Hermann and Secretary, Department of Social Security
[2013] AATA 711
•4 October 2013
[2013] AATA 711
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/5533
Re
Peter Hermann
APPLICANT
And
Secretary, Department of Social Security
RESPONDENT
DECISION
Tribunal Senior Member R W Dunne
Date 4 October 2013 Place Adelaide The Tribunal varies the decision under review.
......................[Sgd]..................................................
Senior Member R W Dunne
CATCHWORDS
SOCIAL SECURITY - pensions, benefits and allowances - overpayment of disability support pension - debt due to the Commonwealth - waiver of right to recover debt - waiver in special circumstances considered - meaning of "knowingly" - decision under review varied.
LEGISLATION
Social Security Act 1991 (Cth) ss 1223(1), 1237A(1), 1237AAD
Social Security (Administration) Act 1999 (Cth) ss 68(2), 72(1)
CASES
Re Clifford and June Callaghan and Secretary, Department of Social Security [1996] AATA 413
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Angelakos v Department of Employment and Workplace Relations [2007] FCA 25Timothy Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
SECONDARY MATERIALS
Secondary Materials
REASONS FOR DECISION
Senior Member R W Dunne
4 October 2013
INTRODUCTION
On 10 December 2012, Mr Peter Hermann (“applicant”) applied for review of a decision of the Social Security Appeals Tribunal (“SSAT”) made on 9 December 2012. The SSAT had affirmed an earlier decision made on 15 March 2012 by a delegate of the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (“Secretary” and “Department”) and affirmed by an Authorised Review Officer on 26 April 2012. The decision was to raise and recover an overpayment of disability support pension (“DSP”) amounting to $14,236.76 (“Debt”) in respect of the period from 29 October 2009 to 16 August 2010 (“Debt Period”).
At the hearing, Mr Hermann represented himself and the Secretary was represented by Mr C Visser (from the Program Litigation and Review Branch, Department of Human Services). I received into evidence the T documents[1] and the applicant’s documents,[2] lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, together with the witness statements of Mr Frank Hasancevic and Ms Kerry Brown[3] from the Department. I also received into evidence the applicant’s bank statements which appeared as attachments to the Secretary’s statement of facts and contentions.
[1] Exhibit R1.
[2] Exhibit A1.
[3] Exhibit R3.
Mr Hermann gave oral evidence in support of his application. He also sought oral evidence from Mr Hasancevic and Ms Brown in relation to their witness statements.
ISSUES
The issues before me are as follows:
(a)Was the applicant overpaid disability support pension in the period from 29 October 2009 to 16 August 2010?
(b)If so, are there any grounds to waive recovery of all or part of the overpayment?
Mr Hermann did not dispute that an overpayment (or overpayments) of DSP had occurred during the Debt Period. He disputed the amount of the overpayment(s) which the Secretary was seeking to recover.
LEGISLATION
The following provisions of the Social Security Act 1991 (“Act”) and the Social Security (Administration) Act 1999 (“Administration Act”) are relevant in this matter:
The Act
Section 1223(1)
“Debts arising from lack of qualification, overpayment etc.
(1) 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.”
Section 1237A(1)
“Waiver of debt arising from error
(1) Administrative error
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.”
Section 1237AAD
Waiver in special circumstances
“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 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.”
The Administration Act
Section 68(2)
“Person receiving social security payment or holding concession card
….
(2) The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a) inform the Department if:
(i) a specified event or change of circumstances occurs; or
(ii) the person becomes aware that a specified event or change of circumstances is likely to occur;
(b) give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c) give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
…”
Section 72(1)
“Provisions relating to notice
(1) A notice under this Subdivision:
(a) must be given in writing; and
(b) may be given personally or by post or in any other manner approved by the Secretary; and
(c) must specify how the person is to give the information or statement to the Department; and
(d) must specify:
(i) in the case of a notice under section 68 that requires the giving of more than one statement, each relating to the payment of the social security payment in respect of a period--the date by which the person is to give each statement to the Department; or
(ii) in any other case--the period within which the person is to give the information or statement to the Department; and
(e) must specify that the notice is an information notice given under the social security law.”
BACKGROUND
The material facts in this case that are relevant have been extracted from the information provided to the Tribunal by the Welfare Rights Centre (SA) Inc (which represented the applicant before the SSAT) and from the Secretary’s statement of facts and contentions. Mr Hermann is 43 years of age. He was first granted DSP on 20 December 2006. He remained on DSP from that date until it was cancelled on 21 July 2008, due to his earnings. In April 2009, he was made redundant from his employment with Rexel Group Pty Ltd (“Rexel”). On 9 June 2009, he was again granted DSP which he continued to receive until 16 August 2010. However, he was reoffered his previous position with Rexel and on 29 October 2009 he recommenced employment on a full-time basis of 40 hours per week.
During October 2009, Mr Hermann was dealing with the Department in relation to an earlier overpayment of DSP arising as a result of under-declaring his wages. It appears he notified the Department of his full-time employment with Rexel on three different occasions, they being 29 October 2009, on or around 18 November 2009 and on or around 15 December 2009. As a result of his ongoing employment with Rexel during the Debt Period, the Debt was raised against the applicant for all of the DSP he received during that Debt Period.
EVIDENCE OF MS KERRY BROWN
In giving her evidence, Ms Brown stated that she was a Service Centre Manager with the Department at Port Pirie. In response to Mr Hermann’s questioning she said that, through data matching with ATO records, employment income was matched in the records of the Department. When pay details were provided to the Department through pay slips, the new data would be entered to update the previous records.
In cross examination by Mr Visser, Ms Brown said that persons in receipt of DSP were obliged to advise the respondent when employment income was derived and the amount of that income. Ms Brown then confirmed that the information contained in her witness statement was correct to the best of her knowledge and belief.
EVIDENCE OF MR FRANK HASANCEVIC
It was Mr Hasancevic’s evidence that, on 4 December 2009, he had received a request from Rexel regarding an employment declaration relating to the applicant for the period 1 July 2007 to 3 December 2009. The response to Question 8 in the declaration showed that the applicant had been employed by Rexel from 12 February 2007 to 24 April 2009 and from 29 October 2009 to “current”.[4] When he was asked what “current” meant, he said he had missed that entry and was unable to comment further. When asked about his conversations with the applicant, Mr Hasancevic said that he did not talk to him on 15 December 2009. The only conversation he could say with certainty he had with the applicant was on 24 November 2009. After sending a Form SS301 to the ATO to match the income for the 2007/2008 financial year, he sent a letter to the applicant on 18 November 2009 to check the difference in his employment income in the ATO records (showing an amount of $39,385) and the Department’s records (showing an amount of $33,049). The applicant then contacted Mr Hasancevic on 24 November 2009 to discuss the letter dated 18 November 2009.
[4] Exhibit R1, T9 at page 50.
In cross examination by Mr Visser, Mr Hasancevic explained that his examination of the applicant was because of a discrepancy between the Department’s records and the records of the ATO in relation to employment income. In his telephone call with the applicant on 24 November 2009, he said that the record appearing on page 87[5] on that date was made during the course of his actual discussion with the applicant. Mr Hasancevic denied that, in this discussion, the applicant had asked him to cut off his pension payments. He said that if a customer requested that his pension be stopped because of income, he would advise the customer to remain on the system until such time as the Department stopped payment. This would occur after 6 fortnights, during which the customer’s arrangements regarding the receipt of employment income remained the same. Customers would put in their fortnightly forms to confirm that they were still receiving employment income.
[5] Exhibit R1, T12.
In questioning by me, Mr Hasancevic said that, if a customer asked to have his pension payments cancelled, he would initially advise the customer to remain on the system. However, if the customer insisted that they wanted their pension cancelled, the Department would arrange for this to happen. If a customer asked to have their pension payments cancelled because they thought they were wrong, the payments would also be cancelled. The customer would not simply be advised to remain on the system “because the actual receipt of the payments meant the customer was entitled to the pension”.
EVIDENCE OF MR HERMANN
In giving his evidence, I referred the applicant to paragraph 36 of the Reasons for Decision of the SSAT (relating to the applicant), which read:
“… On his own evidence, he held a belief that his continuing instalments of disability support pension were wrong.”
Mr Hermann said he notified the Department of his full-time employment with Rexel on three separate occasions. The first contact was made on 29 October 2009 when he went to the Department’s office at Port Pirie to notify of his change of circumstances and that he was now employed. His second contact with the Department was on 18 November 2009 when he again attended the office in Port Pire to query the amount of DSP he was receiving. He said that, notwithstanding his contact with the Department on these occasions, he still continued to receive DSP until he received a bill for approximately $14,000 in respect of the overpayment.
Mr Hermann then said that the report of the Authorised Review Officer (Ms Issy Docherty) was flawed. The information that had been input into the Department’s system did not match the wages that he received during the period 12 February 2007 to 21 July 2008. This was as a result of a request for Freedom of Information that he had made to the Department. He said that for 46 fortnights none of his payslips with Rexel had been correctly entered into the Department’s records. He had given the Department all his pay slips on the basis that this information would be entered into their records and his DSP would be cancelled.
I then referred Mr Hermann to paragraph 40 of the SSAT’s Reasons for Decision, which read:
“Mr Hermann did not specifically assert that at any time he genuinely believed that he was entitled to the disability support pension paid to him during the relevant period. After hearing from him, I considered that in fact at all relevant times, he either knew that he was not entitled, or at the very least, believed or suspected that he should not be receiving disability support pension while he was working. That is not receipt in good faith.”
Mr Hermann said that he did not want to have a large bill at the end of the year and went into the Department to endeavour to have his DSP cancelled whilst he was working full-time for Rexel. He said that he would not have the Debt if the people at the Department had done their job.
In cross examination by Mr Visser, Mr Hermann said that he was not sure of the amount of DSP that he should be receiving from the Department. He said that, on the occasions when he contacted the Department, he believed he may not be entitled to DSP. He said he was not sure whether the amount of DSP that he was receiving was correct. However, he said that he had the suspicion that he was not entitled to receive the full amount of DSP. He then acknowledged that he did not declare to the Department the wages he received in November 2009, December 2009 and during the early months in 2010. He said he did not make these declarations because he had been into the Department in October 2009 and subsequently to advise them that he was in full-time employment. He said the Department had advised him that he did not have to declare his earnings because they would rely on the information that he had provided to them previously.
CONSIDERATION
Was the applicant overpaid disability support pension in the period from 29 October 2009 to 16 August 2010?
Under s 68(2) of the Administration Act, a person who is receiving DSP may be given a notice which requires the recipient to inform the Department of a specified event or a change of circumstances or to give to the Department a statement about a matter that might affect the payment to the person of DSP. Section 72(1) of the Administration Act sets out the information to be included in the notice, including the period within which the person is to give the information to the Department. I understand it was accepted by the present parties that the letters forwarded by the Department on 3 July 2009, 8 September 2009 and 18 November 2009[6] were notices in terms of s 68(2) of the Administration Act and had effectively been given to the applicant.
[6] Exhibit R1, T13 at pages 93, 105 and 131.
Section 1223(1) of the Act sets out the circumstances where a recoverable debt arises from the receipt of Social Security payments, including DSP. A debt due to the Commonwealth by a recipient may be waived by the respondent, pursuant to s 1237A(1) or s 1237AAD of the Act, if certain circumstances exist.
I am satisfied (and this is not disputed) that the applicant has been overpaid DSP during the Debt Period. The amount of the overpayment is a debt due to the Commonwealth which is recoverable under s 1223(1) of the Act.
Are there any grounds to waive recovery of all or part of the overpayment?
Waiver under section 1237A(1) of the Act
As I have said above, there can be no question that the applicant received DSP, which was overpaid during the Debt Period. As the SSAT found, he either knew that he was not entitled to, or at the very least believed or suspected that he should not be receiving, DSP while he was working. Moreover, in his evidence before me he said he suspected that he was not entitled to receive the full amount of DSP.
On the evidence, I am not satisfied that any part of the Debt was attributable solely to an administrative error made by the Commonwealth. In these circumstances, the Debt should not be waived under s 1237A(1) of the Act.
Waiver under section 1237AAD of the Act
Under s 1237AAD of the Act, the Secretary (and upon review, the Tribunal) may waive the right to recover all or part of the Debt if it is satisfied that there are special circumstances (other than financial hardship alone) that make waiver desirable. 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 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.”
What is meant by “knowingly” when used in s 1237AAD? This question was addressed by Deputy President Forgie in Clifford and June Callaghan and Secretary, Department of Social Security,[7] where she said:[8]
“There is nothing in s 1237AAD which suggests that the work ‘knowingly’ should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.”
[7] [1996] AATA 413.
[8] [1996] AATA 413 at paragraph 48.
The applicant contended that the Debt should be waived under s 1237AAD of the Act on the ground that there were “special circumstances” in his case that made it desirable to waive. He argued that the erroneous and incompetent treatment that he was stressfully exposed to by the Department during the Debt Period amounted to special circumstances.
The expression “special circumstances” has been considered on numerous occasions by Courts and Tribunals. In Re Beadle and Director-General of Social Security,[9] the Tribunal comprising Toohey J, Member Wilkins and Member Dr Billings said: [10]
“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 on 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.”
[9] (1984) 6 ALD 1.
[10] (1984) 6 ALD 3.
More recently, in Re Angelakos v Department of Employment and Workplace Relations,[11] Justice Besanko in the Federal Court reviewed the extensive case law on the issue of special circumstances. In doing so, he said:[12]
[11] [2007] FCA 25
[12] [2007] FCA 25, paragraphs 32 & 33.
“32 In Ryde v Secretary, Department of Family and Community Services (supra) Branson J considered the provisions of s 1237AAD and in particular whether the Tribunal in that case had erred in concluding that special circumstances meant circumstances which were ‘unusual, uncommon or exceptional’. Her Honour referred to the first passage from the reasons for judgment of the Full Court in Beadle set out in [28] above. She also referred to the following passage in Jess v Scott (1986) 12 FCR 187 (at 195):
‘What is needed to justify an extension of time is indicated in r 15(2) by the words "for special reasons". It is that there be shown a special reason why the appeal should be permitted to proceed, though filed after the expiry of twenty-one days. In that context, the expression "special reasons" is intended to distinguish the case from the usual course according to which the time is twenty-one days. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the Court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression "for special reasons" implies something narrower than this.’
Although those observations were made in the context of the expression ‘for special reasons’ in the rules of Court, her Honour considered they were of assistance in the interpretation of the expression ‘special circumstances’.
Her Honour then said (at [25] and [26]):
In my view, the Tribunal probably overstated the significance of the requirement in s 1237AAD(b) for "special circumstances". The Full Court in Beadle did not endorse the view expressed by the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 that circumstances are special only if they are "unusual, uncommon or exceptional".
However, the Tribunal concluded that the applicant’s circumstances "do not differ from those of many income support recipients". In the context in which the Tribunal reached this conclusion, it is to be understood as having made a judgment that neither hardship nor unfairness made it desirable to waive all or part of the applicant’s debt because the applicant’s circumstances were common-place rather than special. While, as French J pointed out in Hales, the evident purpose of s 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for "special circumstances" discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.’
33 I note her Honour’s reference to the Tribunal in the case before her probably overstating the test. I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.” [emphasis mine]
It seems to me that what occurred in the applicant’s case, given the circumstances, was unusual or uncommon and was something that distinguished it from the ordinary or usual case.
Mr Visser referred to the decision of Deputy President Forgie in Timothy Davy and Secretary, Department of Employment and Workplace Relations,[13] where she said: [14]
“… ‘special circumstances’ are not merely directed to the person’s own circumstances. Rather, they are directed to those that are ‘special circumstances … that make it desirable to waive’. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances which he was not entitled to it …He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement. …”
As Deputy President Forgie indicated, the analysis of special circumstances necessarily requires a consideration of a person’s individual circumstances, but also a consideration of the general administration of the social security system. Doing that in the applicant’s case indicates to me that the treatment given to him as part of the general administration of the social security system left a lot to be desired. Even though he may have suspected that he should not be receiving DSP while he was working, the applicant was not being dealt with appropriately by the Department. There were ongoing errors which, in my view, amounted to special circumstances.
[13] [2007] AATA 1114.
[14] [2007] AATA 1114 at paragraph 80.
Although Mr Visser submitted that the applicant was told by the Department he would not receive DSP on 29 October 2009, he turned a blind eye to this. Nevertheless, he acknowledged that the circumstances in the applicant’s case, if the Tribunal so found them, indicated that there should be waiver of the Debt in part. Mr Visser agreed that waiver could be from a date during the Debt Period, or on the basis of a percentage of the Debt amount. In my view, it is difficult in the applicant’s case to allow waiver from a particular date in the Debt Period.
In written submissions put to the Tribunal on 16 April 2013 by the Welfare Rights Centre (SA) Inc, it was argued that the Department had knowledge of the applicant’s full-time employment with Rexel for over 8 months before it chose to act. Likewise, the applicant attempted to advise the Department of his employment on at least two occasions. Given these factors, it was submitted that at least half of the Debt should be waived on the basis of special circumstances.
In my view, a waiver of half of the Debt under s 1237AAD of the Act is appropriate in the applicant’s special circumstances.
DECISION
For the reasons outlined above, the Tribunal varies the decision under review by waiving one half of the Debt under s 1237AAD of the Act.
I certify that the preceding 39 (thirty -nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne .......................[Sgd].................................................
Administrative Assistant
Dated 4 October 2013
Date of hearing 15 August 2013 Applicant In person Advocate for the Respondent Mr C Visser, Department of Human Services
Key Legal Topics
Areas of Law
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Social Security Law
Legal Concepts
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Overpayment of Benefits
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Waiver of Debt
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Good Faith Receipt
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Administrative Error
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