James Russell and Secretary, Department of Social Services
[2015] AATA 91
•20 February 2015
[2015] AATA 91
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/2041
Re
James Russell
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Ms G Ettinger, Senior Member
Date 20 February 2015 Place Sydney The Tribunal affirms the decision under review.
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Ms G Ettinger, Senior Member
CATCHWORDS
Social security – overpayment of DSP – failure to declare partner’s income in full – certain administrative error of the Commonwealth – not sole administrative error – decision under review affirmed.
LEGISLATION
Social Security Act 1991 ss 1064, 1223, 1236(1A), 1236A, 1237A(1), 1237AAD
Social Security (Administration) Act 1999 s 68
CASES
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Davey and Secretrary, Department of Employment and Workplace Relations [2007] AATA 1114
Re Gerhardt & Anor and Department of Education, Employment and Training [1996] AATA 173
Groth v Secretary, Department of Social Security [1995] FCA 1708Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76
REASONS FOR DECISION
Ms G Ettinger, Senior Member
20 February 2015
SUMMARY
The decision under review is that of the Social Security Appeals Tribunal (SSAT) dated 17 March 2014 which affirmed a decision of Centrelink to raise and recover a debt for the overpayment of Disability Support Pension (DSP) of $11,146.20 to Mr James Russell for the period 9 July 2009 to 18 January 2012.
The debt arose because the earnings of Ms Kylie Russell, Mr Russell’s wife, had not been disclosed correctly in the relevant period, and in part, (but not solely), because of administrative error of Centrelink.
The evidence before the Tribunal did not satisfy me that the debt arose because of sole administrative error, or that it should otherwise be written off or waived. I could not be satisfied that there were special circumstances distinguishing Mr Russell’s case from that of other recipients of benefits.
I have affirmed the decision under review. My reasons follow.
BACKGROUND
Mr Russell, who is 42 years old, has been receiving DSP since 2008. He and Ms Kylie are married, and presently separated. It is undisputed that he was receiving DSP in the debt period 9 July 2009 to 18 January 2012.
Both Mr Russell and Ms Kylie gave evidence by telephone at the hearing. Mr Russell told me that he is very stressed about the debt situation, and Ms Kylie added that he suffers anxiety. Mr Russell was quite aggressive when giving his evidence, and angry that his debt had not been waived as a result of administrative error of the Commonwealth. During the Respondent’s closing submissions made by Ms Martini on behalf of Centrelink, Mr Russell hung up. Attempts we made to reconnect Mr Russell and Ms Kylie were unsuccessful, and we completed the hearing in their absence.
As to the debt, I noted that Centrelink sent Mr Russell letters in 2009, and 2010, and in the period following. Those letters, which incorrectly recorded that Ms Russell was earning $600 per fortnight, (rather than weekly as reported by Mr Russell), required Mr Russell to inform Centrelink of any joint income of the couple, which would then be taken into account in calculating his DSP (section 68(2) of the Social Security (Administration) Act 1999 (the Administration Act)). Mr Russell told me that he cannot read, and also told me that he made no attempt to have the letters read to him. He said that they had reported Ms Kylie’s earnings of $600 per week, and that their circumstances had not changed, so he saw no need to report anything further, or to read Centrelink’s letters. He told me that if her income varied slightly, he considered it would all even out over a period of time. He told me that neither he nor Ms Kylie noticed that her income had been recorded incorrectly by Centrelink, and the records confirm they did not report the error.
The incorrect coding of Ms Kylie’s income as $600 per fortnight rather than per week as disclosed by the Applicant, and acknowledged by Centrelink, constitutes an error of the Commonwealth, but as I explain in the paragraphs below, does not, in this case, constitute sole administrative error.
I am mindful that notwithstanding Ms Kylie was Mr Russell’s correspondence nominee, he was ultimately responsible for his actions, and for informing Centrelink of both his and his wife’s earnings.
ISSUES TO BE DECIDED
The issues are:
·Whether the Applicant has incurred the debt of $11,146.20 for overpayment of DSP for the period 9 July 2009 to 18 January 2012.
·Whether the debt is recoverable; whether it should be written off or waived in full or in part.
RELEVANT LEGISLATION
The relevant legislation is the Social Security Act 1991 (the Act), and the Administration Act.
Section 1064 of the Act determines how rates of pension, including DSP, are calculated. Section 1064-A2 of the Act provides:
Where 2 people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis (see points 1064-E2 and 1064-G2 below). They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis (see section 1070V).
In order to determine the effect of a person's ordinary income on the person's maximum payment rate of a pension, including DSP, section 1064-E2 of the Act provides:
If a person is a member of a couple, add the couple's ordinary incomes (on a yearly basis) and divide by 2 to work out the amount of the person's ordinary income for the purposes of this Module.
Section 68(2) of the Administration Act details certain reporting requirements to Centrelink. It provides:
(2) The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a) inform the Department if:
(i) a specified event or change of circumstances occurs; or
(ii) the person becomes aware that a specified event or change of circumstances is likely to occur;
(b) give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c) give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
Section 1223(1) of the Act provides:
(1) Subject to this section, if:
(a) a social security payment is made; and
(b) a 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 1236(1A) of the Act provides for the writing off of a debt where it is appropriate:
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) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
Section 1237A(1) of the Act provides for waivers of debts that are caused solely by administrative error. Subsection 1237A(1) provides:
(1) Subject to subsection (1A), the Secretary must 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.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
Section 1237AAD of the Act provides for waiver of debts due to 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.
Whether the Applicant has incurred a debt of $11,146.20 for overpayment of DSP during the period 9 July 2009 to 18 January 2012
The Applicant was in receipt of DSP during the relevant period, 9 July 2009 to 18 January 2012. In recognition of the fact that couples needed to disclose their total joint income, he had reported to Centrelink that Ms Kylie earned $600 per week. As already stated above, and confirmed by Centrelink, that was incorrectly coded by Centrelink as $600 per fortnight.
The Respondent’s Statement of Fact and Contentions discloses that on 14 March 2013, upon receipt of ATO records, Centrelink noted that Ms Kylie had been under declaring her income to Centrelink. The amount disclosed to the ATO was $35,987 in the 2009/2010 year whereas to Centrelink it was $15,640. The SSAT noted that in the period 9 July 2009 to 18 January 2012, Ms Kylie earned income of $95,671.14 which was greater than the declared amount of $600 per week in September 2009. The SSAT also noted that Centrelink recorded income of $40,200 which was $600 per fortnight, and that accordingly Mr Russell was paid DSP at the incorrect rate. Centrelink calculated that, on that basis, Mr Russell had been paid $11,146.20 more DSP than he was entitled during the period of 9 July 2009 to 18 January 2012.
I have already stated above that Mr Russell relied upon his disclosure in 2009 of Ms Kylie’s income as $600 per week. He did not feel he had to read, or have read to him, or indeed respond to letters from Centrelink, because he had disclosed his wife’s income in 2009, and he told me nothing had changed. She was still doing the same job. He also told me that if his wife’s income varied slightly, he considered it would all even out over a period of time. He told me that neither he nor Ms Kylie noticed that her income had been recorded incorrectly by Centrelink. I conclude that is because they did not read Centrelink’s letters. The records confirm they did not report the error.
Accordingly, notwithstanding Ms Kylie was Mr Russell’s nominee, he was still responsible for reporting their income, and to read and respond to Centrelink’s correspondence. I find therefore in reliance on Centrelink’s calculations, that Mr Russell has incurred a debt to the Commonwealth of $11,146.20 in that he obtained the benefit of DSP paid at a rate to which he was not entitled during the relevant debt period.
Section 1223(1) of the Act provides:
(1) Subject to this section, if:
(a) a social security payment is made; and
(b) a 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.
I must then consider whether the debt must be paid back in part or in full, or whether there are grounds to write it off.
Whether the debt is recoverable; whether it should be written off or waived in full or in part
Section 1236(1A) of the Act provides for the writing off of a debt where it is appropriate:
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) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
I am not satisfied from the evidence that the debt is irrecoverable at law, or that Mr Russell has no capacity to repay the debt, which is currently being recovered at $20 per fortnight from his DSP benefit. His whereabouts are known, and it is cost effective for the Commonwealth to recover the debt. I am mindful that Mr Russell is separated, and lives under difficult financial conditions, and that it is likely he does not have the capacity to pay more than is being recovered, or to repay the debt in a lump sum. However, I am satisfied the debt should be recovered, and not written off, which in any case is only a deferral.
I have also considered the application of section 1237A(1) of the Act, which leads to waiver of a debt where there is sole administrative error of the Commonwealth, and section 1237AAD, which provides that in special circumstances a discretion may apply to waive a debt in part or in full.
For consideration of section 1237A(1) of the Act, I note that although Mr Russell notified Centrelink that his wife was earning $600 per week in 2009, Centrelink recorded that as $600 per fortnight. That was an error of the Commonwealth. However, the evidence before me satisfies me that neither Mr Russell nor his wife sought to correct the mistake. Mr Russell’s evidence was that he did not read or have Centrelink letters read to him, and assumed that once he had informed Centrelink of his wife’s income situation, which he said remained constant, he had fulfilled his duty. I have noted that apart from any other considerations, Ms Kylie’s income was not constant, and that by 2011/2012, her income had increased substantially. However it was not reported to Centrelink. Accordingly there was error of the Commonwealth, but also of Mr Russell.
It is clear from the case law that the meaning to be given to sole, in the consideration of sole administrative error is its ordinary meaning. In Re Gerhardt & Anor and Department of Education, Employment and Training [1996] AATA 173, the Tribunal stated:
The Secretary’s duty to waive (the debt), does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error.
Similarly in Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76, the Court stated:
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 a multiple causes.
I find therefore that the debt cannot be waived for sole administrative error, because it was not sole administrative error, but a combination of error of the Commonwealth and Mr Russell.
I move then to consider the application of section 1237AAD, pursuant to which a debt may be waived in part or in full. That discretion may be exercised if the debt did not arise from the debtor making a false statement or representation, or failing or omitting to comply with a provision of the Act, and special circumstances (other than financial hardship alone), that make it desirable to waive the debt, are found.
The term special circumstances is not defined in the Act. However, it has been considered in the case law many times. In ReBeadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal stated:
An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.
In Groth v Secretary, Department of Social Security [1995] FCA 1708, the Federal Court stated:
The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case (229), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.
In a more recent case, Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, Deputy President Forgie stated in part as follows:
The ‘special circumstances’ are not merely directed to the person's own circumstances. Rather, they are directed to those that are ‘special circumstances... that make it desirable to waive’. That necessarily requires a consideration of the person's individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it... He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement... The system of administration of the SS Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act.
Mr Russell submitted that he has special circumstances which support a waiver of the debt due to his health, impecuniosity, and because of the administrative error of the Commonwealth in recording his wife’s income incorrectly.
I am not satisfied that Mr Russell knowingly made a false statement or knowingly failed to comply with a provision of the Act. I accepted his evidence that he did not respond to Centrelink letters (as he is required to do pursuant to the Administration Act) because he thought he had disclosed his wife’s income in 2009, and she was still in the same employment and nothing had changed. He said that if she earned more or less in a particular period, he believed that would even out in the DSP calculations. The figures before me indicate that in 2011 and 2012 Ms Russell’s income increased substantially, so that it was not a case of minor fluctuations, even if that had been acceptable for purposes of calculating Mr Russell’s DSP.
In considering special circumstances, I noted that Mr Russell is reliant on his DSP benefit, has a Health Care Card to assist with medication and doctors, and that he now lives alone, and rents accommodation. I accept his evidence that the debt causes him stress.
However, I cannot be satisfied that there are special circumstances which would warrant a waiver of Mr Russell’s debt in part or in full. A small amount in repayment to the Commonwealth is being recovered through Mr Russell’s DSP benefit. I am satisfied that his circumstances are not so unusual as to distinguish his from others in similar positions.
Mr Russell’s circumstances are not sufficiently special to warrant exercising the discretion to waive all or part of the debts under section 1237AAD of the Act. He had the benefit of public money, $11,146.20 during the period 9 July 2009 and 18 January 2012 to which he was not entitled, and it must continue to be recovered.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 41 (forty -one) paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member
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Associate
Dated 20 February 2015
Date of hearing 16 January 2015 Applicant In person Advocate for the Applicant Ms Kylie Russell (wife) Solicitor for the Respondent Ms K Martini, Department of Human Services
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