Johnson; Department of Family and Community Services

[2002] AATA 551

DECISION AND REASONS FOR DECISION

[2002] AATA 551

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2002/312
GENERAL ADMINISTRATIVE  DIVISION
  Re:         SECRETARY TO THE
  DEPARTMENT OF FAMILY AND
  COMMUNITY SERVICES
  Applicant
  And:       DANIEL JOHNSON
  Respondent

DECISION

Tribunal:       G.D. Friedman, Member
Date:             18 June 2002
Place:            Melbourne

Decision:For the reasons given orally at the hearing, the Tribunal sets aside the decision under review and substitutes a decision that the balance of the debt owed by the respondent continue to be recovered at the rate of $10.00 per fortnight from the respondent's disability support pension.

(sgd) G.D. Friedman
  Member

1. SOCIAL SECURITY - recovery of debt to Commonwealth - write-off - whether cost-effective - capacity to repay
   Social Security Act 1991 s1236

REASONS FOR DECISION

18 June 2002  G.D. Friedman, Member

1. This is an application by the Secretary, Department of Family and Community Services (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 18 February 2002. The SSAT varied a decision of Centrelink dated 5 October 2001 and substituted a decision that recovery of the remainder of a debt to the Commonwealth owed by Daniel Johnson (the respondent) be written off. 

2. At the hearing of this matter on 18 June 2002 Ms E. King, an advocate with Centrelink, represented the applicant and Ms M. Johnson, wife of the respondent, presented the case on behalf of the respondent, who was unable to attend the hearing.
   BACKGROUND

3. In 1994, while living in Brisbane, the respondent was notified that he owed a debt to the Commonwealth in the amount of $24,308.49.  He was prosecuted and convicted.  The Court made a reparation order and recovery of the debt commenced.  Between 18 July 1994 and 11 October 2000 $7,075.54 was recovered, leaving a balance of $17,232.95, after which recovery was deferred for twelve months.  In March 2000 the respondent requested that the debt be waived or permanently written off.  On 5 October 2000 the applicant decided not to waive or write off the debt, although repayments were reduced to $10 per fortnight because of the respondent's financial circumstances.

4. Following a request by the respondent for a review of the decision, recovery was deferred for twelve months.  The applicant re-commenced recovery of the debt on the expiry of this period, but deferred recovery for a further two months pending review.  On 17 December 2001 an authorised review officer decided to affirm the decision not to waive or write off the debt.  On 10 January 2002 the respondent sought review by the SSAT and in its decision the SSAT found that recovery of the debt would not be cost-effective.  On 28 March 2002 the applicant lodged an application with the Tribunal for review of the decision by the SSAT.
   EVIDENCE

5. The Tribunal received into evidence the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1-T24).   

6. The respondent's wife gave oral evidence to the Tribunal.  She said that the debt arose when she and the respondent were living in Brisbane and involved payments received from Centrelink.  She told the Tribunal that in 1998 the respondent was struck by a motor vehicle and suffered head injuries.  Since his discharge from hospital he has resided in a nursing home and requires high-level care.  Ms Johnson said that the respondent receives disability support pension in the amount of $427.60 per fortnight, and his expenses are estimated at $408.36, of which $336.36 is for nursing home costs and the remainder includes clothing, outings, haircuts, pharmacy needs, fruit and confectionery.  He has no assets.  Ms Johnson told the Tribunal that she currently contributes $108.00 per month from her own funds towards the respondent's pre-paid funeral plan, and has about $40.00 remaining each fortnight after paying all expenses.  She also stated that the respondent's expenses for items such as medication vary from month to month.  

7. Ms Tracey Rodoni, Financial Counsellor with Casey Community Health Service, told the Tribunal that she has been assisting the respondent and Ms Johnson since February 1999.  She said that generally the respondent's expenses are met from his income from Centrelink.  She also agreed that Ms Johnson generally manages to live within her own budget, although occasionally the respondent requires extra expenditure on items such as outings, food and clothing.  Ms Rodoni said that the respondent does not have the capacity to repay the debt and that Ms Johnson should not have to make the payments for the respondent's pre-paid funeral plan.     
   CONSIDERATION OF THE ISSUES

8. Section 1236 of the Social Security 1991 (the Act) provides in relation to the writing off of a debt:

   (1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

   (1A)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.

   (1C)For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:

   (a)       deductions from the debtor's social security payment; or

   (b)deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or

   (c)       setting off under section 84A of that Act;
   the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.

9. Ms King submitted that the debt should not be written off. She said that in accordance with s1236(1A)(b) the respondent has the capacity to repay the debt, as the amount he receives as disability support pension is sufficient to cover his essential living expenses and the recovery of the debt at the rate of $10.00 per fortnight. She stated that for this reason his circumstances do not amount to severe financial hardship under s1236(1C). She said that the cost to the applicant of computer-generated recovery of debt is negligible, so s1236(1A)(d) does not apply in this case. Ms King submitted further that in the circumstances of this application there were no applicable provisions under the Act for waiver of the debt.

1. In reaching its decision the Tribunal takes into account the written material, the oral evidence and the submissions made at the hearing.  The Tribunal notes Ms Johnson's evidence, that after paying for essential items for the respondent's daily needs and the $10.00 per fortnight in recovery by the Commonwealth, there is little remaining; and at times the amount of expenses may exceed the level of income.  The Tribunal also notes Ms Johnson's evidence that she has approximately $40.00 per fortnight remaining after expenses.

2. The Tribunal agrees with Ms Rodoni that the respondent and Ms Johnson generally manage to live within their means and are able to meet essential expenses for daily needs and other items such as outings, confectionery and fruit in addition to that provided at the nursing home. For these reasons the Tribunal accepts the submission by Ms King that in the circumstances the respondent's situation does not constitute severe financial hardship, so that s1236(1A)(b) does not apply.

3. The Tribunal also agrees with Ms King that the cost of computer-generated recovery measures is negligible, so s1236(1A)(d) does not apply. Consequently the Tribunal finds that there are no grounds for the debt to be written off. There are no applicable provisions for waiver of the debt.
   DECISION

4. The Tribunal sets aside the decision under review and substitutes a decision that the balance of the debt owed by the respondent continue to be recovered at the rate of $10.00 per fortnight from the respondent's disability support pension.

   I certify that the 13 preceding paragraphs are a true copy of the reasons for the decision herein of 
   G.D. Friedman, Member

   (sgd)       Natalie Horwood

   Clerk

   Date of Hearing:  18 June 2002
   Date of Decision:  18 June 2002
   Advocate for the applicant:         Ms E King, advocate for Centrelink
   Advocate for the respondent:       Ms M. Johnson, wife of respondent