mrs Culina knowingly make a false statement or representation?
Mr Culina, who represented both himself and Mrs Culina, contended they did not knowingly make a false statement or false representation to Centrelink. Mr Culina explained his difficulties in complying with notification obligations. The uncertainty as to the days he would be offered work and the effect of weather and other factors on the regularity of his work made his earnings difficult to predict accurately. He pointed out that medically he was entitled to the disability payments and that it was hard for him to do physical work and he only tried to do some work because they needed the money. He was not always well enough to go to work. Mr Culina further indicated they would have refrained from repaying the debts until they had exhausted their appeal rights or would have arranged for repayment by installments over time had they known they had these options.
I accept that actual knowledge in making a false statement is an essential part of establishing this ground. There may have been some element of doubt as to the exact earnings Mr Culina was making when statements were made to Centrelink but I do not accept that Mr and Mrs Culina were prevented from notifying Centrelink of Mr Culina’s activities to the extent shown in the written statements they lodged with Centrelink. It was not correct to say, for example, that Mr Culina had not worked over the last six months if he had worked even for one day. In Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 at 445 the Tribunal commented:
“(48). There is nothing in s 1237AAD which suggests that the word “knowingly” should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission”.
Mrs Culina twice lodged forms with Centrelink in which she answered “No” to the questions “Is your partner currently employed?” and “Has your partner worked in the last six months?”. She made these statements on forms completed on 3 September 2003 and 8 March 2004 (T32 and T37). The income tax returns for Mr Culina’s business are before me and clearly show that Mr Culina was in business and working during the periods ending June 2002, 2003 and 2004. He has told the tribunal that he did not always work without interruptions and breaks but he has not disputed the accuracy of these returns or attempted to reconcile Mrs Culina’s statements to any particular period when he stopped working. Mrs Culina’s answers were false. Mr Culina was conducting his roof plumbing business, Mario’s Roofing, when these forms were completed, as evidenced by the income tax returns at T58 and T59. Mrs Culina did not appear before me but Mr Culina on her behalf did not ask me to accept that Mrs Culina had no knowledge of her husband’s business activities and I see no reason to find this was the case. I note that her allowance had been cancelled for a period in 2002 because of the income from his employment. This tends to show she was aware that her allowance entitlements changed when her husband was working.
Both debts under consideration arose due to Mr Culina’s business income not being taken into account in calculating the rates for Mr and Mrs Culina’s social security payments. During the relevant period, notices were sent to both of the applicants. These notices required them to notify Centrelink within 14 days of changes in income and changes in their or their partner’s employment status (T11, T17, T26 - T27, T34 - T36). Mr Culina notified Centrelink that he re-commenced work in June 2002. Then, Mr and Mrs Culina subsequently notified Centrelink in September 2002 that Mr Culina had ceased work in August 2002. This meant their payments were favourably affected. However, neither Mr nor Mrs Culina informed Centrelink when he re-commenced work again later. As a result, their payments were not reduced as they should have been by that event.
It is clear from income tax returns that Mr Culina undertook additional employment and increased his income in the 2003 and 2004 income years but neither Mr nor Mrs Culina notified Centrelink of the increase in income in spite of being notified of the requirement to do so and in spite of their payments previously being affected when they advised of Mr Culina’s resumed employment and the associated increase in income to the end of June 2002.
On balance, I find the evidence strongly suggests that Mr and Mrs Culina knowingly failed to comply with the requirement that they notify Centrelink of changes to their income. For this reason, section 1237AAD (a) is not satisfied. It follows that the debts should not be waived on the ground that Mr and Mrs Culina did not knowingly fail to meet their obligations.
Are there special circumstances?
Mr Culina gave evidence to the tribunal about potentially serious health problems he developed in 2005 and medical appointments that have been taking up his time. The worries about his health are unfortunate and may affect his future circumstances. However, I note that he has not furnished medical certificates about his condition and will be undergoing further investigation. I nevertheless accept that he is telling the truth about his health concerns although his condition may not be as worrying as he fears. At this stage, he does not appear to have incurred medical expenses that might affect his circumstances and has not put any evidence before me to this effect. I note his evidence that he will be exposed to expenses if he goes ahead with knee replacements through private arrangements rather than public health care. I accept that he may be unable to work as much as previously and that this will reduce his income.
The term “special circumstances” was examined by the Federal Court in Re Beadle and Director General of Social Security (1984) 6 ALD 1 at 3, where Toohey J stated:
“An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special”.
In Re Ivovic and Director-General of Social Security (1981) 3 ALN 95 the Tribunal said at N97:
“The reference to special circumstances by reason of which a person liable should be released requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes ... Thus, whilst keeping the dominant principle of [recovery of a debt] in mind, [the decision maker] must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate”.
Mr and Mrs Culina’s application for review sets out that the repayment they made to Centrelink came from funds that they hoped to use for future medical expenses, including knee replacement operations for Mr Culina of both knees. Mr Culina gave evidence that the surgery will cost $26,000 per knee. However, in cross examination, Mr Culina admitted that he could get this done in a public hospital but would have to wait around 3 years. He told the tribunal he made inquiries about getting the operation done in a public hospital about two years ago but did not put his name on the waiting list as he made the choice to go to a private hospital. In addition, Mr Culina gave evidence that he and his wife have around $95,000 in savings and own their own home. He gave further evidence that doctors are currently investigating whether he has another more life threatening illness. He has to have further tests before he knows his prognosis. He said he sees no point in having knee surgery if he does not have long to live. He also told the tribunal that he had to pay for medications that helped with his shoulder injury and at the same time did not upset his stomach. He said he takes herbal remedies and could not get assistance for these expenses.
While I am sympathetic to Mr Culina and his health concerns, his stomach condition may not be as bad as he fears and has not yet been resolved. He also furnished little detail of his actual expenses. As well, the discretion available in section 1237AAD of the Act should not be exercised in circumstances where a recipient has not complied with the obligations to advise Centrelink of changes in circumstances. The discretion is not exercised lightly where a recipient has failed in his or her obligations. For example, in Re Secretary, Department of Family & Community Services and Jonauskas (2001) 65 ALD 553, the applicant was careless in failing to read the back page of notices sent to him by Centrelink. Nevertheless, the tribunal saw no grounds for finding special circumstances to justify waiving the debt.
On balance, I find no strong evidence that special circumstances should apply in the situation in which Mr and Mrs Culina find themselves. They were fortunate enough to be able to repay their debts in full and are not presently in dire or straightened circumstances. While it is no doubt disappointing to lose such a large sum of money from their savings, this has occurred through their own failure to account properly to Centrelink. I am not satisfied that they are left in circumstances that are so special as to warrant exercise of the discretion under section 1237AAD.
decision
The tribunal affirms the decision under review.
I certify that the preceding 27 paragraphs are a true copy of the reasons for the decision herein of Senior Member Robin Hunt
Signed:
Margaret Driscoll
Associate
Date/s of Hearing 16 February 2006
Date of Decision 17 March 2006
Counsel for the Applicant Self RepresentedSolicitor for the Respondent Gary Richardson
0
0
0