Hooper and Department of Family and Community Services
[2001] AATA 617
•2 July 2001
DECISION AND REASONS FOR DECISION [2001] AATA 617
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2000/894
GENERAL ADMINISTRATIVE DIVISION )
Re DAWN HOOPER
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Dr EK Christie, Member
Date2 July 2001
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and in substitution therefor decides: That the overpayment of disability support pension received by Mrs Hooper over the period 14 December 1999 to 27 January 2000 (inclusive) should be waived; and That applying subsection 1237AB(2) of the Social Security Act 1991, the decision takes effect from 9 March 2000. This means Mrs Hooper's application for review is partly successful.
(Sgd) EK CHRISTIE
MEMBER
CATCHWORDS
SOCIAL SECURITY - disability support pension - overpayment - waiver of overpayment - whether special circumstances exist.
Social Security Act 1991 ss 1237AAD
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435
Re Ivovic and Director-General of Social Services (1981) 3 ALD N95
Secretary, Department of Social Security v Garvey (1984) 91 ALR 245
REASONS FOR DECISION
2 July 2001 Dr EK Christie, Member
This is an application by Dawn Hooper for a review of a decision made by the Social Security Appeals Tribunal ("the SSAT") on 30 August 2000 to raise and recover an overpayment of disability support pension in the sum of $1187.51 for the period 14 December 1999 to 9 March 2000. The SSAT decision affirmed the decision of a Centrelink Authorised Review Officer made on 16 March 2000.
In arriving at its decision, the SSAT concluded:
"The debt may be waived pursuant to section 1237A(1) [of the Social Security Act] if the debt arose solely as a result of error on the part of Centrelink and any payment made as a result was received in good faith be the recipient. This section is not relevant here and accordingly the debt cannot be waived under this section; and
[In relation to Section 1237AAD of the Social Security Act]
"The Tribunal is not satisfied that …. Mrs Hooper has 'failed or omitted to comply with a provision of this Act' in that she has failed to notify Mr Porter's income. In any event and even if this is not so the Tribunal is not satisfied that there are special circumstances in this case which would warrant the debt being waived under this section." [T2, Folio 8]
Mrs Hooper represented herself at the hearing. The Department of Family and Community Services ("the Department") was represented by Mr P Kanowski, a Departmental Advocate.
At the hearing the Tribunal had in evidence before it, documents lodged pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 – the "T" Documents (Exhibit 1), and the following exhibits:
Exhibit 2 Financial records for the partnership of Mark and Dawn Porter for the year ending 30.6.00
Exhibit 3 Income Tax Return for Dawn Porter and Mark Porter for the year ending 30.6.99
Exhibit 4 Suncorp Metway Statement – 28 October to 27 November 1999
Exhibit 5 Norwich Insurance Policy Document, Porter's Specialised Haulage
Exhibit 6 ANZ Bank Statements of Accounts – 3 December 1999 to 4 February 2000
Exhibit 7 Centrelink Memo dated 7.2.00
Exhibit 8 Australian Securities Commission document: Porter's Specialised Haulage
Facts
Based on the evidence before it, the SSAT made the following findings of fact:
"(i) Mrs Hooper was in receipt of Disability Support Pension in 1999 and 2000.
(ii)Mr Porter, Mrs Hooper's partner, became ill and received payments [$2,000 per month] pursuant to an income protection insurance policy.
(iii)These payments were made to Mr Porter.
(iv)These payments were not disclosed to Centrelink.
(v)Mrs Hooper received payments of Disability Support Pension without reference to these payments." [Document T2 Folio 7]
Mrs Hooper disputes the validity of finding (iv) and (v) made by the SSAT.
The overpayment of $1187.51 has now been fully recovered by Centrelink.
Issues for the Tribunal to Decide
The only issue for the Tribunal to decide was whether the overpayment of disability support pension could be waived, in part or in full, under the "special circumstances" or "administrative error" provisions of the Social Security Act 1991.
Evidence of Dawn HooperMrs Hooper applied for disability support pension ("DSP") on 2 November 1999 and had provided Centrelink with tax returns for the 1998/99 financial year. Mrs Hooper said that she had fully co-operated with Centrelink in advising them of all income details in order to ensure the correct entitlement for DSP was paid to her. In addition, the Profit and Loss Statement for the partnership, prepared by their accountant, was also given to Centrelink at this time. The income on this statement matched the income on the 1998/99 tax return ($153,050).
Over the period May 1998 to February 2000, her partner (Mr Porter) was diagnosed and treated for a serious illness (aggressive prostrate cancer), had hip replacement surgery, deep vein thrombosis, osteoarthritis, bowel irradication and a coronary (necessitating 35 days in the Wesley Hospital). Her own personal health was poor as she suffered from emphysema, bronchiosis, osteoporosis and cataracts. Mrs Hooper believed the ongoing overpayment problem with Centrelink had exacerbated the medical conditions of both her partner and herself.
As a result of her partner's illness, they had attempted to sell their business and motor vehicles in order to repay existing loans.
Mrs Hooper stated that the payments received from the income protection insurance policy during the period Mr Porter could not work because of illness, were paid into the business in order to pay for a replacement driver for Mr Porter as well as to cover other business expenses.
During cross-examination by Mr Kanowski, Mrs Hooper stated:
that she disputed any suggestion that the Profit and Loss Statement dated 30 June 1999 was not included with her application for DSP; and
that the income protection insurance payments that Mr Porter received would always go into the business ("partnership") account – never a personal account.
Contentions and Submissions of the Parties
Mr Kanowski contended that the payments of $2,000 per month received under the income protection insurance policy were not disclosed at the time a claim for DSP was made in November 1999. Mr Kanowski referred to the DSP claim form made by Mr Porter (Document T6, 21 December 1999). This form specified that "income may include – income replacement insurance" (Folio 64). However, Mr Porter had later answered on this form that he did not have – nor did he receive – any income from an income protection insurance policy (Folio 64). It was Mr Kanowski's contention that these answers were significant as they were false.
Mr Kanowski submitted that the problems associated with receipt of income protection insurance payments only came to light when Mr Porter was interviewed by Centrelink in March 2000 (Exhibit 7) and Centrelink then became aware that Mr Porter received these payments. Further enquiries were then made by Centrelink with Mr Porter's accountant (Document T11).
Mr Kanowski submitted that the income protection insurance payments of $2,000 per month were the personal income of Mr Porter received by him for his own use and benefit – and not business income; the payments were made to Mr Porter himself (Document T13 Folios 111, 112; Document T20 Folio 125; Exhibit 2) and deposited in a business bank account.
Mr Kanowski contended that the payments Mr Porter received under his income protection policy due to his ill-health were applied to his business expenses as a matter of his own choosing. There was no legal obligation in their partnership agreement to apply these payments to their business. Accordingly, Mr Kanowski submitted that Mr Porter received income protection payments for his own benefit. That is, the payments represented personal income of Mr Porter. Under the Section 1064 income test of the Social Security Act, these payments must be included when applying the income test for determining the rate of DSP for Mrs Hooper. The income of Mr Porter precluded Mrs Hooper from payment of DSP and hence an overpayment had arisen.
Mr Kanowski submitted that the "special circumstances" provision of the Social Security Act was the only relevant provision to consider waiver of the overpayment of DSP. It was Mr Kanowski's contention that because of Mr Porter's false answers in completing his application for DSP (Document T6), he had knowingly made a false statement or representation. The false answers could not have been made inadvertently as the income protection insurance had existed for a number of years (Exhibit 5).
Mr Kanowski further submitted that there were no "special circumstances" which justified waiver of the debt as the debt had been recovered. The ill health of Mrs Hooper and Mr Porter was not an "unusual" circumstance for DSP recipients. Financial hardship was not in issue. The parties owned their own home and had $24,000 in their bank account at the time of application for DSP.
Mr Kanowski concluded by reference to the decision of the Full Federal Court in Secretary, Department of social Security v Garvey (1989) 91 ALR 245 as authority for the proposition that "….the definition of 'income' in the [Social Security] Act does not permit the 'negative yield' of one source of income to be offset against the yield from other sources".
"In defining 'income' the Act was concerned with what amount was available to a pensioner to meet commitments and outgoings after the pensioner had drawn together the net returns of various sources of income. It was not concerned with what amount was left in the pensioner's hands after that income had been received and had been applied to various commitments and outgoings including the losses of business activities that had produced no net income. There would have been an expectation underlying the Act that any applicant for income assistance in the form of a pension would have corrected or relinquished any such activities which occasioned loss. The purpose of the relevant part of the Act was very clear, namely to maintain a basic level of income for those who were unable to receive sufficient income to provide for themselves. It was not the purpose of the Act to provide a further source of income for a person who had applied his or her income to maintain a business conducted at a loss or upon outgoings incurred in acquiring or maintaining assets: see Read v Commonwealth of Australia (1988) 15 ALD 261; 78 ALR 655 per Brennan J at 662 at pp 351-2)."
Mrs Hooper stated that she was not present when her partner, Mr Porter, completed his application for DSP (Document T6) in December 1999. Mr Porter would have had to be assisted by someone else to complete the form. However, she said that at this time he was in extreme pain and could barely walk, talk or smile. It was her belief that, in this condition, she doubted whether Mr Porter remembered he had an income protection insurance policy.
Mrs Hooper submitted that it was a significant fact that the policy owner for the income protection insurance policy (Exhibit 5) was "Porter Specialised Haulage Pty Ltd"; the life insured under the policy was her partner, Mark Alfred Porter. The insurance premiums were paid by the business. All payments received under the policy were paid by cheque to Mr Porter and then the cheque was immediately banked into the business bank account to pay business expenses and to keep the business afloat.
It was Mrs Hooper's contention that the income of $2,000 per month received under the insurance policy was not "income" in the hands of Mr Porter but money paid into the business. Mrs Hooper contended that income in the hands of Mr Porter was determined after trading expenses were deducted. Furthermore, she submitted that Mr Porter received income from their business – not directly from the insurance policy.
Mrs Hooper concluded by submitting that all financial information required by Centrelink to correctly estimate her DSP entitlement had been provided by herself and their accountant. There had never been any deliberate attempt on their part to hide income as they had at all times acted honestly with Centrelink.
Consideration of the IssuesThe objective of the Tribunal is to review administrative decisions, not only on their merits, but in accordance with the law at all times. The relevant legislation is the Social Security Act 1991 ("the Act").
The first issue for the Tribunal to decide is the truthfulness of Mrs Hooper in relation to her dealings with Centrelink. The Tribunal finds Mrs Hooper to be an honest witness who has acted consistently and openly in her dealings with Centrelink in disclosing all relevant information necessary for calculating her DSP entitlement.
The next issue for the Tribunal to decide is the status of the income replacement payments paid to Mr Porter under the insurance policy (Exhibit 5). After careful consideration of all the evidence and submissions before the Tribunal, and the relevant law as stated in Garvey's case (see paragraph 20), the Tribunal can make no other conclusion than to find that the payments received by Mr Porter were income received by him, personally, and so should be included in the calculation of Mrs Hooper's DSP over the period 14 December 1999 to 9 March 2000. As a result, an overpayment of DSP to Mrs Hooper has arisen.
The next question for the Tribunal to decide is whether the overpayment should be waived under the "special circumstances" provisions of the Act.
Section 1237AAD of the Act provides for circumstances where a debt due by a recipient of social security to the Commonwealth may be waived in "special 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 a 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."
The meaning of the term "knowingly" has been considered by the Tribunal in Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435 where Deputy President Forgie stated at 445:
"(48) There is nothing in s 1237AAD which suggests that the word '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."
Applying the test in Callaghan's case, the Tribunal concludes that Mrs Hooper, and Mr Porter, did not "knowingly" make a false statement or false representation at the time they applied for DSP in December 1999. In Mr Porter responding "no" to Question 38, 39 (document T6 Folio 74) that he did not have, or receive income from, an income protection insurance policy, the Tribunal gives weight to the fact that Mr Porter had a serious illness at that time affecting his ability to remember detail (see paragraphs 10, 21), that the policy owner was their business "Porter Specialised Haulage Pty Ltd" (Exhibit 5), and that all insurance payments were applied for the benefit of their business and not Mr Porter personally. Moreover, Mr Porter required someone else (but not Mrs Hooper: see paragraph 21) to complete the claim form (see Document T6 Folio 79). Accordingly, the Tribunal concludes that on the balance of probabilities, Mrs Hooper and Mr Porter did not have actual knowledge that they had made a false representation of statement to Centrelink and hence failed to comply with a provision of the Social Security Act 1991. Accordingly, the Tribunal concludes that paragraph (a) of Section 1237AAD of the Act is satisfied.
The next issue for the Tribunal to consider is whether paragraph (b) of Section 1237Aad of the Act is satisfied – that is, whether there are "special circumstances (other than financial hardship alone) that makes it desirable to waive" the right to recover all or part of the debt. The Tribunal has had to consider the meaning and application of the expression "special circumstances" on many occasions. The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 has been an oft-quoted benchmark as to the interpretation of "special circumstances". In that case the Tribunal said (at 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."
In Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 the Tribunal at N97 said:
"The reference to special circumstances 'by reason of which' a person liable 'should be released' requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes. … Thus whilst keeping the dominant principle of s 115 in mind, he must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate."
The Tribunal makes the further conclusion that there are "unusual" or "uncommon" circumstances in Mrs Hooper's case that warrant the description of "special circumstances":
that, notwithstanding that the income from the income protection insurance policy may have been received by Mr Porter personally, all payments received over time had been applied consistently for the benefit of their business, entirely (see paragraph 22) in a manner consistent with their understanding of the purpose of the insurance policy they had taken out for their business;
that the confusion between personal income and business income under the insurance policy existed as the policy owner, and contact address, was Porter Specialised Haulage Pty Ltd – not Mr Porter, whereas the Life Insured was Mark Alfred Porter (Exhibit 5);
that the policy did not distinguish in any way whether payments made were personal or business income (Exhibit 5);
that the Total Income in the Profit and Loss Account for the year ending 30 June 1999 (Document T11) coincides exactly with the Total Income in the Partnership 1998/99 Income Tax Return (Document T8). Only the Profit and Loss Account specified an amount under Total Income for "Insurance Recoveries – Income Protection". The Tribunal also considers that the Tribunal finding of Mrs Hooper's honesty in disclosing all relevant financial information to Centrelink is a relevant consideration (see paragraph 26);
that the first Centrelink Notification Notice was sent to Mrs Hooper on 27 January 2000 (Document T10). This was the first opportunity Mrs Hooper may have had to query or to seek advice of her obligations as a DSP recipient that she was receiving the correct amount of entitlement. The notification notice could have acted as a "trigger" for Mrs Hooper in relation to pursuing changes in income as specified in the notice.
Based on the above findings, the Tribunal concludes that there are "special circumstances" that warrant waiver of part of the debt due to the Commonwealth. The Tribunal finds that the overpayment should be waived from the time that DSP payments commenced (14 December 1999) to the time of the first notification notice (27 January 2000) [inclusive].
The Tribunal decides that the decision under review should be set aside and in substitution therefor decides:
(a)that the overpayment of DSP received by Mrs Hooper over the period 14 December 1999 to 27 January 2000 (inclusive) should be waived; and
(b)that applying subsection 1237AB(2) of the Social Security Act 1991, the decision to take effect from 9 March 2000.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed: Denise Burton
SecretaryDate/s of Hearing 4.5.01
Date of Decision 2.7.01
Rep. for the Applicant Applicant appeared in person
Solicitor for the Respondent Mr P Kanowski, Departmental Advocate
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