Curtis and Secretary, Department of Social Services (Social services second review)

Curtis and Secretary, Department of Social Services (Social services second review) [2020] AATA 362 (28 February 2020)
Division:GENERAL DIVISION
File Numbers: 2019/2324 & 2019/2325
Re:Anthony Curtis and Lynette Curtis
APPLICANTS

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Chris Puplick AM, Senior Member
Date:28 February 2020
Place:Sydney

The Tribunal affirms the decision under review.
..........................[SGD]......................
Chris Puplick AM, Senior Member
CATCHWORDS
SOCIAL SECURITY – overpayment of carer payment and disability support pension entitlements – debt owed to the Commonwealth – failure to disclose additional income and changes in financial circumstances – whether debts should be written off or waived –any special circumstances to justify waiver of all or part of the debts – decision affirmed
LEGISLATION
Data-Matching Program (Assistance and Tax) Act 1990 (Cth)
Social Security Act 1991 (Cth) ss 8, 9, 117, 120, 1064, 1072, 1099A, 1223, 1236, 1237A, 1237AAD
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Beadle and Director General of Social Security [1984] 6 ALD 1
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Dranichnikov v Centrelink [2003] FCAFC 133
Jess v Scott and Others [1986] 70 ALR 185
Saunders and Secretary, Department of Family and Community Services [1999] AATA 952
Secretary, Department of Social Security v Hales [1998] FCA 219
Skinner and Secretary, Department of Social Services [2015] AATA 569
Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729
Ward and Secretary, Department of Family and Community Services [2000] AATA 212
REASONS FOR DECISION
Chris Puplick AM, Senior Member
28 February 2020
BACKGROUND

On 24 April 2019 the Social Services and Child Support Division of this Tribunal (AAT1) upheld a decision made by the Secretary, Department of Social Services (the Respondent) to claim repayments of certain social service benefits made to Mr Anthony and Mrs Lynette Curtis (the Applicants).[1]
[1] Section 37 Tribunal Documents at [9]-[14].
The Secretary claims that Mr Anthony Curtis has been overpaid the sum of $12,792.74 in respect of the disability support pension (DSP) in the period from 30 November 2016 to 29 August 2018.
The Secretary claims that Mrs Lynette Curtis has been overpaid the sum of $69,966.55 in respect of a carer payment for the period from 6 January 2005 to 29 August 2018.[2]
[2] Ibid at [164]-[167].
These decisions were made by the Secretary effective from 17 October 2018 and were affirmed by a decision of a departmental Authorised Review Officer (ARO) on 11 December 2018.
As already stated the AAT1 affirmed the original decision to raise debts against each Applicant, and they subsequently applied to this Tribunal (AAT2) on 30 April 2019 for a review of that decision.
The matter was heard by the Tribunal on 3 February 2020 with Mr Curtis appearing by telephone, with the support and assistance of his wife.
MATTERS AT ISSUE
The nub of the Secretary’s case is that Mr Curtis commenced receiving an invalidity pension from the Public Sector Superannuation Scheme (PSS pension) on 13 January 2005 and he failed to inform the Department of this fact, as he was obliged to do. The result of this failure to notify was that, as a result, this income was not taken into account when assessing the total family income of the couple for the purposes of calculating social security payments due to each of them.[3] The Secretary further contends that not only was Mr Curtis obliged to make an initial disclosure to the Department of this additional income but that, in a series of subsequent notices from the Department to each of the couple separately, they failed to declare that their financial circumstances had changed as a result of this additional income.
[3] Respondent’s Statement of Facts, Issues and Contentions at [17].
In response, Mr Curtis states, and affirmed at the Tribunal hearing, that he had notified the Department (in this instance Centrelink) shortly after receipt of the PSS pension, that this had been paid to him.[4] Further, both Mr and Mrs Curtis insist that, as they had provided this initial notification, when asked if their financial circumstances had “changed” they rightly and truthfully responded that they had not, since there had been no change beyond that of the initial receipt of the (notified) PSS pension.
[4] Applicant’s Evidence at Tab [1], email dated 8 April 2019.
The Secretary responds further to this by stating that there is no record in any of the Department’s recording systems of any such notification being received. Moreover, the Secretary claims, each of the couple was provided with several items of correspondence in which it is clearly stated the sum of total annual income for the couple, upon which their separate social security payments were calculated, and each of them knew that the sum therein stated was incorrect. It was substantially less than their actual income, but they did not report this to the Department.[5]
[5] Respondent’s Statement of Facts, Issues and Contentions at [30].
These claims are complicated by the fact that for the critically relevant period of at least from 3 December 2004 to 1 February 2006 the Department’s record system has malfunctioned such that detailed records of interactions between the Applicants and the Respondent are “unretrievable” in documentary form although the existence; nature (e.g. enquiry/referral to other agencies/compensation action etc.) and “channel” (e.g. personal/telephone/mail/facsimile etc.) of contact are identifiable.[6]
[6] Supplementary Tribunal Documents at [733].
SOCIAL SERVICES AND OTHER PAYMENTS
Mr Curtis, who was born in January 1957, informed the Tribunal that he joined the Royal Australian Navy when he was about 15 years of age but that as a result of treatment therein received (“bastardisation”) and other conditions of service he was granted a TPI (totally and permanently incapacitated) pension and was finally discharged from the Department of Defence in September 2004.[7]
[7] Issues arising from Mr Curtis’ Navy service were recognised by the ARO in his initial determination but specifically excluded from his considerations of any grounds for a waiver under special circumstances considerations. Tribunal Documents at [168].
Thereafter, the social security payment history of the couple is as follows:
·14 October 2004 - Mrs Curtis was granted carer payment in respect of her husband;
·3 December 2004 - Mr Curtis was granted the DSP;
·31 March 2005 - Mr Curtis was removed from the DSP as a result of having received a compensation payment resulting from a serious motor vehicle accident as that compensation payment involved a “preclusion” period in which no payments from the Department of Social Services could be made to him;
·30 November 2016 - Mr Curtis applied for and was again granted the DSP as the preclusion period attached to the compensation payment had expired.
It appears that at the end of August 2018 the Department became aware of the existence of Mr Curtis’ PSS pension payment[8] and that, as a result, they made a recalculation of the social security entitlements of both Applicants.
[8] Ibid at [261]. Information confirmed by the Commonwealth Superannuation Corporation on 13 September 2018: Tribunal Documents at [156]-[157].
This resulted in the Department notifying both parties on 17 October 2018 to the effect that:
1.Mr Curtis owed a debt to the Commonwealth of $12,792.74 as a result of overpayment of DSP from 30 November 2016 (the date his DSP was restored) to 29 August 2019;[9]
2.Mrs Curtis owed a debt in the same amount for the same period in relation to payment of carer’s allowance;[10]
3.However, on 8 November 2018 the Department wrote again to Mrs Curtis varying its decision and stating that the first calculation had been in error and that, in fact, her debt was $69,966.55 for the period from 13 January 2005 (the date of the first PSS payment to her husband) to 29 August 2018.[11]
[9] Ibid at [159]-[160].
[10] Ibid at [161]-[162].
[11] Ibid at [163].
It is a matter of fact that:
(a)On 13 January 2005 Mr Curtis commenced receipt of a PSS pension which was initially paid at the rate of $820.99 gross fortnightly rising to $1,143.42 gross fortnightly by 22 June 2018.[12]
(b)Mr Curtis received the DSP from 30 November 2016 to 29 August 2019.[13]
(c)Mrs Curtis received carer allowance in respect of Mr Curtis from 14 October 2004 to 25 October 2004 and this was restored on 25 November 2004[14] (first effective payment on 30 November 2004). These payments continued until 29 August 2019.[15]
(d)The calculation of payments made to Mr and Mrs Curtis individually did not include the income which they, taken as a couple, received from the PSS pension, and consequently each was overpaid.[16]
[12] Ibid at [156]-[157].
[13] Ibid at [280].
[14] Ibid at [310]. The one month break relates to the compensation payment preclusion period.
[15] Ibid at [159]-[163].
[16] Ibid at [159]-[162].
MATTERS FOR DETERMINATION
Under the provisions of the Social Security Act 1991 (the Act) there are two questions which the Tribunal must address:
1.Have Mr and Mrs Curtis been overpaid and if so, do they owe a debt to the Commonwealth?
2.If they do, is there any basis upon which such a debt should be written off or waived?
IS THERE A DEBT?
Yes.
For whatever reason (see below) the income which the couple received per Mr Curtis’ PSS pension payment was not taken into account by the Department when calculating the payments due to Mr Curtis for his DSP and Mrs Curtis for her carer payment. Hence they were overpaid and as such there is created a recoverable debt under section 1223(1) of the Act:
(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.
IS THERE A BASIS UPON WHICH TO WAIVE OR WRITE OFF THE DEBT?
No – because of the strict application of the Act.
Section 1236 of the Act regulates the general way in which debts to the Commonwealth may be written off or waived at the discretion of the Secretary.
(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.
(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:
(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 died leaving no estate or insufficient funds
(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.
…
(3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.
Section 1237A provides a further avenue for such debts to be considered where (in this instance) an overpayment may have resulted from “administrative error” on the part of the Department.
(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.
It is critical to note the use of the term “solely” in this section. As has been made clear by the Courts, even if there has been an error on the part of the Department, even if that error is gross, if the debtor has made even the smallest contribution to the debt arising then it is they (the debtor) who must bear the burden of repayment.
Finally, section 1237AAD provides that there may be “special circumstances” in which such a debt may be waived.
The Secretary may waive the right to recover all of 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;
(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.
Working through those provisions, the evidence before the Tribunal is that Mr and Mrs Curtis do have a debt; they do have capacity to repay that debt (see below); their whereabouts are known and the sum in question appears sufficient to make it cost effective to recover the debt.
Hence the provisions of section 1236(1A) are met. Debt recovery may be by way of future deductions from social security payments (section 1236(1C)(a)) and indeed each of the Applicants is already making repayments at $30 per fortnight under an arrangement with the Department.
The question of financial hardship then arises (section 1236(1C)). Again, this provision contains an important qualification – the financial hardship must be “severe”.
In Stubbs the Court has interpreted this to mean:
Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature.[17]
[17] Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729 at [20].
In his evidence to the Tribunal Mr Curtis made it clear that he and his wife were under considerable financial strain. Due to Mr Curtis’ health condition they live some distance from town in a village of Gidginbung – some 18km in one direction to Temora and 50 km in another to West Wyalong. The Post Office which was opened there in 1891 closed in 1978.
The couple have a mortgage in the order of $180,000[18] and other debts for matters such as a loan for the purchase of a car and significant utility expenses. They have to pay approximately $800 every five weeks for water to be carted to their property and there are high costs incurred in the maintenance of their pumps on a rural property and in air-conditioning their home. They have tried to reduce their utility expenses by installing solar panels on their barn. They have no income other than that derived from social security and PSS pension payments. Mr Curtis gave evidence to the effect that the pressures arising from pursuit of this debt was likely to lead the couple to sell their home and to purchase a caravan and travel where they “could live off generators” around the State.
[18] The Respondent’s Statement of Facts, Issues and Contentions at [66] asserts that the couple “own their house, are up to date with mortgage payments”. Mr Curtis asserts (more accurately) that “the Bank owns the house” and they are still paying the mortgage.
The Tribunal has no difficulty in concluding that the Curtis’ face considerable financial stress. However, the families’ income is as follows:
·Mr Curtis receives $2,577.33 per fortnight from his DVA and PSS pensions.[19] He also receives $107.40 per fortnight from his DSP;[20]
·Mrs Curtis receives carer allowance of $237.20 per fortnight.[21]
[19] Supplementary Tribunal Documents at [752]-[753].
[20] Ibid at [751].
[21] Ibid at [750].
This provides a fortnightly combined couple income of $2,921.93 and includes the current $30 repayment deduction from each currently in place.
This, as the Secretary asserts, allows them to manage their affairs in a way that, while they have debts other than to the Commonwealth, those debts are capable of being serviced and they are not in significant arrears of payments.[22]
[22] Respondent’s Statement of Facts, Issues and Contentions at [66].
The Tribunal accepts the evidence that Mr Curtis notified the Department that he had received the initial PSS pension payment. It accepts that it only has his word for this given under affirmation at the hearing of the Tribunal, but it takes him to be a person of honesty and integrity who has sought to do the right thing throughout these proceedings. It accepts that there is no clear evidence in the Department’s records that such information was provided, but notes that it cannot be certain of this given the chaotic state of the Department’s records for that crucial period and the “unretrievable” nature of the records in question, no matter how qualified this is in relation to channels of communication.
However, the Tribunal equally accepts that Mr and Mrs Curtis failed to comply with their obligations to notify the Department of changes in their financial circumstances as they were obliged to do. In the Secretary’s Statement instances are given of notifications dated 3 December 2004, 17 January 2005, 24 November 2011, 10 December 2011, 9 December 2016 and 30 January 2017, which required updates of changes in financial circumstances which were not responded to. Mr Curtis did not deny receipt of any of these notifications.
Although Mr Curtis states that, having notified the Department of the initial PSS pension payment, no further “changes” occurred, three matters are against him.
In the first instance his PSS pension payment changed. It was updated and increased every six months.[23] Secondly, he and his wife would have seen on the notices that their “combined annual income” was stated. For example, on 17 January 2005 this was stated to be $20,563.84, and on 30 January 2017 to be $34,470.08.[24] They knew this was an understatement but failed to inform the Department accordingly. Thirdly, responses on Income and Assets Update forms failed to report accurately “income from any income stream products” in the manner required.[25]
[23] Tribunal Documents at [156]-[157].
[24] Ibid at [505] and [402] respectively.
[25] For example ibid at [84].
As to the question of “administrative error”; once again, the Courts have made it clear that even a minor error on the part of the debtor will count against them, no matter whether or not there has also been an error (of whatever proportion) on the part of the Department. In Ward the Court stated:[26]
This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor.
[26] Ward and Secretary, Department of Family and Community Services [2000] AATA 212 at [47].
Although there may have been error on the part of the Department, that error was not the sole or exclusive cause of what followed and the Applicants clearly contributed to that error either coming into existence in the first place or else persisting thereafter when they should have taken steps to correct it.
Thus, any error on the part of the Department does not provide grounds for the waiver of the debt under the provisions of the legislation.

Finally, are there any “special circumstances” to consider?
This provision of the Act contains two separate elements. The first of these requires some determination of whether the applicant for waiver “knowingly:” made a false statement or representation.
The Tribunal does not believe that there is any basis for accepting that the Applicants acted in a “knowingly” misleading fashion and had some specific intention to so do. As the court made clear in Saunders, “Inadvertent or unintentional failure does not constitute “knowingly” even where an applicant knows he needs to notify.”[27]
[27] Saunders and Secretary, Department of Family and Community Services [1999] AATA 952 at [22].
The Secretary is at one with the Tribunal in accepting that any failure of notification on the part of the Applicants was not done “knowingly” in the terms prescribed in the Act.[28]
[28] Respondent’s Statement of Facts, Issues and Contentions at [56].
As with so many key concepts in the Act, the term “special circumstances” is not given any precise definition. Without going into extensive detail, it can be said that the courts have identified a number of factors which go to establishing whether or not “special circumstance” exist. They must be:
·Something more than ordinary or usual;[29]
·Markedly different from the usual run of cases – not necessarily unique but having a particular quality of unusualness;[30]
·Somehow distinguishing from usual cases of an analogous nature;[31]
·Attuned to the individual circumstances of each case;[32]
·Not so rigidly applied as to risk harsh or unreasonable outcomes;[33]
·Supportive of the overall integrity of the social security system and recognising the public interest in ensuring that public moneys are recovered where they can and should be.[34]
[29] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; Jess v Scott and Others [1986] 70 ALR 185.
[30] Beadle and Director General of Social Security [1984] 6 ALD 1 at [3].
[31] Dranichnikov v Centrelink [2003] FCAFC 133.
[32] Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114.
[33] Secretary, Department of Social Security v Hales [1998] FCA 219.
[34] Skinner and Secretary, Department of Social Services [2015] AATA 569; Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, Secretary, Department of Social security v Hales [1998] FCA 219.
It is clear from the evidence that Mr Curtis is not in the best of health, although the precise details of his medical conditions and his mental health wellbeing are not before the Tribunal. Nevertheless he has qualified for the DSP and been classified as TPI. The Tribunal accepts that he suffers from a particular issue of social phobia and that his wife has been paid as his carer.
The Tribunal has already discussed the straitened but not destitute financial circumstances of the Applicants.
It is also true that there is a considerable gap between the first payment to Mr Curtis in 2005 and the identification of this element of his income (and hence Mrs Curtis’ entitlements) in the latter part of 2018. The Tribunal finds it hard to understand how the data-matching arrangements which were established by the Data-Matching Program (Assistance and Tax) Act 1990 did not become operative in this instance given that the PPS pension was paid by a Commonwealth Authority, the Public Sector Superannuation Scheme. However, no information or evidence was put before the Tribunal on this point.
The Tribunal is however, conscious of and sympathetic to the point which Mr Curtis apparently made to the AAT1 that, had this debt been drawn to his attention at an earlier stage, he would have dealt with it and thus avoided what has been an increasing level of distress and “emotional setback” for both himself and his wife.[35]
[35] Tribunal Documents at [14]: AAT1 decision at paragraph [23].
None of these matters can, however, be considered exceptional, unusual or out of the ordinary.
No case is established on the existing legal tests for the debt in question to be written off, nor is there any reason presented that it should, in the alternative, be waived (section 1237AAD(c)).
In many respects this is an unfortunate case and the Tribunal agrees specifically with the comment of the AAT1 to the effect that:
Mr and Mrs Curtis are sincere individuals who over several years received overpayments of welfare due to a number of factors in which neither played a conscious role.[36]
[36] Tribunal Documents at [14], AAT1 Decision at paragraph [24].
It also recognises what that Tribunal said in terms of “the emotional upset this matter has caused to both Mr and Mrs Curtis.”[37]
[37] Ibid.
However, whatever the Tribunal may think of the merits of the Applicants in person, its sole responsibility is to give effect to the provisions of the legislation as enacted by the Parliament and interpreted and explained by the courts.
In that respect it is established that:
1.Overpayments of social security benefits were made to both Mr and Mrs Curtis;
2.Those overpayments have created debts to the Commonwealth;
3.Those debts are recoverable; and
4.No reason(s) has been established as to why those debts should be written off or waived.
QUANTUM ISSUES
The way in which social security payments are calculated is complex. Sections 117 and 120 of the Act direct attention to the Pension Rate Calculator which is set out in section 1064. The key relevant issue in this instance is the definition of what constitutes “ordinary income”. To establish what constitutes ordinary income in any individual case reference must be made to sections 8(1) and 1072 of the Act which includes “income streams”, both short and long term, in the calculation of ordinary income.
This in turn leads to a consideration of sections 1099A and 9(1) of the Act which, read together, establishes that Mr Curtis’ PSS pension payments were and are an asset-test exempt defined benefit income stream.[38]
[38] For tax free status of PSS pension payments see Tribunal Documents at [156]-[157].
They must thus be taken into account when calculating not only his income, but that of his wife. Where people are members of a couple, for the purposes of calculating social security benefits, their incomes are combined and then divided by 2 to establish each persons’ ordinary income (section 1064-E2).
Unlike the AAT1 which apparently made its own calculations which supported those made by the Department and confirmed by the ARO,[39] this Tribunal has not independently calculated the quantum of overpayment claimed by the Department but has accepted the calculations as provided in the Secretary’s submission.
[39] Tribunal Documents at [11]: AAT1 decision at paragraph [5].
DECISION
The decision under review is affirmed.

I certify that the preceding 59 (fifty-nine) paragraphs are a true copy of the reasons for the decision herein of Chris Puplick AM, Senior Member

................................[SGD].............................
Associate
Dated: 28 February 2020

Date(s) of hearing: 3 February 2020

Applicants: In person

Solicitor for the Respondent: Ms E Ulrick, Department of Human Services

[2020] AATA 362

28 February 2020

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Remedies

Date(s) of hearing:	3 February 2020
Applicants:	In person
Solicitor for the Respondent:	Ms E Ulrick, Department of Human Services