Hudson and Secretary, Department of Social Services (Social services second review)

Hudson and Secretary, Department of Social Services (Social services second review) [2018] AATA 1845 (25 June 2018)
Division:GENERAL DIVISION
File Number: 2017/6802
Re:Karen Hudson
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D K Grigg
Date:25 June 2018
Place:Brisbane

The decision under review is set aside and in substitution the Tribunal decides that the NSA Debt and DSP Debt should be waived and exercises the discretion in section 1237AAD of the Act.
.........................[sgd]....................................
Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance and Disability Support Pension – overpayment – where no administrative error – whether special circumstances – decision under review set aside and substituted – debt waived – special circumstances exist
LEGISLATION
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76
Secretary, Department of Social Security v Hales [1998] FCA 219; (1998) 82 FCR 154
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
SECONDARY SOURCES
Guide to Social Security Law
REASONS FOR DECISION
Member D K Grigg
25 June 2018
BACKGROUND & CLAIMS HISTORY

On 7 March 2011 Ms Hudson had emergency surgery to repair a cerebral aneurysm.[1]
[1] Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, page 35, DSP claim form completed by Ms Hudson dated 29 October 2012.
On 1 April 2011 Ms Hudson lodged a claim for Newstart Allowance (“NSA”).[2] As part of her claim Ms Hudson completed an Income and Assets form and provided this to the Department of Human Services (“Centrelink”).[3] NSA was granted from 30 March 2011.[4] The notice from Centrelink set out that:[5]
(a)Ms Hudson needed to inform Centrelink if there were any changes to her income and assets and provided a definition of what constitutes “income” which included sick or accident insurance and compensation; and
(b)her NSA was calculated on the basis that her fortnightly income was 94 cents.
[2]           Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, para 4, Annexure A, pages 3-7.
[3]           Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 8-23, Income
and Assets form completed by Ms Hudson dated 29 March 2011.
[4]           Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 50-52, Letter
from Centrelink to Ms Hudson dated 28 April 2011.
[5]           Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 50-52, Letter
from Centrelink to Ms Hudson dated 28 April 2011.
Ms Hudson indicated in her claim form and Income and Assets form that she was not receiving any income at that time.[6]
[6] Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, page 5 and 17.
Between 31 May 2011 and 4 September 2012, Centrelink sent Ms Hudson notices reminding Ms Hudson of her obligation to inform Centrelink if there were any changes to her income.[7]
[7] Exhibit 1, T Documents, T29, pages 219-445, Centrelink notices between 31 May 2011 and 4 September 2012.
On 13 July 2012 Dr Webster, Neurosurgeon, reported that:[8]
(c)Ms Hudson’s aneurysm had been secured;
(d)Ms Hudson was not dealing with the cognitive and psychological effects resulting from her aneurysm;
(e)Ms Hudson needed counselling, temporary use of an antidepressant and the input of a speech pathologist to assist with word finding difficulties.
[8] Exhibit 1, T Documents, T4, page 64, Report of Dr Webster dated 13 July 2012.
As a result of her medical condition Ms Hudson made a claim for income protection insurance from AIA Australia which was granted on 4 October 2012.[9]
[9] Exhibit 1, T Documents, T5, page 65, Letter from AIA Australia: Grant of Claim dated 4 October 2012.
Ms Hudson’s insurance claim entitled her to receive monthly benefits of $1,700.00 and a total income benefit of $18,715.56 for the period 7 May 2011 to 6 May 2012.[10] This money was not received by Ms Hudson until 18 months after she commenced receiving NSA payments.
[10] Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 56-58, and
Exhibit 1, T5, pages 65-67, Letter from AIA to Ms Hudson dated 4 October 2012.
Ms Hudson did not advise Centrelink that she was receiving income protection payments and continued to receive NSA. Ms Hudson told the Tribunal she had not been aware that she had income protection insurance as part of her superannuation scheme until she obtained advice from Maurice Blackburn Lawyers approximately 12 months after her aneurysm. Ms Hudson’s solicitors organised her income protection claim for her and told her that AIA would liaise with Centrelink about her payments. None of this evidence was challenged at the hearing.
On 29 October 2012, Ms Hudson completed a claim form for the Disability Support Pension (“DSP”).[11] DSP was granted with effect from 23 October 2012.[12] Ms Hudson did not advise Centrelink that she was receiving income protection payments when she applied for the DSP.
[11] Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 25-49, DSP claim form completed by Ms Hudson dated 29 October 2012.
[12] Exhibit 1, T Documents, T29, page 495, Letter from Centrelink to Ms Hudson dated 4 December 2012.
AIA approved further income protection payments:
(a)in December 2012, for the period 7 August 2012 to 6 December 2012 of $6,531.76;[13]
(b)in January 2013, for the period 7 December 2012 to 6 January 2013 of $1,632.94 ;[14] and
(c)in February 2013, for the period 7 January 2013 to 6 March 2013 of $3,265.88.[15]
[13]         Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 59-60, and      Exhibit 1, T6, pages 68 – 69, Letter from AIA to Ms Hudson dated 11 December 2012.
[14]         Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 61-62, and      Exhibit 1, T7, pages 70 – 71, Letter from AIA to Ms Hudson dated 4 January 2013.
[15]         Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 63-64, and      Exhibit 1, T8, pages 72 – 73, Letter from AIA to Ms Hudson dated 25 February 2013.
There is no record of Ms Hudson informing Centrelink that she was receiving income protection payments during the period December 2012 and 6 March 2013, and she continued to receive her NSA and then DSP. At the hearing Ms Hudson confirmed that she had not informed Centrelink because of her health at the time and also because, as referred to earlier, she had not realised that AIA was not informing Centrelink of the income protection payments she was receiving.
On 5 April 2013 Centrelink sent Ms Hudson a notice which set out that her DSP was calculated on the basis that her annual income was $7.55 and reminded Ms Hudson that she needed to inform Centrelink if there were any changes to her income and assets.[16]
[16] Exhibit 1, T Documents, T29, pages 512-514, Letter from Centrelink to Ms Hudson dated 5 April 2013.
Ms Hudson contacted Centrelink on 18 April 2013 and advised she had been receiving income protection payments.[17] At the hearing, Ms Hudson could not recall why she contacted Centrelink at that time. This is understandable given that it was more than 5 years ago, and due to the effect of her medical condition on her memory.
[17] Exhibit 1, T Documents, T28, page 177, Centrelink records.
On 30 April 2013, Ms Hudson completed a compensation damages form confirming that she was claiming income protection compensation as a result of the disability sustained on 7 March 2011.[18] Ms Hudson wrote to Centrelink explaining that she had been fighting with the insurance company for over 12 months and as a result engaged a solicitor to help sort out income protection compensation payments. Ms Hudson told Centrelink that:[19]
(a)she had not received any money from the income protection insurers since March 2013;
(b)she had to obtain medical reports from her doctors every month in order to continue to claim protection insurance; and
(c)she had had enough.
[18] Exhibit 1, T documents, T9, pages 74 – 76, compensation and damages form dated 30 April 2013.
[19] Exhibit 1, T documents, T10, page 77, letter from Ms Hudson to Centrelink dated 30 April 2013.
Ms Hudson also indicated that she was not aware that she had to declare her income protection payments.[20]
[20] Exhibit 1, T Documents, T10, page 77, letter from Ms Hudson to Centrelink dated 30 April 2013.
On 14 May 2013 Centrelink issued Ms Hudson with a section 196 notice under the Social Security (Administration Act) 1999 (“Administration Act”) requesting that Ms Hudson provide details of the Income Protection payments she had been receiving from AIA.[21]
[21] Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, pages 54-55, and Exhibit 1, T 11, pages 78 – 79, Letter from Centrelink to Ms Hudson dated 14 May 2013.
As a result of the information provided by Ms Hudson,[22] Centrelink determined that the income protection payments were “income” and need to be taken into account in the calculation of her Centrelink benefits. Centrelink accordingly assessed her annual income as $20,261.55.[23]
[22] Exhibit 1, T Documents, T11, pages 65-73, 78-81,
[23] Exhibit 1, T29, page 520, Letter from Centrelink to Ms Hudson dated 21 May 2013.
On 31 May 2013 Ms Hudson advised Centrelink that the income protection payments had ceased.[24]
[24] Exhibit 1, T Documents, T28, page 178, Centrelink records.
On 19 June 2013 AIA provided Centrelink with a list of the payments it had made to Ms Hudson between 7 May 2011 and 7 February 2013 and confirmed that her benefits had ceased.[25] Centrelink updated Ms Hudson’s records accordingly.[26]
[25] Exhibit 1, T documents, T12, page 80, letter from AIA dated 19 June 2013.
[26] Exhibit 1, T Documents, T28, page 179, Centrelink record.
On 16 July 2013, another insurer, OnePath, wrote to Ms Hudson and confirmed that her income protection claim under her HESTA insurance policy had been accepted.[27] OnePath accepted that Ms Hudson had been assessed for total disability for the period 5 June 2011 to 15 May 2012 and then again from 29 August 2012 ongoing. For the period 5 June 2011 to 4 October 2013 OnePath paid Ms Hudson a total of $22,163.98.[28]
[27] Exhibit 1, T documents, T13, pages 81-82, Letter from One Path: Income protection claim dated 16 July 2013.
[28] Exhibit 1, T documents, T 13, pages 81 – 82, letter from one path to Ms Hudson dated 16 July 2013.
Ms Hudson contacted Centrelink on 31 July 2013 regarding her claim for DSP and provided information which indicated that she had received back payments from her income protection insurance. Centrelink then began an investigation as to whether Ms Hudson had been overpaid NSA and DSP between 5 June 2011 and 31 July 2013.[29]
[29] Exhibit 2, Secretary’s Statement of Facts & Contentions dated 17 May 2018, Annexure A, page 72, Centrelink
record.
AIA approved further income protection payments:
(a)on 14 August 2013, for the period 7 March 2013 to 6 April 2013 of $1,632.94;[30] and
(b)on 27 August 2013, for the period 7 April 2013 to 6 May 2013 of $1,632.94 and for the period 7 May 2013 to 6 October 2013 totalling $8,556.60.[31]
[30] Exhibit 1, T documents, T14, pages 83 – 84, Letter from AIA to Ms Hudson dated 14 August 2013.
[31] Exhibit 1, T documents, T 15, pages 85 – 86, Letter from AIA to Ms Hudson dated 27 August 2013.
For the financial year ending 30 June 2014, Ms Hudson’s PAYG payment summary indicated that her gross payments for the year totalled $25,567.[32]
[32] Exhibit 1, T documents, T 16, page 87, PAYG payment summary for the financial year ending 30 June 2014.
On 5 February 2015, AIA approved further income protection payments for the period 7 January 2015 to 6 May 2015 totalling $7,064.32.[33]
[33] Exhibit 1, T documents, T 17, pages 88 – 89, Letter from AIA to Ms Hudson dated 5 February 2015.
Ms Hudson did not advise Centrelink about the further payments made to her by OnePath in July and August 2013.
On 17 February 2015, Ms Hudson contacted Centrelink in relation to her income protection payments and an officer referred the matter for follow up action.[34]
[34] Exhibit 1, T Documents, T28, page 185, Centrelink records.
On 23 February 2015, a Financial Services Officer ("FSO") spoke to Ms Hudson about her income protection payments and advised her that she may have been overpaid.[35] The record of the FSO indicates that the AIA policy had been coded as having ceased, per Ms Hudson’s advice in May 2013, but that after legal action commenced by Ms Hudson’s lawyers, AIA had recommenced payments but Centrelink had not been informed.
[35] Exhibit 1, T Documents, T28, page 186, Centrelink records.
On 16 April 2015, Centrelink wrote to Ms Hudson and requested further information from her as a result of her advice that her AIA income protection payments were continuing.[36] Centrelink asked that Ms Hudson provide AIA income protection statements to confirm the amounts received from March 2013, and that the information be provided by 7 May 2015.[37]
[36] Exhibit 1, T documents, T28, page 187, Centrelink records.
[37] Exhibit 1, T documents, T 18, pages 91 – 92, letter from Centrelink to Mrs Hudson dated 16 April 2015.
On 14 July 2015, AIA wrote to Centrelink and confirmed that:[38]
(a)although it had remitted a total and permanent disability lump sum benefit to Ms Hudson on 9 June 2015, that amount was remitted to Rest Industry Super which holds the payment while it completes its own internal review; and
(b)it was possible Ms Hudson may not receive that lump sum at all if the fund disagrees with AIA’s decision to accept and pay the claim.
[38] Exhibit 1, T documents, T 19, page 93, letter from AIA to Centrelink dated 14 July 2015.
As a result of receiving relevant information from Ms Hudson and AIA, Centrelink determined that:[39]
(a)for the period 1 June 2011 to 22 October 2012 Ms Hudson had been overpaid NSA by $17,281.27 and that this amount was now recoverable (“NSA Debt”); and
(c)for the period 23 October 2012 to 23 July 2013, Ms Hudson had been overpaid DSP by $8,965.22 and that this amount was now recoverable (“ DSP debt”).
[39] Exhibit 1, T Documents, T28, pages 193-194, Centrelink records.
Centrelink sent notices outlining the NSA Debt and DSP Debt to Ms Hudson on 25 August 2015.[40]
[40] Exhibit 1, T Documents, T29, pages 554 and 558, Letters from Centrelink to Ms Hudson dated 25 August 2015.
On 11 January 2017 Centrelink advised Ms Hudson that the debt for the period 1 June 2011 to 22 October 2012 had been amended to $16,532.28.[41] Centrelink advised that the debt was amended after it had been established that a debt had already been raised for part of this period.[42]
[41] Exhibit 1, T documents, T 20, page 94, letter from Centrelink to Ms Hudson dated 11 January 2017.
[42] Exhibit 1, T documents, T 20, page 94, letter from Centrelink to Ms Hudson dated 11 January 2017.
Ms Hudson requested a review of the decision to raise the NSA Debt and DSP Debt on the grounds that she acted in good faith, had been experiencing medical issues during the period of the debt that prevented her from reporting the changes in circumstances, and was unaware that she had to declare income from sources other than employment income.[43]
[43] Exhibit 1, T Documents, T 21, page 100, Authorised Review Officer notes dated 2 May 2017.
On 2 May 2017 the Authorised Review Officer (ARO) affirmed the decision to raise the NSA Debt and DSP debt. The ARO found that:
(a)from 1 June 2011 to 22 October 2012 Ms Hudson was paid a total NSA of $17,479.01, when she should have been paid $946.73, resulting in a debt of $16,532.28; and
(b)from 23 October 2012 to 23 July 2013 Ms Hudson was paid a total DSP of $14,227.77, when she should have been paid $5262.55, resulting in a debt of $8,965.22.
As a result, the ARO found that the calculation of the debts was correct and found no administrative error on the part of Centrelink, nor any special circumstances which would justify waiving the debts owed.[44]
[44]Exhibit 1, T Documents, T 21, pages 95 – 102, Authorised Review Officer Decision and notes dated
Ms Hudson then sought a further review by the Social Services and Child Support Division (“SSCSD”) of this Tribunal.[45] The SSCSD affirmed the ARO’s decision on 10 October 2017.[46]
[45] Exhibit 1, T documents, T 22, notice of application for review, dated 13 June 2017.
[46] Exhibit 1, T Documents, T2, pages 3 – 8, SSCSD’s Decision and Reasons for Decision dated 10 October 2017.
On 13 November 2017, Ms Hudson lodged an application for review of the SSCSD’s decision by the General Division of the Tribunal and submitted that her life changing brain injury has caused her to struggle on a day-to-day basis and has severely affected her memory.[47] Ms Hudson says she did not receive all the letters from Centrelink and that she had been locked out of her online MyGov account for over two years. Ms Hudson also says that she does not live in the family home and does not own a home and currently lives with her daughter.[48]
[47] Exhibit 1, T Documents, T1, pages 1–2, Application for Review dated 13 November 2017.
[48] Exhibit 1, T Documents, T1, pages 1–2, Application for Review dated 13 November 2017.

ISSUES FOR DETERMINATION

The issues for determination are whether:
(a)Ms Hudson has been overpaid her entitlement to an NSA and DSP, resulting in the NSA debt and DSP Debt; and, if yes
(b)the Debts are recoverable; and if yes
(c)the Debts should be waived due to administrative error pursuant to section 1237A of the Social Security Act 1991 (“the Act”); or
(d)“special circumstances” exist such that the Debts should be waived pursuant to section 1237AAD of the Act.

WAS MS HUDSON OVERPAID NSA AND DSP PAYMENTS?

If a person is not entitled to the social security benefit they have obtained, 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 1223(1) of the Act.
Ms Hudson did not declare to Centrelink the amounts received from her income protection payments. These amounts should have been included in the calculation of her NSA and DSP entitlements,[49] and as they were not, Ms Hudson has been overpaid.
[49] Section 17(2A) of theAct; Guide to Social Security Law, para 4.3.9.30.
Ms Hudson was under an obligation to advise Centrelink of any changes in her circumstances within 14 days.[50]
[50] Section 72 of the Administration Act.
Because Ms Hudson was not entitled to the total social security benefits she received during the debt periods, the amounts she received during that period is a debt due to the Commonwealth and arose when she obtained the benefit of the payment: section 1223(1) of the Act.
There is no dispute by Ms Hudson that Centrelink calculated the Debts in accordance with the Act.
The Tribunal finds therefore that Ms Hudson owes the NSA Debt and DSP Debt to the Commonwealth.

ARE THE NSA AND DSP DEBTS RECOVERABLE?

Even if a debt is owed, the Secretary may write off a debt in certain circumstances set out in section 1236 of the Act which provides:
1236Secretary may write off debt
(1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)...; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.

The Secretary must also 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 1237A of the Act.
Further, the Secretary may exercise its discretion to waive the right to recover all or part of the debt if satisfied that:
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.

SHOULD THE DEBTS BE WRITTEN OFF? (S 1236)
Are the debts irrecoverable at law?

Section 1236(1B) sets out when a debt is taken to be irrecoverable at law:
(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
None of the circumstances set out in section 1236(1B) of the Act exist in this case and therefore the Tribunal finds that the debt is not irrecoverable at law.

Does Ms Hudson have capacity to repay the debt?

Section 1236(1C)(a) of the Act provides that if a debt is recoverable by means of deductions from the debtor’s social security payment, the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
Ms Hudson’s debt was being repaid through withholdings of her DSP payments until her DSP payments ceased[51] and since then she has been paying $200 out of her income protection payments.[52]
[51] Exhibit 2, Secretary's Statement of Facts & Contentions dated 17 May 2018, para 93, Annexure A, page 83,
Repayment history.
[52] Exhibit 2, Secretary's Statement of Facts & Contentions dated 17 May 2018, para 93, Annexure A, page 83,
Repayment history.
Severe financial hardship needs to involve severe or extreme financial suffering and that a person’s entire financial position would need to be materially less than the current rate of their pension.[53]
[53] Re Lumsden and Secretary, Department of Social Security [1986] AATA 228; Stubbs and Secretary, Department
of Family and Community Services [2003] AATA 729; L and Department of Social Security [1995] AATA 159; Secretary, Department of Family and Community Services and Birgden [2003] AATA 67.
Ms Hudson provided a Statement of Financial Circumstances and a budget prepared on her behalf by the Salvation Army. Those documents indicate that Ms Hudson’s financial situation is tight but that she is still able to afford pay TV and to buy gifts.[54]
[54] Exhibit 5 and Exhibit 9, Statement of Financial Circumstances dated 14 April 2018 and budget dated 6 April 2018.
Ms Hudson is currently being paid income protection payments of approximately $2,765 per month. [55]
[55] Exhibit 2, Secretary's Statement of Facts & Contentions dated 17 May 2018, para 93, Annexure A, page 83,
Repayment history.
There is no evidence to suggest that Ms Hudson suffers from severe financial hardship as that term is understood under the Act.

Is it cost-effective for the Commonwealth to recover the debt?

There is no indication from the Secretary that it is not cost-effective for it to recover the debt.
Conclusion
There is no basis for the debt to be written off under section 1236 of the Act.

DID MS HUDSON RECEIVE THE OVERPAYMENTS IN GOOD FAITH AND WERE THE DEBTS, OR A PROPORTION OF THE DEBTS, ATTRIBUTABLE SOLELY TO AN ADMINISTRATIVE ERROR? (S 1237A)
Was the debt attributable solely to an administrative error?

If administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt. The debt “must be "attributable solely" to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes”: Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76, per Wilcox J (at [41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190.
The Debts arose due Ms Hudson receiving income protection payments which she did not inform Centrelink about. As a result, the Debts owed by Ms Hudson were not ‘attributable solely to an administrative error made by the Commonwealth’ for the purposes of section 1237A(1) of the Act.[56]
[56] See Wecker v Secretary, Department of Education Science and Training[2008] FCAFC 108, at [102].

Should the Debts be waived under section 1237AAD?

There are a few elements to be satisfied under section 1237AAD of the Act before a debt may be waived. First, the debt must not have arisen from the debtor; that is, Ms Hudson must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act. Second, there must be “special circumstances” (other than financial hardship alone) that make it desirable to waive the debt. Third, it must be more appropriate to waive than to write off the debt or part of the debt.
The Secretary does not contend that Ms Hudson knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act.[57]
Are there special circumstances that make it desirable to waive the Debts?
[57] Confirmed by Mr McQuinlan at the hearing.
The Act does not define what constitutes “special circumstances”.
However, decisions of the Federal Court make it clear that “special” denotes something different from the usual or ordinary.[58]
[58] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per
Kiefel J, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639, at [51], Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, at [37].
French J (as he then was) said in in Secretary, Department of Social Security v Hales [1998] FCA 219 (1998) 82 FCR 154, at 162:
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion.
…
The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
The Administrative Appeals Tribunal has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at [12] (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[59]
[59] See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at [19]; Papps and Secretary, Department of Family and Community Services [2005] AATA 660, at [37]
Ms Hudson contends that her medical issues arising from her cerebral aneurysm during the Periods which gave rise to the NSA Debt and DSP Debt constitutes a special circumstance.
In September 2017, Dr Hall, General Practitioner, reported that Ms Hudson had suffered a severe brain injury on 7 March 2011 which had required neurosurgical intervention. At that time, Ms Hudson was deemed to be permanently unable to engage in gainful occupation because she was experiencing severe headaches and communication difficulties including significant cognitive communication impairments, significant challenges of immediate and delayed memory, attention and visuospatial constructional domains and depression. Dr Hall said Ms Hudson was treated with medications for her severe headaches and also received psychology treatment for depression and anxiety.[60]
[60] Exhibit 1, T Documents, T 23, pages 104 – 106, Report of Dr Hall dated 1 September 2017.
Ms Hudson explained her situation as follows:[61]
I suffered a life-threatening brain injury in March 7, 2011. I was left with memory loss and speech problems. I also had two strokes while being treated at PA Hospital in Brisbane. I have had my whole world turned into a complete disaster. I can’t work ever again. I need day to day support due to still having memory issues. I’m seeing a psychiatrist to try and sort out all the issues I’m trying to deal with. I’m on antidepressants as I’m severely depressed. My first 12 months once coming home from hospital is just a blur. I was on high doses of Morphine and Endone and my daughter was caring for me. Including sorting my medications as I was not able to even do that… I also still have regular appointments with neurosurgeons… And also regular MRI of my brain... This letter from my medical practitioner explains that I had severe problems with memory as well as communication problems. These impairments were severe from 7/3/2011 and still I was struggling in 2013. I have come a long tough struggling life changing journey. I have tried to explain to Centrelink all of the above and I have been locked out of My Gov for over two years as I forgot passwords. I have five children… For 10 years I have had to try and cope with the two oldest sons drug addictions. I didn’t spend funds assisting drug addicted sons. I did spend money keeping them alive from drug dealers… I have paid over $4000 back to Centrelink but there is never any paperwork supplied to me showing that I have paid anything… I live with my daughter her partner and 4 grandchildren in the family home… I only got back with my husband early this year and he was put off work like hundreds of others…as the company went into voluntary liquidation. He has not been paid any money owing to him. Therefore we live on my income protection payments. My doctor tells me I have to avoid stress. It’s impossible, all this Centrelink is stressing me daily. Depressingly me constantly and just seems to be no end to it. I have had to move three times in the past 2 ½ years just try and keep myself safe and still don’t feel safe. Police have taken out a DVO against my own son on my behalf to try and protect me. I would like yous to try and spend a day in my life. It’s like living in a constant nightmare.
…
I still have a delayed thinking and remembering problem which causes problems. And sudden outbursts which I have no control of but I’m alive… Due to Centrelink Debt and now the Tax Debt I am going to receive when my tax is completed I am in no financial position to pay both.
…
Centrelink was totally aware of my medical condition. Centrelink never offered any assistance to me even after I had a very long assessment meeting with them in 2012. I was struggling as a single mum with two teenage sons… I was struggling attending rehabilitation for four years... My financial situation is pretty stretched already. I am now in the process of reapplying for my part disability pension again as all the stress and drama of all this has taken its toll, my husband and I have separated. Therefore I now have rent and all the other bills that come with paying rent… I’m at the point of declaring bankrupt. I have now learnt I have a tax bill of over $16,000 I cannot see myself getting these debts paid. I only have income protection payments to the age of 60 I’m 58 this year and I cannot take much more of this. My health is suffering my depression is out of control and I’m so tired of trying to defend myself by myself. Also I have stated that a social worker from the brain injury unit at the PA hospital…organised my payment with Centrelink on my behalf in 2011. As I was so badly effected with speech and memory problems I was not capable, Tribunal has stated there is no record of this on Centrelink files. Check the documents I’m forwarding there is proof of this also in a letter from the PA brain injury doctor that I have forwarded also. Centrelink has treated me like a Dumb Ass yes I have a brain injury and yes it takes me longer to respond to questions and yes I have a problem with memory. And yes im slower than the normal person working things out and getting things done. But I have had enough I have been pushed to breaking point I did not lie cheat or steal but I’m being treated like I have done all of the above.
[61]Exhibit 1, T Documents, T 25, pages 107-108, Application for Review of Decision dated 22 December 2016; Exhibit 3, Email from Ms Hudson dated 22 March 2018; Exhibit 3, Email from Ms Hudson dated 19 March 2018; Exhibit 3, Email from Ms Hudson dated 28 March 2018
Ms Hudson’s daughter, Naomi Hudson, gave evidence that in the first 12 months after the aneurysm her mother needed significant assistance. She needed to learn how to do basic tasks like cooking again and how to talk again. Ms Hudson confirmed that she had had 4 years of speech and other therapy following the aneurysm.
Dr Olsson, Neurosurgical Registrar, reported in August 2012, only 4 months before she began receiving her income protection payments, that Ms Hudson described “significant symptoms associated with her subarachnoid haemorrhage, particularly memory and concentration problems”.[62]
[62] Exhibit 5, Report of Dr Olsson dated 22 August 2012.
Dr David Douglas, Consultant Occupational Physician, reported in April 2013 that, based on his assessment and review of relevant medical reports, Ms Hudson had suffered a permanent impairment and had ongoing problems with fatigue, altered cognitive function and disturbance of language and word finding as well as ongoing depression and anxiety and that her prognosis for recovery was poor.[63]
[63] Exhibit 6, Report of Dr Douglas dated 9 April 2013.
Dr Hall reported in September 2017 that at the time of her aneurysm Ms Hudson:[64]
(a)was permanently unable to work;
(c)had severe headaches and communication difficulties;
(d)had significant cognitive issues concerning immediate and delayed memory; and
(e)had depression and anxiety.
[64] Exhibit 11, Report of Dr Hall dated 1 September 2017.
Hospital records show that in 2014 Ms Hudson was still suffering from persistent depression, unsteadiness and difficulty with solving mental problems including daily issues, as a result of the aneurysm in 2011.[65]
[65] Exhibit 7, GARSS-DT Hospital records 2014.
None of the medical evidence was challenged by the Secretary.
The Secretary submitted at the hearing that ill health is not enough to constitute a special circumstance. The Tribunal contends that “ill health” can constitute a very broad spectrum of conditions and that it is relevant to consider the nature and severity of the ill health before such ill health can be claimed to be not a special circumstance. The Tribunal will look at the totality of the situation in which Ms Hudson found herself.
Ms Hudson suffered a permanent life changing event as a result of her severe brain aneurysm, which has left her with lifelong mental health and cognitive impairment issues. During the periods that Ms Hudson started receiving her income protection payments, she was in the early stage of recovery and therapy and required a significant amount of assistance as her mental functioning was greatly impaired. Further, she had engaged lawyers to assist her and her evidence regarding the advice she received from her lawyers, as set out in paragraph 8 above, was not challenged and is accepted by this Tribunal. Ms Hudson was totally reliant on the help of others as a result of her medical situation. Ms Hudson did not even know when she originally applied for the NSA that she may be entitled to income protection. In addition, Ms Hudson was dealing with two drug addicted children and required police to arrange to have a domestic violence order put in place to protect her from her son. One incident with her son and his girlfriend was described by Ms Hudson’s doctor as “extremely traumatic” and the doctor reported that Ms Hudson had developed post-traumatic stress disorder symptoms as a result.[66] Again, none of this evidence was challenged by the Secretary,.[67]
[66] Exhibit 8, Report of Dr Worth dated 2 May 2018.
[67] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 17 May 2018, para 109.
Ms Hudson was also struggling financially and in February 2015, a social worker referred her to Foodbank Toowoomba and Lifeline to assist her with her “precarious financial position”.[68] Ms Hudson also informed the Tribunal that she is so afraid of incurring another debt that she cancelled her DSP entitlement. This is not how people who deserve and are entitled to social security payments should feel obliged to operate. Finally, despite Centrelink becoming aware of the income protection payments in April 2013, Centrelink did not raise any debt until 2.5 years later; a circumstance the Secretary agreed could be taken into account when assessing the specialness of the circumstances.
[68] Exhibit 7, GARSS-DT Hospital records 2014.
The Tribunal considers Ms Hudson’s circumstances to be out of the ordinary and special and are exactly those kind of circumstances for which the legislation seeks to provide an exemption. As French J said in Hales, to impose “a fetter” on the application of the concept of special circumstances would be “to erode its useful purpose”.[69] In this instance, an “unfairness” would arise if, as sought by the Secretary, “a rigid application” of the recovery of the debts were to be applied.[70]
[69] Secretary, Department of Social Security v Hales (1998) FCR 154, at 162.
[70] Ibid.
For the above reasons, the Tribunal finds special circumstances exist within the meaning of section 1237AAD which make it desirable to exercise the discretion in section 1237AAD to waive the Debts.

DECISION

The decision under review is set aside and in substitution the Tribunal decides that the NSA Debt and DSP Debt should be waived, and exercises the discretion in section 1237AAD of the Act.

I certify that the preceding 80 (eighty) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

..........................[sgd]...................................
Associate
Dated: 25 June 2018

Date of hearing:
Applicant:

15 June 2018

Karen Hudson (In Person)

Advocate for the Respondent: Rick McQuinlan, Principal Government Lawyer

Solicitors for the Respondent: Department of Human Services

2 May 2017.

[2018] AATA 1845

25 June 2018

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