Edwards and Secretary, Department of Employment and Workplace Relations

[2007] AATA 16

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 16

ADMINISTRATIVE APPEALS TRIBUNAL  N°V2006/362

GENERAL ADMINISTRATIVE DIVISION
Re		KAY (NGAWAIKAUKAU) EDWARDS AND IVAN EDWARDS

Applicants

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS  

Respondent

DECISION

Tribunal:Ms Regina Perton, Member

Date:12 January 2007

Place:Melbourne

Decision:The Tribunal affirms the decisions under review.

. . . . . . . . . . . . . . . . . . . . . . .

Member

SOCIAL SECURITY – compensation affected payments – timing of backdated periodic payments – debt incurred by person in receipt of compensation and his partner paid by insurer direct to Centrelink at its request – whether payments can be attributed to the period when they should have been made rather than the actual date of payment – waiver of debt – whether special circumstances exist – decisions under review affirmed.

Social Security Act 1991 Part 3.14, ss 17, 1173, 1174, 1184, 1184A, 1237AAD

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

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

REASONS FOR DECISION

12 January 2007  Ms Regina Perton, Member

1.      Ivan Edwards and his wife, Kay (Ngawaikaukau) Edwards, have been in dispute for some years with Centrelink over debts to Centrelink that arose primarily as a result of workers’ compensation payments made to Mr Edwards.  Mr Edwards was injured in a workplace accident in 2001.  In 2002, Mr Edwards was paid a total of $17,944.00 in arrears of weekly compensation payments in two lump sums for the period between 27 July 2001 and 1 February 2002 (the relevant period).  Mr Edwards had been receiving sickness allowance during the relevant period.  As a result, Centrelink required the insurer to reimburse it for sickness payments already made to Mr Edwards.  An amount of $8.994.41 was deducted from the compensation award to repay Centrelink.  Mr Edwards believes he and his wife have been disadvantaged by the timing of the compensation payment.  It is his view that Centrelink should lessen the amount they were required to repay.   

2.      Mrs Edwards has been receiving disability support pension (DSP) since July 1999.  Centrelink determined that she had been overpaid DSP during the relevant period because of the amount her husband received in arrears of compensation.  Centrelink later decided that she had been also been overpaid DSP during periods before and after the relevant period due to the level of her husband’s income.  On 27 March 2006 the Social Security Appeals Tribunal (SSAT) waived part of Mrs Edwards’s debt accumulated before the relevant period.  However, the SSAT determined that Centrelink was entitled to retain the moneys overpaid to Mrs Edwards during the relevant period.  The SSAT also affirmed a delegate’s decision that Mrs Edwards owed money to Centrelink for a later overpayment period from 2 February 2002 to 11 March 2005  (the later period) during which her husband’s level of income was such that she was not entitled to the rate of DSP paid to her.   

3.      After Mr and Mrs Edwards lodged their application for review to this Tribunal on 5 May 2006, the respondent reconsidered its position in regard to Mrs Edwards’s debt for the later period.  On 23 August 2006, Centrelink notified the Tribunal that Mrs Edwards’s debt for the later period had been cancelled and that a recovered amount of $2,465.51 was to be refunded to Mrs Edwards.  Mr Edwards, who represented his wife and himself at the hearing, agreed that there were now fewer debts in dispute.

4.      Mr and Mrs Edwards’s financial situation is complicated.  The dispute between Mr and Mrs Edwards and Centrelink was contributed to by errors made by Centrelink and Mr Edwards’s former employer.  The time taken to negotiate with, and receive payment from the insurer, has further complicated things.  Both Mr and Mrs Edwards tried to correct the situation in the early years of their dispute but their efforts were thwarted due to factors outside their control.  At one stage, Mr Edwards worked out what he thought he owed Centrelink for overpayment of Newstart Allowance (NSA) due to back payments of compensation so he made an unsolicited payment to Centrelink of around $1,500.  Mr Edwards advised Centrelink at that time that his workers’ compensation payments had resumed. However, Centrelink continued to pay him for some time until Mr Edwards resolved the problem by failing to return a form Centrelink had requested.  Mr Edwards grew increasingly frustrated over his financial situation and his relationship with Centrelink deteriorated.  He is now untrusting of Centrelink’s advice and calculations. 

5.      As stated earlier, a number of the outstanding issues have now been resolved due to the SSAT’s decision and the respondent’s reconsideration and subsequent reimbursement of part of Mrs Edwards’s repayment.  The Tribunal does not propose to revisit all the disputes that were raised with the SSAT as some have been resolved.  The Tribunal will focus on the remaining disputes.  The parties agreed to such an approach at the hearing.

6.      The decisions now under review concern the raising and recovery of a debt of $5,397.09, resulting from an overpayment of DSP to Mrs Edwards during the relevant period and a debt of $3,547.32 from an overpayment of NSA to Mr Edwards during the relevant period..   The Tribunal will consider if the debts are appropriately raised.  The Tribunal will also consider if the debts should be waived due to special circumstances.

Are the Debts Appropriately Raised?

7.      Mr Edwards told the Tribunal about the difficulties he had with his employer and the insurer in obtaining the periodic workers’ compensation payments.  Mr Edwards received workers’ compensation payments late and there were also delays with income protection payments, so the payments were received in later financial years. These delays detrimentally affected his wife’s social security entitlements, his taxation liabilities and the amount he had to repay to Centrelink.  Mr Edwards believes that the debts should be adjusted to reflect the dates when the payments were due rather than when they were actually paid to him.  Mr Edwards pointed out that he tried to make Centrelink aware of the complexity of his situation but the agency took a considerable period to react.  He said that he and his wife declared what they thought was his income but late payments and adjustments to his wages changed that. 

8. Section 17(1) of the Social Security Act 1991 (the Act) sets out that certain payments including disability support pension (s 17(1)(a)) and a social security benefit (s 17(1)()c)) are compensation affected payments. Section 17(2) of the Act defines compensation:

17.(2)  Subject to subsection (2B), for the purposes of this Act, compensation means:

(a)a payment of damages; or

(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

(d)any other compensation or damages payment;

(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury.

9. Part 3.14 of the Act provides for compensation recovery. Sections 1173 and 1174 of the Act provide that where a person and his partner received compensation affected payments and later the person receives backdated periodic compensation payments, there needs to be reconciliation of the entitlements of both members of the couple.  If the amount paid in compensation exceeds the amount of the benefit, a repayable debt is incurred.  

10. Section 1184 of the Act allows the Commonwealth to seek the recoverable amount directly from the compensation payer (Victorian Workcover Authority via its insurer). Centrelink is entitled to issue a recovery notice to the insurer where the person who is paid a lump sum of backdated periodic compensation payments is on a compensation affected payment during the dates for which the backdated payments are made. Section1184A(3) of the Act allows for the recovery of money from the insurer and sets out the recoverable amount when compensation affected payments are made to both the person paid the compensation and his partner.

11. The Tribunal is satisfied that the payments made to Mr Edwards by the insurer constitute compensation as defined in s 17(2) of the Act. The Tribunal is also satisfied that Centrelink was entitled to seek payment direct from the insurer for the overpayments made to both Mr and Mrs Edwards. The t‑documents contain a number of calculations of the debts. There have been a number of reviews of the figures at both the request of Mr and Mrs Edwards and others. Mr Edwards is not convinced that the calculations are correct. However, there is no evidence to the contrary. Furthermore, the calculations have been undertaken according to legislative provisions which the Tribunal is not empowered to ignore.

Should the Debt be Waived?

12.     Where a debt has arisen due solely to administrative error by Centrelink, the debt can be waived (s 1237A).  The evidence does not indicate that this was so. Therefore, Mr and Mrs Edwards are unable to rely on this provision of the Act.

13. Section 1237AAD of the Act provides for waiver of the debt in special circumstances:

The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a)the debt did not result wholly or partly from the debtor or another person knowingly:

(i)       making a false statement or false representation; or

(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c)it is more appropriate to waive than to write off the debt or part of the debt.

14. The Tribunal is satisfied that Mr and Mrs Edwards meet the requirements of s 1237AAD(a) of the Act. The debts arose because of a dispute over workers’ compensation payments and their late payment through no fault of Mr Edwards.

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

16.     Mrs Edwards has severe health problems.  She is suffering from renal failure and requires frequent dialysis.  She also suffers with severe arthritis.  Mr Edwards's health has deteriorated further since the workplace accident.  Mr Edwards stated that he is now in debt, after always having prided himself on having no debt.  The Tribunal accepts that Mr and Mrs Edwards are in difficult circumstances both health-wise and financially.  However, the Tribunal is not satisfied that the situation that they find themselves in is vastly different from other social security recipients who have incurred debts due to late payments of workers’ compensation payments.  The amounts owing have already been recovered by Centrelink.  Mr and Mrs Edwards are not required to make any further payment to Centrelink in relation to the debts being considered by the Tribunal. 

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

DECISION

18.     The Tribunal affirms the decisions under review.

I certify that the eighteen [18] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       ……………………………………………………

Clerk

Date of hearing:  30 August 2006

Date of decision:  12 January 2007
Advocate for applicants:              Mr I Edwards (for wife and himself)
Advocate for respondent:            Mr W Zita , Centrelink Legal Services