Hollingsworth and Secretary, Department of Social Services (Social services second review) - [2017] AATA 1216

Hollingsworth and Secretary, Department of Social Services (Social services second review) [2017] AATA 1216 (3 August 2017)

Administrative Appeals Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2016/6766

GENERAL DIVISION )

Re: Allan Hollingsworth
Applicant

And: Secretary, Department of Social Services
Respondent
TRIBUNAL:               Mrs J C Kelly, Senior Member
DATE:   23 January 2019
PLACE:                     Sydney
IT IS DIRECTED, in accordance with subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975 (Cth), that the debt outstanding “at the date of the hearing”, as referred to in paragraph [39] of the Tribunal’s Reasons for Decision in this matter dated 3 August 2017, being an amount of $212.77, is replaced with the amount of $1,154.62.
............................[SGD].....................................
Mrs J C Kelly, Senior Member
Division:GENERAL DIVISION
File Number(s):      2016/6766
Re:Allan Hollingsworth
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:3 August 2017
Place:Sydney

The decision under review is affirmed.
...........................[sgd] .............................................
Mrs J C Kelly, Senior Member
CATCHWORDS
SOCIAL SECURITY – Seniors Supplement – whether applicant was overpaid Seniors Supplement – applicant overpaid Seniors Supplement - whether debt can be written off – debt cannot be written off - whether debt can be waived – the debt not ‘solely’ the result of administrative error - whether special circumstances exist - special circumstances not found – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Barnard and Secretary, Department of Social Services [2016] AATA 436
Soames and Secretary, Department of Family Housing, Community Services and Indigenous Affairs [2013] AATA 693
Minister for immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82
Re Dainty and Minister for immigration and Ethnic Affairs (1987) 12 ALD 416
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
SECONDARY MATERIALS
The Guide to Social Security Law
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
3 August 2017
Decision under Review

This Tribunal is reviewing a decision of the Administrative Appeals Tribunal (Social Services and Child Support Division) (AAT1) made on 28 November 2016, which affirmed a decision of an Authorised Review Officer (ARO) of the Department of Human Services to raise and recover a Seniors Supplement (SS) debt of $4,165.63 for the period 20 December 2010 to 20 December 2014.
Issues
The issues in this matter are:
(a)Whether Mr Hollingsworth (the Applicant) was overpaid SS, resulting in a debt of $4,165.63; and, if so
(b)Whether there are any grounds for non-recovery of the debt; and
(c)Whether the Commonwealth Seniors Health Card (CSHC) was correctly cancelled.
Background
The following facts are not contentious.
On 23 July 2015, the department decided that the Applicant was required to repay $5,312.93 in SS (including a clean energy advance payment made on 25 June 2012) that he had received during the period 20 June 2010 to 20 June 2015.
On the same date, the department sent a letter to the Applicant stating that his income was too high for him to be eligible for the CSHC and that therefore, his CSHC had been cancelled from 16 October 2014.
On 2 September 2015, the Applicant requested internal review of the 23 July 2015 decisions.
On 6 October 2016, an Authorised Review Officer (ARO) varied the original decision. The ARO made the following findings:
(a)The Applicant was granted a CSHC on 18 June 2010 based on his adjusted taxable income for the 2008/09 financial year, which was below the allowable limit at that time.
(b)The Australian Taxation Office (ATO) advised the department on 26 September 2014 that the Applicant’s adjusted taxable income in the 2011/12 financial year was $74,363 which exceeded the allowable limit for the CSHC. The allowable limit for a single person at the time was $50,000.
(c)Information received from the ATO showed that the Applicant’s adjusted taxable income for the 2009/10 financial year was $50,333; for 2010/11 was $108,219; for 2012/13 was $162,837; and for 2013/14 was $61,079.
(d)The Applicant's income for the purposes of the CSHC income test exceeded the allowable limit from 1 July 2010 and he was therefore not qualified for a CSHC.
(e)Therefore, the department found that during the period 20 June 2010 to 20 June 2015, an amount of SS of $5,312.93 should not have been paid and the debt for this amount was raised.
(f)The ARO decided that because the Applicant had not received his tax assessment notice for the 2009/10 financial year until 11 November 2010, the debt could not start until the SS test day of 20 December 2010. Therefore an administrative error had been made in raising the debt before 20 December 2010. Additionally, the department had also made a mistake in reinstating the CSHC on 3 December 2014, because the Applicant did not provide an actual estimate of his income for 2014/15 at that time and he did not provide sufficient reason to accept an estimate. The ARO wrote that the Applicant received an inheritance in the reference tax year but it appeared this was in the year prior, which would not be an acceptable reason for an estimate to be used. Therefore, the portion of the debt from 20 December 2014 to 20 June 2015 was caused by departmental error, and as the payment for this period was found to have been received in good faith, an amount of $941.85 was waived under section 1237A of the Social Security Act 1991.
(g)Therefore, the decision to raise and recover an overpayment of $4,165.63 was correct, and the ARO was unable to find any other reasons to waive the remainder of the debt.
On 1 September 2016, the Applicant requested AAT1 review of the decision, and on 14 November 2016 a hearing was held.
Legislation
The legislation applicable to this matter is contained within:
(a)the Social Security Act 1991 (the Act); and
(b)the Social Security (Administration) Act 1999 (the Administration Act).
The Guide to Social Security Law (the Guide) contains relevant policy information.
Whilst this Tribunal is not bound to apply policy guidelines (see Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60), the Tribunal will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so: see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639- 645; Re Dainty and Minister for immigration and Ethnic Affairs (1987) 12 ALD 416 at 417; and Minister for immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86.
Commonwealth Seniors Health Card and Seniors Supplement qualification
SS is no longer a social security payment. The final payment of SS was made in the quarter ending June 2015. The following sections were current during payment of SS.
Section 1061U of the Act provided that a person qualified for SS if the person “is the holder of a seniors health card”.
Section 1061ZG(1)(d) of the Act provided that a requirement for CSHC qualification was that the person “satisfies the seniors health card taxable income test”.
Section 1071 of the Act sets out the relevant income test. It used the person’s adjusted taxable income for the reference tax year.
The “reference tax year” was usually the tax year immediately preceding the current tax year unless:
(a)The person had not received a tax notice of assessment for that reference tax year, in which case the reference tax year would be the preceding year: paragraph 1071-2(1 )(b); or
(b)The person had asked the department to use the current tax year: subsection 1071-2(2).
Section 1071-3 of the Act provided that adjusted taxable income was taxable income plus, where relevant, other components.
Section 1071-4 of the Act provided the definition of “taxable income”.
For the purposes of this Part, a person’s taxable income for a particular tax year is:
(a)the person’s assessed taxable income for that year; or
(b)if the person does not have an assessed taxable income for that year— the person's accepted estimate of taxable income for that year.
Section 1071-5 provided the definition of “assessed taxable income”.
For the purposes of this Part, a person's assessed taxable income for a
particular tax year at a particular time is the most recent of:
(a)if, at that time, the Commissioner of Taxation has made an assessment or an amended assessment of that taxable income—that taxable income according to the assessment or amended assessment; or
(b)if, at that time, a tribunal has amended an assessment or an amended assessment made by the Commissioner—that taxable income according to the amendment made by the tribunal; or
(c)if, at that time, a court has amended an assessment or an amended assessment made by the Commissioner or an amended assessment made by a tribunal—that taxable income according to the amendment made by the court.
Section 1071-12 of the Act provided that for single persons to qualify for the CSHC, their adjusted taxable income needed to be below $50,000 when their claim for CSHC was first lodged.
From the start of the debt period, 20 June 2010, the cut-off income to qualify for CSHC was $50,000, increasing to $51,500 from 20 September 2014.
Section 106A of the Social Security (Administration) Act 1999 (Cth) provides that if a person ceased to be qualified for a CSHC, other than by virtue of section 104 or 105 of the Administration Act, then the card is cancelled by force of section 106A on the day on which the person ceases to be qualified.
In Barnard and Secretary, Department of Social Services [2016] AATA 436 , the Tribunal held that section 106A operates to cancel a concession card with effect from the date the person ceased to be qualified.
Social Security debt provisions
Section 1223(1) of the Act provides that where a person who obtains the benefit of a social security payment was not entitled to obtain that benefit, the amount of payment is a debt due to the Commonwealth.
Section 1236 of the Act provides that a debt may be written off in circumstances where the debt is not recoverable at law, the person has no capacity to repay the debt, their whereabouts are unknown, or it is not cost effective to recover the debt. The section specifies when a debt is irrecoverable at law and when a debtor is taken to have capacity to repay the debt.
If a debt is written off, the debt continues to exist and may be recovered at a later time.
Section 1237A of the Act provides that all or part of a debt may be waived where a debt, raised more than six weeks from the first payment that caused the debt, is attributable solely to an administrative error made by the Commonwealth. For a debt to be waived under section 1237A, the debtor must also have received the payments in good faith.
Section 1237AAD of the Act provides that recovery of all or part of a debt may be waived if the debt did not result wholly or partly from the debtor, or another person:
·     knowingly making a false statement or a false representation, or
·     failing or omitting to comply with a provision of the Act, and
·     there are special circumstances (other than financial hardship alone) that make it desirable to waive rather than to write-off part or all of the debt.
All three criteria in s 1237AAD must be satisfied.
The Applicant’s evidence
The Applicant was self-represented. His case was not articulated in terms of the legal tests, but rather in terms that it is unfair that he has the debt. He did not really disagree with the income tax details relied on by Centrelink that his adjusted taxable income exceeded $50,000 in the 2009/10 financial year and each of the financial years 2010/11, 2011/12, 2012/13 and 2013/14, but said that he got rid of the accountant because of delay in finalising his business dealings with his former partner.
The Applicant also told the Tribunal the following:
·He did not apply for CSHC or SS and did not know what the payments he received were for. He was getting bank statements and just filed them. He did go to Centrelink in 2008 but was told he was not entitled to anything. He was told that he may be eligible if he sold a property he owned at Artarmon. At that time, his relationship with his personal and business partner had broken down. In summary, his evidence was that it was an acrimonious and expensive breakdown.
·He had plenty of part-time work from 2008 until mid-2011 and then full-time employment until 2014. Centrelink rang him in about mid-2011 and told him that an envelope had been returned which had been addressed to the premises he had recently sold, where he had lived while in the relationship. He told the caller that he had just started a full-time job. The Centrelink officer said that he was not entitled to “these” payments. He continued to be paid and thought that he must have been entitled to the payments because he was older and not fully employed. He also said that he did not have time to ring Centrelink.
·He said that he really did not use the card but gave it to doctors when they asked for it.
When the Applicant was asked if the conversation with the Centrelink Officer included a discussion of his income, he said that he could not remember, but given the context of the conversation, it would have been. He told the Centrelink officer his new address. He said that he moved once more before purchasing his current premises in 2012. He also said that he thought that he sent a letter to Centrelink advising that he had sold the premises where he had lived with his former partner and purchased his current premises.
The Applicant said that it was a mistake to base payment on a previous tax year as it would be wrong and lead to the raising of a debt.
Was the Applicant’s CSHC “correctly” cancelled?
The Secretary contends that the decision to cancel the Applicant’s CSHC was correct.
The effect of s 106A of the Administration Act as held in Barnard is that cancellation of a concession card takes effect from the date the person ceased to be qualified. As the ARO found, the Applicant’s income for the purpose of the CSHC income test exceeded the allowable limit from 1 July 2010. He therefore, ceased to be qualified on that date and his CSHC was cancelled on that date pursuant to s 106A. Although new cards were issued to the Applicant each year, they were not legally valid cards.
Is there a debt of seniors supplement?
The Applicant received SS from 18 June 2010 to 20 June 2015. It was paid quarterly, after the SS test days of 20 March, 20 June, 20 September and 20 December each year.
Section 1061U of the Act provides that a person is qualified for SS if they are the holder of a CSHC. The Tribunal accepts the Respondent’s argument that the person must be the holder of a legally valid CSHC. The Applicant did not hold a legally valid CSHC from 1 July 2010 when he ceased to qualify for it.
The Tribunal accepts, as the Respondent contended, that the SS debt as found by the ARO was correct. Pursuant to s 1223(1) of the Act, the Applicant has a debt due to the Commonwealth of $4,165.63 for the period 20 December 2010 to 20 December 2014.
Are there grounds for non-recovery of the debt?
Write-off
At the time of the hearing the outstanding debt was $212.77, an amount having been garnisheed from the Applicant’s tax refund. The Applicant told the Tribunal that his current employment contract would end on 30 June 2017 and he was doubtful that he would get further employment but then proceeded to say that he had received a call from a building manager asking him to work while someone was on leave. The Applicant owns his home and has a mortgage off-set account.
The Tribunal finds that there is no evidence before it that the debt is irrecoverable at law, or that the Applicant has no capacity to repay the debt or that his whereabouts are unknown or that it is not cost effective for the Commonwealth to take action to recover the debt.
This is not a case where it is appropriate to write off the debt pursuant to s 1236 of the Act.
Waiver
Was the debt attributable solely to administrative error made by the Commonwealth and were the payments received in good faith as required by s 1237A of the Act?
There is no record in the material before the Tribunal corroborating the Applicant’s claimed discussion with a departmental officer in 2011. The Tribunal also notes his evidence to AAT1 that he was not aware of what SS was when he had that conversation.
A change of address was recorded on 29 February 2012. The change was from the address where he had resided with his former partner to his current address and is consistent with his evidence that he wrote to Centrelink advising that change when he purchased his current premises in 2012. The Tribunal finds that this communication with Centrelink was not the telephone conversation the Applicant talked about in the middle of 2011 because at that time he told the Tribunal he was living at a different address and had not purchased his current premises.
The only possible administrative error raised by the evidence is the Applicant’s claim about the conversation in 2011. Even if it took place, which the Tribunal doubts, the Applicant took no steps to check whether he was entitled to the payments which he continued to receive after he was told he was not entitled to them.
The Tribunal does not accept that the debt as recalculated by the ARO was attributable solely to an administrative error made by the Commonwealth. Further, given the Applicant’s evidence that he really did not know why he was receiving the payments shown on his bank statements from 2010 or the CSHC annually, just thought he must have been entitled to them, and made no inquiries to find out why, the Tribunal does not accept that they were received in good faith. In making that finding, the Tribunal has taken into account the Applicant’s claim that he thought Centrelink could see what his income was but that does not alter the Tribunal’s view.
For those reasons, the debt cannot be waived pursuant to s 1237A of the Act.
Should the debt be waived because of special circumstances?
The Tribunal accepts that the Applicant did not knowingly receive payments to which he was not entitled. “Knowingly” requires actual knowledge, not simply reckless indifference.[1] Therefore s 1237AAD(a) of the Act is satisfied.
[1] Soames and Secretary, Department of Family Housing, Community Services and Indigenous Affairs [2013] AATA 693 [22].
It accepts that the Applicant was distressed by the breakdown of his personal and business relationship in about 2008, the sudden and unexpected death of one of his daughters in 2011 and the death of another of his daughters in 2015 after a three year illness. It also accepts that he has lent his granddaughter $800 for an overseas trip which has not been repaid, pays the electricity bill for his two younger grandsons, and buys clothes for them when they visit Sydney. He estimated that he spends about $3,500 a year helping them.
The Applicant’s taxable income for 2015/16 was $44,225 from his casual employment as a building manager. Having sold an apartment he owned, he now has an offset mortgage account of $350,000 in relation to his home.
Taking into account all of the circumstances, the Tribunal is not satisfied that there are special circumstances that make it desirable to waive the debt pursuant to s 1237AAD of the Act.
Decision
The decision under review is affirmed.

I certify that the preceding 51 paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member

..............................[sgd]..........................................
Associate
Dated: 3 August 2017

Date(s) of hearing: 9 May 2017

Applicant: In person

Solicitors for the Respondent: Ms C Juarez, Department of Human Services

Date(s) of hearing:	9 May 2017
Applicant:	In person
Solicitors for the Respondent:	Ms C Juarez, Department of Human Services