Hendrik Prins and Secretary, Department of Social Services
[2014] AATA 639
[2014] AATA 639
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/2480
Re
Hendrik Prins
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Dr P McDermott RFD, Senior Member
Date 4 September 2014 Place Brisbane The Tribunal affirms the decision under review.
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Dr P McDermott RFD, Senior Member
CATCHWORDS
SOCIAL SECURITY – Overpayment – New Zealand Superannuation – request for overpayment to be advanced and paid back in instalments – Application of
Agreement on Social Security between the Government of Australia and the Government of New Zealand contained in
Schedule 3 of the Social Security (International Agreements) Act 1999 – decision affirmed.
LEGISLATION
Social Security Act 1991 ss 43, 1236
Social Security (Administration) Act 1999
Social Security (International Agreements) Act 1999 s 6, Sch 3
Bankruptcy Act 1966 s 58
CASES
Secretary, Department of Families, Housing, Community and Indigenous Affairs v Mahrous [2013] FCAFC 75
REASONS FOR DECISION
Dr P McDermott RFD, Senior Member
4 September 2014
INTRODUCTION
An overpayment of age pension had previously been paid to Mr Prins (“the applicant”). The amount of that overpayment of age pension had, with the agreement of the applicant, been recovered from arrears of New Zealand Superannuation (“NZS”). The applicant now seeks to be advanced the amount of that overpayment which he is prepared to repay by instalments from his age pension.
BACKGROUND
On 22 May 2013 the applicant applied for age pension and special benefit. On
5 June 2013 the applicant was granted special benefit with a start date of 22 May 2013.
The applicant is a New Zealand citizen who has been granted an Australian permanent visa in 2012. At the time of his claim for age pension, the applicant had been living in Australia for 96 months. On 9 July 2013, Centrelink made arrangements with the applicant to claim the New Zealand pension.
On 6 August 2013, the applicant was granted age pension with a start date of
22 May 2013 and at a fortnightly rate of AUS$708.98. The decision maker noted that the applicant should not have been granted special benefit as he was qualified for the age pension and the difference between the age pension arrears (AUS$3,551.14) and the special benefit paid (AUS$1998.51) would be paid to the applicant (AUS$1,552.63).
On 18 November 2013, the Ministry of Social Development (“MSD”) advised the applicant that he was granted NZS and payment occurred whilst he was living in Australia from 22 May 2013. The MSD calculated the proportional rate of portable NZS, based on 499 months of working age and residence in New Zealand, as NZ$243.75 per week. The MSD advised the applicant that the arrears of New Zealand pension of NZ$6337.49 would be paid to Centrelink. The grant of the New Zealand pension reduced the fortnightly rate of Australian age pension to AUS$485.38. Thereafter the applicant would be paid AUS$223.60 per fortnight from NZS and AUS$485.38 a fortnight from his Australian age pension. On 16 December 2013, the NZS arrears were received by Centrelink and held pending the calculation of the age pension overpayment.
PRIOR DECISIONS
On 4 February 2014, a decision was made to raise a debt of AUS$2,906.83 for the overpayment of age pension to the applicant from 22 May 2013 to 19 November 2013. Centrelink made a decision to place an embargo on the arrears of NZS to recover the debt of AUS$2,906.83 and a debt of AUS$2,921.78, representing an overpayment of Newstart Allowance and Special Benefit to the wife of the applicant. The remaining debt of AUS$15.23 was later waived. The decision was affirmed by the Authorised Review Officer (ARO).
On 6 May 2014, the Social Security Appeals Tribunal (“SSAT”) made a decision to set aside the decision of the ARO and substitute a decision that the overpayment of the applicant's age pension be recovered in full from the arrears of NZS received for that period and the balance of the NZS arrears be paid to the applicant. On 14 May 2014, AUS$2921.78 was paid to the applicant.
The applicant now seeks to have the decision of the SSAT reviewed by this Tribunal.
RELEVANT LEGISLATION
The relevant legislation is the Social Security Act 1991 (“the Act”), the
Social Security (Administration) Act 1999("the Administration Act') and the
Social Security (International Agreements) Act 1999("the International Act").
CONSIDERATION
At the time of his claim for age pension, the applicant did not have 10 years qualifying Australian residence as required by s 43(1)(a) of the Act. The applicant qualified for age pension as his working age residence in New Zealand is recognised under the Agreement on Social Security between the Government of Australia and the Government of New Zealand[1] (“NZ Agreement”).
[1] Social Security (International Agreements) Act 1999, Sch 3.
The NZ Agreement overrides the provisions of the Act and the Administration Act. Section 6 of the International Act provides:
Overriding of social security law by scheduled international social security agreements
(1) The provisions of a scheduled international social security agreement have effect despite anything in the social security law.
(2) Subsection (1) applies to a provision of an agreement only in so far as the provision is in force and affects the operation of the social security law.
In Secretary, Department of Families, Housing, Community and Indigenous Affairs v Mahrous[2], the Federal Court of Australia emphasised that the effect of s 6 of the International Act is to enact the overriding provisions of the NZ Agreement as part of the law of Australia.
[2] [2013] FCAFC 75 at [39].
Article 13 of the NZ Agreement specifies how the rate of the Australian age pension is determined when a person is also receiving a New Zealand benefit. It states that:
2. Subject to paragraph 3, where an Australian benefit is payable, by virtue of this Agreement or otherwise, to a person who is in Australia, the rate of that benefit shall be determined by:
(a)calculating that person's income according to the social security law of Australia but disregarding in that calculation the New Zealand benefit or benefits received by that person;
(b) deducting the amount of the New Zealand benefit or benefits received by that person from the maximum rate of that Australian benefit; and
(c)applying to the remaining benefit obtained under subparagraph (b) the relevant rate calculation set out in the social security law of Australia, using as the person's income, the amount calculated under subparagraph (a).
This article provides the authority for Centrelink to reduce the Australian age pension of the applicant by the amount of the NZS.
The overpayment of Australian age pension from 22 May 2013 to 19 November 2013 had the consequence that the applicant had an age pension debt of AUS$2,906.83.
Article 13 of the NZ Agreement covers an eventuality, such as this case, where a person has been paid a benefit by Australia in respect of a past period including the instance where that benefit would have been reduced had the benefit been paid by New Zealand during that period. This occurrence constitutes a debt pursuant to the operation of
Article 19 of the NZ Agreement which provides:
1. For Australia where:
(a) a benefit is paid or payable by New Zealand to a person in respect of a past period;
(b)for all or part of that period, Australia has paid to that person a benefit under its legislation; and
(c)the amount of the benefit paid by Australia would have been reduced had the benefit paid or payable by New Zealand been paid during that period.
then:
The amount that would not have been paid by Australia had the benefit described in subparagraph (a) been paid on a periodical basis throughout that past period shall be a debt due by that person to Australia.
2.A reference to a benefit in this Article, in relation to Australia, means a pension, benefit or allowance that is payable under the Acts forming the social security law of Australia as amended from time to time, and in relation to New Zealand means any pension, benefit, allowance or advance made by a competent institution including overpayments which arise because of the payment of Australian and New Zealand benefits.
Article 19(3) of the NZ Agreement then gave the Secretary the power to recover from these arrears the debt which accrued for the period 22 May 2013 to 19 November 2013. Article 19(3) provides:
Recovery from arrears
3. Where:
(a)it appears that a person who is entitled to the payment of a benefit by one of the Parties might also be entitled to the payment of a benefit by the other Party, in either case whether by virtue of this Agreement or otherwise;
(b) the amount of the benefit that might be paid by that other Party would affect the amount of the benefit payable by the first-mentioned Party; and
(c)the amount that could be due in respect of the benefit by that other Party, whether by virtue of this Agreement or otherwise, is likely to include an adjustment for arrears of that benefit.
then:
(i) That other Party shall, if the first-mentioned Party so requests, pay the amount of those arrears to the first-mentioned Party; and
(ii)the first-mentioned Party may deduct from the amount of those arrears any excess amount of the benefit paid by it and shall pay any balance remaining to that person.
Centrelink used the arrears to pay the applicant's wife's debt. The Secretary does not challenge the SSAT's decision that informed consent was not given by the applicant to pay that debt.
Article 19(3) of the NZ Agreement provides that the “first-mentioned party” (which both parties accept is “Australia”) "may" deduct from the arrears any excess amount of benefit paid by it. The use of the word “may” indicates that there is a discretion that may be exercised by Australia. The Tribunal must determine whether there was an appropriate exercise of discretion in this case. The applicant contends that the full amount of the arrears should be paid to him, and that he would then pay the debt by instalments. The Secretary contends that this would amount to the applicant being paid an “interest-free” loan; however the applicant states that he would be willing to pay interest.
The discretion under Article 19(3)(c)(ii) of the NZ Agreement is to be exercised having regard to Part A of the Schedule to the NZ Agreement. Part B of Schedule 3 of the International Act contains the exchange of notes dated 28 March 2001 between
New Zealand and Australia which amended the NZ Agreement, including an amendment to Article 19 which provides: “Recovery of overpayments by either Party under this Agreement shall be subject to the terms and conditions set out in Part A of the Schedule of this Agreement”.
Part A of the Schedule to the NZ Agreement provides:
Terms and conditions for recovery of social security debts
1. The terms and conditions referred to in Article 19 of the Agreement are:
…
(e) any institution, court, or tribunal involved in the recovery of a social security debt may defer recovery of the debt, or may order or arrange for the debt to be paid in instalments, if:
(i) the institution, court, or tribunal has the power to do so; and
(ii) it is its normal practice to do so.
The question arises as to what is “normal practice” in these circumstances. In this respect, the applicant is at a disadvantage as he is not privy to Departmental practice. The Secretary contends that it is “normal practice” to recover a debt from arrears of payment from New Zealand and not to make arrangements for the debt to be paid by instalments. There is no reason why I should not accept this contention. In these circumstances it would not be appropriate to make an order for the debt to be repaid by instalments.
Under s 1236 of the Act, the Secretary may, on behalf of the Commonwealth, decide to write off a debt. It is not appropriate to exercise this discretion when the applicant himself has stated that he has the capacity to repay the debt by instalments. Whilst he states that he has the capacity to repay the debt by instalments, it would be inappropriate to make a finding that he is in severe financial hardship.
CONCLUSION
The applicant has received in full the payments of age pension that he is entitled to. I consider that the SSAT was right to conclude that the overpayment of the applicant's age pension be recovered in full from arrears of NZS.
If I was of a contrary view, it would have been prudent to ascertain the attitude of the trustee in bankruptcy, as the applicant is bankrupt on his debtor’s petition. There may be a question of whether the amount of the arrears, which is not an insignificant sum, is after-acquired property which vests in the trustee in bankruptcy under
s 58(1)(b) of the Bankruptcy Act 1966, or is income under that Act.
DECISION
I affirm the decision under review.
I certify that the preceding 26 (twenty -six) paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott RFD, Senior Member ..................................[Sgd]......................................
Associate
Dated 4 September 2014
Date(s) of hearing 27 August 2014 Applicant In person Solicitors for the Respondent Ashley Burgess, Department of Human Services
Key Legal Topics
Areas of Law
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Social Security Law
Legal Concepts
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Overpayment Recovery
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International Agreements
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Social Security Act 1991
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Social Security (International Agreements) Act 1999
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International Social Security Agreement
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