Demovich and Secretary, Department of Social Services (Social services second review)
[2020] AATA 548
•16 March 2020
Demovich and Secretary, Department of Social Services (Social services second review) [2020] AATA 548 (16 March 2020)
Division:General Division
File Number(s): 2018/0967
Re:Vlaho Demovich
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Chris Puplick AM, Senior Member
Date:16 March 2020
Place:Sydney
The decision under review is affirmed.
................................[sgd]........................................
Chris Puplick AM, Senior Member
CATCHWORDS
SOCIAL SERVICES – aged pension – debt raised for overpayment of pension recovered by garnishee notice – whether debt recovered should be refunded – sole administrative error – assets previously disclosed to the department – whether application for aged pension made fraudulently – decision affirmed
LEGISLATION
Acts Interpretation Act 1901 section 29
Student and Youth Assistance Act 1973
Tribunals Amalgamation Act 2015
Social Security Act 1991 sections 1064, 1233, 1236, 1237A, 1237AADSocial Security (Administration) Act 1999 sections 147, 151, 192, 196
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
Demovich v Secretary, Chief Executive Centrelink [25 January 2018] Review Number 2017/S114492
Demovich v Secretary, Department of Family and Community Services [2004] AATA 647
Dranichnikov v Centrelink [2003] FCAFC 133
Falconer v Secretary, Department of Social Services [1996] AATA 149
Gernardt v Secretary, Department of Employment, Education and Training [1996] AATA 173
Jess v Scott and Ors [1986] 70 ALR 185
Nolan and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 769
Re Guerin and Secretary Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 201
Secretary, Department of Education, Employment, Training and Youth Affairs [1997] FCA 1565
Secretary, Department of Social Security v Hales [1998] FCA 219
Secretary, Department of Social Services v Neuendorf [1998] AATA 868
Sekhom v Secretary, Department of Family and Community Services [2003] FCAFC 190
Skinner and Secretary, Department of Social Services [2015] AATA 569
Walker v Secretary, Department of Social Security (No 2) [1197] 75 FCR 493Ward v Secretary, Department of Families and Community Services [2000] AATA 212
REASONS FOR DECISION
Chris Puplick AM, Senior Member
16 March 2020
Outline of Application
This is an application which comes to the Tribunal from Mr Vlaho Demovich (the Applicant) for review of a decision made by the Social Services and Child Support Division of this Tribunal (AAT1). On 25 January 2018, the AAT1 upheld a decision by the Secretary, Department of Social Services (the Respondent) to raise a debt against the Applicant for the overpayment of certain age pension benefits.[1] That decision by the Respondent was made on 17 November 2016[2] and was confirmed by an Authorised Review Officer (ARO) of the Department on 12 July 2017.[3]
[1] Section 37 Tribunal Documents (T-Docs) at 3-9.
[2] Ibid at 600. The statement in the Respondent’s Statement of Facts, Issues and Contentions at [2.1.1] that this decision was made on 16 February 2017 and at [3.41] that the date was 17 November 2017 are both factually incorrect.
[3] Ibid at 956-960.
The hearing before this Tribunal was conducted on 10 and 13 February 2020 and the Applicant was legally represented by Ms Anne McDonald. The Respondent was represented by Dr Stephen Thompson.
At the time of hearing the Applicant did not owe any money to the Commonwealth as the sum in question which was allegedly overpaid had been recouped from the Applicant’s bank account via a garnishee order issued by the Department on 4 May 2017 and executed by the Bank on 7 July 2017.
The Applicant, in effect, seeks a determination by the Tribunal that the original decision of the Secretary was incorrect, or affected by administrative error (see below) such that the sum in question $20,414.70 should somehow be refunded to him. The power of this Tribunal to make such an order is discussed below.
An initial matter: Issues of Credibility
To a great extent the determination of this matter rests upon an assessment of the credibility and evidence of the Applicant himself.
Mr Demovich is 87 years of age, an Australian citizen, originally of Croatian descent. He has reasonable command of the English language although in the proceedings of the Tribunal he was assisted by an interpreter as he indicated some potential difficulty dealing with complex issues or questions. Nevertheless, throughout the Tribunal hearing he was engaged fully with its conduct.
Whatever his limitations in terms of language there is ample evidence of his competence in the management of this financial affairs. At various times he has held and operated bank accounts with the following institutions: Citigroup Pty Ltd., Commonwealth Bank of Australia; HSBC Bank; St George Bank, Westpac Bank and Bank of Cyprus.
He regularly moves money between his various accounts in order to maximise interest returns.
He has a primary place of residence which consists of a house to which is attached some form of “granny flat” or other accommodation which her rents out and receives rental payments in cash. Apart from his primary home he owns an investment property, again providing rental income, again paid in cash.
He pays his bills in cash or by electronic transfer of funds. He denies ownership of a credit card associated with his principal bank (Commonwealth Bank, Summer Hill branch).
He told the Tribunal that he does not share details of his bank accounts with anyone and he is careful to keep bank account details “secret”. He acknowledges that he regularly receives bank statements related to his accounts.
The sums of money which he moves between accounts are often substantial for example at levels of $250,000 or $110,000[4] and he currently has cash deposits in the realm of $450,000.[5]
[4] T-Docs at 6.
[5] Stated by the Applicant in oral evidence.
The volume of documentation before the Tribunal is significant, running to nearly 1,700 pages.
Contained therein are numerous documents bearing the signature “Vlaho Demovich”. When questioned by the representative of the Respondent, the Applicant frequently denied that the signatures were his or commented either that they “may have been” his or were a “little different from” his.
The Tribunal had before it a Statutory Declaration from Mr Demovich dated 24 January 2020 which he signed in the presence of, and which was witnessed by, his legal representative Ms Anne McDonald. He agreed that the signature on that document was his. The Tribunal also accepts that the signature on the formal application to this Tribunal for a review of the decision of the Social Services and Child Support Division of the Tribunal (AAT1) lodged on 23 February 2018 is that of the Applicant.[6] It further accepts as genuine a signature which appears on a letter issued by the Ashfield Local Area Command of the NSW Police Force which has been countersigned by the Applicant.[7]
[6] T-Docs at 2.
[7] Exhibit A2.
The Tribunal professes no formal qualifications in the forensic identification of signatures; suffice to say that all of the documents to which the Applicant was directed appeared to be signed by the same person as had signed the Statutory Declaration, the review application and the Police letter, including all of those which the Applicant denied as containing his signature.
One such document is an application for the age pension, made in his name and dated 29 July 2011.[8] This document contains details of his bank account, his family circumstances and his residential history, all of which accord with the evidence about such matters given by him orally at the hearing. Nevertheless the Applicant denies that the signature on the application is his and denies that he ever received any age pension payments.
[8] T-Docs at 1574-1579.
In addition to this application there are several other documents which contain details which the Applicant says were known only to him personally and which are in each material respect correct, but where he told the Tribunal he had not signed or caused the relevant document to come into existence.
There are bank statements which show that money was paid, by Centrelink, into accounts held in the name of the Applicant, clearly indicating that they were pension payments. These same accounts show numerous withdrawals from them, all of which appear to be in the form of cash withdrawals.
Again the Applicant denies that any of these withdrawals were made or authorised by him.
In effect the Applicant puts to the Tribunal that some person or persons (unknown) has opened and operated a number of bank accounts in his name, each opened based upon documents signed with his name but not by him. Documents supporting those various applications contain accurate personal details about the applicant, both personal and financial which, he says he did not reveal to any third party.
These include a photocopy of the Applicant’s NSW driver’s licence which again he denies having provided to any third party.[9] This is an important document because there is an official stamp on it which shows that an officer at Centrelink sighted the original document on 29 July 2011.[10] The presumption must be that the officer was satisfied that the person handing over the drivers licence to be photocopied was in fact the person whose name, address, photo and signature appeared thereon.
[9] Ibid at 1580.
[10] Ibid.
In relation to a large bundle of documents the Applicant agrees that he hand-delivered to the Centrelink office at Burwood on 11 November 2015,[11] he likewise then eschews any knowledge of them or their contents. He said, in relation to that visit to the Burwood Centrelink office that there was no substantial interaction with the staff on that occasion because he left the office quickly because he “had to run for my life because they very aggressive (sic).”
[11] Ibid at 54-109.
This was one of a number of comments made by the Applicant to the effect that he believes that Centrelink is somehow prejudiced against him. He says he does not trust Centrelink because he has numerous “bad experiences” with them, although giving no specific details.
In relation to the bank accounts, the Applicant says that he has reported the existence of what he claims to be fraudulent operations in those accounts to the Police, to the Banks, to his local Member of Parliament and to the Royal Commission on Banking.
There is some evidence to support the Applicant’s claim that he has been in contact with the Police and banking authorities about what he regards as fraudulent activity taking place on his accounts.
The Applicant supplied a letter from the NSW Police, dated 5 December 2016, which states, inter alia:
“Mr Vlaho Demovich has reported to Ashfield police, various concerns regarding movement of monies through his various banking institutions.”[12]
[12] Exhibit A2.
The letter goes on to indicate that the Applicant has given the Police authority to investigate his concerns and access to his various accounts. The Applicant has not submitted any evidence of actions taken or consequences arising from this compliant to police.
Similarly there is a letter from the Commonwealth Bank, Group Security Division, dated 5 November 2018 which indicates that the Applicant had made a complaint to the Bank about allegedly fraudulent activity in his account.[13] This appears to be in relation to a compliant made by the Applicant to the Bank on 23 March 2018. In a further letter to the Bank dated 31 December 2018 the Applicant states:
“In reference to your letter of 10 December 2018 you advised that the Commonwealth Bank of Australia (CBA) did not accept my claim that money was transferred into and withdrawn out of my account [account number] by persons unknown to me.
I feel the CBA has not taken my claim seriously and has not conducted a sufficient investigation into said claim. I request the CBA to reconsider its position and conduct a serious investigation into my claim.
I request all documentation associated with my claim to be provided to me and strongly suggest video footage of the dates of the withdrawals be reviewed as I believe this will prove it was not me who withdrew money from my account.”[14]
[13] Applicant’s Evidence document A4.
[14] Ibid document A5.
Finally there is a letter from the Applicant, dated 23 March 2018 addressed to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in which he makes a complaint against the Commonwealth Bank branch at Summer Hill and states, inter alia:
“The account was closed by someone else other than me and the money was transferred to an unknown person to me. I contacted the bank after noticing that my account had been closed and was informed that I had closed the account. The Manager of the bank informed me that I signed the authority to close it and transfer the funds to someone.
I informed the manager that the signature on the transfer paper is not mine and is fraudulent. He informed the bank will investigate but I never heard back from him about it.”[15]
[15] Ibid document A6.
What is revealed by all of this is that the Applicant appears to have a genuine belief that fraudulent activity has taken place in relation to monies moved around his accounts and that he has complained to both the Police and the Commonwealth Bank. In relation to the former there is no evidence that any further action has been taken and in relation to the latter it appears that some form of investigation took place resulting in the Bank deciding that the compliant was not substantiated.
As already noted, the Applicant told the Tribunal very clearly that he often moves monies around and between his accounts in order to maximise his investment and interest returns. As such there is frequent movement between these various accounts.
An element of the unreliability and uncertainty of the Applicant’s evidence is revealed in the Statutory Declaration to which reference has been made. This was signed in the presence of his solicitor on 24 January 2020 and contains, inter alia the statement:
“(7) In previous proceedings before the Administrative Appeals Tribunal I was unrepresented and did not seek legal advice.”[16]
[16] Applicant’s Evidence at Tab 4.
This is only partly true. The Applicant was before the Tribunal in 2004 and in the formal decision of that Tribunal it states: “At the hearing the Applicant (ie Mr Demovich) was represented by Mr Ivan Simic, solicitor….”.[17] The Tribunal accepts that the Applicant may have forgotten this and it does appear that when he appeared before the AAT1 in January 2018 he was unrepresented.[18]
[17] Supplementary Tribunal Documents at 1563, Decision of the Administrative Appeals Tribunal, Demovich v Secretary, Department of Family and Community Services [2004] AATA 647 at [10].
[18] Demovich v Secretary, Chief Executive Centrelink [25 January 2018] Review Number 2017/S114492.
Mr Demovich apparently appeared before the Tribunal in 1999 or 2000 in relation to his Mature Age Allowance payments, although the Tribunal records do not allow the production of the relevant decision, other than to note that the decision of the Department under review was affirmed.[19]
[19] Matter S205710 (2000).
It is in the same Statutory Declaration that the Applicant declares:
“(3) There has been no material change in my circumstances since 2003 when I first lost the pension.”
This again is not sustainable on the weight of evidence before the Tribunal.
The Applicant’s property holdings
In 1963, Mr Demovich purchased a residential property in Wellesley Street, Summer Hill in New South Wales where he currently lives in the front part of the property as his principal place of residence. He rents the rear portion of the property to tenants. On 7 April 1981, Mr Demovich purchased an investment residential property in Macarthur Street, Guildford in New South Wales. He also receives rental income from this property. In both instances the Applicant informed the Tribunal that this rent is collected in cash.
History of Applicant’s social security payments
The Applicant has been paid the Age Pension on three separate occasions, each of which was eventually been terminated. Thus there have been two separate occasions on which the Age Pension has been restored to the Applicant, presumably because the Department was satisfied, on the material then before it, that the Applicant’s circumstances had changed and that the reason(s) for, or the calculations related to, the previous cancellation no longer applied.
Event
Date
Notes
Granted Mature Age Allowance
11 August 1994
Transferred to Age Pension
17 April 1997
Age Pension cancelled
22 October 2002
Following asset revaluation
Granted Age Pension
20 September 2007
Age Pension cancelled
7 January 2011
Failure to reply to requests from Department for information
Age Pension granted
20 July 2011
Age Pension suspended
1 September 2016
Following data matching exercise from ATO
Age Pension cancelled
17 November 2016
Failure to reply to requests from Department for information
Since the matter before the Tribunal is related to a claimed overpayment of the age pension in the period 1 July 2013 to 31 August 2016, the Tribunal does not think it necessary to canvass the details of payments made to the Applicant prior to the restoration of his age pension payments on 20 July 2011.
The record shows that on 20 July 2011, Mr Demovich contacted the Department with the intention of claiming the Age Pension.[20] In support of his claim, in that application:
(a)he completed and lodged the written Centrelink claim for the Age Pension form[21]
(b)he completed and lodged the written Centrelink “Income and Assets” form[22]
(c)he declared that he was not sharing accommodation with anyone at his Summer Hill and Guildford properties.[23]
[20] T-Docs at 1285.
[21] Supplementary Tribunal Documents (Supplementary T-Docs) at 1574-1580.
[22] Ibid at 1581-1594.
[23] Ibid at 1577.
The Applicant was granted the Age Pension with effect from 20 July 2011. His payments were made on the basis of his declared assets and income. For example:
(a)for the period from 20 July 2011 to 7 September 2011, he was paid $203.66 for part basic Age Pension, plus an Age Pension supplement.
(b)for the period from 8 September 2011 to 21 September 2011, he was paid $59.61 for part basic Age Pension plus an Age Pension supplement.
(c)for the period from 22 September 2011 to 16 November 2011, he was paid $75.13 per fortnight for part basic Age Pension plus an Age Pension supplement.[24]
[24] Ibid at 1673-1678.
Over the course of time the Department wrote to the Applicant to either seek further information about his assets or income position or to inform him of activities being undertaken in relation to consideration of his continuing entitlements. For example:
·On 19 December 2012, the Department wrote to Mr Demovich at his Summer Hill address with respect to his reporting obligations for the Age Pension.
·On 14 April 2014, the Department wrote to Mr Demovich notifying him that the ATO would be reviewing the market value of the Guildford property.
·On 23 April 2014, the Department wrote to Mr Demovich with an Income Statement for his Age Pension with details of his assets known to the Department.
·On 4 June 2014, the Department again wrote to Mr Demovich about his reporting obligations.[25]
[25] T-Docs at 1455-1471.
The correspondence was properly addressed to him at his place of residence and it must be taken to have been received by him.[26]
[26] Acts Interpretation Act 1901 section 29(1). Re Guerin and Secretary Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 201 at [22]-[23].
Identification of potential over-payments
On 18 September 2015, the Department undertook a data-matching review with the Australian Taxation Office (ATO) in relation to Mr Demovich’s income for the 2013/2014 financial year.[27] The review indicated that Mr Demovich had received $13,242.15 in interest income from nine financial investments with:
(a)Citigroup Pty Ltd for two accounts;
(b)Commonwealth Bank of Australia for two accounts, including account ending #0237;
(c)HSBC Bank Australia Limited;
(d)St George Bank for three accounts;
(e)Westpac Banking Corporation.
[27] T-Docs at 1300.
This information was at odds with the amount which the Applicant had declared to the Department by 18 September 2015 being an account balance of $1,000 in his CBA account ending #0237 with deemed interest of $19.20 per annum.
As a result, on 18 September 2015, the Department wrote to Mr Demovich requesting him to contact the Department to discuss the data-matched information, by 11 October 2015.[28] The letter stated that it was a “request for information notice made under social security law”. Such Notices cannot be ignored, the social security legislation requires that they be replied to. Mr Demovich did not reply.
[28] Ibid at 1473.
On 28 October 2015, there was further correspondence from the Department to the Applicant requesting copies of his bank statements from the five financial institutions revealed in the ATO data-match review, by 27 October 2015.[29] This letter warned that in default, Mr Demovich’s aged pension payments might be stopped; and that response to the letter was a formal requirement under section 192 of the Social Security (Administration) Act 1999 (the Administration Act). On this occasion the Applicant responded by taking a bundle of material into the Centrelink office in Burwood as outlined above.
[29] Ibid at 1475.
The next step was that the Department issued to each of the five institutions named in the ATO data-matching exercise, a Notice under section 196 of the Administration Act requiring them to provide to the Department a complete set of records of the Applicant’s banking transactions from 1 July 2013 to 20 September 2015.[30]
[30] Ibid at 1477-1491.
These were provided by each of the institutions other than Citibank which declined to provide the information as the Notice had been issued to the wrong legal entity within that organisation.[31]
[31] Ibid at 150.
The result of all this activity led the Secretary to make her decision that the Applicant had been over-paid age pension benefits on the basis of a calculation of his entitlements under the assets and income test established by legislation and hence a debt existed. This decision was affirmed on review by an Authorised Review Officer and further affirmed by the AAT1 as outlined above.
A garnishee notice was issued and the money in question recovered from one of the Applicant’s bank accounts.
As stated, age pension payments are means tested and calculated in accordance with the provisions of section 1064 of the Social Security Act 1991 (the Act).
Using this calculator (the calculations of which the Tribunal has not independently verified), on 23 February 2017 it was determined that the Applicant had been overpaid the sum of $20,414.70 for the period 1 July 2013 to 31 August 2016. While it is clear from the material before the Tribunal that the date of 31 August 2016 derives from the date of the cancellation decision (following the suspension decision on 20 July 2016) it is not entirely clear from where the date of 1 July 2013 derives.
The Tribunal presumes, and this was confirmed as probably the case by the Respondent’s representative, that this relates to the dates involved in the ATO data matching exercise which provided data on the Applicant’s financial position for the 2013/2014 Financial Year and hence would have shown data commencing on 1 July 2013.
On 4 May 2017 the Department sent a letter to St George Bank seeking to garnish money from the Applicant’s account[32] and this money was then taken from that account by the Bank and remitted to the Commonwealth on 7 July 2017.
[32] Respondent’s Evidence R2. That letter demanded payment by 18 May 2017 but the Bank did not complete the repayment transaction until 7 June 2017.
The Department is empowered to make such a garnishee order under section 1233 of the Act. The garnishee demand was for $20,414.70.
The money transferred from the Bank to the Commonwealth was $20,424.70.[33]
[33] Applicant’s tendered evidence A1: letter from St George Bank to the Applicant dated 7 June 2017.
The Applicant, at this stage, does not owe any money to the Commonwealth whereas the Commonwealth may well owe the Applicant $10.00.
Claims for recovery or repayment to Applicant
The Applicant now seeks to have that garnished money returned to him on the basis that he claims not to have received any payments of aged pension, or, in the event that he did, these payments resulted from an error on the part of the Department in that they should not have made such payments, knowing as they did (he asserts) that he had not been eligible for the age pension since payments were cancelled in 2002. The Applicant states that he repeated told the Department that his financial circumstances had not changed and that, as a result, they knew that his assets (in terms of his property holdings) rendered him ineligible for pension payment.
It is important to address this claim by the Applicant, namely that the Department had adequate information in its existing files to know that he was not eligible for the pension.
The Tribunal was informed by the solicitor for the Respondent that while the Department may have had historic records of the Applicant’s assets, in terms of his property holdings, if these were the only factor taken into account in calculating his pension entitlement he would still have qualified as being under the assets/income threshold test. However, when details of the Applicant’s non-real estate income was revealed, that is, the money he had in various bank accounts, then the threshold was exceeded and his eligibility ceased. The Department does not, as a matter of either record or course, have access to this information on an on-going basis. It requires the Applicant (indeed, any applicant) to supply it with contemporary information at the time a pension application is lodged and thereafter to update that information on a regular basis noting even relatively small changes in financial circumstances.
In other words, even if the Applicant was correct that the Department should have consulted its records with all the information contained therein, the result would have been to confirm his eligibility in the absence of the up-to-date financial information which only he could supply.
The Department relied upon the material stated in the Income and Assets form attached to the pension application which revealed bank account investments of only $1000 in the Commonwealth Bank and no other bank deposits.[34]
[34] Supplementary T-Docs at 1584.
The pension application
In this application everything turns upon the answer to one simple question: did Mr Vlaho Demovich sign an application for payment of the age pension on 29 July 2011?[35]
[35] Ibid at 1574-1594.
The Tribunal is satisfied that the answer to that question is – YES.
The reasons for the Tribunal coming to that decision are as follows:
(a)It believes that the signature on the document is that of the Applicant, despite his denials and statements to the contrary. The Tribunal has access to copies of signatures which the Applicant admits are his: the Statutory Declaration; the application to this Tribunal for review; the letters to the Police, the Bank and the Royal Commission and the Applicant’s driver’s licence. The Tribunal has no doubt that the signature on the pension application matches all those;
(b)The information contained in the pension application is information known only to the Applicant. This includes details of his residence in Croatia, Austria and “America” with precise dates given which the Applicant confirmed as being correct at the Tribunal hearing;
(c)The information about bank accounts refers to a bank account with the Bank of Cyprus and the Tribunal is satisfied that this is information not shared by the Applicant with unknown third parties;
(d)The information about the tenants in his Wellesley Street, Summer Hill property would be known only to the Applicant and the hand-written notes about this matter are in the same hand as the signature;
(e)The information about the payments made by the tenants at the McArthur Street, Guilford property fall into the same category;
(f)The certification of the photocopy of the Applicant’s driver’s licence by the Centrelink officer would not have occurred had that officer not been satisfied that the person before him/her at the time presenting that licence was indeed the person whose name and details appeared on the pension application form.
Once that is established, the question of any fraudulent activity on any of the Applicant’s accounts becomes otiose. It does not matter what withdrawals were made or by whom they were made. What matters is that deposits were made into the Applicant’s account and he had access to them. They were clearly identified as Centrelink pension payments on his bank statements which he received and saw on a regular basis. He knew that his account was being credited on a regular basis by pension payments.
In addition he received regular correspondence about this pension with requests (and later demands) that he provide updated financial information in relation to such payments. The Applicant chose to ignore such correspondence other than when he deposited certain material with the Burwood offices of Centrelink.
It is thus established that payments were made to the Applicant as a result of his application for them and that he was not, at the relevant time, entitled to them by virtue of his combined assets and income status – the full extent of which he had not disclosed in his pension application.
Hence a debt arose and proper steps were taken for its recovery.
The Tribunal also records that at the very end of the hearing a suggestion was made by the Applicant to the effect that when he attended the Centrelink Burwood office on 29 July 2011 he had gone there with the intention of applying for a seniors card or a health care card and the form he signed was, he believed, simply related to that application. To the extent that the Applicant now says that he did sign a form but he thought it was for a different purpose, the Tribunal does not accept this as a credible explanation. The Applicant is fluent enough in English and has had sufficient experience with the Centrelink offices and processes to know what he was doing when completing forms which are clearly marked as related to the age pension.
IS THERE A BASIS UPON WHICH TO WAIVE OR WRITE OFF THE DEBT?
No, for the reasons outlined below.
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.
Working through those provisions, the evidence before the Tribunal is that the Applicant clearly had a debt and at all time had the capacity to repay that debt; his whereabouts was always known and the sum in question appears sufficient to make it cost effective to recover the debt.
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. The departmental error must be the “single or sole cause” of the error.[36] The 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.”[37] The word “solely” must be given its ordinary meaning.[38]
[36] Sekhom v Secretary, Department of Family and Community Services [2003] FCAFC 190 at [35].
[37] Ward v Secretary, Department of Families and Community Services [2000] AATA 212 at [47].
[38] Gernardt v Secretary, Department of Employment, Education and Training [1996] AATA 173 at [40] in relation to analogous provision in Student and Youth Assistance Act 1973.
Nevertheless, even if there were an element of “administrative error” in these transactions, which the Tribunal has not found, they were not “solely” responsible for the age pension being restored to the Applicant. He contributed to that error by both his repeated failure to respond to departmental correspondence requiring him to update details of his financial circumstances and by his own application for renewal of his pension in which inaccurate financial detail was recorded.
Even if the Tribunal were to find, which it does not, that the renewed pension applications were completed by a person(s) other than the Applicant, that does not relieve the Applicant of the necessity to respond to departmental correspondence and provide updated details of his financial position. He knew what his position was because he had access to bank statements and because he was active in managing his own financial/investment affairs.
There is also the question of “good faith” on the part of the Applicant. He cannot be said to have acted in good faith if he knowingly received the pension payments (which he did when seeing them on his bank statements) and at the same time maintained he was not entitled to them because (a) he had not applied for them and (b) he knew his assets/income threshold exceeded the limits of eligibility.
A payment can be received as a result of administrative error on the part of the department but it will not be received in good faith if the recipient then accepts and retains it.[39] Although questions of good faith are to be considered with reference to the state of mind of the actual recipient and not some hypothetical individual,[40] nevertheless the courts have concluded that, in relation to good faith matters:
Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received - ie is not entitled to use the moneys received as his or her own - that person does not receive the payment in good faith.[41]
[39] Falconer v Secretary, Department of Social Services [1996] AATA 149 at [23]-[24].
[40] Secretary, Department of Social Services v Neuendorf [1998] AATA 868 at [31].
[41] Secretary, Department of Education, Employment, Training and Youth Affairs [1997] FCA 1565 per Finn J extemporary statement of reasons.
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.
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,[42]
·Markedly different from the usual run of cases – not necessarily unique but having a particular quality of unusualness,[43]
·Somehow distinguishing from usual cases of an analogous nature,[44]
·Attuned to the individual circumstances of each case,[45]
·Not so rigidly applied as to risk harsh or unreasonable outcomes,[46]
·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.[47]
[42] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; Jess v Scott and Ors [1986] 70 ALR 185.
[43] Beadle and Director General of Social Security (1984) 6 ALD 1 at 3.
[44] Dranichnikov v Centrelink [2003] FCAFC 133.
[45] Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114.
[46] Secretary, Department of Social Security v Hales [1998] FCA 219.
[47] 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.
None of these definitions give any comfort or support to the Applicant’s potential claim that his circumstances are “special”.
Furthermore, the Tribunal is satisfied on the evidence that the Applicant failed to comply with a provision of the Social Security (Administration) Act 1999 (sections 67 and 74) related to responding to notices requiring the provision of information, hence the Applicant fails the qualification test in section 1237AAD(a)(ii) of the Social Security Act.
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
None of these elements apply to the Applicant who has, at all material times had access to considerable financial resources.
Refund of garnisheed money
The Tribunal notes that Item 5(d) of section 147 of the Administration Act specifically excludes from:
AAT first review ….(a) power or discretion conferred by the social security law on the Secretary under …. section 1233 of the 1991 Act.
Although the reference in the Act is to “AAT first review” it follows that if the AAT1 has no power to make such a determination, nor does the AAT2 in reviewing hat decision.
There appears to have been limited Tribunal or judicial consideration of this imposed limitation which, in effect, prevents this Tribunal from standing in the shoes of the original decision-maker. In Nolan[48] the Tribunal examined the same provision which was then contained in sections 151(1) and (2) of the Administration Act. By reference to the Full Federal Court decision in Walker[49] the Tribunal decided that a decision by the (then) Social Security Appeals Tribunal[50] sending a matter back to the Secretary with “directions” that a garnisheed amount was to be refunded to an applicant was ultra vires the power of that Tribunal.[51]
[48] Nolan and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 769.
[49] Walker v Secretary, Department of Social Security (No 2) (1997) 75 FCR 493 at 505-506.
[50] The SSAT was incorporated into the restructured Administrative Appeals Tribunal by the Tribunals Amalgamation Act 2015.
[51] Nolan and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 769 at [27].
Nevertheless, the Respondent affirmed to the Tribunal that, in the event of the Tribunal making a decision that the debt had been incorrectly raised, there would be no hesitation on the part of the Secretary in refunding such monies given the Commonwealth’s position as a model litigant.
Discussion
The Tribunal has come to a clear finding that the Applicant completed an application for payment of aged pension and that he received regular pension payments of which he was aware.
Regardless of whether or not the Applicant knew that he was not entitled to receipt of such payments, he failed on numerous occasions to reply to departmental correspondence, which he had an obligation to do. This failure led to a situation in which he continued to be paid the pension when he was no longer eligible (had he ever been eligible) because his combined assets and incomes exceeded the means test threshold.
In turn, these overpayments generated a debt. That debt has been paid and for the reasons stated above he is not entitled to any recovery of it.
The Tribunal accepts that, in his own mind, the Applicant is confused about a number of matters and that there are several instances in which his memory has been shown to be faulty or his powers of recall limited. The Tribunal is satisfied that a number of these relate to his inability to recall signing certain documents which clearly bear his signature.
The Applicant’s concerns about fraudulent activity related to his accounts are irrelevant to the matter before the Tribunal. It is not the outgoings of his accounts, but rather the receipt of pension payments into accounts over which he had control which is at issue. Those payments resulted, not from error on the part of the Department, but from a failure of the Applicant to provide the Department with the information necessary for proper assessment of his entitlement (or non-entitlement) to be made.
Caveats or Concerns
The Tribunal expresses some concern that it is unclear as to exactly when the payments to the Applicant, to which he was not entitled, first started and that the Department has identified only a selected period in relation to which it seeks to recover overpayments. The reasons for the choice of this period have been explored, but it is by no means certain that they are the only periods of overpayment.
The Tribunal would be concerned were its determination in this matter to lead to further action being taken against the Applicant as it believes these would be unjustified in all the circumstances of this case. They would also be oppressive and unproductive.
Finally the Tribunal notes that given that the garnishee order made to the Bank was in the sum of $20,414.70 and the sum remitted by the Bank to the Commonwealth was $20,424.70, the Commonwealth should, as a model litigant, refund $10.00 to the Applicant.
DECISION
The decision under review is affirmed.
I certify that the preceding 101 (one hundred and one) paragraphs are a true copy of the reasons for the decision herein of Chris Puplick AM, Senior Member.
....................................[sgd]....................................
Associate
Dated: 16 March 2020
Date(s) of hearing: 10 and 13 February 2020 Date final submissions received: 13 February 2020 Solicitors for the Applicant: Anne McDonald & Associates Solicitors for the Respondent: Department of Human Services
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10
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