FQMH and Secretary, Department of Social Services (Social services second review)

FQMH and Secretary, Department of Social Services (Social services second review) [2023] AATA 1505 (2 June 2023)
Division:GENERAL DIVISION
File Number: 2019/6990
Re:FQMH
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Mr A. Maryniak KC, Member
Date:2 June 2023
Place:Melbourne

The decisions under review made by the Administrative Appeals Tribunal (Social Services and Child Support Division) on 25 February 2019 and 15 October 2019 (as varied by the Respondent’s Department on 10 June 2022) are set aside and substituted with a decision that:
(a)the Applicant has a sickness allowance debt of $47,279.86 for the period 4 February 2014 to 28 November 2017;
(b)parts of the sickness allowance debt which accrued during the following periods be waived for special circumstances under section 1237AAD of the Social Security Act 1991:
i.7 May 2014 to 21 July 2014;
ii.24 October 2014 to 20 January 2015;
iii.11 January 2017 to 5 April 2017;

iv.17 August 2017 to 5 October 2017; and

(c)the remainder of sickness allowance debt is recoverable.

..........................[sgd]..............................................
Mr A. Maryniak KC, Member
CATCHWORDS
SOCIAL SECURITY - Whether Applicant was overpaid sickness allowance - Whether the Applicant owes a debt to the Commonwealth - Where Applicant received income protection payments in the form of lump sums and monthly payments - Where Applicant notified the Respondent of existence of payments but failed to fully inform the Respondent of details of payments - Whether the debt should be written off - Whether the debt must be waived on account of sole administrative error by the Respondent - Whether special circumstances exist to waive the debt - Held special circumstances exist and limited waiver appropriate - Decision varied
LEGISLATION
Evidence Act 1995 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
DHLD and Executive Director, Social Security Appeals Tribunal [2010] AATA 377
Feneley and Secretary, Department of Family and Community Services [2003] AATA 496
Ghanem and Secretary, Department of Social Security [2022] AATA 160
Saab and Secretary, Department of Education, Skills and Employment [2021] AATA 2766
REASONS FOR DECISION
Mr A. Maryniak KC, Member
2 June 2023

The Applicant seeks review of decisions of this Tribunal dated 25 February 2019 and 15 October 2019 (as varied on 10 June 2022). The Tribunal is to determine whether the Applicant has a sickness allowance debt and, if so, for what period and whether all of part of such debt should be written off or waived.
At the outset the Tribunal emphasises that the issue for determination is the Applicant’s entitlement to sickness allowance in light of income she received during the relevant period. The Tribunal accepts that the Applicant has significant health challenges.
The Tribunal has considered the documents lodged with it together with the oral evidence of the Applicant and the oral and written submissions of the parties, including further written submissions lodged after the hearing.
BACKGROUND
On 5 March 2013 the Applicant was granted sickness allowance, from 13 December 2012.[1] The letter advising that she had been granted the allowance noted the requirement to inform the Respondent (Department) of events or changes in circumstances affecting the payment. These included changes in income, which is widely defined, pursuant to s 68(2) of the Social Security (Administration) Act 1999 (Administration Act).[2] Between 5 March 2013 until the sickness allowance was cancelled on 14 November 2017, at least 58 similar notices were sent to the Applicant.[3]
[1] T27 p.745.
[2] T26 p.283.
[3] T26 pp.284 to 644.
Between 5 June 2013 and 18 September 2017, the Department conducted 17 separate reviews based on medical certificates received from the Applicant, each determining that sickness allowance was payable to the Applicant.[4]
[4] T27.
In February 2014 the Applicant wrote to the Department stating she had received a payment from her insurer on 5 February 2014, that she ‘will no longer qualify for Sickness Allowance but may still fit into low income, please advise bracket and send me forms’.[5] The Applicant had received back payments from her income protection insurance with AMP of $22,370.24 for the period of 1 June 2012 to 30 June 2013.[6]
[5] T4 p.12.
[6] T3 p.10.
On 20 March 2014 the Department suspended the Applicant’s sickness allowance from 13 March 2014 and requested that she return a ‘Compensation Detail form’ and proof of payment.[7]
[7] T27 p.739.
On 12 April 2014, the Applicant lodged the Mod C – Compensation and Damages form dated 4 April 2014 indicating she was claiming compensation due to injury which occurred overseas in June 2010.[8] She did not provide contact details of the insurer or a claim number and indicated that she never “received a lump sum compensation payment” but also indicated that she had “received a back payment.”[9] She recorded she had or would be claiming income protection and had not received regular compensation payments but was pursuing a claim for them. She further noted her insurance claim was not finalised.[10] The Tribunal is not satisfied that the information provided clearly alerted the Department the detail of any changes of income of the Applicant.[11]
[8] T5 p.15.
[9] T5, p 16.
[10] T5 pp.13-16.
[11] Ibid at [9].
The Applicant concedes that from 5 March 2014 to 18 April 2017, she received letters from the Department. These letters advised her of the income that formed the basis of the calculation of her sickness allowance and her obligation to report any changes to her circumstances.[12] She continued to receive a sickness allowance until November 2017.[13]
[12] Applicant’s Statement of Facts, Issues and Contentions dated 25 January 2021 (ASFIC), [15].
[13] Respondent’s Further Amended Statement of Facts, Issues and Contentions dated 1 August 2022 (RSFIC), [3.22].
As at 15 April 2014, the Department had not been provided with sufficient details and was awaiting proof of back payment received, for example a letter from the insurance company.[14] On 16 April 2014 the Applicant told the Department she would fax through the letter from the insurance company in the next two weeks.[15]
[14] T27, p. 738.
[15] T27, p. 738.
On 7 May 2014 the Applicant lodged an AMP letter dated 4 February 2014 which stated, inter alia, that her benefit entitled her to 75% of her pre-disability income which was determined to be $2,075.12 per 30 days. It also stated that various lump sum payments would be made including for the period 1 June 2012 to 30 June 2013.[16] She informed the Department she had not received one of the four lump sum payments or payments of $2,075.12 per 30 days, noting that she was following this up with AMP.[17]
[16] T3 p.10.
[17] T27 p.737.
A departmental file note dated 13 May 2014 indicates the Applicant was expecting to be called on 14 May 2014. However, a telephone message was left for the Applicant to call back on 13 May as the Departmental officer was on leave on 14 May. A further note of 14 May indicates that:
clearance will be actioned asap depending on how the insurer, AMP can provide the required information to the Compensation section in order for us to determine if this is to be treated as “compensation” or treated as income stream payments under SUPI. The other option is: Restore customer’s payments, pay arrears as deemed necessary, however, please advise customer that ONCE THE DETERMINATION HAS BEEN MADE, SHE WILL HAVE AN OVERPAYMENT DEPENDING ON THE INFORMATION THAT THE INSURER PROVIDE. Therefore, she can be paid payments but there will be an overpayment at a later stage once the clearance has been assessed.[18]
The Tribunal notes that the Department restored the Applicant’s sickness allowance that day.
[18] T27 p.736.
On 22 June 2014 the Department sent the Applicant a notice setting out the fortnightly income ($145.24) used to calculate the Applicant’s rate of payment and the ongoing requirement to inform the Department if that income was incorrect.[19] Similar notices were subsequently sent noting a fortnightly income of between $4.00 and $150.00.
[19] T26 p.330.
On 24 October 2014 the Applicant confirmed she was ‘receiving or ever been paid compensation, insurance and/or damages’ but did not confirm ‘whether she had told [the Department] about these payments before’.[20]
[20] T48 p.982.
On 11 January 2017 the Department noted the Applicant was “enquiring re further financial support via CLK however SW advised she was receiving correct payments/entitlements (SW/ASK 351)”.[21]
[21] T27 p. 727.
On 5 February 2017 the Applicant responded in a similar manner as on 24 October 2014 but annotated the form ‘Previous clearance - Mod C completed and on file already re income protection with AMP’.[22] No further details were provided by the Applicant in a similar sickness allowance review form lodged on 17 August 2017.[23] The Department sent a notice to the Applicant on 7 March 2017, which clearly set out, incorrectly, the income basis of the sickness allowance she was receiving as $5.56 per fortnight.
[22] T48 p.988.
[23] T29 p.757.
On 14 November 2017 the Applicant attended an interview with the Department (following a random selection for review) and informed the Department of the full details of the monthly income protection payments she had been receiving.[24] The Department sent a request to AMP on 17 November 2017.[25] The sickness allowance was consequentially cancelled.[26]
[24] RSFIC, [3.21].
[25] T27 p. 720.
[26] T27 p.721.
On 22 January 2018, pursuant to the Departmental request, AMP provided information in response.[27]
[27] T10 p.78.
CONSIDERATION
It is not in issue that the Applicant received the following lump sum income protection payments from AMP:
(a)$21,304.56 for the period 27 August 2010 to 30 June 2011 received 4 February 2014;
(b)$10,329.49 for the period 1 July 2011 to 30 June 2012 received 4 February 2014;
(c)$22,370.24 for the period 1 July 2012 to 30 June 2013 received on 4 February 2014; and
(d)$14,871.69 for the period 1 July 2013 to 31 January 2014 received 4 March 2014.
The Tribunal is satisfied, as agreed by the parties, that such payments were income pursuant to s 8(1) of the Social Security Act 1991 (the Act) and that they meet the requirements of s 1073(1) of the Act. Hence, the Applicant is taken to have received one fifty-second of each lump sum as ordinary income during each relevant period. The Tribunal is satisfied that each lump sum has been apportioned appropriately in calculating the consequential reduction in the sickness allowance entitlement of the Applicant for the period 4 February 2014 to 28 November 2017. The Tribunal finds that there has been an overpayment of $48,838.34, being a debt due to the Commonwealth pursuant to s 1223(1) of the Act. The current outstanding balance owing is $47,279.86.[28]
[28] RSFIC, [3.38].
The Applicant submits that in or around March 2014 the Respondent was aware that she had not provided the information required and on that basis should have ceased making sickness allowance payments at the rate that it did. Further, she contends that her communication with the Respondent in February 2014 as discussed in paragraph 6 above should have resulted in the Respondent adjusting the sickness allowance payments. The Tribunal accepts that the Applicant stated that she ‘will no longer qualify for sickness allowance’. However, there is no evidence before the Tribunal that she ever contacted the Department to confirm the commencement of the monthly insurance payments or receipt of the four lump sums referred to in the AMP letter lodged on 7 May 2014.[29]
[29] T3 p.9.
The Tribunal notes the lack of evidence as to why the Department restored the Applicant’s sickness allowance on 14 May 2014 and the equivocal nature of the Department’s file note of 14 May 2014. However, it is clear on the evidence that the Applicant only made incomplete attempts to inform the Department of changes to her income and that it was not until the interview on 14 November 2017 that the Applicant informed the Department of the full details of the monthly income protection payments she had been receiving.[30] The receipt of the lump sums was confirmed in information provided by AMP on 22 January 2018. The Applicant could and should have notified the Department of the further precise details of her change in financial circumstances when they occurred and of any errors in the income assumptions expressly stated in the numerous notices which were sent to her prior to 14 November 2017, pursuant to her ongoing obligations under ss 66A and 68(2) of the Administration Act. The steps taken by the Applicant did not relieve her of her ongoing obligations in this regard and the Applicant’s lack of response to the numerous notices under s 68(2) referred to above and failure to properly and fully update the Department has resulted in the over payment. In light of her actual income, the Applicant had no entitlement to such overpayments.
[30] T27 p.720.
Should the debt be written off?
The Applicant submits that the debt should be written off pursuant to s 1236 of the Act essentially because recovery of the debt will cause the Applicant severe financial hardship, thus having no capacity to repay the debt.[31] The financial circumstances applicable here need to be of a severe or extreme nature.[32] The Tribunal finds that the recovery of the debt will not result in severe financial hardship for the Applicant as she:
(a)Owns her own home unencumbered;
(b)Is receiving income of about $3,200 per month comprising both income protection payments and the disability support pension;
(c)Has previously had capacity to repay the debt at a rate of $20 per fortnight; and
(d)May negotiate with the Department at any time in respect of the rate of recovery.
As s 1236(1A) of the Act is not satisfied, the debt should not be written off.
[31] The Act, ss 1236(1B), (1C); ASFIC, [25-30].
[32] Feneley and Secretary, Department of Family and Community Services [2003] AATA 496 at [36].
Should the debt be waived?
The Applicant next contends the debt must be waived under s 1237A of the Act as it arose out of administrative error. A fundamental requirement for a waiver of this nature is sole administrative error by the Department. While it was open to the Department to further investigate the detail of any income protection payments the Applicant may have been receiving once notified by the Applicant, it was not obliged to do so. It remained the Applicant’s ongoing obligation to keep the Department fully informed of the details about any actual variations to her income.[33] The Applicant’s failure to follow up and provide further details regarding the amounts and dates of income received from AMP satisfies the Tribunal that the sickness allowance overpayment was not ‘attributable solely to administrative error made by the Commonwealth’.[34]
[33] Saab and Secretary, Department of Education, Skills and Employment [2021] AATA 2766 at [66], [68]; Ghanem and Secretary, Department of Social Security [2022] AATA 160 at [40]-[43].
[34] The Act, s 1237A(1).
Further, as a result of the Applicant’s oral evidence during the hearing the Tribunal is satisfied, consistent with the observations above, that there was a general lack of engagement by the Applicant with letters from the Department. The Applicant stated that due to her challenging medical conditions, she didn’t open notices from the Department, only opened ‘fat’ letters because they may have contained important information and yet she was able to complete sickness allowance review forms and lodge medical certificates to maintain receipt of such payments. The grounds for a waiver under s 1237A of the Act are not made out on the evidence. The Tribunal finds that the debt should not be waived pursuant to s 1237A.
Limited waiver due to special circumstances
The Applicant seeks a special circumstance waiver under s 1237AAD of the Act. The Respondent accepts and the Tribunal finds that the Applicant did not knowingly make a false representation or statement, nor did she knowingly fail to comply with the law. The ‘special circumstances’ threshold is not defined and the Tribunal is to look at all the surrounding circumstances in context. Circumstances that are unusual, uncommon, or exceptional need to be present.
The Applicant had made numerous, albeit incomplete, attempts to notify the Department of the facts and details of her receipt of income protection payments, initially with her letter of 27 February 2014. The Tribunal accepts the Applicant had and continues to have significant health challenges. The Tribunal finds that the Applicant should have thought it curious, at least, that the sickness allowance payments she was receiving did not reduce after each time she provided the Department with some information regarding the AMP payments even if she did not open and did not read a significant amount of correspondence from the Department.
However, in light of the various attempts made by her to generally inform the Department of the additional AMP income and the lack of follow up by the Department, see for example the equivocal nature of the 14 May 2014 file note and the Department’s suspending and re-instating of the Applicant’s sickness allowance on more than one occasion, the Tribunal is satisfied, on balance, that the unique circumstances here are sufficiently special to warrant a limited waiver and that there is a limited element of unfairness which supports such an approach.
The Tribunal agrees with and for the most part accepts the further submissions from the Respondent regarding the limitations of the waiver appropriate here. The Tribunal does not consider the Applicant provided sufficient unequivocal notice to the Department until the lodgement of the AMP letter on 7 May 2014. The earlier letter of 5 February 2014 and Compensation Details form lodged 12 April 2014 lacked sufficient detail and clarity. The Applicant further informed the Department that she had received insurance payments, without detailing the sums involved or any other particulars on 24 October 2014, 5 February 2017 and 17 August 2017.[35] In all the circumstances the Tribunal finds it appropriate to limit the waiver to periods running from 7 May 2014, 24 October 2014, 9 March 2017 and 17 August 2017 until the deemed date of receipt of each s 68(2) notice which followed. However, the Tribunal allows a further 14 days in favour of the Applicant in respect of each period to incorporate the time period in which she could and should have comprehensively responded to each notice, informing the Department accordingly.
[35] T48 pp.980, 987; T29 p.756.
Further, the note of the interaction between the Applicant and the Department on 11 January 2017, as discussed in paragraph 15 above, also warrants special consideration in favour of the Applicant. Hence a further limited waiver period should run from 11 January 2017.
The Applicant’s ongoing obligation to inform the Department of her income pursuant to notices sent under s 68(2) remained, whether she opened them or not. Each notice gave the Applicant the opportunity to properly and fully inform the Department with respect to her income and the AMP payments in particular. The relevant notices were sent on 22 June 2014, 19 December 2017, 9 March 2017 and 8 September 2017 respectively. The Tribunal deems that such notices were received 13 days after each was dated, namely 7 July 2014, 6 January 2015, 22 March 2017 and 21 September 2017.[36] To each of those dates, 14 days are to be added, as per the allowance discussed in paragraph 29 above, in favour of the Applicant.
[36] DHLD and Executive Director, Social Security Appeals Tribunal [2010] AATA 377; Evidence Act 1995 (Cth) ss 160, 163.

By reason of the matters discussed above, the Tribunal is not persuaded that any further waiver is justified in the circumstances where the Applicant failed to fully inform the Department of the details of the changes to her actual income during the relevant period.
CONCLUSION
The correct or preferable decision is that the reviewable decision be varied to reflect the reduced debt owing by the limited waiver under s 1237AAD for the periods 7 May 2014 to 21 July 2014, 24 October 2014 to 20 January 2015, 11 January 2017 to 5 April 2017 and 17 August 2017 to 5 October 2017.

I certify that the preceding 33 (thirty-three) paragraphs are a true copy of the reasons for the decision herein of Mr A. Maryniak KC, Member

............................[sgd ]............................................
Associate
Dated: 2 June 2023

Date of hearing: 30 August 2022

Date final submissions received: 8 November 2022

Applicant: Self-represented

Advocate for the Respondent: Aarabi Raveendiran

Solicitors for the Respondent: Services Australia

[2023] AATA 1505

2 June 2023

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Appeal

Jurisdiction

Date of hearing:	30 August 2022
Date final submissions received:	8 November 2022
Applicant:	Self-represented
Advocate for the Respondent:	Aarabi Raveendiran
Solicitors for the Respondent:	Services Australia