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

[2008] AATA 754

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 754

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/1561

GENERAL ADMINISTRATIVE DIVISION		)
Re		PENELOPE FISCHER

Applicant

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

Respondent

DECISION

Tribunal Ms N Isenberg, Senior Member

Date26 August 2008

PlaceSydney

Decision The decision under review is set aside.

....................[sgd]..........................

Ms N Isenberg
  Senior Member

CATCHWORDS

SOCIAL SECURITY – disability support pension – debt due to the Commonwealth – quantum of debt -– whether debt should be waived – “special circumstances” – decision under review is set aside.

Social Security Act 1991 – ss 1223(1), 1236(1A), 1237A(1), 1237AAD

Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

Re Dainty and Minister for Immigration and Ethic Affairs (1987) 6 AAR 259

Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82

Saunders and Secretary, Department of Family and Community Services (1999) 57 ALD 495

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

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Secretary, Department of Social Security v Hales (1998) 82 FCR 154

Davy v Secretary, Department of Employment & Workplace Relations (2007) 94 ALD 693

REASONS FOR DECISION

26 August 2008 Ms N Isenberg, Senior Member   

1.A decision of the Social Security Appeals Tribunal (“SSAT”) made on 26 March 2007, affirming a decision of a Centrelink authorised review officer (“ARO”) made on 14 September 2006 to raise and recover a disability support pension (“DSP”) debt in the amount of $5,649.82 for the period from       6 October 2005 to 21 August 2006.

ISSUE BEFORE THE TRIBUNAL

2.Whether Ms Fischer owes the Commonwealth a debt for overpayment of her DSP; and if so:

(a)What is the quantum of that debt; and

(b)Whether there are any grounds not to recover part or all of the debt.

BACKGROUND

3.Ms Fischer has been in receipt of DSP from 13 May 1999.

2.On 21 July 1999, Centrelink sent her a letter setting out her notification obligations, which included advising Centrelink if her income increases, if her income exceeded $457.63 per annum or if she received a lump sum amount of money or one-off payment from any source. 

3.On 8 April 2005, Ms Fischer enquired at Centrelink about the general effect of a scholarship she had been offered.  On 14 April 2005, Centrelink received a letter from Ms Fischer advising that although she enrolled to do a PhD, she would have to withdraw. 

4.In July 2006, information about Ms Fischer’s income from UNSW was received by Centrelink. The UNSW records show that on 6 October 2005, the amount of $9,805.37 was paid to Ms Fischer’s account and on 4 May 2006 the amount of $10,971.37 was paid into her account. 

5.On the basis of the UNSW information, on 28 August 2006, Centrelink calculated that Ms Fischer’s DSP that has been overpaid in the amount of $5,649.82 and a debt was raised and decision was made to recover that amount. 

6.That decision was affirmed on internal review and by the SSAT and on 27 April 2007, Ms Fischer lodged the present application for review.

4.On 30 October 2007, on the request of Ms Fischer, the debt was recalculated. The recalculated debt amount is $5,295.52. 

LEGISLATION

7.The relevant legislation in this matter is the Social Security Act 1991 (“the Act”) in particular sections 1237A and 1237AAD.

THE HEARING

8.l had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence.  The following documents were also tendered:

(a)The Applicant’s statement of facts and contentions dated 4 and 30 July 2008;

(b)The Respondent’s statement of facts and contentions dated 31 March 2008; and

(c)The Respondent’s submissions and amendments dated 21 and 22 July 2008.

9.Ms Fischer gave evidence as did Ms Debbie Green, the Centrelink officer who has calculated the debt. 

CONSIDERATION OF EVIDENCE AND FINDINGS

Is there a recoverable debt?

10.There was no dispute that Ms Fischer had been paid more DSP, than that to which she was entitled.  Ms Fischer took issue though with the calculation of the debt.

Calculation of the debt

11.Although Ms Fischer conceded that she had been overpaid DSP she was not prepared to concede that the amount claimed by Centrelink as the overpayment - $5,295.52 - had been properly calculated. The main thrust of Ms Fischer’s concerns was that she had no confidence in the way the debt was calculated because, she had difficulty reconciling the amounts said to be paid to her and what had been deposited into her account. Similarly, the Centrelink records varied as to relevant amounts and dates. The debt had been recalculated at least three times and on each occasion Centrelink had come up with a different figure, in a different format.  

12.In particular she had concerns about how the UNSW payments were treated.  She noted that her payment from UNSW was in the form of an annual entitlement to $18,837 payable fortnightly, in respect of the period 31 March 2005 to 30 March 2008.  In this regard she referred to the letter dated 22 September 2005, from the Manager, Scholarships of the University of New South Wales (UNSW) advising her about her Australian Postgraduate Awards.  She submitted that because a payment of $9805.37 was paid by UNSW on 4 October 2005 it should have been treated as arrears, for example from 31 March 2005 back to the date. 

13.On 29 September 2005, Ms Fischer sent a letter to UNSW requesting that the payment of the scholarship monies be postponed until she decided whether to proceed with her studies.  Nonetheless a subsequent payment of $10,971.37 was made on 2 May 2006.

14.Section 1064-E1of the SSA sets out states that the amount of a person’s ordinary income must be worked out on a yearly basis.

15.I was referred to Centrelink’s policy document entitled “eReference 108.04610 – Assessing scholarship income” dated 21 June 2008.

16.Step 15 states that a scholarship (or part of a scholarship) that is paid in lump sum arrears is to be assessed over a 12 month period from the date the arrears pay was received.  Ms Fischer said this was unfair and that it should be backdated to 31 March 2005. The Centrelink advocate had arranged for calculation of the debt in the event that I decided to backdate the payment as Ms Fischer had requested.  The effect was said to the different of $142.16, thereby reducing the debt to $5153.36.

17.As I discussed at the hearing, whilst I am not bound to apply policy guidelines of the kind referred to in the Guide (see Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409) I may do so and, indeed, the Tribunal will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so: see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639-645; Re Dainty and Minister for Immigration and Ethic Affairs (1987) 6 AAR 259 at 267; and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86.

18.I see no reason in this matter not to adopt the approach set out in the policy.

19.Ms Green had adopted this approach and gave evidence about the painstaking process she had engaged in to satisfy herself about the correct quantum of the debt. She relied on the Centrelink computer program and also undertook the process manually. I am satisfied that she had applied the correct approach and see no reason not to accept that the debt has been correctly calculated at $5,295.52. I therefore find there is a recoverable debt under subsection 1223(1) of the Act in that amount.

Should the debt be recovered?

20.The Act makes provision in limited circumstances for debts not to be recovered. Pursuant to s 1236(1A) of the Act a debt may be written-off in very specific circumstances, 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.

21.None of these apply to Ms Fischer.

22.A debt may be waived under s 1237A(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.

23.For a debt to be waived under section 1237A, two conditions must be met, namely that the debt arose solely because of administrative error and, secondly payments were received by the debtor in good faith.

Was the debt solely attributable to an administrative error by the commonwealth?

24.Ms Fischer contended that the error in paying her was as a result of Centrelink’s failure to backdate the payment to 31 March 2005 and to the error UNSW to pay her fortnightly in accordance with the terms of the scholarship.

25.I have already addressed Centrelink‘s approach to the payments Ms Fischer received and that it had proceeded correctly.  As to UNSW, it is not ‘the Commonwealth’ as contended by Ms Fischer, rather it commenced operations pursuant to an Act of the NSW Parliament in 1989.

26.I therefore find that the debt did not arise solely from Centrelink’s error.

27.Having come to this view it was not necessary for me to consider if the payments were received in good faith.

Are there special circumstances why the remainder of the debt should be waived?

28.Section 1237AAD of the Act is a further provision that allows for waiver of debts in “special circumstances”:

(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, the  Administration 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.

29.Before considering Ms Fischer’s circumstances I must be satisfied that she is not precluded from consideration by 1237AAD(a).  Ms Fischer said she did not know the money had been paid into her account, indeed when she found out she didn’t access it, and apparently still has not done so.  I accept that there was no evidence that she intentionally or deliberately failed to comply with her obligations: Inadvertent or unintentional failure does not constitute "knowingly", even when an applicant knows he or she needs to notify: Re Saunders and Secretary, Department of Family and Community Services (1999) 57 ALD 495.

30.It must be the case, amongst the other requirements of the provision, that there are special circumstances other than financial hardship alone that make it desirable to waive the debt. The Act provides no guidance as to the meaning of the term “special circumstances” in that provision. In Beadle v Director-General of Social Security (1985) 7 ALD 670, the Full Federal Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss" (at [674]). There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security (1984) 6 ALD 1) where (at [3]) the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances "must have a particular quality of unusualness that permits them to be described as special". See also Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 per Besanko J at [33].

31.In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle’s case, observed (at 545) that special circumstances:

would require something to distinguish... [the]… case from others, to take it out of the usual or ordinary case. …It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

Evidence was given about several aspects of her personal circumstances which were said to be ‘special’.

health

32.Ms Fischer said that she had experienced four car accidents in 2003 – 2004 none of which were her fault.  This has necessitated ongoing medical attention from physiotherapists, neurologists, hydrotherapy osteopaths, podiatrists and rheumatologists.  Only some all of these were met by the insurance companies.  She continued to suffer vision disturbances which are unassisted by glasses.  She has migraine type headaches which have lasted for up to seven weeks.

33.Last year she had glandular fever which lasted for some months and for which she consulted an immunologist.

34.She has had some balance problems and these have been tested twice. Her unsteadiness has caused her to fall over on numerous occasions and she has broken her toe, ankle and finger.

35.She has consulted a psychiatrist and a psychologist.

36.She has had to borrow $15,000 against her house to fund her medical treatment.

Legal proceedings

37.Ms Fischer alleged that her solicitor had settled her litigation against the insurance companies without her consent.  At least one of the actions was, she understood still on foot.  She has brought complaints against her solicitor.

Family situation

38.Ms Fischer lives alone.  Her elderly mother, who has Alzheimer’s disease, lives in Queensland with her husband. Ms Fischer endeavours to see her to provide relief to her step-father.  She last visited her mother at Christmas because she has not been well.

employment

39.Ms Fischer tutors students and may receive $42 for three students and up to $84 for six.  She works casually, usually 4 afternoons a week.  She is unable to undertake additional work as she need to spend do much time at medical appointments.  As she no longer drives she must travel to appointments by public transport.

40.As to her studies, she has not progressed her PhD as she should have.

financial situation

41.Ms Fischer owns her own home – a two bed room terrace in Woollahra –  which she purchased in 1991 of $280,000.  She does not know how much the mortgage is, but she pays $700 per month.

42.She informed me that she has not touched the UNSW money because she may have to give it back if she does not complete her PhD.  She thinks ethically she should give it back so someone else more deserving can get it.

43.I was informed that the debt presently stands at $1521.92 and Ms Fischer is paying it back at $76.10 per fortnight.

CONCLUSION

44.Each matter is different.  In the present matter, I agree that Ms Fischer’s circumstances are unfortunate but she has had the benefit of the money to which she was not entitled.  For reasons best known to herself she has preferred to borrow to meet her medical expenses rather than use the money she received from UNSW.

45.Taxpayers are entitled to expect that in the ordinary course money paid to Centrelink beneficiaries to which they are not entitled will be recovered: Secretary, Department of Social Security v Hales (1998) 82 FCR 154. Recently, that approach was adopted in Davy v Secretary, Department of Employment & Workplace Relations (2007) 94 ALD 693 at 716.

46.I accept though that Ms Fischer has had a long and frustrating period of time trying to ascertain precisely where she stands with Centrelink.  This, together with her ill health has, no doubt been most distracting from her studies.  I accept that she no confidence in the way the debt was calculated, especially because, in response to her concerns, it had been recalculated at least three times and on each occasion the figure had varied.  While there may have been a logical explanation, such a course does not inspire confidence.  Centrelink beneficiaries are entitled to be confident that the information provided to them by Centrelink is accurate.  It was only though Ms Fischer’s perseverance that there can now be any confidence that the amount currently identified as the debt amount is correct.

DECISION

47.For that reason I have come to the conclusion that, Ms Fischer’s circumstances, taken together, sufficiently unusual or unfair that would justify a waiver of some of the debt under s 1237AAD of the Act. The debt of $5,295.52 is waived to the extent of $500, and is therefore reduced to $4795.52.

48.The decision under review is set aside and in substitution the debt of $5,295.52 is waived to the extent of $500, and is therefore reduced to $4795.52.   

I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member.

Signed:         ...............[sgd]................................................................
  Associate

Date of Hearing        31 July 2008
Date of Decision        26 August 2008
Appearance for the Applicant        Self-represented      

Advocate for the Respondent        Ms S Mantaring, Centrelink Legal Services