Hyde and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2012] AATA 832
•23 November 2012
[2012] AATA 832
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/1924
Re
GARRY HYDE
APPLICANT
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT
DECISION
Tribunal Dr P McDermott, RFD, Senior Member
Date 23 November 2012 Place Brisbane The Tribunal sets aside the decision of the Social Security Appeals Tribunal of 28 February 2012 and substitutes the decision:
The applicant was overpaid disability support pension and so incurred the following debts owing to the Commonwealth of: -
(i) $183.99 for the period 23 December 2006 to 22 January 2007;
(ii) $3,913.95 for the period 24 July 2007 to 9 June 2008; and
(iii) $1,867.36 for the period 17 April 2009 to 8 December 2009.
These debts, insofar as they have not been repaid, shall be recovered from the applicant at the rate of $20 per fortnight for a period of one year with a review to be carried out by Centrelink at the end of that time.
.................[Sgd].......................................................
Dr P McDermott, RFD, Senior Member
CATCHWORDS
SOCIAL SECURITY – Pensions, benefits and allowances – Disability support pension – Recovery of overpaid pension – Debt not written off – No severe financial hardship – No administrative error – No special circumstances – Decision under review set aside and substituted.
LEGISLATION
Social Security Act 1991 (Cth), ss 117, 1064, 1223, 1236, 1237A, 1237AAD
Social Security (Administration) Act 1999 (Cth), ss 68(2), 100
CASES
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9
Secretary, Department of Social Security v Hales (1998) 82 FCR 154REASONS FOR DECISION
Dr P McDermott, RFD, Senior Member
INTRODUCTION
Mr Gary Hyde seeks review of a decision of Centrelink to raise and recover debts for the overpayment of Disability Support Pension (DSP). The debts were raised on the basis that the gross earnings of Mr Hyde had not been correctly reported. I have to determine whether these debts have been correctly raised and whether those debts should be recovered.
BACKGROUND
Since 1995 Mr Hyde has been entitled to receive DSP. Whilst he is entitled to receive this benefit he has nevertheless sought to obtain employment when he can. There have been a number of times his entitlement to DSP has been suspended because of the level of the hours that he has worked and because of the level of his payment.
There are three periods in which it is submitted by the respondent that Mr Hyde was overpaid DSP: these periods being 23 December 2006 to 22 January 2007; 24 July 2007 to 9 June 2008; and 17 April 2009 to 8 December 2009. During these periods he was employed as a hospital porter.
During these relevant periods Mr Hyde was required to report his earnings to Centrelink on a fortnightly basis. In evidence are various information notices that Centrelink sent to him on the following dates: 12 April 2006; 5 January 2007; 9 July 2007; 18 July 2007; 19 September 2007; 1 October 2007; 10 December 2007; 3 March 2008; 26 May 2008; 17 April 2009; 18 April 2009; 29 April 2009; 13 May 2009; 25 May 2009; 18 June 2009; 3 July 2009; 21 July 2009; 27 July 2009; 8 September 2009; 13 October 2009; 19 October 2009; and 26 October 2009.
On 7 May 2008 Centrelink wrote to Mr Hyde to advise him that, as a result of a data‑matching exercise with the Australian Taxation Office (ATO), a discrepancy had been identified between the Applicant’s 2006/2007 income declared to Centrelink and his taxable income declared to the ATO. The Applicant was requested to provide details of all of his income for the 2006/2007 financial year.
On 7 October 2008 Centrelink issued a request to the employer of Mr Hyde to provide details of his employment and income in the period 1 July 2007 to 1 July 2008. His employer produced the payroll records for the period 1 July 2007 to 30 June 2008. On 9 January 2009 Centrelink issued a further request to the employer to provide details of his hours worked and income for the period 8 August 2006 to 10 June 2008. On about 19 January 2009 the employer produced an employee history report. On 14 December 2009 Centrelink issued a request to the employer to provide details of the Applicant’s employment and income in the period 1 June 2006 to 14 December 2009. The employer produced records of the employment on 24 December 2009 and on 3 December 2010.
Based on the information supplied by the employer, Centrelink verified that the actual income of Mr Hyde was greater than the income that was declared to Centrelink for the relevant periods.
OVERPAYMENTS
I find that Mr Hyde was overpaid DSP in the amounts of $183.99 (for the period from 23 December 2006 to 22 January 2007); $3,913.95 (for the period from 24 July 2007 to 9 June 2008) and $1,867.36 (for the period from 17 April 2009 to 8 December 2009). I make this finding on the basis of the following evidence relating to these periods.
23 December 2006 to 22 January 2007
In the period from 23 December 2006 to 22 January 2007, Mr Hyde declared income of $1,362.00. His actual earnings in this period were $2,235.82, resulting in him being overpaid $275.17. As Mr Hyde was entitled to arrears of $91.18 in the period 9 January 2007 to 22 January 2007, the debt amount was reduced by the amount of the arrears payable. In evidence is a debt calculator which explains the calculations of the debt.[1] I am satisfied that the correct amount of the overpayment for the period 23 December 2006 to 22 January 2007 is $183.99.
[1] Exhibit D, Attachment B.
24 July 2007 to 9 June 2008
In the period from 24 July 2007 to 9 June 2008, Mr Hyde declared income of $26,699.20. His actual earnings in this period were $38,016.03, resulting in him being overpaid $3,913.95.[2] I am satisfied that the correct amount of the overpayment for the period 24 July 2007 to 9 June 2008 is $3,913.95.
[2] T50, p 210.
17 April 2009 to 8 December 2009
In the period from 17 April 2009 to 8 December 2009, Mr Hyde declared income of $13,432.25. His actual earnings in this period were $20,736.13, resulting in him being overpaid $1,867.36. In evidence is a debt calculator which explains the calculations of the debt.[3] I am satisfied that the correct amount of the overpayment for the period 17 April 2009 to 8 December 2009 is $1,867.36. This is a reduction of the debt of $2,011.54 which was originally calculated.
[3] Exhibit D, Attachment C.
PRIOR DECISIONS
On 10 November 2011 Centrelink wrote to Mr Hyde to advise him that a decision was made to raise and recover the following debts: -
a. $184.04 for the period 23 December 2006 to 22 January 2007. (Subsequent calculations have shown the correct amount of this debt to be $183.99);
b. $3,913.95 for the period 24 July 2007 to 9 June 2008; and
c. $2,011.54 for the period 17 April 2009 to 8 December 2009. (Subsequent calculations have shown the correct amount of this debt to be $1,867.36).
Mr Hyde requested an internal review of the decisions to raise and recover the debts, which were affirmed on 21 December 2011. On 17 January 2012 that decision was later affirmed by an Authorised Review Officer.
On 22 January 2012 Mr Hyde made an application to the Social Security Appeals Tribunal (SSAT) for a review of the decision. On 21 February 2012 the SSAT affirmed the decision to raise the debts. The SSAT varied the decision under review by writing off the debts until Mr Hyde had repaid an advance that had been made to him on 17 October 2011 as well as providing that the rate of recovery should then be set at $70 per fortnight for a period of one year with a review to be carried out by Centrelink by the end of that time.
On 1 May 2012 Mr Hyde applied to this Tribunal for a review of the decision.
RELEVANT LEGISLATION
The legislation that I have to consider is the Social Security Act 1991 (“the Act”) and the Social Security (Administration) Act 1999 (“the Administration Act”).
Section 117 of the Act states that the rate of a person’s DSP is calculated in accordance with rate calculator A, as set out in s 1064 of the Act.
Section 1064-A1 of the Act provides a Method Statement for working out a person’s maximum payment rate, and Module E of s 1064 provides a Method Statement for working out the effect of a person’s income on the person’s maximum payment rate. Mr Hyde does not dispute that his ordinary income in the relevant period, for the purposes of calculating his rate of DSP, must include the correct amount of earnings from his employers.
Subsection 100(1) of the Administration Act states as follows:
100(1) Subject to subsection (2), if:
(a)a person who is receiving a social security payment is given a notice under subsection 68(2); and
(b)the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(c)the event or change of circumstances occurs; and
(d)the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(e)because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.
The notices that I have earlier mentioned are each a request for information that has been made under s 68(2) of the Administration Act. As Mr Hyde has not complied with the information notices by providing the correct information concerning his earnings, his entitlement to DSP can be retrospectively reduced under subs 100(1) of the Administration Act from 23 December 2006.
DEBT
Under s 1223 of the Act, if a person receives a payment which they are not entitled for any reason to receive, the amount of the overpayment is a debt due to the Commonwealth.
I have found that Mr Hyde was overpaid DSP in the amounts of $183.99 (for the period from 23 December 2006 to 22 January 2007); $3,913.95 (for the period from 24 July 2007 to 9 June 2008) and $1,867.36 (for the period from 17 April 2009 to 8 December 2009). These amounts are a debt due to the Commonwealth under s 1223 of the Act.
RECOVERY OF DEBT
I am satisfied that the debts have been properly raised by Centrelink; I will next consider whether the debts should be recovered.
WRITE OFF
Section 1236 of the Act provides that a debt may be written off for a period. This is where a debt is irrecoverable or if a debtor has no capacity to repay the debt. A debt will not be irrecoverable if it can be recovered by way of withholdings from a person’s Centrelink benefits (s 1236(1B)).
Section 1236(1C) provides that if deductions from a person’s current social security entitlements can be used to recover the debt, the person is taken to have the capacity to repay the debt unless “severe financial hardship” would be the result. Mr Hyde is currently in receipt of DSP, and withholdings of $20 per fortnight are being deducted from his payments in respect of this debt. Therefore the debt is not irrecoverable.
There is also no evidence that “severe financial hardship” would result to Mr Hyde if there was withholding of his DSP entitlements because he has been able to reduce some debts such as the debts to the lessor of the flat where he resides and Telstra. He now no longer has the expense of registering and maintaining a car. During the hearing he confirmed that he had a healthcare card.
Mr Hyde has disclosed some debts relating to an art gallery business that he started after he left the employment of the hospital. Including in those debts are loans from his sons. Mr Hyde also stated that he owes $10,000 due to an artist. It would appear that the artist had given him a painting to sell on a consignment basis. Mr Hyde stated that the artist would want to be paid. There is no evidence that Mr Hyde has been sued for these business debts. During the hearing I expressed the view that it would seem to be unlikely that there would be litigation to recover these business debts as he does not have any assets.
ADMINISTRATIVE ERROR
Section 1237A(1) of the Act provides that where a debt arose solely due to an administrative error and the person received the payments giving rise to the debt in “good faith”, the debt must be waived. There are some exceptions to s 1237A which are not material in this case.
I do not consider that there is a basis for waiving of the debts under s 1237A(1) of the Act. The evidence before me does not disclose that the debts arose “solely due to administrative error”. The Federal Court of Australia has provided guidance on the interpretation of s 1237A(1) of the Act. Essentially for a debt to be solely attributable to administrative error the only cause that objectively can be ascribed to the relevant debt is an administrative error.[4] The evidence before me is that the debt arose from a failure by Mr Hyde to declare his income.
[4] Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126.
The case of Mr Hyde is that he had provided his payslips by post which was addressed to the manager of his local Centrelink office. Mr Hyde stated that he had provided a dozen payslips to that office. However, the office could only find of some of these payslips. Mr Hyde stated that he had persisted in sending his payslips to Centrelink and had requested Centrelink to ring his employer and confirm his hours of work. However, social security law squarely places the obligation to correctly report income in each reporting or benefit period upon the customer. This is because the information notices that were issued to Mr Hyde under s 68(2) of the Administration Act required him to report his gross income to Centrelink and to notify Centrelink of any change to his circumstances, including changes to his income or hours of work.
SPECIAL CIRCUMSTANCES
Section 1237AAD of the Act 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 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.
Section 1237AAD enables the Secretary to waive the recovery of all or part of a debt where the debtor or another person did not knowingly make a false statement or representation, or did not knowingly fail or omit to comply with a provision of the Act, and there are “special circumstances” (other than hardship alone) that make it more appropriate to waive than to write off the debt.
There is no evidence before me that Mr Hyde has knowingly made a false statement or failed to comply with his obligations. I accept that he has endeavoured to comply with his reporting obligations, but has not correctly calculated his earnings in the relevant periods.
While the term “special circumstances” is not defined in the legislation, it has been the subject of much case law. It is accepted that special circumstances are circumstances which take a case out of the usual or ordinary case: see Groth v Secretary, Department of Social Security (1995) 40 ALD 541; Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9. I have reviewed the material before me and have found no such special circumstances present in this case. Mr Hyde did not point to any special circumstance which would make it desirable to waive the debts.
I do not consider it appropriate to exercise of the discretion to waive part or all of the debt under s 1237AAD of the Act. I have borne in mind that as French J explained in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at 155: “The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered …”.
I have given some thought to the level of deductions that should be made from the payments of DSP. The SSAT made a decision that after the repayment of an advance (which has now been repaid by Mr Hyde) that the rate of recovery should then be set at $70 per fortnight for a period of one year with a review to be carried out by Centrelink at the end of that time. I have thought it prudent to set the rate of recovery at $20 per fortnight. Mr Hyde has been managing to repay some essential debts (such as Telstra) whilst this amount is being deducted from his pension every fortnight. At the hearing Mr Hyde had mentioned this as the amount that he could pay and the respondent had no objection to this amount being set as a rate of repayment in the decision.
I wish to express my appreciation to the advocate for the Secretary who has ensured that all relevant material has been placed before this Tribunal.
DECISION
I set aside the decision of the SSAT of 28 February 2012 and substitute the following decision: -
The applicant was overpaid DSP and so incurred the following debts owing to the Commonwealth of: -
(i) $183.99 for the period 23 December 2006 to 22 January 2007;
(ii) $3,913.95 for the period 24 July 2007 to 9 June 2008; and
(iii) $1,867.36 for the period 17 April 2009 to 8 December 2009.
These debts, insofar as they have not been repaid, shall be recovered from the applicant at the rate of $20 per fortnight for a period of one year with a review to be carried out by Centrelink at the end of that time.
I certify that the preceding 39 (thirty-nine) paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member. .................[Sgd].......................................................
Associate
Dated 23 November 2012
Date of hearing 13 November 2012 Applicant In person Solicitor for the Respondent Ms Brooke Carruthers
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