Ellis-Howe; Secretary, Department of Employment and Workplace Relations and
[2007] AATA 1415
•7 June 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1415
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W 200600198
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS Applicant
And
ANNETTE LORRAINE ELLIS-HOWE
Respondent
DECISION
Tribunal Deputy President S D Hotop Date7 June 2007
PlacePerth
Decision The Tribunal sets aside the decision of the Social Security Appeals Tribunal dated 14 June 2006 and, in substitution therefor, decides that:
· a debt in the amount of $14,680.95 is due by Mrs Ellis-Howe to the Commonwealth under s 1184F of the Social Security Act 1991 (Cth) (“the Act”); and
· the whole of that debt is recoverable from her by the Commonwealth in accordance with s 1230C and Pt 5.3 of the Act.
….......[Sgd S D Hotop]...........
Deputy President
CATCHWORDS
SOCIAL SECURITY – compensation – respondent received parenting payment from 1999 – respondent injured in motor vehicle accident in 1999 – respondent received lump sum compensation payment in March 2004 – respondent notified Centrelink of accident and compensation payment in November 2004 – respondent given notice by Centrelink in December 2004 that amount of $14,680.95 received by her by way of parenting payment during lump sum preclusion period recoverable from her – debt in amount of $14,680.95 due by respondent to Commonwealth – no special circumstances that make it appropriate to treat whole or part of compensation payment as not having been made – no special circumstances that make it desirable to waive whole or part of debt – whole debt recoverable from respondent by Commonwealth – decision under review set aside
Social Security Act 1991 (Cth), s 1178, 1184F, s 1184K(1), s 1230C, s 1235 and s 1237AAD
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Haidar v Secretary, Department of Social Security (1998) 28 AAR 288
Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Secretary, Department of Social Security v Smith (1991) 30 FCR 56REASONS FOR DECISION
7 June 2007 Deputy President S D Hotop Introduction
1. Annette Lorraine Ellis-Howe (“Mrs Ellis-Howe”) was in receipt of Parenting Payment under the Social Security Act 1991 (Cth) (“the Act”) from March 1999 to March 2005.
2. On 24 November 2004 Mrs Ellis-Howe notified Centrelink that she had been injured in a motor vehicle accident on 19 December 1999 and that she had received a lump sum compensation payment of $95,900.00 on 30 March 2004.
3. On 21 December 2004 the Insurance Commission of Western Australia informed Centrelink that Mrs Ellis-Howe’s motor vehicle accident compensation claim had been settled on 27 February 2004 and that the gross settlement amount was $90,000.00, plus $7,000.00 costs, which included the amount of $15,900.00 for past loss of earning capacity and $25,000.00 for future loss of earning capacity.
4. On 29 December 2004 an officer of Centrelink sent to Mrs Ellis-Howe a “Recovery Notice under Section 1178 of the Social Security Act 1991” notifying her that:
· by reason of her lump sum compensation payment of $97,000.00, she was not eligible to receive “Centrelink payments” during the “preclusion period” from 19 December 1999 to 2 June 2001;
· she was required to repay to Centrelink the amount of $14,680.95 (being the total amount of “Centrelink payments” received by her during the preclusion period) within 28 days.
5. Following a request by Mrs Ellis-Howe, the decision to recover the sum of $14,680.95 from her was reviewed within Centrelink and was ultimately affirmed by an Authorised Review Officer (“ARO”) on 9 February 2006.
6. On 14 June 2006, however, the Social Security Appeals Tribunal (“SSAT”) set aside the Centrelink officer’s decision of 29 December 2004, as affirmed by the ARO, to recover the amount of $14,680.95 from Mrs Ellis-Howe, and instead decided that:
· the amount of $14,680.95 received by Mrs Ellis-Howe by way of Parenting Payment during the preclusion period is a debt due by her to the Commonwealth;
· recovery of the amount of $7,340.48, being part of that debt, is waived under s 1237AAD of the Act;
· the amount of $7,340.47, being the balance of that debt, is to be recovered from Mrs Ellis-Howe.
7. The Secretary to the Department of Employment and Workplace Relations (“the Secretary”) has applied to the Tribunal for review of the decision of the SSAT.
The Issue and the Tribunal’s Determination
8. There is no dispute that the amount of $14,680.95 was received by Mrs Ellis-Howe by way of Parenting Payment during the abovementioned “preclusion period” and that, by reason of her lump sum compensation payment, she was not eligible to receive that amount. The only issue for the Tribunal’s determination is whether the whole of that amount, or part of it, is recoverable from her under the Act.
9. For the reasons which follow, the Tribunal has determined that the abovementioned amount of $14,680.95 is a debt due by Mrs Ellis-Howe to the Commonwealth and that the whole of that debt is recoverable from her under the Act.
The Legislation
10.
Part 3.14 of the Act, which is headed “Compensation recovery”, contains provisions which, inter alia, require the repayment, by a person who has received a lump sum compensation payment, of a “compensation affected payment”
(which includes Parenting Payment) received during the “lump sum preclusion period” worked out in accordance with s 1170 of the Act.
11.
Section 1178 of the Act authorises the Secretary to give to a person, who has received both a lump sum compensation payment and a “compensation affected payment”, a written notice determining that the person is liable to pay to the Commonwealth the amount specified in the notice. Section 1184F of the Act provides that, in the event that the Secretary gives to a person a notice under
s 1178, the amount specified in the notice is a “debt due by the person to the Commonwealth”.
12. Section 1184K(1) of the Act provides that, for the purposes of Pt 3.14, the Secretary may treat the whole or part of a compensation payment as not having been made if the Secretary “thinks it is appropriate to do so in the special circumstances of the case”.
13. Chapter 5 of the Act is headed “Overpayments and debt recovery”. Part 5.2, which is headed “Amounts recoverable under this Act”, contains various provisions which expressly provide that amounts paid by way of social security payments in certain circumstances are “debts due to the Commonwealth”. Part 5.3 provides the methods of recovery by the Commonwealth of debts due to the Commonwealth under Pt 5.2.
14.
Part 5.4 of the Act, which is headed “Non-recovery of debts”, contains, inter alia, provisions authorising the waiver of debts in certain circumstances, including
s 1237AAD which provides as follows:
“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 a false representation; or
(ii) failing or omitting to comply with a provision of this 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.”
Section 1235 of the Act provides that, in Pt 5.4, “debt” means (relevantly) “a debt recoverable by the Commonwealth under Part 5.2”.
The Evidence
15. The evidence before the Tribunal comprised:
· the “T Documents” (T1-T26, pp 1-100) lodged by the Secretary in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (Cth);
· Centrelink schedule of payments of Parenting Payment to Mrs Ellis-Howe from 26 March 1999 to 2 March 2005 (Exhibit A1); and
· the oral evidence of Mrs Ellis-Howe.
The evidence of Mrs Ellis-Howe
16. Mrs Ellis-Howe’s evidence may be summarised as follows:
· she has lived in Kalbarri, Western Australia, since 1982;
· her marriage started to deteriorate in December 1998 when her husband was drinking heavily and was violent towards her;
· she and her husband separated in March 1999, by which time he had accumulated debts of $13,000, and he left Kalbarri and migrated to South Africa with a woman in July 1999;
· her main occupation in Kalbarri was that of a masseuse, but she also did waitressing work in a café;
·
in October 1999 when driving her car in Kalbarri she accidentally collided with a 4-year-old boy who had ridden his bicycle in front of her car without warning, but because she braked hard and reduced her speed to about
20 kph the boy was not seriously injured; she, however, was taken to hospital in shock and hyperventilating, and she still has nightmares about that incident;
· following that incident, her car was declared unroadworthy by the police and she gave it to the wreckers, and she and her children then used bicycles for local transport;
· in December 1999 she accepted an offer from a friend to travel with him in his car to Adelaide because she wanted to visit her very sick mother who lived there;
· on 19 December 1999, while travelling to Adelaide, the motor vehicle accident, as a result of which she received the relevant lump sum compensation payment, occurred, and she and her children (who were then aged 5, 9 and 12) were taken to Kalgoorlie Hospital;
· as a result of that accident she lost the 4th and 5th fingers of her left hand and she still suffers hip, back and neck pain;
· when she and her children were discharged from Kalgoorlie Hospital, they completed the journey to Adelaide by aeroplane (the cost of which was paid for by her family in Adelaide);
· while she was in Adelaide the bank foreclosed on the mortgage on her, and her estranged husband’s, house in Kalbarri but she received none of the proceeds of the sale of the house;
· she and her children returned to Kalbarri in April 2000 and they moved into a rented home unit in May 2000;
· she and her estranged husband divorced in 2000 but she did not receive any property settlement;
· her mother died in 2001 and in 2003 she received $45,000 from her mother’s estate;
· she subsequently bought and sold a car, and then bought another car for about $16,000;
· in 2002 she met her present partner and in 2004 they jointly purchased a house in Kalbarri where she and her children lived, while he lived in his house in Geraldton;
· the purchase price of the house was $160,000 but, as a result of a rapid appreciation in its value, it is probably now worth about $320,000; the amount of the mortgage debt is about $115,000;
· they now live as a couple in the Kalbarri house, and he pays the mortgage payments and provides general support, and she pays for the children’s food and living expenses and the upkeep of the house;
· she currently works in a supermarket but, because of her hip, back and neck pain, she keeps her working hours to a minimum and earns about $200.00 per week; she has not been eligible for social security payments since March 2005 because of her, and her partner’s, combined income;
· her ex-husband (the children’s father) does not contribute financially to the children’s upbringing;
· she presently has about $50,000 in the bank;
· she wants to have an operation on her injured left hand and to be fitted with prosthetic fingers, which would cost $15,000 - $20,000, but she will not be able to afford that operation if she is required to repay the amount of $14,680.95 to Centrelink;
· her 3 children are presently living with her and her partner in the Kalbarri house;
· her 19-year-old daughter (who, until recently, was living in Geraldton) has ongoing neck and back pain, and requires physiotherapy, as a result of the motor vehicle accident, and, although she works full-time, she has debts, and she (Mrs Ellis-Howe) is trying to help her financially;
· her 16-year-old son is an elite surfer and she supports him by driving him to surfing competitions in Western Australia and paying for his airfares and accommodation so that he can compete in inter-State surfing competitions.
Analysis and Findings
Section 1184K(1) of the Act – the discretionary power to disregard the whole or part of a compensation payment
17. Pursuant to s 1184K(1) of the Act, the Tribunal may, for the purposes of Pt 3.14, “treat the whole or part of a compensation payment as… not having been made” if the Tribunal “thinks it is appropriate to do so in the special circumstances of the case”. The effect of exercising this discretionary power in the present case would be to extinguish, or at least reduce, the amount of $14,680.95 that would otherwise be recoverable from Mrs Ellis-Howe by the Commonwealth pursuant to ss 1178 and 1184F of the Act.
18. The discretionary power conferred by s 1184K(1) of the Act and its statutory predecessors has been considered in numerous decisions of the Federal Court and of the Tribunal. The tenor of those decisions is that, before it may become appropriate to exercise that discretionary power in a particular case, there must be special circumstances in that case which render the application of the relevant “compensation recovery” provisions in Pt 3.14 of the Act, in relation to the person concerned, unjust, unfair, unreasonable or otherwise inappropriate, having regard to the purpose and object of Pt 3.14 of the Act, namely, generally to preclude a person who has received compensation for incapacity from also receiving social security payments for a certain period of time: see, for example Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61 at pp N96-N97; Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3; Secretary, Department of Social Security v Smith (1991) 30 FCR 56 at 58-63; Haidar v Secretary, Department of Social Security (1998) 28 AAR 288 at 296-297.
Is Pt 5.4 of the Act (“Non-recovery of debts”) also applicable in this case?
19. Part 5.4 of the Act (comprising ss 1235-1237AB) contains provisions authorising the write off, or waiver, of debts in specified circumstances. Section 1235 provides, however, that in Pt 5.4 the word “debt” means (relevantly):
“a debt recoverable by the Commonwealth under Part 5.2”.
20. Part 5.2 of the Act (comprising ss 1222A-1230C) deals with “amounts recoverable under [the] Act” and contains provisions relating to certain categories of “debts due to the Commonwealth” which are recoverable by the Commonwealth. One such category of “debts due to the Commonwealth” in Pt 5.2 which formerly existed was “compensation debts” under s 1225 of the Act but that section was repealed by the Family and Community Services Legislation (Simplification and Other Measures) Act 2001 (Cth) (No 71, 2001, s 3, Sch 1(20)). There is presently no provision in Pt 5.2 of the Act which relates specifically to debts due to the Commonwealth arising as a result of a person’s having received both compensation and social security payments.
21. Part 3.14 of the Act (“Compensation recovery”), on the other hand, does contain provisions in Division 5 (“Recoverable debts”) which relate specifically to debts due to the Commonwealth arising as a result of a person’s having received both compensation and social security payments. Those provisions include (relevantly) s 1184F (see paragraph 11 above).
22. Part 5.2 of the Act, however, contains s 1230C (“Methods of recovery of debt”) which sets out the methods of recovery of a “debt due to the Commonwealth under this Act”. A debt due by a person to the Commonwealth under s 1184F of the Act is a “debt due to the Commonwealth under this Act” within the meaning, and for the purposes, of s 1230C. It follows that a debt due by a person to the Commonwealth under s 1184F of the Act is a “debt recoverable by the Commonwealth under Part 5.2” (within the meaning of s 1235) and is, therefore, a “debt” within the meaning, and for the purposes, of Pt 5.4 of the Act.
23. Accordingly, Pt 5.4 of the Act (“Non-recovery of debts”) is also applicable in this case.
Section 1237AAD of the Act – Waiver in special circumstances
24. Pursuant to s 1237AAD of the Act, the Tribunal may waive the right to recover all or part of a “debt” (which is recoverable under Pt 5.2) if the Tribunal is satisfied that, inter alia, “there are special circumstances (other than financial hardship alone) that make it desirable to waive”.
25. In Secretary, Department of Social Security v Hales (1998) 82 FCR 154 the Federal Court of Australia (French J), referring to s 1237AAD of the Act, said (at 155, 162):
“From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the person concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth. …
…
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion.
…
The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.”
Are there “special circumstances”, for the purposes of s 1184K(1) and
s 1237AAD of the Act, in Mrs Ellis-Howe’s case?26.
Mrs Ellis-Howe relied on the SSAT’s finding that the following circumstances in her case constituted “special circumstances” for the purposes of s 1237AAD of the Act:
"
· her inability to work in her previous occupation as a massage therapist and no longer able to work full-time in any job due to her injuries, ongoing pain in her neck and back and loss of short term memory…;
· separation from her violent ex-husband who provides little maintenance and support for her three children;
· mental stress and anxiety caused by her mother being diagnosed with stomach cancer not long before the car accident, followed by her death 18 months later;
· being the driver of a car which hit a four year old child, the loss of her vehicle and the lack of a motor vehicle for transport for two years;
· traumatic impact of the car accident on her three children including bed wetting for 12 months, nightmares and her daughter screaming while travelling in a car;
· lack of family support in Kalbarri as all her family live in Adelaide;
· bank foreclosing on her home in Kalbarri and having to return to remove her possessions from the home when she was still not well enough to travel; and
· continued anxiety and emotions about the car accident.”
Mrs Ellis-Howe also submitted that, since 1999, events which adversely affected her and her children’s lives have occurred in quick succession such that she “did not have time to react” to them and she is “now slowly working [her] way out of the problems”. She submitted that, as she is able to earn only $200.00 per week, she needs the balance of the compensation payment to support herself and her children, and that her being required to repay the amount of $14,680.95 to Centrelink would cause her hardship.
27. The Tribunal accepts that, in the period 1999-2001 in particular, Mrs Ellis-Howe experienced a number of unfortunate incidents which caused her to suffer emotional stress and financial hardship – most notably, the break-up of her marriage in March 1999, the motor vehicle accidents of October and December 1999, the loss of her family home in early 2000, and her mother’s very serious illness and death in 2001.
28. The Tribunal notes, on the other hand, that since 2002 Mrs Ellis-Howe’s financial circumstances have improved considerably in that:
· in 2003 she received the sum of $45,000 from her deceased mother’s estate;
· in March 2004 she received the relevant lump sum compensation payment in respect of the motor vehicle accident of December 1999;
· in 2004 she and her new partner jointly purchased a house for $160,000 and that house is now worth approximately $320,000 (subject to a mortgage debt of approximately $115,000);
· the mortgage payments are made fully by her partner, whereas she pays the family’s general living expenses from her present income of $200.00 per week and her money in the bank;
· she presently has a credit bank balance of approximately $50,000.
29. The Tribunal also notes that the applicant, in the Deed dated 27 February 2004 whereby she settled her claim for damages in respect of the motor vehicle accident of 19 December 1999, expressly acknowledged that she “may be liable to repay money to the Commonwealth of Australia from the settlement money”. (T20, pp 72-73)
30. In the Tribunal’s opinion, there are no special circumstances in Mrs Ellis-Howe’s case which would render the application of the relevant “compensation recovery” provisions in Pt 3.14 of the Act unjust, unfair, unreasonable or otherwise inappropriate in her case. Accordingly, the Tribunal declines to exercise the discretionary power, conferred by s 1184K(1) of the Act, to treat the whole, or any part, of the compensation payment made to Mrs Ellis-Howe on 30 March 2004 as not having been made.
31. Likewise, having regard to the circumstances of Mrs Ellis-Howe’s case as a whole, the Tribunal is not satisfied that there are any “special circumstances”, within the meaning of s 1237AAD of the Act, that make it desirable to waive, pursuant to that section, the right to recover the whole, or any part, of the debt in the amount of $14,680.95 due by her to the Commonwealth under s 1184F of the Act. In the Tribunal’s opinion Mrs Ellis-Howe is not suffering severe financial hardship such as might constitute a special circumstance for the purposes of s 1237AAD of the Act. On the contrary, her financial circumstances are relatively favourable and she has the financial capacity fully to discharge the debt due by her to the Commonwealth and also, should she decide to have an operation on her left hand, to pay for that operation. As regards Mrs Ellis-Howe’s health, although she continues to suffer hip, back and neck pain, it seems to the Tribunal that her general health is satisfactory and she is able to work at least part-time. There is certainly no medical evidence before the Tribunal to indicate that her health is so poor that it might constitute a special circumstance for the purposes of s 1237AAD of the Act. The Tribunal notes, furthermore, Mrs Ellis-Howe’s wish to provide financial assistance to her 19-year-old daughter (who is herself working full-time) and financially to support her 16-year-old son to give him the opportunity to realise his potential in the sport of surfing, but, although that wish may be understandable, it does not, in the Tribunal’s opinion, constitute a special circumstance making it desirable to waive the right to recover any part of the abovementioned debt. Finally, the Tribunal is also not satisfied that the other circumstances referred to by the SSAT (see paragraph 26 above) constitute special circumstances for the purposes of s 1237AAD of the Act.
Conclusion
32. The Tribunal notes that it is common ground that none of the other provisions in Pt 5.4 of the Act is applicable in this case.
33. The Tribunal concludes, therefore, that a debt in the amount of $14,680.95 is due by Mrs Ellis-Howe to the Commonwealth under s 1184F of the Act and that the whole of that debt is recoverable from her by the Commonwealth in accordance with s 1230C and Pt 5.3 of the Act.
Decision
34. For the above reasons the Tribunal sets aside the decision of the SSAT dated 14 June 2006 and, in substitution therefor, decides that:
· a debt in the amount of $14,680.95 is due by Mrs Ellis-Howe to the Commonwealth under s 1184F of the Act; and
· the whole of that debt is recoverable from her by the Commonwealth in accordance with s 1230C and Pt 5.3 of the Act.
I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President S D Hotop
Signed: ..................[Sgd Y Maker].....................
AssociateDate of Hearing 30 April 2007
Date of Decision 7 June 2007Representative of the Applicant Mr P Maishman
Senior Legal Services Officer
Legal Services BranchCentrelink
Representative of the Respondent Self-represented
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