Jakopovic and Secretary, Department of Employment and Workplace Relations
[2006] AATA 7
•6 January 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 7
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2005/162
GENERAL ADMINISTRATIVE DIVISION ) Re BRANKO JAKOPOVIC Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Ms Linda Savage Davis, Member Date6 January 2006
PlacePerth
Decision (a) Sets aside the decision of 8 September 2004 not to repay the applicant the sum of $4,087 and in substitution decides that this sum is to be repaid to the applicant.
(b) Sets aside the decision of 16 September 2004 to raise and recover an overpayment of $22,745.38 Disability Support Pension (DSP) paid for the period 17 October 1996 to 30 June 2000 and in substitution decides that there is an overpayment and recoverable debt of DSP for the period 1 October 1997 to 30 June 2000.
....[sgd Linda Savage Davis]....
Member
CATCHWORDS
SOCIAL SECURITY - Disability support pension - over payment - ordinary income – meaning of “work out the amount of the person's ordinary income on a yearly basis” - over recovered payments
Social Security Act 1991ss 132, 133, 135, 1064, 1224, 1231, 1237 AAD
Secretary Department of Family and Community Services and Rolley (1999) AATA 0968
REASONS FOR DECISION
6 January 2006 Ms Linda Savage Davis, Member 1. This is an application by Mr Branko Jakopovic (“the applicant”) for a review of a decision made by a Centrelink officer on 16 December 2004 to raise and recover an overpayment of $22,745.38 in disability support pension paid to the applicant for the period 17 October 1996 to 30 June 2000; and to review a decision made by a Centrelink officer on 8 September 2004 not to repay the applicant $4,087 that had been collected in repayment of a debt. These decisions were reviewed by the Social Security Appeals Tribunal (“SSAT”) which decided on 15 April 2005 to affirm both decisions.
2. At the initial hearing on 24 August 2005 the matter was adjourned because neither the Tribunal nor the applicant had had adequate time to examine the Statement of Facts and Contentions provided by the respondent shortly before the hearing commenced.
3. At the hearing on 4 October 2005 the applicant was represented by his son Paul. The hearing was adjourned after some two hours of evidence and recommenced on 11 November 2005 when the applicant appeared on his own behalf. The respondent was represented on all occasions by Mr Paul Maishman of Centrelink Legal Services. The documents lodged pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 (“the T documents”) were admitted into evidence, along with Exhibits A1, A2, R1 and R2. The relevant legislation is contained in the Social Security Act 1991 (“the Act”) and will be referred to in detail later in this decision.
4. At the hearing of 4 October 2005 the applicant gave evidence to the Tribunal with the assistance of his son Paul. The Tribunal noted that the applicant had difficulty at times hearing although he told the Tribunal he did not have a hearing aid because he could not afford one. He also appeared at times to have some difficulty in understanding questions even with assistance from his son, although he did not request an interpreter.
The Applicant’s Evidence
5. The applicant referred the Tribunal to paragraph 22 of the Social Security Appeals Tribunal decision of 15 April 2005. In regard to his employment he said that the members of the SSAT were not at the work site, so he queried how they could draw conclusions about how much he could earn in a certain period. The applicant said he obtained work by giving quotes for the entire job. He was not paid an amount per week and therefore the $36,036 he had earned in 1996/97 should not be averaged to result in a weekly amount of $1,386. He said in the real work place you can earn whatever the market would pay. He said he worked to pay off his debts. Given that there was no evidence as to when he earned the money, he believed he should be given the benefit of the doubt that he earned it in the period he said he did. He said it shouldn’t be spread over the entire year; to do so was an intentional or stupid mistake. It should be accepted that he earned it when he was not receiving the disability support pension between April 1996 and October 1996, and April 1997 and December 1997.
6. The applicant said it was his right not to have Centrelink stick its nose into his private life and told the Tribunal he had been subject to surveillance by Centrelink. There was he said no concrete evidence for the decisions that had been reached by Centrelink and the SSAT.
7. The applicant told the Tribunal he would not provide the names of current directors of HRVAT Pty Ltd (HRVAT) although he agreed that his tax return indicated that he had received wages from that company. Although he was once a director of HRVAT, he explained that HRVAT did not actually pay him any money but he took the amount as a director at the time. Both the applicant and his son indicated to the Tribunal that they were unable and not prepared to provide information about the directors of HRVAT.
8. In cross examination the applicant was referred to T4/29 and agreed that he had advised Centrelink that he had ceased full time employment with Vale Steel Construction also known as Jebray Pty Ltd on 4 October 1996. The applicant agreed that it was a fair assumption that he earned $8,250 between 1 July 1996 and 4 October 1997 and that in the previous tax year he earned $18,000. The applicant said that amounts declared to the Tax Department as income from HRVAT, that is, $5,000 in 1997/98; $23,500 in 1998/99 and $14,500 in 1999/2000 was recorded but was not actual income he received. He said he had an obligation to take this income because he was a director. The applicant said that as a director in 1998 he had given his word to HRVAT not to disclose information.
9. The applicant told the Tribunal his health is poor mainly due to psychological reasons. He worked when he could and cancelled his disability support pension (“DSP”) at those times. He went back on the DSP when he could no longer work. He said he currently receives DSP less $35 a week. He lives in a Homeswest flat and the rent is deducted from his pension. The applicant said he can’t live there all the time because he knows he is under surveillance. He told the Tribunal he believes the smoke alarm has a camera lens and he has had to cut the wires. He often stays with his son and friends. He does not have a car and is forced to use those of his friends. He needs glasses but could not afford to pay for them or a hearing aid. He takes medication for diabetes and has a poor memory.
10. When the hearing reconvened on 11 November 2005 the applicant maintained that he could not tell the Tribunal or anyone exactly when and where he had worked. He said this needed to be kept secret even though he had worked for HRVAT and had been a director. He said that he was “not at liberty to say” anything about HRVAT. He told the Tribunal that he was dismissed by the Board of HRVAT because he handed over photocopies of documents about HRVAT to Centrelink.
11. The applicant provided the Tribunal with additional medical evidence at the hearing on 11 November 2005 (Exhibit A2). He told the Tribunal that he takes herbal medication because ordinary medication hasn’t helped him and at least herbal medication does not result in side effects. He said that the decisions by Centrelink and the SSAT made him sick and upset. The applicant said that contrary to what was said he had attempted to find pay slips and other information but could not. He said at times he was aware of helicopters, and he said it was because he believes he could be psychic and has uneasy feelings.
12. In response to questions raised by the Tribunal Mr Maishman conceded the decision of 5 August 2004 not to repay $4,087 had been made several months before the decision of 16 December 2004 to recover an overpayment of $22,745.38 DSP paid to the applicant in the period 17 October 1996 to 30 June 2000. Mr Maishman agreed that he could not provide any legal basis for not repaying the money after 5 August 2004 but indicated that it was based on common sense rather than on a legal basis and referred the Tribunal to the policy contained in 107.12610 that stated:
“Advice has been received from the Department of Family and Community Services (FaCS) regarding over recovered accounts when another account is outstanding. If a payment (e.g. withholdings, cash, garnishee) is received on an account, and the debt amount is reduced which causes it to over recover, the over recovered payment/s can be transferred to any other outstanding account the customer may have. The only requirement is that the customer must have been sent a legal advice (i.e. account payable).”
Submissions
13. The applicant said in his final submissions that he didn’t cheat Centrelink of anything. Whilst he said he understood the law may require them to average what he earned over a year, he did not believe it was right. He said he cannot repay $25,000 and it was affecting his health. He said he has been hounded because of this debt and spied on by Centrelink.
14. On behalf of the respondent the Tribunal was referred to the Statement of Facts and Contentions (Exhibit R1) and the following oral submissions were made that can be briefly summarised as follows:
· that the applicant declared to the Australian Taxation Office a total gross income of $36,036 for the financial year 1996-97; $28,697 for the financial year 1997-98; $23,500 for the financial year 1998-1999 and $15,500 for the financial year 1999-2000, and that these amounts were the applicant’s true income amounts earned, derived or received as defined by s 8(2) of the Act.
· that despite the efforts of the respondent (T58/214) and the obligations on the applicant to supply information as to the periods in which he worked in accordance with s 132 and 135 of the Social Security Act 1991 (“the Act”) (T5/30-32; T9/36-38; T16/48-50 and T24/61-62) the applicant has not complied with that request. As a result the distinct periods as to when the applicant worked had not been established. Therefore the correct method to use in assessing the applicant’s income for the period 17 October 1996 to 30 June 2000 was, it was submitted, to use the annual income figures declared on the applicant’s income tax returns as wages and business income and to assess those figures over each relevant year. The Tribunal was referred to Secretary Department of Family and Community Services and Rolley (1999) AATA 0968 in support.
· that the applicant’s failure to comply with the requirements of s 132 and 133 of the Act and fully disclose the true amount of his earnings between the period 17 October 1996 and 30 June 2000 has resulted in an overpayment of DSP in accordance with s 1224 of the Act until 1 October 1997 and s 1223 of the Act from 1 October 1997 to 30 June 2000.
· that in regard to the exercise of the discretion in s 1237 AAD of the Act, it was submitted that the applicant knew and understood the requirements to comply with s 132 and 133 of the Act as he had previously advised Centrelink on 9 April 1997 of a return to full-time employment; on 14 May 1998 of a likely commencement of work; on 9 June 1999 of income from work and on 20 July 1999 of working more than 20 hours per week and therefore could be said to have “knowingly” failed to provide the specific information required and requested.
· in addition it was submitted there were no “special circumstances”. In regard to the applicant’s health it was submitted this had not prevented him from undertaking paid employment whilst receiving DSP nor his ability at times to notify Centrelink to suspend his DSP payment whilst undertaking paid employment.
· in regard to the decision of 8 September 2004 not to repay $4,087 to the applicant it was submitted that although there was no legislative basis for the recovery of $4,087 and technically the amount should have been repaid, a commonsense decision was made not to. In addition it was submitted that the ARO decision of 5 August 2004 clearly indicated to the applicant that this debt may remain if more detailed information was not provided by the applicant or obtained by Centrelink. The Tribunal was referred to Centrelink Policy at 107.12610 in support.
15. In reaching its decision, the Tribunal took into account the written and oral evidence before it and the relevant legislation and authorities.
Decision of 16 December 2004 to raise and recover an overpayment of $22,745.38 DSP paid to Mr Jakopovic in the period 17 October 1996 to 30 June 2000.
16. DSP is calculated in the applicant’s circumstances in accordance with s 1064 of the Act. S 1064-EI provides for assessing income on a yearly basis. S 1064 provides that a person’s rate of DSP will be reduced if they earn income in excess of their income free limit. The applicant has submitted that the total of income earned for the financial years 1996/97, 1997/98, 1998/99 and 1999/2000 as evidenced on his income tax returns was earned in either the periods he cancelled his DSP (April 1996 to October 1996 and April 1997 to December 1997) or other periods that he refuses to or is unable to disclose. This includes the entire amounts recorded as income for the financial years 1998/99 and 1999/2000 from HRVAT, a company he was previously a director of. Centrelink has been unable to obtain information about Mr Jakopovic’s employment from a number of companies including Clough Engineering (1997/98) and Jebray Pty Ltd (1996/97).
17. Despite the applicant’s suggestion that he could earn significant amounts in the periods during which he cancelled his DSP, and that he had been unable to provide more detailed information because of the difficulties in his relationship with HRVAT in particular, it was also apparent to the Tribunal that he believed he was under no obligation to do so. The SSAT concluded that in the absence of other evidence it was difficult to accept that the applicant earned approximately $1,386 per week for the period he worked in 1996/97 given his poor health (T2/5/ para 22). The SSAT drew similar conclusions in regard to the income earned during the 1997/98 financial year when Mr Jakopovic was not in receipt of DSP (T2/5/ para 23). Whilst there is a legitimate basis for deeming income referrable to a particular or discrete period, in this case there is no evidence of the periods or the amounts earned during any of the periods in question. As a result the Tribunal concludes that the correct basis on which to assess the applicant’s income for the purpose of assessing the rate of DSP payable is to use the annual income figures as provided by the ATO as wages and business income (T34/78-81); and to assess those figures averaged over a year. It should be noted that this is not a conclusion that the amounts of $36,036 and $28,697 could not have been earned in the periods April 1996 to October 1996 and April 1997 to December 1997 respectively. However, the lack of evidence makes it impossible to confidently conclude it was. The Tribunal accepts that on this basis Mr Jakopovic has been overpaid DSP for the period.
18. For the overpayment of DSP prior to 1 October 1997 to constitute a debt it must be established that the applicant failed to comply with the requirements of the Act (s 1224(1)). Notices were sent in accordance with the Act requiring Mr Jakopovic to notify Centrelink within 14 days if his income increased, he started work, a business or became self-employed. (T5/30-32). Mr Jakopovic did notify Centrelink on 9 April 1997 that he had returned to work and his payment was suspended from 4 April 1997 until 8 December 1997. The Tribunal does not believe the applicant can be said to have failed to comply as he did notify of a return to work on 4 April 1997 resulting in the cancellation of his DSP. When he recommenced receiving DSP the debt provisions had changed to provide that any social security payment paid to a person which they were not qualified to receive is a debt due to the Commonwealth. Therefore the DSP received from 10 October 1997 onwards constitutes a debt under s 1223(1) of the Act.
19. Having found that all DSP paid from 10 October 1997 to 30 June 2000 is a debt due to the Commonwealth the question arises whether it should be repaid. Relevant to this matter is s 1237 AAD that 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 a false representation; or
(ii) failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
Special circumstances
20. The respondent has submitted that the applicant not only “knowingly” failed to comply with the requirements of the Act but that no special circumstances exist. It is widely accepted that “special circumstances” requires circumstances that are unusual or out of the ordinary. Mr Jakopovic is in receipt of DSP from which withholdings are being taken to repay his debt. He is accommodated by Homeswest though appears to be uneasy staying alone. The medical evidence supports a conclusion that he suffers from Paranoid Personality Disorder. (Exhibit A2). His treatment seems to be intermittent partly, it appears, because Mr Jakopivich is reluctant to use medication. Whilst Mr Jakopovich’s health is problematic it has not at times prevented him working, and overall the Tribunal cannot conclude that his circumstances are special as envisaged by the Act and case law.
Decision of 8 September 2004 not to repay $4,087.00 to Mr Jakopovic
21. On 18 September 2001 an overpayment of DSP totalling $25,544.75 (Debt ID 64224619) paid to the applicant from 1 July 1995 to 1 July 2000 was raised. On 5 August 2004 an Authorised Review Officer (ARO) reviewed that decision and set it aside. Some $4,087 had by this time been recovered. The applicant sought to have this amount returned to him. On 8 September (2004) a decision was made by the respondents not to refund this amount.
22. On 17 December 2004 a debt for $22,745.38 (Debt ID 62194233) was raised against the applicant for DSP paid from 17 October 1996 to 30 June 2000 and on 6 January 2005 the previously recovered amount of $4,087 was transferred to reduce the debt of $22,745.38.
23. In the decision of 5 February 2005 affirming the decision not to refund the $4,087, the ARO said that:
“The decision was made under Section 1231 (1A) that the recovery of Debt ID 64224619 could be used as a partial recovery of Debt ID 62194233.”
24. The SSAT affirmed the decision not to refund by reference to Centrelink’s Internal Policy (107.12610) and on the grounds that when the ARO set aside the debt on 5 August 2004:
“… the language used by the authorised review officer clearly showed that his directions that the debt be reconsidered with the benefit of further information would still result in a sizeable debt to be paid to the Commonwealth. Given his situation the Tribunal affirms the Centrelink decision to not refund the $4,087.00 to Mr Jakopovic as that amount would only have resulted in him now having an even larger outstanding debt amount which could only add to his difficult financial circumstances.”
25.Section 1231(1A) states that:
1231(1A) The Secretary is to decide in each case the amount by which each payment of the person’s social security is to be reduced, and may vary the amount from time to time.”
26. The Tribunal does not believe this section of the Act is relevant to the issue at hand. The respondent has conceded there was no legal basis for the withholding of the sum of $4,087 already recovered for a debt, then set aside, on the basis that another debt was likely to be raised. The decision to raise an overpayment of $22,745.38 (Debt ID 62194233) occurred approximately 3 months after the decision to set aside Debt ID 64224619 at which time the amount already recovered should have been re-credited. The Tribunal notes at that time there was no other outstanding account that the $4,087 could have been transferred to as envisaged in Centrelink Internal Policy (Policy 107.12610). It appears a decision that the applicant’s debt was now $0.00 and recorded at T60 was considered and disregarded by two Centrelink officers and a decision was made not to re-issue the $4,087. The following was also recorded:
“As a/n still has definite debt, it will be recalculated in the next 4-6 weeks, however we first needed to gather some more information. Once we raise an overpayment the amount of $4,087 is to be deducted as already paid.”
27. The Tribunal is concerned this illustrates a serious misunderstanding of the power of Centrelink officers under the Act which does not in this situation extend to retaining a recovered amount in these circumstances. There was no legal or discretionary basis that would allow them to make such a decision. The Tribunal therefore sets aside the decision of 5 February 2005 not to refund the sum of $4,087 to the applicant.
28.The Tribunal therefore;
(a)Sets aside the decision of 8 September 2004 not to repay the applicant the sum of $4,087 and in substitution decides that this sum is to be repaid by the applicant.
(b)Sets aside the decision of 16 September 2004 to raise and recover an overpayment of $22,745.38 Disability Support Pension (DSP) paid for the period 17 October 1996 to 30 June 200 and in substitution decides that there is an overpayment and recoverable debt of DSP for the period 1 October 1997 to 30 June 2000.
I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Ms Linda Savage Davis, Member
Signed: ........[sgd D Brodie]....................
AssociateDate/s of Hearing 4 October 2005 and 11 November 2005
Date of Decision 6 January 2006
Counsel for the Applicant
Appearing for the Applicant Mr P Jakopovic
Counsel for the Respondent
Appearing for the Respondent Mr P Maishman
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