Frendo and Secretary, Department of Family and Community Services

[2004] AATA 1336

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1336

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/512

GENERAL ADMINISTRATIVE  DIVISION

Re:         JOSEPH FRENDO

Applicant

And:SECRETARY,

DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             15 December 2004

Place:            Melbourne

Decision:      The Tribunal affirms the decision under review.

(sgd) Regina Perton
  Member

SOCIAL SECURITY ‑ age pension ‑ failure to notify variation of wife’s income ‑ overpayment ‑ debt to Commonwealth ‑ waiver of debt ‑ write‑off of debt 

Social Security Act 1991 ss 1064, 1223(5), 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 ss 68(2), 98, 99, 100,

Data-matching Program (Assistance and Tax) Act 1990 s 11

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

Re Secretary, Department of Family and Community Services v Janauskas [2001] AATA 72

Re Graham v Secretary, Department of Family and Community Services [2003] AATA 1082

REASONS FOR DECISION

15 December 2004  Regina Perton, Member

1.      This is an application by Joseph Frendo (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 23 March 2004.  The SSAT affirmed the decision of a delegate of the Secretary to the Department of Family and Community Services (the respondent) dated 23 July 2003 which had been varied by an authorised review officer (ARO) on 9 January 2004.  The SSAT decided that the applicant had been overpaid age pension between 18 March 2000 and 26 June 2003 and that he owed $13,049.02 to the respondent.

2.      At the hearing on 23 September 2004, the applicant was represented by Ms D. Rasheva of counsel.  Mr D. Perdon, a Centrelink advocate, represented the respondent.  

3.      The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T43) and a number of documents submitted by Victoria Legal Aid on behalf of the applicant.

BACKGROUND

4.      Mr Frendo, who was born on 26 July 1928, has been receiving age pension for several years.  On 1 February 2000, Mr Frendo advised Centrelink that his wife, Norma Frendo, had commenced full‑time employment.  On 2 March 2000, he advised Centrelink that his wife had ceased working.  Mrs Frendo resumed full‑time employment on 18 March 2000 but there is no record of Mr Frendo having advised Centrelink of this. 

5.      Centrelink sent letters to Mr Frendo on 8 March 2000, 30 March 2000, 11 May 2000 and 7 December 2000 in which he was advised that he had an obligation to advise Centrelink if his and his wife’s combined income increased beyond the amount upon which Mr Frendo’s then benefits were calculated.  This amount varied between $30.72 and $1,509.68.

6.      Following a data matching review with the Australian Taxation Office on 23 May 2003, Centrelink obtained detailed wage records from Mrs Frendo’s employer.  The records indicated that Mrs Frendo had recommenced work on 18 March 2000 and had been continuously employed since then.

7.      On 23 July 2003, the respondent’s delegate decided that Mr Frendo had been overpaid $19,951.57 in age pension between 18 March 2000 and 20 June 2003, and raised a recoverable debt in that amount.

8.      Mr Frendo sought review of that decision on 4 September 2003.  On 27 November 2003, an ARO determined that there had been an overpayment but that the amount of the debt was incorrect.  On 9 January 2004, the ARO determined that the amount of the overpayment between 18 March 2000 and 20 June 2003 was $13,049.02.  On 29 January 2004 Mr Frendo applied to the SSAT for review of the decision.  On 30 March 2004 the SSAT affirmed the delegate’s decision that there was a recoverable debt and affirmed the amount of the debt as $13,049.02.  An application for review with this Tribunal was lodged on 28 April 2004.

9.      The issue before the Tribunal is whether the applicant owes a debt to the Commonwealth, and if so, whether the debt should be waived or written off. 

EVIDENCE

10.     Mr Frendo told the Tribunal that he was born in Malta and has lived in Australia since 1951.  He stated that he had left school by the time he was 13 years old because of the war.  After leaving school, he helped his father in a coffee bar.  After migrating to Australia, he worked as a waterside worker for 36 years.  He said that he did not have to undertake much reading or writing during his working life.  Mr Frendo said that he can read and write English, but he takes a while to do so, partly because of his failing eyesight. 

11.     Mr Frendo said that he received a redundancy payment from his wharf job.  He then received carer pension for a time, while looking after his first wife who was suffering from cancer.  She died in 1985.  He said that after her death, he could not work and remained on a pension.  He remarried and his second wife died within five years of their marriage.  He married his present wife, Norma Frendo, in the Philippines in 1998 and she was granted an Australian visa about nine months later.  He said that Mrs Frendo started working in Australia about two years after her arrival.

12.     Mr Frendo said that he remembered telling Centrelink that his wife had resumed work.  He said that she had stopped working for two weeks in March 2000 to take care of him as he was not well.  He said that the Centrelink office is around the corner from his home and he went in personally to advise them that his wife was working again because he knew he had to do so.  He said that he took his wife’s pay packet with him.  Mr Frendo said that a Centrelink officer had asked for his wife’s tax file number, which he did not have.  The officer had commented that he would be able to get that information from the computer.  Mr Frendo said that he thought that if Centrelink could get his wife’s tax file number, it would be able to see how much she earned.  Mr Frendo said that the Centrelink officer he spoke to had written a note on a small piece of yellow paper.  He said that it was busy at the Centrelink office that day and surmised that the officer may have forgotten to enter the information Mr Frendo had given him.  Mr Frendo stated that he could recall getting letters from Centrelink after his wife went back to work but did not pay attention to them as they all appeared to be similar and were about the amount of pension he would receive.   He said that the letters usually informed him of a pension increase of 30 or 40 cents per week so he did not think them important. 

13.     Mr Frendo said that he knew that he had to tell Centrelink about his wife’s earnings but could not recall how he obtained that knowledge.  He said that he thought that Centrelink had information about his wife’s income via their computer system and did not think he needed to advise them if her income went up by 40 cents.  He said that Centrelink knows everything about everyone so he did not think he had to tell them about minor variations in her weekly pay.  Mr Frendo stated that his pension has varied regularly by small amounts.  He said that he has never queried the amount with Centrelink when it goes up or down.  He said that when he needs some money, he goes to the bank, his passbook is updated with the amounts deposited by Centrelink since he last went to the bank and he takes out an appropriate amount depending on what his bank balance shows. 

14.     Mr Frendo said that he and his wife are experiencing financial difficulties which have been exacerbated by deductions Centrelink is making in relation to the overpayment.  He said that when he needed new glasses, he could not meet the full cost and paid the required amount over several weeks.  He also had difficulty in meeting the cost of repairing his car.  He said that his wife regularly sends money to the Philippines to support her  son and daughter, aged 27 and 24 years respectively, and her daughter’s one year old child, due to the difficulty of obtaining work in the Philippines.  Mr Frendo said that in the past he owned several homes, but has been forced to rent for several years, having spent all his money and liquidating all his assets as a result of an earlier relationship.   

15.     On cross examination, Mr Frendo said that he did not pay much attention to Centrelink letters as he trusts that Centrelink is sending him only what he is entitled to receive.

CONSIDERATION OF THE ISSUES

16. Section 1064 of the Social Security Act 1991 (the Act) sets out the rate calculator for age pension, and provides that a person’s income, and the income of their partner, will affect the rate of pension. 

17. Section 68(2) of the Social Security (Administration) Act 1999 (the Administration Act) provides that Centrelink may give a person a notice requiring the person to inform Centrelink of any changes in circumstances. Section 123(3) of the Administration Act provides that a determination of a rate of payment continues until the payment becomes payable at a lower rate under s 98, s 99 or s 100 of the Administration Act. Sections 192, 194 and 196 of the Administration Act allow Centrelink to make enquiries with third parties, including the recipient’s partner’s employer, where there appears to be a debt to the Commonwealth.

18. Mr Frendo did not dispute that his and his wife’s combined income exceeded the amount used by Centrelink to calculate payments to him between March 2000 and June 2003. However, Ms Rasheva’s oral submission, and a written submission prepared by a Victoria Legal Aid solicitor, on Mr Frendo’s behalf, was that the debt should be waived under s 1237A(1) of the Act as Centrelink’s failure to take account of Mrs Frendo’s income arose out of an administrative error by Centrelink. Mr Frendo, in oral and written evidence, stated that he had gone to the Centrelink office in late March 2000 and told a male Centrelink officer that his wife had resumed work. However, Centrelink have no record of this. Mr Frendo’s advocates also submitted that Centrelink did not adequately explain to him his obligation to advise it of all changes to his wife’s income. They submitted that Centrelink’s letters were an inadequate means of reminding Mr Frendo of his obligations, given his limited reading ability and his belief that Centrelink had access via its computer to all required information concerning Mrs Frendo’s income.

19.     Mr Frendo’s advocates submitted that if the debt was not to be waived on the basis of administrative error by Centrelink, it should be set aside on the basis of Mr Frendo’s special circumstances, which included his and his wife’s limited ability to read English, his medical condition and their difficult financial circumstances.

20. Mr Perdon noted that Centrelink sent several letters to Mr Frendo between 2000 and 2003 in which his and his wife’s then recorded income level for pension purposes was set out and he was informed that it was his obligation to notify Centrelink if the income was higher than that specified in the letter. He submitted that Mr and Mrs Frendo’s annual income was higher than that advised to Centrelink and upon which it based its payments. He submitted that it was only after taxation records were matched with Centrelink records and enquiries were made of Mrs Frendo’s employer that the level of the discrepancy was discovered. On this basis, Mr Perdon stated that Mr Frendo had been paid more than his entitlement from 18 March 2000 to 26 June 2003, which is a debt owed to the Commonwealth. Mr Perdon submitted that the debts cannot be waived under s 1237A(1) of the Act as they did not arise through sole administrative error on the part of Centrelink. He also submitted that there were no special circumstances that would justify waiving the debt (Re Beadle and Director-General of Social Security (1984) 6 ALD 1).

21.     Mr Frendo was sent several letters before and during the period in which the debt accumulated, reminding him of the requirement to notify Centrelink if his and his wife’s income was above the amount specified in the letters.  The Tribunal notes that the applicant acknowledged receipt of the letters and told the Tribunal that he paid little heed to the letters as he was not concerned about minor changes to his pension.  Mr Frendo’s advocates submitted that his English was insufficient to be able to read and comprehend the content of the letters.  Ms Rasheva sought to demonstrate Mr Frendo’s reading inadequacies by having him read a Centrelink letter to the Tribunal.  While Mr Frendo read relatively slowly, which he attributed partly to his poor eyesight, he read fluently and satisfied the Tribunal that his literacy skills were of a higher order than had been described in the written submissions provided to the Tribunal before the hearing.  The Tribunal is satisfied that Mr Frendo’s reading skills were sufficient to read and comprehend Centrelink’s correspondence.  Mr Frendo’s decision not to check the content of those letters does not negate the debt nor change the amount owing. 

22. The Tribunal is satisfied that the taxation returns and employer records made available to Centrelink show that Mrs Frendo earned significantly more than the amount documented in Centrelink records from 18 March 2000 to 26 June 2003, upon which the applicant’s pension was calculated. The Tribunal accepts that the calculations presented to it are correct. The Tribunal finds that, during the relevant period, Mr Frendo received an overpayment of $13,049.02 in aged pension, to which he was not entitled. The Tribunal finds that this amount is a debt owed to the Commonwealth under s 1223(5) of the Act (s 1223(1) from 1 July 2001).

23. Section 1236 of the Act provides that the debt may be written off in certain limited circumstances; namely, if it is irrecoverable at law, the debtor has no capacity to repay the debt, the debtor’s whereabouts are unknown or it is not cost effective for the Commonwealth to take action to recover the debt. If a debt is recoverable by means of deductions from the debtor’s social security payment, the debtor is taken to have a capacity to pay. In this matter, the applicant is the recipient of a social security payment. The Tribunal therefore finds that the applicant has the capacity to repay the debt, and the debt is not irrecoverable at law. Therefore, there are no grounds to write‑off the debt.

24. Section 1237A of the Act provides for waiver of a debt arising from administrative error:

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.

1237A.(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.

25. Centrelink advised Mr Frendo on several occasions in 2000, of his obligation to notify it, if his and his wife’s combined income increased from the level specified in the letter. There is no record of Mr Frendo having done so. Mr Frendo gave evidence that he had informed Centrelink in late March 2000 that his wife had resumed work. He surmised that the Centrelink officer who received the information failed to record it. However, even if Mr Frendo’s recollection of the timing and circumstances of his notification to Centrelink is accurate, he did not seek to rectify the Centrelink officer’s error over the next three years, when it was apparent that his and his wife’s combined income was not properly recorded. Regardless of the reason for his failure to follow the instructions in the letters, the evidence indicates that Centrelink did notify Mr Frendo of his obligations. Therefore, the Tribunal finds that the debt is not attributable solely to an administrative error by the Commonwealth. As a result, the debt cannot be waived under s 1237A(1A) of the Act.

26. Section 1237AAD of the Act provides for waiver of the debt in certain other circumstances:

1237AAD.  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 false representation; or

(ii)failing or omitting to comply with a provision of this 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.

27. Mr Frendo gave evidence that he would have provided Centrelink with regular updates on the exact amounts of his and his wife’s combined income had he been aware of the need to do so. There is a record of Mr Frendo advising Centrelink when Mrs Frendo first started working and when she stopped a short time later. Mrs Frendo submitted taxation returns in relation to her income. There is no evidence to suggest that Mr and Mrs Frendo deliberately withheld information from Centrelink. The Tribunal finds that the applicant did not knowingly make false statements or representations to Centrelink nor did he deliberately fail to comply with a provision of the Act. He therefore meets the criteria in s 1237AAD(a) of the Act.

28.     In Re Beadle, the Tribunal held that the special circumstances, referred to in s 1237AAD(b) of the Act, must be unusual, uncommon or exceptional.  Those circumstances must be other than financial hardship alone. 

29.     Ms Rasheva referred the Tribunal to Re Graham and Secretary, Department of Family and Community Services [2003] AATA 1082. In that matter, the Tribunal found that there were special circumstances and waived a debt for a person with a lower than normal intelligence and various health problems who was unaware of his obligation to inform Centrelink of his partner’s income. The Tribunal is not satisfied that Mr Frendo’s circumstances are akin to those of the applicant in Re Graham. 

30.     Mr Perdon cited Re Secretary, Department of Family and Community Services and Janauskas [2001] AATA 72 as an applicable authority. In Re Janauskas, the respondent was careless in failing to read notices sent to him by Centrelink, prompting the Tribunal to comment:

79.      I am not satisfied that Mr Jonauskas’ circumstances are special.  Many people who are on the Age Pension suffer from ill health and have difficulties in managing their affairs because of it.  Many have some degree of difficulty in reading letters whether because of lack of English or because of problems caused by ill health.  This does not justify their being careless or reckless about the manner in which they manage their affairs.  They may seek assistance from family members although they are not obliged to.  There are avenues of assistance available to them and one of those is to telephone the Department, and now Centrelink, for assistance and guidance as to a person’s obligations.  People who have difficulties and have the capacity to understand their difficulties use those avenues or at least make some attempt to.  Mr Jonauskas neither used them nor made any attempt to do so.  I am satisfied that he had the capacity to understand his situation.  He also had the capacity to understand any obligations that he might have known he was under but, by making no attempt to read the letter of 22 July 1997 (or subsequent letters) chose not to know about them.  In view of this, I have concluded that there are no special circumstances making it desirable to waive the debt.

31.     The Tribunal accepts that the applicant has medical problems.  It accepts that he has had a limited education and poor eyesight and that he does not do much reading beyond the local newspapers.  However, it is satisfied that Mr Frendo is capable of reading and understanding Centrelink correspondence.  The Tribunal acknowledges that Mr Frendo may  not be in a position to direct his wife to stop using her income to support her adult children overseas to the extent that she does and that this commitment affects Mr and Mrs Frendo’s access to funds.  However, the Tribunal is not satisfied that the situation that Mr Frendo finds himself is vastly different from that of other social security recipients who have received overpayments.  The Tribunal is not satisfied that the circumstances in this case are unusual, uncommon or exceptional as defined in Re Beadle.  Therefore, they do not constitute special circumstances (other than financial hardship alone). Hence, the waiver provisions of s 1237AAD of the Act do not apply.

32.     Therefore, Mr Frendo owes a debt of $13,049.02 to the respondent. 

33.     Mr Frendo is currently repaying the debt at the rate of $60.00 per fortnight from his pension.  He is able to approach Centrelink at any time to seek to renegotiate the rate of repayment if he is experiencing financial hardship.

DECISION

34.     The Tribunal affirms the decision under review. 

I certify that the thirty-four [34] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of hearing:  23 September 2004

Date of decision:  15 December 2004
Applicant:  Ms D. Rasheva
Advocate for respondent:            Mr D. Perdon, Centrelink