Impiombato and Secretary, Department of Social Services (Social services second review)
[2017] AATA 237
•27 February 2017
Impiombato and Secretary, Department of Social Services (Social services second review) [2017] AATA 237 (27 February 2017)
Division:GENERAL DIVISION
File Number: 2016/2414
Re:Caterina Impiombato
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member D R Davies
Date:27 February 2017
Place:Brisbane
The decision under review is set aside. The sum of $7576.69 of the debt raised by the Department against the Applicant for the period 25 June 2009 to 6 November 2013 is waived under section 1237AAD of the Act. The debt is reduced to $22730.08. The penalty imposed of $3030.65 is set aside.
.........................[Sgd]...............................................
Senior Member D R Davies
CATCHWORDS
OVERPAYMENT – Carer’s Pension and Disability Support Pension – debt to Commonwealth – basis to write off or waive recovery of debt – “knowingly” make false or misleading statements - special circumstances.
LEGISLATION
Social Security Act 1991
CASES
Callaghan and Secretary, Department of Social Security [1996] AATA 413
Jonauskas and Secretary, Department of Family and Community Services [2001] AAT 72
Pirotta and Secretary, Department of Social Services [2015] AATA 84
Beadle and Director-General of Social Security (1985) 7 ALD 670
Hales v Secretary, Department of Social Security (1998) 82 FCR 154
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Rosemarie Beadle and Director-General of Social Security [1984] AATA 176
Davey and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693
REASONS FOR DECISION
Senior Member D R Davies
27 February 2017
BACKGROUND
This is an application by Caterina Impiombato (the Applicant) for review of a decision made by the Administrative Appeals Tribunal Social Services and Child Support Division on 13 April 2016 (“AAT1”) affirming a decision made by the Department of Human Services (“the Department”) to raise and recover a disability support pension (“DSP”) debt totalling $33,337.42 for the period 25 June 2009 to 6 November 2013 (“the Debt Period”).
The Applicant has been in receipt of DSP since 3 October 2008.[1]
[1] Exhibit 1 – T Docs, T14, page 179.
During the period 7 November 2008 to 30 May 2012 the Applicant was sent numerous notices by the Department notifying her of her obligation to advise the Department of changes to her circumstances including her income earned.[2]
[2] Exhibit 1 – T Docs, T14, pp 179-202.
On 21 November 2013 the Department received employment information from the payroll manager of the agency for Milena Morrow who had employed the Applicant as her carer. This advised that the Applicant’s employment income for the period 25 June 2009 to 6 November 2013 had been $77,671.77.[3]
[3] Exhibit 1 – T Docs, T5, pp 21-70; T13 pp 103-104.
The Applicant had failed to declare this income to the Department and had been paid DSP at a higher rate than she was entitled to receive. During the Debt Period the Applicant received DSP totalling $94,764.61 rather than $64,457.64.[4]
[4] Exhibit 1 – T Docs, T10, page 90; T13 pp103-104.
On 1 May 2014 the Department raised a DSP debt against the Applicant totalling $33,337.42 for the Debt Period comprising the overpayment of $30,306.77 and an additional recovery fee or penalty of $3,030.65 on account of undeclared income.[5]
[5] Exhibit 1 – T Docs, T6, page 71.
On 27 August 2015 the Applicant requested review of the Decision and provided a statement which stated:
“I would like to apply for a special circumstances waiver due to my poor health. My disability affected my ability to understand or comply with Centrelink’s rules.”[6]
[6] Exhibit 1 – T Docs, T7, page 72.
On 9 October 2015 an Authorised Review Officer (“ARO”) of the Department affirmed the decision under review.[7]
[7] Exhibit 1 – T Docs, T10, pp 88-95.
On 16 December 2015, the Applicant applied for a review of the ARO’s decision to AAT1.
On 13 April 2016, AAT1 affirmed the Decision under review finding that the debt had been properly raised with no basis for waiver or write off under Part 5.4 of the Social Security Act 1991 (“the Act”).[8]
[8] Exhibit 1 – T Docs, T3, pp 6-10.
AAT1 noted that the Applicant had previously been in receipt of social security benefits for some years and had experience of reporting income to the Department in periods prior to 25 June 2009 and had debts raised on 14 July 1998, 23 September 1998 and 17 January 2002 for not declaring income from previous employers.[9]
[9] Exhibit 1 – T Docs, T3, page 9.
The Applicant also maintained contact with the Department during the Debt Period and had applied for advanced payments of pension on several occasions including 1 October 2010, 19 May 2011, 24 May 2011, 23 November 2011 and 30 May 2012.[10]
[10] Exhibit 1 – T Docs, T3, page 8.
The Applicant agrees that she was paid the amounts recorded by Centrelink between 25 June 2009 and 6 November 2013. She did not dispute that she had earned income as a carer for Milena Morrow during this period which was not declared to Centrelink. She does not dispute the amount of the debt incurred. Her application is that the debt should be waived because of special circumstances. In her evidence the Applicant also acknowledged that she had applied for and received advanced payments of her pension on a number of occasions.
LEGISLATIVE PROVISIONS
The relevant legislation is in Sections 1223, 1228, 1228B, 1236, 1237, 1237A and 1237AAD of the Social Security Act 1991 (“the Act”).
Section 1223(1) provides that:
“Where a social security payment is made and the person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit, the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.”
Section 1228B(1) of the Act provides for an additional 10% to be added to a debt that arose wholly or partly because the person refused or failed to provide information in relation to his or her income, or knowingly or recklessly provided false or misleading information in relation to his or her income.
Section 1228B(2) provides that the amount to be added by way of penalty is an amount equal to 10% of so much of the debt as arose because the person refused, or failed to provide the information or provided false or misleading information.
Section 1228B(4) provides that the section does not apply if the person had a reasonable excuse for refusing or failing to provide the information.
Section 1236 of the Act provides the criteria under which a determination can be made to write off a debt. The only ground for write off which could be relevant here is that the debtor has no capacity to repay the debt.[11]
[11] Section 1236(1)A(b).
Section 1237 of the Act provides that the Commonwealth’s right to recovery may only be waived in certain circumstances.
Section 1237A of the Act states:
“(1)Subject to subsection 1(A) the Secretary must waive the right to recover the proportion of the debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.”
Section 1237AAD of the Act provides that:
“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;
(ii)Failing or omitting to comply with a provision of this Act, the Administration 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”.
ISSUES FOR THE TRIBUNAL
The issues to be considered by the Tribunal are:
·Is there a debt for the period 25 June 2009 to 6 November 2013?
·If there is a debt, is there a basis to write off or waive recovery of the debt?
·If there is no basis to write off or waive the recovery of the debt, should a penalty be imposed?
CONSIDERATION
Is there a debt for the period 25 June 2009 to 6 November 2013?
The Applicant in her evidence to the Tribunal said that she was aware that whilst she was in receipt of DSP, she was required to report changes in her circumstances, including her income, to the Department.
The Applicant also acknowledged in her evidence that she had earned undeclared income during the Debt Period and that she did not dispute the debt.
I am satisfied that the Applicant did not advise the Department of her income from Milena Morrow during the Debt Period.
Accordingly I find that the Applicant was overpaid DSP in the amount of $30,306.77 for the period 25 June 2009 to 6 November 2013 and that there was a debt due to the Commonwealth in that amount at that time.
Is there a basis to write-off the debt?
As I have previously mentioned, the only relevant ground on which the debt can be written off under section 1236 of the Act is that the debtor has no capacity to repay the debt.[12]
[12] Section 1236(1)(A)(B).
However, section 1236(1)(C) of the Act provides that where a debt is recoverable by means of deductions from a social security payment, the debtor is taken to have a capacity to repay the debt unless recovery by deductions would cause the debtor severe financial hardship. The evidence in this case is that the current debt has been reduced by deductions of $50.00 from the Applicant’s fortnightly DSP and that as at 30 November 2016 it has been reduced to $27,856.88. In her evidence, the Applicant said that she was able to manage on the DSP, although it is not easy. The Applicant has not provided any evidence of severe financial hardship.
I find that the Applicant does have a capacity to repay the debt by deductions from social security payments which she receives and that this will not cause the Applicant severe financial hardship. I find that there is no basis to write off the debt.
Is there a basis to waive recovery of the debt?
As I have previously mentioned, the right to recover a debt may be waived where the proportion of the debt is attributable solely to an administrative error made by the Commonwealth.
In the present case there is no evidence of any administrative error by the Commonwealth. On the contrary, it is apparent that the debt has arisen because the Applicant failed to report the income which she was receiving. Accordingly the debt cannot be waived on that ground.
The right to recover may also be waived under section 1237AAD of the Act where:
·The debt did not result from the debtor or another person knowingly making a false statement or representation or failing to comply with the Act;
·There are special circumstances (other than financial hardship alone) that make it desirable to waive; and
·It is more appropriate to waive than to write off the debt or part of the debt.
Knowingly
The first element to be considered is whether the Applicant knowingly made a false statement or representation or knowingly failed to comply with a provision of the Act.
The use of the word ‘knowingly’ clearly requires that there be some element of intent in the making of the false statement or representation or failure to comply.
The Macquarie Dictionary defines ‘knowing’ as:
“Conscious, intentional, deliberate”.
The Lexis Nexis Australian Legal Dictionary[13] defines ‘knowingly’ as:
“With knowledge or consciousness. A person cannot do something or be in a particular relationship “knowingly” unless the person thought about the matter and formed a particular view on it: R v Turner (1980) 24 SLSR 217.”
[13] 2016 Second Edition.
In Re Callaghan and Secretary Department of Social Services[14] the Tribunal commented at para 48:
“There is nothing in section 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.”
[14] [1996] AATA 413.
In Re Secretary, Department of Family and Community Services and Jonauskas[15] the Tribunal said at 73 that:
“Knowingly in the context of section 1237AAD is a deliberate choice and means actual knowledge”,
It went on to say that it does not encompass reckless disregard, although recklessness could be relevant in determining whether special circumstances existed.
[15] [2001] AATA 72.
In the present case, the evidence is that the Applicant failed to report to the Department the income which she received from Milena Morrow. The Applicant in her evidence said that she misunderstood the position when she changed from a carer’s pension to the DSP and thought that she only had to provide notification if her income changed. Whilst she said that she was aware that her work hours did increase during this period, she also said that during this period she was suffering from a depressive illness which affected her ability to function, including performing day to day tasks and managing mail and other paperwork. In the evidence which she gave to the Tribunal, the Applicant impressed me as a truthful witness.
Accordingly, I am not satisfied that there was a deliberate or conscious intent by the Applicant to make false statements or representations or to fail to comply in relation to reporting her income to the Department.
I find that the Applicant did not knowingly fail to comply with the Act by failing to report her income to the Department.
Special Circumstances
Accordingly it is now necessary to consider whether there are special circumstances making it desirable to waive the debt.
The meaning of the expression “special circumstances” for the purposes of the Act, has been considered by the Tribunal and the Courts on many occasions. In Pirotta and Secretary of Department of Social Services[16] the Tribunal stated at para 26:
“It is ‘by its very nature incapable of precise or exhaustive definition’ and contemplates circumstances that are ‘unusual, uncommon or exceptional’: Beadle and Director-General of Social Security (1984) 6 ALD 1. Other formulations are circumstances that distinguish an Applicant’s case from others and take it ‘out of the usual or ordinary case’: Groth and Secretary of Department of Social Services [1995] FCA 1708”.
[16] [2015] AATA 874.
In Beadle v Director-General of Social Security (1985) 7 ALD 670 the Court, when considering the meaning of “special circumstances” in the context of whether a time period should be extended said:
“More difficult would be questions of ignorance, illiteracy, isolation, illness and the like. It would depend on the circumstances of the particular case whether these constituted special circumstances. We do not think it is possible to lay down precise limits or precise rules.”
In Hales v Secretary of Department of Social Security (1998) 82 FCR 154, French J stated:
“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…. 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 Secretary’s submission that there cannot be special circumstances for the purpose of s1237AAD(b) unless there is also financial hardship is not accepted.”
His Honour went on to say:
“The evident purpose of section 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 a debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words…”
His Honour further stated:
“As already observed, the concept of “special circumstances” is broad. In any given case it is quite possible that the matters by reason of which it is concluded that there was no knowing misrepresentation or non-compliance will be relevant to the special circumstances which are involved. There may be a case, for example, in which a person has failed to comply with the requirements of the Act because of the effects of a psychiatric illness. This may explain the non-compliance and enable it to be characterised as innocent for the purposes of para (a). It may also be a special circumstance for the purpose of paragraph (b).”
In Angelakos v Secretary Department of Employment and Workplace Relations [2007] FCA 25, Besanko J noted that:
“The authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case… Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.”
In the Tribunal’s decision in Beadle and Director-General of Social Security [1984] AATA 176 the Tribunal said at para 13:
“The existence of ‘special circumstances’ is to be determined from all the circumstances surrounding the application and the time at which it is made. Several recent decisions have found ‘special circumstances’ in the entirety of the situation presented rather than in any one circumstance.”
The Applicant submits that her ill health during the Debt Period constitutes the special circumstances which would make it desirable to waive the debt.
The Applicant has tendered a number of medical reports and character references in relation to her health and circumstances during the relevant period.
Dr Sharma a psychiatrist has provided reports dated 5 December 2007[17] and 9 January 2008.[18] Those reports indicate that the Applicant presented with symptoms of major depressive illness on a background of dysthymia and chronic low self-esteem with personality vulnerabilities arising from significant childhood abuse. When Dr Sharma saw the Applicant in January 2008 she reported that the Applicant continued to have flat moods and excessive tiredness. She considered that the Applicant would benefit from treatment from a psychologist for cognitive behavioural therapy and continued use of anti-depressant medication.
[17] Exhibit 1 – T Docs, T12, page 102.
[18] Exhibit 1 – T Docs, T12, page 101.
Dr Sharma saw the Applicant again on 6 October 2010 and her report of that date[19] indicates that the Applicant presented with exacerbation of chronic recurrent major depressive illness with the background referred to in her previous reports. Her symptoms at that time were characterised by depressed mood but there was no evidence of symptoms of post-traumatic stress disorder. Dr Sharma noted that the Applicant had developed onset of depression in early 2000 when she became the carer for her brother who had some mental disorders and other health issues. The catalyst for the Applicant’s current relapse was two incidents involving her stepfather which rekindled previous memories of abuse. Dr Sharma noted that from the Applicant’s account, her current episode did not appear to be as severe as they had been back when she had seen the Applicant in 2007. She considered that the Applicant’s condition warranted aggressive treatment with anti-depressant medication as well as therapy from a psychologist.
[19] Exhibit 1 – T Docs, T12, page 98-99.
On 3 April 2013 the Applicant received treatment at the Robina Hospital Emergency Department. The hospital report[20] records that the Applicant presented with a dry cough with chest pain. She was diagnosed with a viral illness causing some degree of reactive airways with an underlying anxiety component. She was discharged with a course of Prednisone.
[20] Exhibit 1 – T Docs, T9, page 81.
Dr Cano the Applicant’s general practitioner, in a referral letter to Miss Purnell-Webb a psychologist, dated 12 June 2013[21] refers to the Applicant having a mental health care plan created in April 2013 and requests Miss Purnell-Webb’s assistance with cognitive behavioural therapy. Dr Cano records that the Applicant was on anti-depressant medication at the time.
[21] Exhibit 1 – T Docs, T9, page 81.
On 16 January 2014 the Applicant presented to the John Flynn Hospital Emergency Centre with acute shortness of breath. The hospital report[22] indicates that she was distressed and very anxious with an occasional irritable cough. She was treated with Ventolin and prescribed a course of Prednisolone.
[22] Exhibit 1 – T Docs, T9, page 83.
Eight days later on 24 January 2014, the Applicant presented to Robina Hospital Emergency Department with difficulty breathing on a background of similar episodes over the last six years. The report of the Registrar, Dr Atkins[23] records that she had not begun to take the Prednisolone which had been earlier prescribed at the John Flynn Hospital and she was treated with Ventolin and discharged to continue with the Ventolin and Prednisolone.
[23] Exhibit 1 – T Docs, T9, page 80.
Dr Elsa Yeung a psychiatrist has provided a report dated 3 August 2015.[24] This report notes that Dr Yeung had been treating the Applicant since August 2013. She was diagnosed with major depressive disorder and post-traumatic stress disorder. When she had first seen the Applicant, she was severely depressed and had regular panic attacks. She was not able to look after herself. She had recently separated from her husband which had triggered her post traumatic stress disorder due to his aggressive behaviour. The Applicant had been admitted to Currumbin Clinic from 7 November 2013 to 25 November 2013, 11 September 2014 to 24 October 2014, 20 November 2014 to 7 January 2015 and 23 February 2015 to 12 March 2015. Dr Yeung says that in the last nine months the Applicant has had a few relapses and this has made it difficult for her to manage her day to day life. Dr Yeung says that since 2013 the Applicant continued to suffer from some degree of depression and this has had significant impact on her ability to process information.
[24] Exhibit 1 – T Docs, T9, page 76.
The Applicant’s employer Milena Morrow has provided two letters relating to the Applicant dated respectively 28 August 2015[25] and 24 January 2017.[26] These confirm that Ms Morrow employed the Applicant as a support worker from December 2001 to November 2013. Ms Morrow is herself disabled. She said that the Applicant experienced bouts of severe depression over many years, the symptoms of which became so extreme from 2007 that she sought professional help. She says that on one occasion she accompanied the Applicant to see a psychiatrist. Ms Morrow says that in the period after 2007 the Applicant’s depression began to compromise her ability to be reliable in her work and she would swap or give shifts away. She said that there were times when the Applicant couldn’t even get out of bed and her condition became so severe that she had to take long service leave to stay in a mental health clinic for close to two months. Ms Morrow appears to have been very understanding of the Applicant and encouraged her to continue with her job.
[25] Exhibit 1 – T Docs, T9, page 75.
[26] Exhibit 7.
Rachel Hanson has provided a letter dated 7 December 2016[27] in which she states that she has known the Applicant since 2001 when they were both employed by Ms Morrow as her part time carers. She says that during the 13 years of the Applicant’s employment she would receive last minute calls to attend the Applicant’s shifts as the Applicant was too unwell due to fatigue or depression. She says that at times the Applicant was unable to care for herself, having to spend many days staying with her family who would look after her.
[27] Exhibit 4.
The Applicant’s sister, Tonia Standing, as well as giving evidence to the Tribunal, also provided an email dated 14 December 2016.[28] Ms Standing says that in 2000 the Applicant began to care for her brother Tony who suffered from mental illness. She said that this took a toll on the Applicant and she ended up in psychiatric care in Currumbin Clinic. She said in her evidence that at times the Applicant complained how hard it was to get out of bed. She would often isolate herself at home. In her evidence Ms Standing said that there was a period when the Applicant did not open any mail and on one occasion when visiting the Applicant she went to open the unopened mail and the Applicant became very angry and told her not to touch anything.
[28] Exhibit 6.
Ms Standing in her evidence said that things went downhill for the Applicant around the time that she stopped caring for her brother and went from the Carer’s Pension to the DSP. She said that the Applicant was not able to cope with things.
The Applicant’s mother Lena Jones also provided a letter received by the Tribunal on 12 December 2016[29] which confirms the evidence given by Ms Standing in relation to the Applicant. Ms Jones also says in that statement that many times she and her daughter had to go through the Applicant’s paperwork and bills, and help her to get to appointments and that she became housebound and needed constant assistance from them.
[29] Exhibit 5.
The Applicant in her evidence said that in the period up until 2014 her work hours for Ms Morrow varied, but were mostly about 7-8 hours per week. She said that Ms Morrow was disabled and her work included getting her out of bed, helping with showering and dressing and other household tasks.
The Applicant gave evidence that when she was looking after her brother she attended to all of his needs including paperwork and she would also take him to medical appointments. However, she said that after the onset of her depression she was unable to do those things for herself. She said her condition worsened around the time that she went from the carer’s pension to the DSP.
The Applicant gave evidence that she remembered applying to Centrelink for advances of her pension on a number of occasions. She said that she had heard that this could be done and that she had been able to make these applications over the phone. She said that at those times she was struggling financially and had a lot of overdue bills and did not want to look at her mail. She said that during this period she was in a “dark hole” and for a long period she was housebound and it was an effort to go to work for Ms Morrow.
The evidence is that the Applicant applied to the Department on several occasions between 1 October 2010 and 30 May 2012 for advance payments of her pension.[30]
[30] Exhibit 1 – T Docs, T13, page 160-162.
The evidence is that prior to the Debt Period, the Applicant had declared her income to the Department for the period 2001 to 2 November 2008.[31]
[31] Exhibit 1 – T Docs, T10, page 95.
The Applicant gave evidence that when she had changed from the carer’s pension to DSP in about 2008 she thought that she had been told by Centrelink that she only needed to report changes in her income if she worked more hours. In cross examination, she did concede that during the Debt Period her work hours had varied and at times had increased.
The Applicant gave evidence that she went a few years without putting in a tax return and that a couple of years ago her sister got on to her about this and helped her sort out her tax returns. She said that she is still receiving ongoing treatment and therapy from a psychiatrist and psychologist.
The medical evidence is clear that the Applicant has since at least about 2007 been suffering from a major depressive illness which has required the treatment of a psychiatrist and psychologist including some periods of treatment in a mental health clinic.
I am satisfied that the evidence is that during the Debt Period this illness was chronic and has adversely affected the Applicant’s ability to perform daily tasks including managing mail and paperwork. Whilst the Applicant has been able to undertake part-time work of about 7-8 hours per week during this period, it is apparent that she has had a very supportive employer in Ms Morrow which has enabled her to maintain this employment even though she has at times been unreliable as a consequence of her illness. Having considered the meaning given to the expression “special circumstances” by the Tribunal and the Courts, to which I have previously referred, that they are circumstances which are unusual or uncommon and which would distinguish the Applicant’s case from others and take it out of the usual or ordinary case, I have formed the view that there are special circumstances in the present case. The particular factors that cumulatively result in that conclusion are as follows:
(a)In the period to 2008, the Applicant did report her income to Centrelink apart from 3 instances which gave rise to small debts being raised against her in each of July 1998, September 1998 and January 2002.
(b)The applicant was under the impression that when she changed from the carer’s pension to the DSP in 2008 she only had to report changes in her income.
(c)The medical evidence is that since at least 2007, the Applicant has been suffering from a major depressive illness on a background of dysthymia which has required the treatment of a psychiatrist and psychologist including periods of hospitalisation in a mental health clinic.
(d)The Applicant requires ongoing medical treatment and medication for her illness.
(e)For the period 2000-2007, the Applicant was caring for her brother who suffered from a mental illness and during this period, her own health deteriorated.
(f)During the Debt Period, the Applicant’s metal illness was chronic and it adversely affected her ability to perform day-to-day tasks including managing her mail and other paperwork. She was unable to function normally and was at times housebound.
(g)Whilst the Applicant undertook part-time work of 7-8 hours per week during this period, she was at times unreliable because of her illness and was able to maintain this employment because of a sympathetic employer who was herself disabled.
(h)Apart from the income which she received from the part-time work during this period which gave rise to this debt, she is otherwise dependent on the DSP for income.
(i)To date there has been repayment of some of the debt by fortnightly deductions from her DSP.
The next matter to be considered under s1237AAD(b) is whether there are special circumstances which make it desirable to waive. As stated by the Tribunal in Davy v Secretary of Department of Social Security (2007) 94 ALD 693 at paragraph 80:
“The “special circumstances” are not merely directed to the persons own circumstances. Rather they are directed to those that are “special circumstances”… that make it desirable to waive.” That necessarily involves a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system.”
Whilst there is a public interest in recovering debts in respect of overpayments of social security benefits, in this instance for the reasons which I have referred to above, I consider that having regard to all of the circumstances in this case including the public interest, such special circumstances do exist and that it is desirable to waive in accordance with s1237AAD(b).
The final question which s12347AAD requires to be considered is whether it is more appropriate to waive or write off the debt or part of the debt.
This involves a consideration of whether the public interest in recovering debts properly raised is greater than the special circumstances disclosed. This also involves a consideration of whether there is any likelihood that the Applicant’s financial position will improve and that she will have the capacity to fully repay the debt.
Apart from the part-time work of 7-8 hours per week which she undertook as the carer of a disabled person for a period of 13 years until about 2013, her only source of income has been a pension and since about 2008 that has been the DSP. The applicant is dependent on the DSP for her main source of income. She is receiving ongoing treatment for her mental illness. It is unlikely that her dependence on the DSP for her income will change in the foreseeable future. Her only ability to repay the debt is from the deductions which are currently being made from the DSP which she receives.
Write off rather than waiver is only a real issue where there is a capacity to repay. Here, I do not consider that there is a capacity to repay apart from the small periodic deductions which are being made from her DSP. In these circumstances, I conclude that it would be more appropriate to waive than to write off the debt raised.
The final issue is whether the debt as raised should be waived in whole or in part.
This is a case where the Applicant has received payment of a DSP in an amount which is greater than she was legally entitled over a period of some four years. There is a public interest to which I have previously referred in recovering debts raised where the person was not legally entitled to receive the money. I consider that it would not be appropriate to apply a waiver that would result in a refund to the Applicant. Although the Applicant was suffering from a major depressive illness throughout the debt period and did not engage in a deliberate course of not informing the Department, it is nevertheless the case that she did receive a large sum of money over a protracted period to which she was not legally entitled. In those circumstances, a waiver of part of the debt is appropriate to ensure that there is a balance between the public interest in recouping public money owed and ensuring that the law is not administered in a harsh and unfair manner.
I have formed the view that it is appropriate to waive 25% of the debt which was originally raised. This will result in the waiver of the sum of $7576.69 of the debt originally raised of $30306.77.
Imposition of Penalty
The remaining matter to consider is the imposition of the penalty of 10% amounting to $3030.65.
As I have previously mentioned, s1228B of the Act provides for an additional 10% by way of penalty to be added to the debt that arose wholly or partly because the person failed to provide information in relation to his or her income or knowingly or recklessly provided false or misleading information in relation to his or her income. However that section also provides that this does not apply if the person had a reasonable excuse for failing to provide the information.
In the present case, the Applicant failed to provide information in relation to her income. It is therefore necessary to consider whether the Applicant had reasonable excuse for that failure.
In this case I am satisfied that because of the Applicant’s major mental illness throughout the Debt Period and the adverse effect which that had upon her ability to manage her affairs including processing mail and responding to letters received from the Department along with the other circumstances to which I have referred in this decision, it is appropriate to find that the Applicant had reasonable excuse for her failure to provide information of her income to the Department during the Debt Period.
Accordingly I find that the 10% penalty should not be imposed and is set aside.
CONCLUSION
The decision under review is set aside. The sum of $7576.69 of the debt raised by the Department against the Applicant for the period 25 June 2009 to 6 November 2013 is waived under section 1237AAD of the Act. The debt is reduced to $22730.08. The penalty imposed of $3030.65 is set aside.
I certify that the preceding 86 (eighty -six) paragraphs are a true copy of the reasons for the decision herein of Senior Member D R Davies
.......................[Sgd].................................................
Associate
Dated: 27 February 2017
Date of hearing: 2 February 2017 Applicant: In person Solicitors for the Respondent: Department of Human Services
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