Eleanor Hernandez and Secretary, Department of Social Services

[2015] AATA 419

[2015] AATA  419

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2014/5696
Re	Eleanor Hernandez
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Dr M Denovan, Member
Date	12 June 2015
Place	Brisbane

The Tribunal affirms the decision under review.

………[Sgd]………………….
Dr M Denovan, Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Disability Support Pension – New Start Allowance – Overpayment – Collection of debt – Waiver – Administrative error - Special Circumstances – Decision under review affirmed

LEGISLATION

Social Security Act 1991 (Cth) ss 1223(1), 1237A
Social Security (Administration) Act 1999 (Cth) s 100(1)

CASES

Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3
Re:Dranichnikov v Centrelink (2003) 75 ALD 134
Re Colaiacolo and Secretary to Department of Social Security (AAT 2109, 24 April 1985); [1985] AATA 91
Re:Groth v Secretary Department of Social Security (1995) 40 ALD 541

Re:Zaccardi and the Secretary, Department of Social Security (1995) 40 ALD 760

Re Secretary, Department of Family and Community Services and Zugul [2005] AATA 42.

REASONS FOR DECISION

Dr M Denovan, Member

12 June 2015

1. Mrs Eleanor Hernandez is the applicant in these proceedings. She was in receipt of New Start Allowance (“NSA”) from 4 December 2008 to 14 September 2010. She was then transferred to Disability Support Pension (“DSP”). At all relevant times, Mrs Hernandez was partnered to Mr Ryeland.

2. Both NSA and DSP are means tested. In November 2012 a data match between Centrelink and the Australian Tax office showed a discrepancy between the amount of Mr Ryeland’s income, and that which Centrelink was using to calculate the amount of DSP Mrs Hernandez would receive. On 24 March 2014, as a result of that discrepancy, Centrelink determined Mrs Hernandez was overpaid $12,481.87 for the period 23 September 2010 to 25 December 2013. At the request of Mrs Hernandez, the decision was reviewed. The Authorised Review Officer (“ARO”) who reviewed the decision, determined that a further overpayment of $867.07 had been made to Mrs Hernandez when she was in receipt of NSA. The total debt was increased to $13,348.94. On 2 October 2014 the Social Security Appeals Tribunal (SSAT) affirmed the revised decision.

3. Mr Ryeland represented his wife and gave evidence at the hearing. He contends that the debt occurred as a result of administrative error, and that the debt should be waived due to special circumstances. He further contends the debt is not accurately or fairly calculated.

   RELEVANT LEGISLATION

4. Section 100(1) of the Social Security (Administration) Act 1999 (Cth) states as follows:

   Automatic rate reduction--recipient not complying with subsection 68(2) notice

   (1) Subject to subsection (2), if:

   (a) a person who is receiving a social security payment is given a notice under subsection 68(2); and

   (b) the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period ); and

   (c) the event or change of circumstances occurs; and

   (d) the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and

   (e) because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;

   the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs. (Original emphasis.)

5. Section 1223(1) of Social Security Act 1991 (Cth) (“the Act”) reads:

   Debts arising from lack of qualification, overpayment etc.

   (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. (Original emphasis.)

6. Section 1237A of the Act states as follows:

   Waiver of debt arising from error

   Administrative error

   (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.

   Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

   (1A) Subsection (1) only applies if:

   (a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

   (b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

   whichever is the later.

   Underestimating value of property

   (2) If:

   (a) a debt arose because the debtor or the debtor's partner underestimated the value of particular property of the debtor or partner; and

   (b) the estimate was made in good faith; and

   (c) the value of the property was not able to be easily determined when the estimate was made;

   the Secretary must waive the right to recover the proportion of the debt attributable to the underestimate.

   Proportion of a debt

   (3) For the purposes of this section, a proportion of a debt may be 100% of the debt. (Original emphasis.)

   CONSIDERATION

   Was there solely administrative error?

7. Mrs Hernandez was in receipt of NSA for approximately two years. During this time Centrelink sent Mrs Hernandez fortnightly review forms, which, amongst other things, required her to provide details of her partner’s income. Mrs Hernandez told me she was the person who usually retrieved the mail from the residential letterbox. It is important to note at this stage that although Mrs Hernandez can communicate competently in English, it is not her first language. She told me when the Centrelink fortnightly review forms arrived in the mail, she would pass them to her husband. She said she did complete the forms herself, after Mr Ryeland advised her as to his most recent income. Mr Ryeland has worked as a security guard for many years. He has worked for a number of employers. He is, and during all relevant times, was employed on a part-time casual basis. His income is not, and was not at relevant time, the same each fortnight. His fortnightly income is determined by the availability of work.

8. When Mrs Hernandez was transferred to DSP, Centrelink no longer sent her fortnightly review forms, and her evidence is that as a result, she and her partner concluded it was no longer necessary to keep Centrelink informed about Mr Ryeland’s income. Mr Ryeland told me he concluded that DSP was not means tested. He admits to not having made any enquires with Centrelink in this regard.

9. Unlike those on NSA, recipients of DSP are not required to complete fortnightly review forms. They are however, still required to keep Centrelink informed about all matters that may affect their entitlement to DSP, and the calculation of the amount of DSP that is paid each fortnight. These obligations have been set out in writing in correspondence to Mrs Hernandez numerous times. The obligations were set out in the letter informing Mrs Hernandez that she qualified for DSP, and in each of the 60 or so letters subsequently sent to her in connection with the DSP.

10. The ARO who reviewed this matter considered it an administrative error that Mrs Hernandez was not sent fortnightly review forms after she was transferred to DSP. Although no longer required to report fortnightly, I assume the reasoning of the ARO was that the usual practice of Centrelink is to continue to ask for fortnightly income details of those recipients in Mrs Hernandez’s situation, when it is known that they or their partner’s income tends to fluctuate. Had regular review forms been sent to Mrs Hernandez after her payment was changed to DSP, I expect she would have probably kept Centrelink informed of Mr Ryeland’s income. I accept that the decision to cease sending fortnightly income reporting forms to Mrs Hernandez was less than ideal administrative practice, however I am  not persuaded that the failure to continue to send the reporting forms  amounts to an administrative error. However, even if it does amount to administrative error, my decision would be the same.

11. As stated, Mrs Hernandez’s obligations to keep Centrelink informed were clearly stated in the letter that was sent informing her she was to be changed from NSA to DSP. Mrs Hernandez admits to receiving that letter, dated 14 October 2010, which informed her that she qualified for DSP. The same letter stated the combined annual income used for the assessment of her DSP was $2,142.24[1], and included details of Mrs Hernandez’s obligations to inform Centrelink of changes in her circumstances.

    [1] T Documents, p. 209.

12. Mr Ryeland argues that there was no obligation to report any changes to Centrelink, as his circumstances did not change, as his income always varied from one fortnight to another. The obligations set out in the letters did not require Mrs Hernandez to determine whether or not her circumstances were of a nature that required reporting.  The letter dated 14 October 2010, as did approximately 60 subsequent letters relating to her DSP, included the following passage:

    Please check the information on this statement carefully. If the details on this statement are correct there is no need for you to contact Centrelink. If your circumstances change please contact us within 14 days… You must tell us if you and your partner… have any change to your income from employment (the amount you earn goes up or down).

13. Even if one or two of these letters went missing in the post, and there is no evidence to that effect, I cannot accept Mr Ryeland’s argument that neither he or Mrs Hernandez received the letters from Centrelink setting out Mrs Hernandez’s obligations. Mrs Hernandez did not change address at any time during the relevant period, and by completing all the reporting requests whilst she was on NSA demonstrated that she was receiving Centrelink’s letters prior to October 2012. Centrelink keeps a copy of all records sent, and although the format of the copies is different to that sent, the information is exactly the same. That Mr Ryeland finds the computerised copies of the letters sent to Mrs Hernandez difficult to follow is understandable, however it does not assist his contention that the letters were not sent. I am reasonably satisfied that Mrs Hernandez was informed of her reporting obligations on multiple occasions, through written correspondence from Centrelink.

14. Mr Ryeland was determined to share with me his anger and frustration with most aspects of his interactions with Centrelink. He cited conduct (much of which was recent, and occurred subsequent to the accumulation of Mrs Hernandez’s debt) which he claimed   were examples of Centrelink’s incompetence. He also referred me to a recent speech given by the Minister, Scott Morrison. Poor conduct by Centrelink, and difficulty communicating with the department, is one of the reasons Mr Ryeland believes the debt should be waived. As I understand it, the thrust of his argument is that, the whole debt is a result of administrative error, as even if he had tried to inform Centrelink of his actual income, there is no guarantee the information would have been recorded correctly. He also claims that even when Centrelink accurately recorded his income, Centrelink has a long history of making calculation errors, and there is no guarantee the correct calculation of Mrs Hernandez’s DSP payments would have been made.

15. I note that despite his frustrations and purported difficulties, Mr Ryeland and Mrs Hernandez had no difficulty regularly reporting his income by personally retuning the appropriate forms to a Centrelink office during the entire time Mrs Hernandez was in receipt of NSA, and I see no reason why Mrs Hernandez would have been prevented from continuing to update Centrelink regularly after she was granted DSP. Mr Ryeland’s contentions are hypothetical only. He has produced no evidence, or even claimed that the information he provided to Centrelink during that time was incorrectly recorded, or that the calculations of Mrs Hernandez’s NSA payments were erroneous at any time.

16. I accept that if Centrelink continued to send reporting request forms to Mrs Hernandez after she was granted DSP, it is likely she would have diligently returned them as she had in the past, and the debt that arose would have likely been considerably less. I am not convinced no debt would have occurred, as there were errors in some of the information Mrs Hernandez sent in her fortnightly reports whilst she was in receipt of NSA. It was because of those errors the ARO raised the second part of the debt, and total amount Mrs Hernandez was over paid increased to $13,348.94. The calculation of the difference between the amount Mrs Hernandez was paid and that which she was entitled to whilst on NSA from 4 December 2008 is set out on folios 60-81 of exhibit 1, and after checking all this material I am satisfied these calculations are correct.[2] The additional $867.07 was the result of inaccurate reporting of Mr Ryeland’s income whilst Mrs Hernandez was in receipt of NSA. There is no argument raised by either Mrs Hernandez or Mr Ryeland that administrative error contributed to that component of the debt and I cannot see any reason to conclude there was any administrative error.

    [2] T Documents, p. 60 – 81.

17. Even if there was some administrative error, the debt was certainly not solely due to administrative error. The component of the debt that arose subsequent to Mrs Hernandez being granted DSP would have either been avoided entirely, or have been considerably less had Mrs Hernandez or Mr Ryeland complied with Mrs Hernandez’s reporting obligations that were clearly set out in the regular letters and statements sent to her on and after 14 October 2010.

18. Administrative decisions of this nature are determined on the civil, not criminal standard of proof. A decision maker, such as myself, must be reasonably satisfied of all material facts relevant to the decision. As I understand, many of Mr Ryeland’s contentions are based on the premise that Centrelink has not proven Mrs Hernandez has a debt, as  many of the material facts such as whether Mrs Hernandez received letters from Centrelink have not been proven beyond reasonable doubt. I must be reasonably satisfied that administrative error was not the sole cause of the debt, and on the evidence before me I am. As administrative error was not the sole cause of any part of the debt, it cannot be waived in part or full.

19. Mr Ryeland claims the debt has not been calculated fairly or correctly. He refers to the difference in the dates used to calculate his fortnightly income to that used to assess fortnightly pension allowances. After carefully reviewing the method used to calculate Mrs Hernandez’s debt, it is clear that the departmental delegate trialled a number of different ways to adjust the dates, and calculate the debt. Ultimately the ARO appears to have adopted the position that was most favourable to Mrs Hernandez. I am reasonably satisfied the calculations are correct. Mr Ryeland claims the statements of his earnings issued by his employers are not reliable. He cited a number of occasions when he was under and over paid. He reluctantly agreed that the amount he received was the same as that reported. Whether Mr Ryeland was under or over paid is a matter for him to take up with his respective employers, and the ATO. If errors are discovered, it is possible that Mrs Hernandez’s debt could be adjusted to reflect the correct income. There is no evidence before me to suggest the income Mr Ryeland received is any different to that reported in his tax returns. Mr Ryeland said he has not taken up the issue of incorrect payment with either his employers or the ATO at this point in time.

    Special circumstances

20. Whilst the expression “special circumstances” is not defined in the Act or the Social Security (Administration) Act 1999 (Cth), the approach to be taken in interpreting and applying discretionary provisions has been dealt with by the Tribunal and the Federal Court in numerous circumstances.

21. In Re Beadle and Director-General of Social Security[3] it was said that:

    The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context, which allows one to say that the circumstances in one case are markedly different from the usual, run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

    [3] (1984) 6 ALD 1 at [3].

22. In Dranichnikov v Centrelink,[4] the Full Federal Court when considering the meaning of “special circumstances” observed:

    ….what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary…

    [4] (2003) 75 ALD 134 at [66]

23. Financial hardship has been considered as a possible component of special circumstances in a number of decisions. It is well established that, by itself, such hardship is not enough,[5] and that financial circumstances must not only be strained but also exceptional.[6]

    [5] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at [4].

    [6] Re Colaiacolo and Secretary to Department of Social Security (AAT 2109, 24 April 1985)[1985] AATA 91 ); Groth v Secretary Department of Social Security (1995) 40 ALD 541; Re Zaccardi and the Secretary, Department of Social Security (1995) 40 ALD 760.

24. Mr Ryeland argues that after repaying the debt his wife will be receiving less than the amount regarded as the poverty line. Mrs Hernandez and Mr Ryeland have been together for approximately 10 years. Mr Ryeland has worked hard and due to his diligence he owns his own car and house. He continues to work, albeit only very limited hours due to health problems. He told me he has $40,000.00 in the bank. Mrs Hernandez is indeed fortunate to have partnered a man who has been responsible with his money and hard working. I have no doubt Mr Ryeland is not exaggerating when he told me he and Mrs Hernandez lead a frugal lifestyle, do not drink or smoke or buy magazines or spend money on any other frivolous items. They live in a small home and keep their expenses to a minimum by living simply. Although Mrs Hernandez may be receiving an amount regarded as below the poverty line, her financial situation must be considered in context. Mrs Hernandez and Mr Ryeland have no mortgage or rent obligations. The calculation of the poverty line takes into consideration those and other expenses Mrs Hernandez does not have to pay. I understand why both Mr Reyland and Mrs Hernandez feel upset because of the existence of the debt and the requirement to repay it. They are not wealthy, however largely due to the responsible attitude to money they have both adopted during their lives they are in a secure financial position.  Mrs Hernandez’s financial situation is considerably better than many persons on DSP, who must pay rent and transport expenses from their fortnightly DSP pension.

25. Mr Ryeland told me about Mrs Hernandez’s unfortunate medical problems. She has a rare condition that affects her blood and skin and can affect different parts of her body, leaving her incapacitated and in a lot of pain. There is no satisfactory treatment and the situation is no doubt going to worsen over time. Mrs Hernandez is understandably very distressed by the large debt she now must pay. Understandably the stress of the debt aggravates her ill health. Poor health can be a factor that contributes to special circumstances. However, the condition for which compensation was received is not usually a factor which can be considered as relevant for the purposes of establishing special circumstances.[7]

    [7] Re Secretary, Department of Family and Community Services and Zugul [2005] AATA 425.

1. When the relevant circumstances of the applicant are looked at in their entirety, they cannot be fairly described as unusual, uncommon or exceptional, so as to be “special” in the sense in which the legislature intended that term. None of the circumstances raised by Mr Ryeland on Mrs Hernandez’s behalf have significantly contributed to the reason the debt was accumulated. Had Mrs Hernandez not been overpaid, it is likely the couple would have a smaller bank balance, however little else would be different.

2. Taxpayers expect debts to be recovered by the Commonwealth. It is appropriate that only in exceptional circumstances a debt in part or in full can be waived. To waive debts that were the result of a person’s failure to comply with their obligations because they did not read information sent to them, could potentially encourage recipients of social security benefits to ignore their reporting obligations and hope that they can keep any overpayments that result, by pleading ignorance. That would be inappropriate, and would frustrate an already overburdened social security system.

   DECISION

3. The decision under review is affirmed.

I certify that the preceding 28 (twenty-eight) paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member

..................[Sgd]......................................................

Associate

Dated 12 June 2015

Date of hearing	15 April 2015
Advocate for the Applicant	Leon Ryeland
Solicitors for the Respondent	Jasmine Forsyth, Department of Human Services