Elbaye and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2011] AATA 680

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 680

ADMINISTRATIVE APPEALS TRIBUNAL      )

)No. 2011/0761

GENERAL ADMINISTRATIVE DIVISION		)
Re		ANIS ELBAYE

Applicant

And SECRETARY DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS  

Respondent

DECISION

Tribunal Regina Perton, Member

Date30 September 2011

PlaceMelbourne

Decision The Tribunal affirms the decision under review.

[sgd] Regina Perton

Member

SOCIAL SECURITY – overpayment of newstart allowance – debt to Commonwealth – whether steps taken correctly to garnishee debt from termination payment

Social Security Act 1991 s 1230C

REASONS FOR DECISION

30 September 2011 Ms Regina Perton, Member

1.      Mr Anis Elbaye was receiving newstart allowance. On 10 December 1996 a Centrelink officer decided that Mr Elbaye had been overpaid $47,471.00 in newstart allowance between 9 March 1990 and 29 May 1996 because he had been working at the time and had not declared his earnings. The officer decided to raise and recover a debt of $47,471.00 (the 1996 debt).  Similarly, on 27 November 2000 a Centrelink officer decided that Mr Elbaye had been overpaid $31,019.27 in newstart allowance between 3 January 1997 and 3 November 2000.  Centrelink decided to raise and recover a debt of $31,019.27 (the 2000 debt). On 13 March 2003 Centrelink decided to garnishee the outstanding amount of $64,652.33 from Mr Elbaye’s lump sum termination payment from his employer.  Mr Elbaye believes that Centrelink should not have done so. 

LEGISLATIVE BACKGROUND

2. Section 1230C of the Social Security Act 1991 (the Act) provides:

1230C Methods of recovery of debt

(1)Subject to subsection (2), a debt due to the Commonwealth under this Act or Part 3B of the Administration Act is recoverable by the Commonwealth by means of one or more of the following methods:

(a)If the person who owes the debt is receiving a social security payment—deductions from that person’s social security payment;

(b)If, in respect of the debt, section 1234A applies to another person who is receiving a social security payment—deductions from that other person’s social security payment;

(c)repayment by instalments under an arrangement entered into under section 1234;

(d)legal proceedings;

(e)garnishee notice.

(2)Subject to subsection (3), a debt due to the Commonwealth under this Act or Part 3B of the Administration Act is recoverable by means of a method mentioned in paragraph (1)(d) or (e) only if the Commonwealth:

(a)has first sought to recover the debt by means of a method mentioned in paragraph (1)(a), (b) or (c); and

(b)can establish that the person who owes the debt:

(i)     has failed to enter into a reasonable arrangement to repay the debt; or

(ii)     after having entered into such an arrangement, has failed to make a particular payment in accordance with the arrangement.

(3)If the Secretary determines that the recovery of the debt by means of a method mentioned in paragraph (1)(a), (b) or (c) is not appropriate having regard to the circumstances of the case, paragraph (2)(a) does not apply in respect of the recovery of the debt.

ISSUE

3.      There was no dispute that the overpayments were recoverable debts owed to the Commonwealth.  The issue before the Tribunal is whether Centrelink exercised its garnishee power correctly, instead of recovering the debts by deduction from social security payments or repayment by instalments (s 1230C(3) of the Act). 

DID CENTRELINK EXERCISE ITS GARNISHEE POWER CORRECTLY?

4. Mr Elbaye told the Tribunal that s 1230C(3) does not apply in this case and that Centrelink should not have garnisheed his termination payment. By way of background, he said that he arrived in Australia from Lebanon in 1979 and was employed by The Age newspaper from 1989 until 2000 when he was made redundant.  He acknowledged that in 1998 he pleaded guilty in the Magistrates’ Court to a criminal charge involving the receipt of social security payments to which he was not entitled, and was sentenced to a community-based order.  He was also ordered to attend a program for gamblers because of his gambling addiction.  Mr Elbaye stated that in 2000 Centrelink proposed withholding $100 per week from his wages to repay the debt, but he had offered $50 per week.  Centrelink rejected the offer because of his gambling problem and an assertion that he had failed to pay his debts in the past. He said that Centrelink had previously garnisheed his wages at a rate of $80 per fortnight.

5.      Mr Elbaye agreed that in 2001 he pleaded guilty to a further four charges in the Magistrates’ Court and was sentenced to one month’s imprisonment and released on a good behaviour bond for 24 months.  He said that in 2003 Centrelink issued a garnishee notice against his former employer in the amount of $65,372.33. In response he had offered to repay the debt by instalments of $80 per week but  this had been rejected by Centrelink.  The amount was withheld from his redundancy package in April 2003, and further amounts were withheld from his newstart allowance between May and December 2003 to pay the remainder of the debt.  He said that he could not understand why Centrelink had refused to continue to do so but had instead chosen to garnishee his termination payment.

6.      In respect of his employment prospects at the time of the garnishee order,   Mr Elbaye said that he needed the money from his termination payment because he had signed a contract to purchase a café in Frankston for $41,000. He said he intended to operate the café after returning to Lebanon and finding a wife to assist him. He expected to meet his repayment obligations to Centrelink by instalments from the profits of the café.  He stated that at the time of the garnishee order he had no savings or debts, and lived in public housing accommodation.  Mr Elbaye said that he asked Centrelink to refund the money to enable the purchase to proceed but his request was refused.  Consequently, he withdrew from the contract to purchase the café.  Mr Elbaye admitted that he had gambled at times but denied that he had a gambling problem.  He said that since ceasing work in 2003 he has endured health problems and was declared bankrupt in 2007 as a result of debts to the Child Support Agency and purchases of furniture.

7.        In a record of interview with Centrelink dated 17 January 1997, Mr Elbaye admitted receiving social security payments to which he was not entitled while he was working. He explained that he had been gambling at the races and at the casino and had spent all his earnings and social security payments.  He said that his gambling habit commenced ten years earlier, after his divorce.

8.        In an assessment for vocational purposes dated 14 December 1999, Dr H Jarvis, psychologist, stated that Mr Elbaye suffers from depression and is a compulsive gambler.  She  recorded that he had consulted a psychiatrist on two occasions to obtain assistance with his gambling problem.

9.        In a report to Centrelink dated 2 July 2010 Dr M Greenbaum, consultant psychiatrist, stated that Mr Elbaye was suffering from depression, rage and isolation following the breakdown of his marriage, and was drinking to excess.  He urged Centrelink to agree to the refund of the lump sum taken from the termination payment so that Mr Elbaye could resume and rebuild his life, with the debt to be repaid from withholdings from Mr Elbaye’s social security payments.

10.      Documents provided to the Tribunal indicate that amounts were withheld from Mr Elbaye’s newstart allowance to repay the 1996 debt from January 1997 until October 2000, when the allowance was suspended.  In respect of the 2000 debt, Centrelink took action in December 2000 to garnishee payments from his wages.  On 14 April 2003 the sum of $64,652.33 was garnisheed by Centrelink from Mr Elbaye’s termination payment of $75,200.  $35,073.06 was applied to the 1996 debt and $29,579.27 was applied to the 2000 debt.  The remainder of the 2000 debt was repaid through withholdings from newstart allowance in 2003.

11.      The Tribunal takes into account that Centrelink had previously recovered money from Mr Elbaye in relation to the 1996 debt  by withholdings from his newstart allowance and instalments from his wages from 7 April 2003.  Although the documentary evidence of Centrelink’s consideration of whether to seek a garnishee order is somewhat sparse, the issue was raised in  Centrelink file notes dated 4 July 2001 and  13 March 2003.

12.      On all the material before the Tribunal, it is satisfied that Centrelink gave adequate consideration  to Mr Elbaye’s request  to repay  the debts by deductions from his newstart allowance or by an instalment plan. The Tribunal is satisfied that repayment by these methods was not appropriate in view of the failure of these methods in the past.  The offer to repay $80 per week was not a reasonable offer, given the length of time that would be required to repay both debts at that rate of repayment.  The Tribunal is also satisfied from Mr Elbaye’s own admissions that he has a longstanding gambling problem, which led to him spending all his wages and then applying for newstart allowance while he was working.  Furthermore, the Tribunal notes that Mr Elbaye has had no experience in the hospitality industry and has significant health problems. Therefore, his proposal to utilise his termination payment to purchase and operate a café with the assistance of a future wife from Lebanon and then to repay his debts to Centrelink is impractical and unrealistic.

13. For these reasons the Tribunal is satisfied that in attempting to recover the debts owed by Mr Elbaye, Centrelink first sought to deduct amounts from his social security payments and to seek repayment by instalments but that recovery of the debts by these methods was not appropriate in the circumstances of this case. Therefore, s 1230C (3) of the Act applies and s 1230C (2(a)) of the Act does not apply. The debts owed to the Commonwealth were recoverable by means of a garnishee order.

DECISION

14.      The Tribunal affirms the decision under review.

I certify that the fourteen [14] preceding paragraphs are a true copy of the reasons for the decision of:

Ms Regina Perton, Member

Signed:……Dianne Eva

Clerk  

Date of hearing:  25 July 2011
Date of decision:  30 September 2011

Advocate for applicant:                Mr A Boughton

Solicitor for the applicant:            J N Zigouras & Co
Advocate for respondent:            Mr T De Uray, Advocacy Branch, Centrelink