JEFFREY TOWNSON and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2013] AATA 321

[2013] AATA  321

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2013/0024
Re	JEFFREY TOWNSON
APPLICANT
And	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT

DECISION

Tribunal	Mr R G Kenny, Senior Member
Date	20 May 2013
Place	Brisbane

The Tribunal affirms the decision under review.

..........................[SGD]..............................................

Mr R G Kenny, Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances  – Age pension – Failure to give timely notification of income – Overpayment of age pension a debt due to the Commonwealth – No basis for writing off debt – No special circumstances making it desirable to waive debt – Decision under review affirmed

LEGISLATION

Social Security Act 1991 (Cth) ss 8, 23, 1064, 1223, 1236, 1237A, 1237AAD

Social Security Act (Administration) 1999 (Cth) s 68

CASES

Secretary Department of Social Security v Hales (1998) 82 FCR 154

Beadle v Director-General of Social Security (1985) 7 ALD 670

Beadle and Director-General of Social Security (1984) 1 AAR 362

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

Mr R G Kenny, Senior Member

BACKGROUND

1. Jeffrey Townson (the applicant) was in receipt of the age pension in accordance with the Social Security Act1991 (Cth) (the Act) from 1 July 2003 until 7 July 2009 (the relevant period). On 15 July 2009, a Centrelink delegate determined that the applicant had been overpaid in the amount of $7,058.31 in the relevant period. That decision was affirmed by an authorised review officer on 27 September 2012 and by the Social Security Appeals Tribunal on 6 December 2012.

   ISSUES, LEGISLATION AND SUBMISSIONS

2. Under s 1064 of the Act, age pension is calculated using the Pension Rate Calculator. This is found at the end of s 1064-A1 of the Act and operates such that payments of age pension are adjusted by taking account of a recipient’s ordinary income, which is defined to include “an income amount earned, derived or received by the person for the person’s own benefit”[1]. Where a recipient is overpaid an amount of age pension, the overpayment amount is a debt due to the Commonwealth.[2] Any such debt may be written off or waived in circumstances set out in the Act.[3]

   [1] See s 8(1) of the Act.

   [2] See s 1223(1) of the Act.

   [3] See ss 1236, 1237A and s 1237AAD of the Act.

3. Mr Hamilton, for the respondent, submitted that the applicant had not advised Centrelink of his income at any time during the relevant period. This meant that he was paid as if he had no earnings during that time and this was the reason for the overpayment of his age pension which was a debt owed to the Commonwealth. Mr Hamilton noted that the applicant was repaying the debt through withholdings from his current Centrelink benefits and submitted that, on that basis, the debt should not be written off. He submitted that the applicant had received and read notices sent to him by Centrelink advising him to report his income details and that, therefore, the overpayments of age pension were not due solely to error on the part of the Commonwealth. He submitted that the applicant’s circumstances were similar to those of many other social security recipients and that there were no grounds to justify waiver of the debt. Accordingly, he submitted that the decision under review should be affirmed.

4. The applicant did not challenge the basis on which Centrelink raised the debt against him or its amount. He agreed that he received and read letters sent periodically by Centrelink which required him to provide income details. However, he had relied on advice provided by his accountant in 2000 that he was not obliged to provide income details if he was informing the Australian Taxation Office (ATO) of his income. He agreed that he was managing financially, albeit barely, with the withholding of $20 per week from his current payments. He described aspects of his life which he wanted the Tribunal to take into account when considering the waiver of the debt for special circumstances. His wife is in ill health and he receives a carer benefit from Centrelink for his role in looking after her. He also has health problems of an orthopaedic nature, hypertension and prostate nature. Much of the Centrelink benefits received by him and his wife are spent on medications. He is responsible for all household duties and for his and his wife’s transportation needs. He visits daily his son who has multiple sclerosis and lives in care, the costs of which are met by his son. The applicant and his wife live in a rental home, have no savings and have assets which comprise personal and household items as well as a 29 year old car which the applicant is able to drive to fulfil his and his wife’s transport needs. His only debt is that relating to his age pension overpayment.

   CONSIDERATION

   The debt

5. I am satisfied that the concession by the applicant that he was overpaid the amount of $7,058.31 during the relevant period was properly made. In evidence were Centrelink records by which that amount was calculated. I am also satisfied that that amount is a debt due by him to the Commonwealth under s 1223(1) of the Act.

   Writing off the debt

6. Provision is made for a debt to be written off under s 1236 of the Act. This is the case if the debt is irrecoverable at law; or the debtor has no capacity to repay the debt; or the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or it is not cost effective for the Commonwealth to take action to recover the debt. The only component of that provision of potential relevance in this matter is that relating to lack of the applicant’s capacity to repay the debt. He has been repaying the debt to the respondent through deductions from his fortnightly payments and I am satisfied that there is capacity for that to be done on a continuing, albeit long term, basis. In that situation, the debt should not be written off.

   Waiver of debt: s 1237A of the Act

7. A debt may be waived under s 1237A of the Act, which reads:

   Administrative error

   (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.

   (1A)  Subsection (1) only applies if:

   (a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

   (b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

   whichever is the later.

8. The first element to be satisfied under that provision of the Act is that the debt must be attributable solely to administrative error made by the Commonwealth. The applicant conceded that he had received letters from Centrelink throughout the relevant period which referred to the income relied on by Centrelink to determine the level of his age pension. Copies of the letters were in evidence and the amount stated as the applicant’s annual income is, variously, 12 or 14 cents.[4] He was employed as a taxi-driver throughout the relevant period and, though his income varied from day to day, he agreed that his average annual income was considerably in excess of the amount in the Centrelink letters. I am satisfied that those letters comprise notices under s 68 of the Social Security (Administration) Act 1999 (Cth) which obliged the applicant to provide the information requested. I am also satisfied that he did not advise Centrelink of his income during the relevant period. His reason for failing to do so was that he understood, from advice given by his accountant some time before the relevant period, that he did not need to do so provided he kept the ATO informed of his income. Clearly, that information was incorrect. Because he did not provide the requested information to Centrelink, it follows that the Commonwealth was not solely responsible for the overpayment of age pension to him. The debt may not be waived under s 1237A of the Act.

   [4] See for example Exhibit 1, T-documents, pp. 173, 176, 179, 181, 184 and 188.

   Waiver of debt: s 1237AAD of the Act

9. A debt may also be waived under s 1237AAD of the Act, which reads:

   1237AAD Waiver in special circumstances

   The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

   (a) the debt did not result wholly or partly from the debtor or another person knowingly:

   (i)  making a false statement or 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.

10. I am satisfied that the applicant believed he was complying with what he understood to be the notification requirements in relation to his income and that, accordingly, he did not knowingly make a false statement or false representation about that to Centrelink. The Act provides no guidance as to the meaning of the term “special circumstances” in s 1237AAD of the Act. In Secretary Department of Social Security v Hales[5] (Hales), French J, in the context of special circumstances, said:[6] 

    The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.

    [5] (1998) 82 FCR 154.

    [6] Op cit at 162.

11. In Beadle v Director-General of Social Security,[7] the Full Federal Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss”. There, the Court affirmed the decision of the Tribunal[8] which had acknowledged that the term was “incapable of precise or exhaustive definition” and that, to be special, the circumstances “must have a particular quality of unusualness that permits them to be described as special”. In Groth v Secretary, Department of Social Security,[9] Kiefel J observed that special circumstances:

    would require something to distinguish ... [the] ... case from others, to take it out of the usual or ordinary 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.

    [7] (1985) 7 ALD 670 at 674.

    [8] Re Beadle and Director-General of Social Security (1984) 1 AAR 362 at 364.

    [9] (1995) 40 ALD 541 at 545.

12. The applicant’s evidence was that he and his wife struggle to meet their costs of living. This is especially acute when he has to meet a periodic cost such as the annual car registration fee. This is made worse because he is unable to obtain an advance payment from Centrelink due to the existence of the debt he owes to Centrelink. They have problems with their health and this requires them to outlay significant amounts on medications. Despite that, his evidence was that they are able to cope financially and it is fortunate that the applicant, despite his health concerns, is able to meet the responsibilities of caring for his wife and undertaking the tasks associated with maintaining the household. I am satisfied that the circumstances of the applicant are not out of the ordinary and do not have a particular quality of unusualness that permits them to be described as special such that it is desirable to waive the debt raised against him. In Hales,[10] French J noted that “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 am satisfied that this is applicable in the applicant’s case. Mr Townson was not entitled to the monies which he was overpaid in the relevant period and I am satisfied that his circumstances are not special such that the discretion under s 1237AAD of the Act should be exercised in his favour.

    [10] (1998) 82 FCR 154 at 155.

    DECISION

13. The decision is affirmed.

I certify that the preceding 13 (thirteen) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member.

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Associate

Dated 20 May 2013  

Date of hearing	3 May 2013
Applicant	In person
Solicitors for the Respondent	Mr Bob Hamilton, departmental advocate