Healion and Secretary, Department of Family and Community Services
[2005] AATA 194
•9 March 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 194
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S2004/108
GENERAL ADMINISTRATIVE DIVISION ) Re ROBERT HEALION Applicant
And
SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Respondent
DECISION
Tribunal Senior Member L Hastwell Date9 March 2005
PlaceAdelaide
Decision The Tribunal affirms the decision under review.
(Signed)
L HASTWELL
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Disability Support Pension – special circumstances – waiver – write-off – decision affirmed
Social Security Act 1991 ss 1223, 1236, 1237, 1237A-1237AAD
Re Beadle and the Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary of Department of Social Security (1995) 40 ALD 541
Re Reynolds and Secretary to the Department of Social Security (AAT 2656, 2 May 1986)REASONS FOR DECISION
9 March 2005 Senior Member L Hastwell introduction
1. Mr Healion (the applicant) was granted Disability Support Pension (DSP) with effect from 5 March 1998. This pension was granted for back and neck problems.
2. On 7 November 2003 a decision was made by Centrelink to raise and recover an overpayment of the DSP of $11,673.37 against the applicant for the period 25 June 1999 to 21 October 2003 (the debt recovery period) on the basis that the correct income amount of both the applicant and his partner during the relevant period had not been taken into account in assessing the rate of pension payable. An authorised review officer confirmed that decision on 8 January 2004.
3. The SSAT considered the matter on review, and on 8 March 2004 affirmed the decision under review.
4. The applicant applied to this Tribunal for a review of that decision.
issues for determination
5. The issues to be determined by the Tribunal are:
(a)has the applicant been overpaid DSP of $11,673.37 for the relevant period;
(b)does this overpayment represent a debt owed to the Commonwealth; and if so
(c)do any grounds exist to either write off or waive the right of the Commonwealth to recover all or any part of the debt?
legislation
6. The relevant legislation which provides for the raising of a debt is contained in s 1223(5) of the Social Security Act 1991 (the Act), which was replaced during the debt period by s 1223(1) of the Act. Section 1223(5) provided as follows:
“If:
(a)an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997; and
(b) because the received amount had not been correctly calculated using the relevant rate calculator, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment that should have been paid to the person under the Act;
the difference between the received amount and the correct amount is a debt due to the Commonwealth.”
7. The provision which replaced s 1223(5) of the Act, namely s 1223(1), is expressed as follows:
“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.”
8. If a debt is found to exist then there are provisions that allow for write-off or waiver of a debt in certain circumstances. These provisions are set out in ss 1237A to 1237AAD of the Act. Section 1237(1) of the Act provides:
“On behalf of the Commonwealth, the Secretary may waive the Commonwealth’s right to recover the whole or part of a debt from a debtor only in the circumstances described in section 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD.”
9. Sections 1237AA to 1237AAC of the Act have no applicability in this instance. The only relevant provision under which the applicant could claim write-off or waiver would be either s 1237A, s 1237AAD, or s 1236 of the Act. Waiver is provided for in s 1237A(1) and s 1237AAD of the Act. Section 1236 of the Act provides for the write-off of a debt in certain circumstances.
10. Section 1237A(1) provides:
“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.”
11. Section 1237A(1A) provides:
“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.”
.
12. Section 1237AAD provides:
“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.”
13. Section 1236 of the Act provides for write off in certain circumstances. The only relevant provision in this case would be s 1236(1A)(b), which provides as follows:
“The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) …
(b) the debtor has no capacity to repay the debt; or
…”
background and discussion of the evidence
14. At the hearing the applicant represented himself, and Ms Pugsley was advocate for the respondent (the Department).
15. The T documents were admitted in evidence, and both parties tendered other exhibits in the course of the hearing that will be referred to where relevant.
16. The applicant gave evidence on his own behalf. The respondent did not call any witnesses.
17. At the outset, the applicant conceded the quantum of the debt, and the fact of its existence. He acknowledged his rate of pension had been incorrectly calculated, pursuant to the Act, and the evidence focussed on whether there were grounds to waive recovery of all or part of the debt.
18. The applicant could not point to any specific administrative error by the Department other than to state his belief that a conversation recorded at TA2/18 had been incorrectly recorded, and his belief that he was verbally told by a customer service officer that he spoke to on 17 July 2002, that he was able to record income annually rather than on a 12 weekly basis with the Department. Despite this belief, the records that were given by the applicant to the Department over the debt recovery period were not always correct in any event, and he did not go on to rely on annual reporting.
19. The applicant asked the Tribunal at the outset to consider “special circumstances” in his case. He said that he believed that he met the criteria for special circumstances because of events that occurred during the relevant period. He said he almost divorced, and he also suffered what he referred to as “extreme illness” in 2002. He was also concerned to challenge any suggestion that he had intentionally misreported his income position, or that of his wife, to the Department.
20. The applicant is 46 years of age. He is a teacher by occupation, but has not been actively involved in the workforce since October 2002 when, as a result of a work-related incident, he commenced receiving WorkCover payments. He continued to be in receipt of Workcover payments at the time of the hearing.
21. The applicant married his current spouse in 1997 in India, and apart from a period of separation under the one roof between March 2000 and March 2001 [Exhibit A6], they remain married. The applicant advised the Department that he had commenced cohabitating with his wife in March 1999 when she entered Australia.
22. The applicant acknowledged he had failed in his obligation to accurately report income to Centrelink at different times during the debt recovery period. He was at pains to point out that he did make some reports of income and changes in his circumstances, but he acknowledged it was occasional and there were substantial periods of non-reporting.
23. The applicant said that in the initial period after his wife came to Australia, any irregularity in reporting related to what he referred to as “pure lapse of memory”. Later in his evidence he said that any irregularities in reporting his wife’s income between 1999 and 2001 was because he was not aware of her accurate earnings.
24. In his evidence the applicant acknowledged that his wife’s earnings remained relevant despite a period of separation under the one roof (as evidenced by Exhibit A6) being an Application for Divorce filed by the applicant in the Family Court in March 2001. The applicant was unclear as to whether this application lapsed or whether it was discontinued, but he acknowledged that he and his wife remain married and continue to cohabit as man and wife, and that the period of difficulties in their relationship has ended.
25. The applicant acknowledged that his wife worked at Wesley House from mid 1999 until August 2001, and that he had wrongly advised the Department that she had ceased work in February 2000 [TA2/14]. He explained this incorrect advice as being due to the fact that around February 2000 she had tendered her resignation, but she had then continued to work. He said “I did not report she was earning. I did not think she earned a lot.”. He said that her employer continued to ask her to come back to do some work. He did not advise the Department of her continuing earnings.
26. The applicant gave evidence that he completed his teaching qualifications in 2000, and thereafter he obtained relief teaching work in 2001. At this time his wife was studying at Flinders University and also working, and it appears she was also receiving some Austudy payments during this time. She completed her qualifications in April 2001, and thereafter her Austudy ceased.
27. After the applicant’s wife completed her nursing qualifications she obtained employment at Karingal Nursing Home in August 2001. Records contained in the T documents [T53/112] indicate that she worked continuously throughout the debt recovery period, and the applicant’s evidence was the he did not advise Centrelink of her income from Karingal Nursing Home at all, nor did he advise of her income from the subsequent employment at the Morphett Nursing Home (Lakeside Villages Incorporated) [T50/100] where she commenced employment in June 2003. He excused his failure to advise on the basis that he was desperately trying to get his life in order, and that he was also ill for some of the debt recovery period.
28. In 2002 the applicant obtained a contract to teach, and he commenced that contract in May 2002 and worked 0.6 of a workload until June 2002 when, as a result of an incident in a classroom, he had one day off on WorkCover. He then returned to the contract, but ceased work in October of that year, and has not returned to work since that time and has ultimately been paid WorkCover payments since that time at varying rates. It would appear that by October of that year he was suffering the effects of what was subsequently diagnosed as Meniere’s disease.
29. It is acknowledged that the applicant wrote to the Department on 9 April 2003 advising of his WorkCover claim, and advising that he may receive back payment [T40/82]. He had actually received a back payment in February or March of 2003, and he noted that he did fail to report that. In his evidence, he commented that he did not think that he kept his WorkCover payments “a secret” for very long.
30. The applicant generated a computer record from his own computer of what he had recorded of his contacts with Centrelink during the debt recovery period. His record [T68/177] did not accurately correspond with Centrelink’s records, and showed some reporting in 1999, no reporting in 2000, some reporting in 2001 and limited reporting in 2002. The applicant acknowledged that some of the reports that he had recorded may have been reports to Austudy, rather than Centrelink, while his wife was in receipt of Austudy. Reports to Austudy would not be conveyed on to Centrelink.
31. The illness that the applicant states affected his ability to deal with Centrelink for a period was Meniere’s disease, the onset of which occurred shortly after the classroom incident in June 2002. He told the Tribunal that for 6 months in 2002 the Meniere’s disease was acute. Medical records were available to the Tribunal. The Tribunal noted a report from Mr Neville Minnis at T47/94 which was prepared in the context of the WorkCover claim. Mr Minnis diagnosed the onset of Meniere’s to roughly coincide with the time of the work related incident in June 2002. When Mr Minnis saw the applicant in early 2003, he reported that the symptoms had largely resolved. A further report of Dr Frayne at T52/107 again described the applicant suffering dizziness in December 2002, and later that there was a balance disorder sometimes with dizziness at night.
32. The Tribunal accepts that at various times between mid 2002 to the end of 2002, the applicant was suffering from the effects of Meniere’s disease, causing him vertigo and dizziness, and the other unpleasant side effects associated with Meniere’s disease. In that regard the Tribunal notes the contents of Exhibits A8 and A9.
33. In his evidence the applicant acknowledged that he did not accurately report income to Centrelink, and he acknowledged periods of what he termed “gross negligence in reporting”, particularly, when he was unwell.
34. The applicant stated that he continues to live with his wife, and they do share expenses, but keep separate incomes. He described himself and his wife as being mutually dependant. She owns an investment property in North Adelaide, which she purchased in late 2001, and they jointly own a property at 37 Newman Street, Semaphore. The Semaphore property he estimated to have a value of $350,000.00, with a mortgage of $14,000.00. He estimated that the property in North Adelaide was worth approximately $200,000.00, with a $90,000.00 debt against it. He said that his wife had paid for the Hyundai vehicle that she owns, and he had paid for the Volkswagen that he owned.
35. The applicant acknowledged that he had loaned $25,000.00 to his ex-wife to cover a shortfall on her finances recently by way of drawing on his $100,000.00 overdraft facility that he uses, and which was currently drawn to $14,000.00. This is the debt secured against his home. He said that she had since paid that back. He acknowledged that he and his current wife did not suffer financial hardship, and they enjoy what he described as a good combined income. Nevertheless, he said that his wife has stipulated that the Centrelink debt is his debt, and not her debt, and she is not willing to participate in repaying it.
36. In final submissions the applicant put to the Tribunal that he was still not cleared to work as a teacher. He referred the Tribunal to the material that he had provided to the Tribunal about Meniere’s disease, and he said that at various times during the debt recovery period he was too preoccupied to even think about Centrelink. He said that the WorkCover dispute was also a big issue for him throughout 2003. He said that he lost focus on other issues. He said that the period October to December 2002 was when he recalls the Meniere’s disease as being particularly severe.
37. The applicant acknowledged in cross-examination that he had effectively been double paid, in that he received WorkCover throughout a period when he was also receiving benefits. He appeared to not grasp the concept that was put to him, namely that as he had been double paid for a period, he should therefore make some repayment to Centrelink.
38. The Department’s submission was that the applicant suffered no financial hardship, and although he may have had a health problem for two months during the debt recovery period, he had managed his life throughout the bulk of the period. He studied for some of the period, and worked for some of the period, and had control of his life. The Department submitted that relationship difficulties were not uncommon or exceptional, and that for the bulk of the period of the debt recovery the applicant did know of his obligations, albeit in a somewhat misguided way. The Department submitted that there were no unusual or exceptional circumstances that would give rise to waive the debt, pursuant to s 1237AAD of the Act.
findings of fact and application of the law
39. The applicant raises no dispute with the quantum of the debt. The only issue for the Tribunal to decide is whether waiver or write-off is applicable.
40. The Tribunal is satisfied based on the evidence of the applicant, the evidence in the T documents, and exhibits before it, that the overpayment of DSP did occur and that it has been correctly calculated by the Authorized Review Officer. The Tribunal is satisfied that there is a debt due to the Commonwealth, pursuant to ss 1223(1)(a) and (b) of the Act.
41. The applicant does not allege sole administrative error, and on the evidence before the Tribunal there is no specific instance of administrative error that could give rise to the application of s 1237A of the Act.
42. The Tribunal went on to consider whether waiver is appropriate under the discretionary provisions set out in s 1237AAD of the Act.
43. The Tribunal notes that the applicant concedes that at times he was grossly negligent in his reporting, and certainly not up to the standard that is expected of a person in receipt of benefits. His presentation of evidence was somewhat confused, his records of his own recording of events were confused, and he conceded himself that he may well have not been reporting income at all on occasions. On other occasions he acknowledged he was misreporting, and sometimes possibly reporting to the wrong agency.
44. Under s 1237AAD of the Act, special circumstances can only be considered if the debt did not result wholly or partly from the debtor knowingly making a false statement or false representation, or failing or omitting to comply with a provision of the Act.
45. Based on all the evidence, the Tribunal is of the view that the errors in information supplied to the Department, and the omissions to supply information by the applicant, resulted from reckless and/or negligent reporting by the applicant. It would appear from some comments made by him that at times he knowingly withheld information from Centrelink, including information about his WorkCover entitlements. The Tribunal is therefore of the view that there is no basis on which special circumstances can be considered. Nevertheless the issue of special circumstances has been raised by the applicant, and the Tribunal will address that issue.
46. The concept of special circumstances has been considered on many occasions by the Tribunal, and the Tribunal looked to the decision in Re Beadle and Director-General of Social Security (1984) 6 ALD 1, which is considered a leading authority. In that case the Tribunal said at page 3:
“…
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. 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.
…”
47. In Groth v Secretary, of Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court’s decision in Re Beadle, observed at page 545 that special circumstances:
“… would require something to distinguish Mr Groth’s 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. …”
48. On all the evidence put before it, the Tribunal can find nothing which could be described as unusual, uncommon, out of the ordinary or exceptional, such that the applicant should be excused from the normal reporting conditions to Centrelink. The applicant was in quite reasonable health throughout most of the debt recovery period, and even when unwell, appeared to be able to conduct his affairs reasonably, including pursuing a claim for workers’ compensation. During the debt recovery period the applicant’s wife was well and working, and it would appear accumulating assets, and he and his wife were managing well financially. It appears that it was a matter of priorities for the applicant, and in the Tribunal’s view he simply did not prioritise the need to properly account to Centrelink.
49. The applicant had an obligation to be aware of his responsibility to accurately report income, and he failed to do so on numerous occasions, or when he did report he gave inaccurate reports. He appeared to be a disorganised person in the way he conducted his affairs. At times he may have inadvertently misled the Department, but at other times his failure to report was negligent and/or reckless. This has left him with a debt which he is in a position to pay immediately if he wishes to do so, given his comfortable financial position.
50. The Tribunal accepts that during a short portion of the debt recovery period the applicant was unwell, but the Tribunal does not accept that he was so unwell that he was incapable of conducting his affairs. It appears that he may have been significantly unwell for two months, but at the conclusion of that time he could well have corrected any incorrect information provided to the Department. He went on to pursue a workers’ compensation claim, and manage his life in all other respects. The applicant appeared quite capable of making the decision to correctly report information to Centrelink if he had put his mind to it, and prioritised that obligation. There is, in the Tribunal’s view, nothing in this case that would distinguish it from other cases to make it unusual or exceptional. The Tribunal is not in a position to exercise the discretion contained in s 1237AAD of the Act, and waive the debt in question as it is not satisfied that there are any special circumstances in this case that would justify exercising the discretion to waive the debt.
51. The only other basis on which the Tribunal could consider writing off the debt would be pursuant to s 1236(1A) of the Act The applicable provision is s 1236(1A)(b) of the Act, and the issue of whether the applicant has the capacity to repay the debt:
“The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) …
(b) the debtor has no capacity to repay the debt; or
…”
52. The financial evidence provided by the applicant was that he and his wife were in a comfortable financial position. They had a household income that well exceeded the combined pension of a husband and a wife in each week. His Social Security Appeals Tribunal Statement of Financial Circumstances [Exhibit A10] showed his partner’s income at a gross of $769.00 per week, and his own income at a gross of $389.50 per week. In addition his partner received rental of $160.00 per week from her investment unit, although that was committed to the mortgage. In a subsequent Notice of Assessment with respect to his partner’s income sent to the Tribunal after the hearing, it would appear that his partner’s taxable income was $48,207.00 for the year ended 30 June 2004, which provided for a weekly income of $927.00 for his partner in that year. An amendment to the applicant’s WorkCover payments, which occurred subsequent to the hearing, and was reported to the Tribunal by the applicant in a letter after the conclusion of the hearing, still leaves the applicant and his wife well above the combined pension level of a husband and wife.
53. The applicant and his wife own a property situated at 37 Newman Street, Semaphore, which he estimates has a value of $350,000.00, and against which he said there is currently a $14,000.00 overdraft. He has redraw a facility on that property, and only some months ago he drew a significant sum of money to loan to his ex-wife because she was in financial difficulties. There is nothing in any of the documentation provided in Exhibit A10 that would convince the Tribunal that the applicant suffers any financial hardship and that he is not capable of repaying the debt. His wife has substantial funds in the bank in her own name. It appears that the applicant pays all household outgoings, and then periodically his wife draws on her funds to contribute her share of expenses.
54. The Tribunal adopts the reasoning in the case of Re Reynolds and Secretary to the Department of Social Security (AAT 2656, 2 May 1986) that severe financial hardship is likely to require a level of household income that is less than the maximum pension rate. The income in the applicant’s household is considerably higher, and he and his wife enjoy, by his own acknowledgement, a comfortable, financially secure lifestyle.
55. The Tribunal finds that the applicant does have the capacity to repay the debt, and in the circumstances, write-off under s 1236(1A) of the Act is not applicable.
56. The Tribunal affirms the decision under review which means that the applicant’s claim is unsuccessful.
I certify that the 56 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member L Hastwell
Signed: .....................................................................................
AssociateDate of Hearing 1 February 2005
Date of Decision 9 March 2005
Counsel for the Applicant In person
Solicitor for the Applicant -
Counsel for the Respondent Ms A Pugsley
Solicitor for the Respondent Centrelink Service Recovery Team
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