Kalepo and Secretary, Department of Social Services (Social services second review)

Kalepo and Secretary, Department of Social Services (Social services second review) [2018] AATA 313 (26 February 2018)
Division:GENERAL DIVISION
File Number: 2017/2253
Re:Iele Kalepo
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D K Grigg
Date:26 February 2018
Place:Brisbane

The Tribunal affirms the decision under review.
..............................[SGD]..........................................
Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – disability support pension – overpayment - whether member of a couple – decision under review affirmed
LEGISLATION
Guide to Social Security Law
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531; 53 ALD 277
Cocks v Centrelink [2000] FCA 1248
In the Marriage of Todd (No 2) (1976) 25 FLR 260
Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Secretary, Department of Families, Housing, Community Services & Indigenous Affairs and Nicolaas [2009] AATA 416
Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Secretary, Department of Social Security v Hales [1997] FCA 1565; (1998) 82 FCR 154
REASONS FOR DECISION
Member D K Grigg
26 February 2018

Mr Kalepo has been a recipient of the Disability Support Pension (“DSP”) since September 2008.[1]
[1] Exhibit 1, T Documents, T13, page 199, Centrelink record.
The rates at which people are paid DSP is determined using the Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991 (Cth) (“Act”).[2] The maximum basic rate payable varies depending upon a person’s family situation. The maximum basic rate payable to a member of a couple is less than that of a person who is not a member of a couple.[3]
[2] Section 117, Act.
[3] Section 1064-B1, Act.
Mr Kalepo is married to Mrs Vailo Kalepo. However, in February 2012 Mr Kalepo advised the Department of Human Services (“Centrelink”) that he had separated from his wife in May 2010 and that due to his poor health, following a work accident, he had returned to the marital home on 26 January 2012 for assistance.[4] Mr Kalepo also informed Centrelink that his wife worked at a nursing home.
[4] Exhibit 1, T Documents, T4, pages 42-53, Relationship details form – Separated under one roof completed by Mr
Kalepo dated 3 February 2012; Exhibit 1, T Documents, T11, page 130, Centrelink record.
A Centrelink officer recorded that Mr Kalepo said he was not sure if he would get back together with his wife.[5]
[5] Exhibit 1, T Documents, T11, page 130, Centrelink record.
On 12 June 2012 Centrelink informed Mr Kalepo that it had decided that Mr Kalepo was living as a member of a couple with his wife and that Mrs Kalepo’s income must be taken into account in assessing the rate of his DSP.[6]
[6] Exhibit 1, T Documents, T10, pages 85-86, Letter from Centrelink to Mr Kalepo dated 12 June 2012.
On 9 August 2012 Mr Kalepo telephoned Centrelink informing them that he believed he was not a member of a couple and that he planned to move out of the marital home once he had recovered from his injury.[7] On 13 August 2012 a Centrelink officer explained the reasons for Centrelink’s decision and Mr Kalepo decided to withdraw his request for a review. During that conversation Mr Kalepo told the Centrelink officer that he
[7] Exhibit 1, T Documents, T11, page 136, Centrelink record.
[8] Exhibit 1, T Documents, T11, page 138, Centrelink record.
lives with his wife for convenience and financial reasons, that they present to family, friends and the community as a couple, they are invited out as a couple, holiday together, eat together and do laundry together. Mr Kalepo was advised that he is eligible for the partnered rate of DSP and Centrelink’s records indicate that Mr Kalepo said he understood.[8]
On 29 August 2012 Mr Kalepo told Centrelink his wife had told him to move out, but that he does not have sufficient funds. Mr Kalepo asked if the single rate of pay could be reinstated.[9]
[9] Exhibit 1, T Documents, T11, page 140, Centrelink record.
In October 2012 Centrelink wrote to Mrs Kalepo’s employer requesting information regarding Mrs Kalepo’s employment and income.[10] Mrs Kalepo’s employer informed Centrelink that during the period 12 June 2012 and 20 May 2013 Mrs Kalepo was employed part-time.[11]
[10] Exhibit 1, T Documents, T5, pages 54-58, Request for employee information dated 11 October 2012.
[11] Exhibit 1, T Documents, T5, pages 54-58, Request for employee information dated 11 October 2012; T6, pages
59-69, Employment report form dated 6 June 2013.
Mr Kalepo told Centrelink that he did not declare income from his partner because he was only staying with his wife due to his ill-health and that he did not know what she earns.[12]
[12] Exhibit 1, T documents, T11, page 167, Centrelink record.
Between 28 June 2012 and 29 May 2013 (“Debt Period”) Mr Kalepo received numerous letters from Centrelink which indicated that Mrs Kalepo’s income was not being taken into account in calculating the rate of DSP and reminding Mr Kalepo that he was under an obligation to inform Centrelink within 14 days if his partner earns any income.[13]
[13] Exhibit 1, T Documents, T10, pages 89-121, Letters from Centrelink to Mr Kalepo between 12 June 2012 and 27
May 2013.
On 21 May 2013 Mr Kalepo made an enquiry regarding making a claim for a single parenting payment. A Centrelink officer phoned Mr Kalepo’s referee, who said he did not know much about Mr Kalepo’s business, that he had heard gossip about Mr Kalepo’s marriage separation and that Mr Kalepo telephoned him on 20 May 2013 to tell him he had separated from his wife.[14]
[14] Exhibit 1, T Documents, T11, page 159, Centrelink record.
Mr Kalepo informed Centrelink on 21 May 2013 that he was living in his car as he had recently separated from his family.[15]
[15] Exhibit 1, T Documents, T11, page 161, Centrelink record.
On 4 June 2013 Centrelink sent Mr Kalepo a letter requesting proof of separation.[16]
[16] Exhibit 1, T Documents, T11, page 159, Centrelink record.
On 27 June 2016 Centrelink wrote to Mr Kalepo informing him that during the Debt Period Mrs Kalepo’s earnings had not been taken into account in calculating his DSP and that as a result Mr Kalepo was overpaid his DSP by $12,132.99 (“DSP Debt”)[17] which was now a debt recoverable by Centrelink.[18]
[17] Exhibit 1, T Documents, T12, pages 182-191, Centrelink debt calculations.
[18] Exhibit 1, T Documents, T10, pages 125-126, Letter from Centrelink to Mr Kalepo dated 27 June 2016.
Mr Kalepo contends that his rate of payment should have been assessed as a single person under section 24 of the Act, because he was not a member of a couple during the Debt Period.
Section 24 relevantly provides:
(1) Where:
(a)    a person is legally married to another person; and
(b)    the person is not living separately and apart from the other person on a permanent or indefinite basis; and
(c)    the Secretary is satisfied that the person should, for a special reason in the particular case, not be treated as a member of a couple;
the Secretary may determine, in writing, that the person is not to be treated as a member of a couple for the purposes of this Act.

Claim History

As a result of Centrelink’s decision to raise the DSP Debt, Mr Kalepo sought a review by an Authorised Review Officer (“ARO”). The appeal to the ARO was unsuccessful on the grounds that Mr Kalepo was a member of a couple during the Debt Period and had not declared his partners earnings and that there was no basis for the DSP Debt to be waived.[19]
[19] Exhibit 1, T Documents, T7, pages 70-77, Authorised Review Officer’s Decision and Notes dated 10 October
2016.
Mr Kalepo then lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal. The SSCSD rejected Mr Kalepo’s claim and affirmed the ARO’s decision on 21 March 2017.[20]
[20] Exhibit 1, T Documents, T2, pages 3-9, SSCSD’s Decision and Reasons for Decision dated 21 March 2017.
At present Centrelink is withholding $15.00 per fortnight from Mr Kalepo’s DSP towards repayment of the DSP Debt.[21]
[21] Exhibit 1, T Documents, T8, page 78, Debt information.
Mr Kalepo has sought a review of the SSCSD’s decision by this Tribunal.[22]
[22] Exhibit 1, T Documents, T1, pages 1-2, Application for Second Review of a Decision dated 13 April 2017.

ISSUES FOR DETERMINATION

The Tribunal has to decide whether:
(a)Mr Kalepo was a member of a couple during the Debt Period; and, if yes
(b)Mr Kalepo should, for a special reason in this particular case, not be treated as a member of a couple (s 24(2)(d) the Act);
(c)Mr Kalepo has been overpaid his DSP during the Debt Period; and, if yes,
(d)the DSP Debt is recoverable; and
(e)the DSP Debt should be written off for a period or waived.

WAS MR KALEPO A MEMBER OF A COUPLE?

Section 4 of the Act, relevantly, defines a person as a "member of a couple" if the person is legally married to another and is not living separately and apart on a permanent or indefinite basis.[23]
[23] Subsection 4(2)(a), Act
Pursuant to section 4(3) of the Act, in determining whether or not two people are to be regarded as a member of a couple, all the circumstances of the relationship might be taken into consideration including in particular the following:[24]
[24] See Melvin v Secretary, Department of Social Security [2016] FCA 375, at [23]-[24].
(a) the financial aspects of the relationship, including:
(i) any joint ownership of real estate or other major assets and any joint liabilities; and
(ii) any significant pooling of financial resources especially in relation to major financial commitments; and
(iii) any legal obligations owed by one person in respect of the other person; and
(iv) the basis of any sharing of day‑to‑day household expenses;
(b) the nature of the household, including:
(i) any joint responsibility for providing care or support of children; and
(ii) the living arrangements of the people; and
(iii) the basis on which responsibility for housework is distributed;
(c) the social aspects of the relationship, including:
(i) whether the people hold themselves out as married to, or in a de facto relationship with, each other; and
(ii) the assessment of friends and regular associates of the people about the nature of their relationship; and
(iii) the basis on which the people make plans for, or engage in, joint social activities;
(d) any sexual relationship between the people;
(e) the nature of the people’s commitment to each other, including:
(i) the length of the relationship; and
(ii) the nature of any companionship and emotional support that the people provide to each other; and
(iii) whether the people consider that the relationship is likely to continue indefinitely; and
(iv) whether the people see their relationship as a marriage‑like relationship or a de facto relationship.[25]
[25] Section 4(3), Act.
(My emphasis)
The factors listed in section 4(3) of the act are not an exhaustive list and no one factor is determinative.[26] The circumstances of each case must be looked at in totality having regard to all the material facts.[27]
[26] Pelka v Secretary, Department of Family and Community Services [2006] FCA 735 at [51].
[27] Staunton-Smith v Secretary, Department of Social Security (1991) 25 ALD 27, at 32-33.
Watson J in In the Marriage of Todd (No 2) (1976) 25 FLR 260 (at 262–263), said of marriage:
What comprises the marital relationship for each couple will vary. Marriage involves many elements some or all of which may be present in a particular marriage — elements such as dwelling under the same roof, sexual intercourse, mutual society and protection, recognition of the existence of the marriage by both spouses in public and private relationships.

Mr and Mrs Kalepo’s Relationship
The Financial Aspects of the Relationship

During the Debt Period Mr and Mrs Kalepo were legally married. Mr Kalepo told the Tribunal that while he was living with Mrs Kalepo:[28]
·he made no contributions towards the mortgage
·they had no combined assets
·they had no joint bank accounts and shared no debts
·he paid approximately $250 a fortnight to his wife by way of rent[29]
·he had no will and no superannuation left, having used what he had to buy a car
·he did not contribute to the paying of bills
·when he was able he gave the children what they required
[28] Exhibit 1, T Documents, T4, pages 42-53, Relationship details form dated 3 February 2012.
[29] Exhibit 1, T Documents, T4, page 44, Relationship details form dated 3 February 2012.
Mr Kalepo explained that the Centrelink payments he was receiving were not enough to pay for his medications and food and that Mrs Kalepo gave him no money. Mr Kalepo said he had no family here other than his children who wanted him to stay and that the only reason he moved back into the home was because he was on crutches for 6 – 8 months and needed assistance.
No documentary evidence, such as bank statements, was supplied by Mr Kalepo to support his contentions. It is clear that he was contributing to the finances by way of rent and that this money would have been used by Mrs Kalepo towards the payments of bills and other general household expenses. There is no evidence of pooling of resources “in relation to major commitments”[30] during the Debt Period. Mr Kalepo was however benefiting financially by residing in his wife’s home during his period of convalescence.
[30] Pelka v Secretary, Department of Family and Community Services [2006] FCA 735, at [52].

The Nature of the Household

The children of the marriage were teenagers during the Debt Period. Mr Kalepo explained that the house is a 3 bedroom house and that he stayed in the lounge room. Mr Kalepo said he did not cook or do any housework, particularly as he was ill and he needed his children’s assistance around the house.[31]
[31] Exhibit 1, T Documents, T4, pages 42-53, Relationship details form dated 3 February 2012.

The Social Aspects of the Relationship

Mr Kalepo explained that he had separated and reconciled with his wife on numerous occasions and this is confirmed by Centrelink records.[32] Mr and Mrs Kalepo clearly have an “on again off again” or unstable relationship.
[32] For example, see Exhibit 1, T documents, T 11, page 163, Centrelink record; Exhibit 5 Centrelink records.
A Centrelink file note records that Mr Kalepo said that he and his wife presented to family and friends as a couple, and holiday together, visiting New Zealand family, as a couple.[33] At the hearing Mr Kalepo says he does not recall saying that. However, there is no reason to doubt the accuracy of the file note kept by the Centrelink officer. Mr Kalepo also acknowledged that he shared family meals with Mrs Kalepo and their children.[34]
[33] Exhibit 1, T Documents, T11, page 138, Centrelink record.
[34] Exhibit 1, T Documents, T11, page 130, Centrelink record.
There is no other evidence that Mr and Mrs Kalepo held each other out as being together or that they otherwise socialised together.
Between 27 February 2013 until 11 March 2013 Mr and Mrs Kalepo travelled overseas together for approximately 2 weeks to New Zealand to visit family.[35] The Tribunal also notes that Mr Kalepo’s need for assistance must have lessened in order to enable him to travel overseas. This is an example of giving an appearance to others that they were operating as a couple.
[35] Secretary’s Supplementary Submissions dated 2 February 2018, Attachment E.

Any Sexual Relationship between the People

Mr Kalepo told the Tribunal there was no sexual relationship[36] and there is no evidence to the contrary.
[36] See also Exhibit 1, T Documents, T4, page 46, Relationship details form – Separated under one roof completed
by Mr Kalepo dated 3 February 2012 where Mr Kalepo indicated that he had no sexual relationship with Mrs Kalepo.

The Nature of the People’s Commitment to Each Other

Mr Kalepo accepted at the hearing that he had hoped to reconcile with his wife during the time that he stayed with her, but that they had not managed to achieve that goal, although he was pleased she had cared for him. The Tribunal also notes that Mr Kalepo indicated in the Separated Under One Roof Form that he was not sure if he would get back together with his wife[37] and that he told a Centrelink officer on 12 June 2012 that “he is trying [to reconcile] but it’s hard because women always change their mind”.[38] The move back in was primarily driven by Mr Kalepo’s need for assistance. Mr Kalepo said his wife provided no companionship or emotional support and was simply assisting him because of his medical condition. Further, there is no evidence from Mrs Kalepo that she also had hoped or intended to reconcile. In fact in her statement she says she allowed him to stay with her because he needed care.[39]
[37]         Exhibit 1, T Documents, T4, page 43, Relationship details form – Separated under one roof completed by Mr
Kalepo dated 3 February 2012
[38]         Exhibit 1, T Documents, T11, page 130, Centrelink record.
[39]         Exhibit 3, Statement of Mrs Kalepo dated 3 October 2017.
Mr and Mrs Kalepo commenced a de facto relationship in 1998 and were married in 2006. Centrelink records indicate between 1999 and 2006 Mr Kalepo reported that he had separated from his wife on four occasions.[40] Mrs Kalepo provided a statement which indicated that she had separated from her husband and that she allowed him to stay with her and the children for a short period of time because of his need for care and assistance due to his medical condition.[41] Mrs Kalepo confirmed that he stayed with her until he was well enough to look after himself.
[40] Exhibit 5 Centrelink records.
[41] Exhibit 3, Statement of Mrs Kalepo dated 3 October 2017.
Mr and Mrs Kalepo say that they reconciled in September 2014.[42]
[42] Exhibit 3, Statement of Mrs Kalepo dated 3 October 2017.
There was some degree of confusion at the hearing regarding the exact length of time that Mr Kalepo remained under the same roof with his wife. Various records of Mr Kalepo’s residential addresses during the Debt Period have been obtained by the Secretary and
Mr Kalepo has provided some tenancy records to indicate when he was paying rent at various alternative accommodations.[43] The records indicate that:
(a)
Mr Kalepo was not living with Mrs Kalepo after May 2013 until they reconciled

15 months later in September 2014; and
(b)Mr Kalepo was not residing with Mrs Kalepo between May 2010 and January 2012.
[43] Exhibit 4, Tenant Ledger and Rental Statements; Secretary's Supplementary Submissions dated 2 February
2018.
However, there are no tenant ledgers indicating that Mr Kalepo was living somewhere other than with his wife during the Debt Period.
The Tribunal does not, considering the totality of the circumstances, consider it necessary to reconcile the exact dates during which Mr Kalepo resided at Mrs Kalepo’s home. That Mr Kalepo resided with Mrs Kalepo is a factor to be taken into account in determining whether or not Mr Kalepo was a member of a couple. Mr Kalepo originally indicated to Centrelink that he would only be residing with Mrs Kalepo for 4 to 6 months, until approximately June through to August 2012, yet, Mr Kalepo remained in the home for some time after that. The Tribunal finds that, based on the available records, Mr Kalepo was residing in the family home between 28 June 2012 to 20 May 2013.[44]
[44] Secretary’s Supplementary Submissions dated 2 February 2018.

The Secretary nevertheless accepts that Mr Kalepo and his wife had marital difficulties during the Debt Period.

Conclusion

During the relevant Debt Period, reconciliation remained a possibility, as they have reconciled on numerous occasions before, and no steps had been taken by either Mr or Mrs Kalepo to permanently end the relationship.
Other than Mrs Kalepo’s statement, Mr Kalepo provided no statements from other family or friends regarding the nature of their relationship.
Considering the totality of the above factors, the Tribunal finds that Mr Kalepo was a member of a couple under section 4 of the Act during the Debt Period and therefore was overpaid DSP during the Debt Period.

WAS MR KALEPO OVERPAID DSP PAYMENTS?

If a person is not entitled to the social security benefit they have obtained, 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 1223(1) of the Act.
The Tribunal has found that Mr Kalepo was a member of a couple during the Debt Period and therefore, Mrs Kalepo’s income should have been taken into account in calculating

Mr Kalepo’s rate of DSP.
On the basis of the above factors, the Tribunal finds that Mr Kalepo was a member of a couple under section 4 of the Act during the Debt Period.

IS THERE A SPECIAL REASON THAT MR KALEPO SHOULD NOT BE TREATED AS A MEMBER OF A COUPLE PURSUANT TO SECTION 24?

In determining whether there is, for the purposes of s 24(2) of the Act, a special reason why Mr Kalepo should not be treated as a member of a couple, what must be considered is the position of Mr Kalepo, not the position of the couple of which he is a member: Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at
536; 53 ALD 277 at 282 per French J (“Boscolo”).
The Respondent referred me to the Guide to Social Security Law (“the Guide”) which is used by the Department. Section 2.2.5.50 of the Guide sets out how section 24 is to be applied. The Tribunal is not bound to apply the Guide, but it may, and it should, apply it in exercising its discretion, unless it is unlawful or “tends to produce an unjust decision”.[45]
[45] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, at 645.
Section 2.2.5.50 provides that the questions to be considered are whether there is:
(a)A special reason in this couple’s circumstances;
(b)A lack of being able to pool resources as a result of the couple’s circumstances; and
(c)Financial difficulty as a result of the couple’s circumstances.
There is some debate as to whether section 24 of the Act poses 3 questions or fewer.[46] While financial difficulty and an ability, or lack thereof, to pool resources may be relevant in the circumstances to an exercise of the discretion, they are only relevant if they constitute a “special reason” which is all the section prescribes.
[46] See Purdie and Secretary, Department of Social Services [2013] AATA 743, at [14].
In order for Mr Kalepo to not be treated as a member of a couple for the purposes of calculating his DSP, the Secretary needs to be satisfied that there is a special reason for why he should not be so treated. In the event that there is such a special reason, the Secretary may then determine that the person is not to be treated as a member of a couple.[47] That is under section 24 of the Act, even if a special reason exists, the Secretary may still decide not to exercise the discretion.
[47] Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at [19].
No argument was raised by Mr Kalepo, because his sole contention is that he was not a member of a couple.
The Tribunal notes that during the Debt Period Mr and Mrs Kalepo were married, living in the matrimonial home, caring for each other, parenting their children, holidaying together, utilising Mr Kalepo’s DSP and Mrs Kalepo’s income.
There are no reasons before the Tribunal which give rise to a special reason to explain why Mr Kalepo should not be treated as a member of a couple.
Mr Kalepo provided a Statement of Financial Circumstances in January 2017, but he left it blank.[48] There is no evidence that Mr Kalepo’s current living expenses far exceed the total of the DSP benefits he receives.
[48] Exhibit 1, T-documents, T9, pages 81-84, Statement of Financial Circumstances, dated 16 January
2017.
The core requirement for special reason[s] is that there be something “unusual or different”: French J in Boscolo, at [18]; Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, Barker J, at [37].
In Cocks v Centrelink [2000] FCA 1248, O’Loughlin J said that it may be appropriate to exercise the discretion where a couple could not pool resources. In that case Mrs Cocks had nothing to contribute to the pool. In Secretary, Department of Families, Housing, Community Services & Indigenous Affairs and Nicolaas [2009] AATA 416 however, it was found that although the applicant’s partner was unable to contribute to the pooling of resources, it did not weigh in favour of exercising the discretion. Each situation has to be considered based on its own circumstances.
In these circumstances the Tribunal finds that no special reason exists to enliven the discretion in section 24 of the Act.
Mr Kalepo raised no other special reason which may exist to enliven the discretion in section 24.

WAS MR KALEPO OVERPAID DSP PAYMENTS?

If a person is not entitled to the social security benefit they have obtained, 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 1223(1) of the Act.
The Tribunal has found that Mr Kalepo was a member of a couple during the Debt Period and therefore, Mrs Kalepo’s income should have been taken into account in calculating

Mr Kalepo’s rate of DSP pension.
The Tribunal finds therefore that Mr Kalepo owes the DSP Debt to the Commonwealth.

IS THE DSP DEBT RECOVERABLE?

Even if a debt is owed, the Secretary may write off a debt in certain circumstances set out in section 1236 of the Act, which provides:

1236 Secretary may write off 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…
(d)   it is not cost effective for the Commonwealth to take action to recover the debt.

The Secretary must also 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.[49]
[49] Section 1237A, Act.
Further, the Secretary may exercise its discretion to waive the right to recover all or part of the debt if satisfied that:

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 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.

SHOULD THE DSP DEBT BE WRITTEN OFF? (S 1236)
Is the debt irrecoverable at law?

Section 1236(1B) sets out when a debt is taken to be irrecoverable at law:
(1B)           For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a)   the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa) the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b)   there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)   the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)   the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
Mr Kalepo’s DSP Debt is currently being repaid through withholdings of his DSP payments.[50] None of the circumstances set out in section 1236 (1B) of the Act exist in this case and therefore the Tribunal finds that the debt is not irrecoverable at law.
[50] Exhibit 2, Secretary's Statement of Facts Issues and Contentions dated 3 November 2017, Attachment A,
Overpayment details.
Further, sections 123(1) and 123(3) of the Social Security (Administration) Act 1999 (“Administration Act”) state as follows:
123(1) A determination that:
(a) a person’s claim for social security payment is granted; or
(b) a social security payment is payable to a person;
continues in effect until:
(ba) the payment is cancelled by section 38M of the 1991 Act; or
(c)   a further determination in relation to the payment under section 80, 81 or 82, subsection 95C(1) or section 124H, 124M or 124NF takes effect; or
(d)   the payment ceases to be payable under section 90, 91, 93, 94 or 95; or
(e)   the end of the day immediately before the day on which the person dies.
(3) A determination of the rate of a social security payment continues in effect until:
(a)   a further determination in relation to the payment under section 78, 79, 81A or 85A takes effect; or
(b) the payment becomes payable at a lower rate under section 98, 99 or 100.
Pursuant to section 100(1) of the Administration Act:

100 Automatic rate reduction—recipient not complying with subsection 68(2) notice
(1)     Subject to subsection (2), if:
(a)    a person who is receiving a social security payment is given a notice under subsection 68(2); and
(b)    the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(c)    the event or change of circumstances occurs; and
(d)    the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(e)    because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;

the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.

Mr Kalepo was under an obligation to advise Centrelink of the income Mrs Kalepo was receiving under section 72 of the Administration Act and was reminded repeatedly of that obligation.[51]
[51] Exhibit 1, T-documents, T10, pages 85-126, Letters from Centrelink to the applicant for the period 12
June 2012 to 27 July 2016.
Because Mr Kalepo was not entitled to the total DSP benefit he received during the Debt Period, Mr Kalepo was overpaid DSP payments totalling $12,132.99 and that amount is a debt due to the Commonwealth, which arose when he obtained the benefit of the payment.[52]
[52] Subsection 1223(1), Act.

Does Mr Kalepo have capacity to repay the debt?

Subsection 1236(1C)(a) of the Act provides that if a debt is recoverable by means of deductions from the debtor’s social security payment, 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.
Severe financial hardship needs to involve severe or extreme financial suffering and that a person’s entire financial position would need to be materially less than the current rate of their pension.[53]
[53] Lumsden and Secretary, Department of Social Security [1986] AATA 228; Stubbs and Secretary, Department
of Family and Community Services [2003] AATA 729; L and Department of Social Security [1995] AATA 159; Secretary, Department of Family and Community Services and Birgden [2003] AATA 67.
As referred to earlier, Mr Kalepo failed to complete the Statement of Financial Circumstances.
There is no evidence to suggest that Mr Kalepo suffers from severe financial hardship.

Is it cost-effective for the Commonwealth to recover the debt?

There is no indication from the Secretary that it is not cost-effective for it to recover the debt.

Conclusion

There is no basis for the debt to be written off under section 1236 of the Act.

DID MR KALEPO RECEIVE THE OVERPAYMENT IN GOOD FAITH AND WAS THE DEBT, OR A PROPORTION OF THE DEBT, ATTRIBUTABLE SOLELY TO AN ADMINISTRATIVE ERROR? (S 1237A)
Was the debt attributable solely to an administrative error?

If administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt. The debt “must be "attributable solely" to administrative error. 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 multiple causes”: Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76, per Wilcox J (at [41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190.
The DSP Debt arose due to a failure to comply with the relevant notification requirements. The debt owed by Mr Kalepo was not ‘attributable solely to an administrative error made by the Commonwealth’ for the purposes of section 1237A(1) of the Act.[54]
[54] See Wecker v Secretary, Department of Education Science and Training[2008] FCAFC 108, at [102].

Should the DSP Debt be waived under section 1237AAD?

There are a few elements to be satisfied under section 1237AAD of the Act before a debt may be waived. First, the debt must not have arisen from the debtor, that is Mr Kalepo must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act. Second, there must be “special circumstances” (other than financial hardship alone) that make it desirable to waive. Third, it must be more appropriate to waive than to write off the debt or part of the debt.
The Act does not define what constitutes special circumstances.
However, decisions of the Federal Court make it clear that “special” denotes something different from the usual or ordinary.[55]
[55] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per
Kiefel J, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639, at [51], Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, at [37].
French J (as he then was) said in in Secretary, Department of Social Security v Hales[1997] FCA 1565; (1998) 82 FCR 154, at 162:
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. But as a matter of grammar and ordinary logic, 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 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.
The Administrative Appeals Tribunal has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD
[56] See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at [19]; Papps and Secretary, Department of Family and Community Services [2005] AATA 660, at [37]
1 (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[56]
No special circumstances have been raised for the Tribunal’s consideration. For the above reasons the Tribunal finds that no special circumstances exist within the meaning of section 1237AAD to warrant the exercise of the discretion in section 1237AAD to waive the debt.

DECISION

Mr Kalepo’s appeal fails. He is a member of a couple for the purposes of the Act and no special reason exists to treat him differently.
The decision under review is affirmed.

I certify that the preceding 88 (eighty-eight) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

...............................[SGD].........................................
Associate
Dated: 26 February 2018

Date of hearing: 18 January 2018

Date final submissions received: 19 February 2018

Applicant: By Phone

Advocate for the Respondent: Ms M Brazier

Solicitors for the Respondent: Department of Human Services

[2018] AATA 313

26 February 2018

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Appeal

Date of hearing:	18 January 2018
Date final submissions received:	19 February 2018
Applicant:	By Phone
Advocate for the Respondent:	Ms M Brazier
Solicitors for the Respondent:	Department of Human Services