Karanikolas and Secretary, Department of Family and Community Services

[2005] AATA 1314

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1314

ADMINISTRATIVE APPEALS TRIBUNAL        № V2005/231

GENERAL ADMINISTRATIVE DIVISION

Re:         VASILIOS KARANIKOLAS

Applicant

And:       SECRETARY,

DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Mr C. Ermert, Member

Date:22 December 2005

Place:Melbourne

Decision:The decision under review is affirmed.

(sgd) C. Ermert

Member

SOCIAL SECURITY – disability support pension – calculated on the basis of combined income including wife’s earnings – change in wife’s earnings – failure to notify Centrelink – whether overpayment amounts to a debt to Commonwealth – whether debt can be waived or written off – decision affirmed

Social Security Act 1991

Social Security (Administration) Act 1999

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

Director-General of Social Services v Hales  47 ALR 281

Re SDSS and McAvoy (1996) 44 ALD 721

REASONS FOR DECISION

22 December 2005  Mr C. Ermert, Member

INTRODUCTION

1.      Mr Karanikolas arrived in Australia from Greece in 1965, worked for five years in a plastics factory and then for 25 years at Hella Australia.  In 1995 he developed heart problems and could not continue working.  Mr Karanikolas applied to Centrelink for a disability support pension.  Centrelink is the service delivery agent for the Department of Family and Community Services.  The disability support pension was granted on 14 December 1995.  His initial pension was calculated on the basis of a combined income of $22,822, which included his wife’s earnings.  At the time Mrs Karanikolas was working at Mercedes Plastics where she had been employed for 18 years.  She continues to work at the same job but is now having problems with her knees and may not be able to work for too much longer.

2.      In July 1996 Mr Karanikolas’ pension was increased on the basis of a combined income of only $2,436.34 from real estate and investment earnings.  In January 1997 his pension was increased slightly, but continued to be based on the same combined income, which clearly did not include his wife’s earnings.  The notices sent to Mr Karanikolas by Centrelink advising of the pension payments contained the requirement to tell Centrelink within 14 days if the combined income shown was incorrect.  Mr Karanikolas did not respond to these notices.

3.      Although Mr Karanikolas did not inform Centrelink of the error, another section of Centrelink was aware of his wife’s earnings.  When her husband was granted a disability support pension Mrs Karanikolas received a partner allowance.  As her earnings continually varied due to overtime Mrs Karanikolas was required to submit her payslips to Centrelink fortnightly, which she provided with the required form.  The fortnightly form due to be submitted on 29 May 1998 was incomplete and not processed by Centrelink.  As a result the partner allowance was stopped.  Mrs Karanikolas did not question Centrelink about the cessation of the payment but just accepted the situation.  As a consequence, she also stopped providing Centrelink with information regarding her earnings.  At all times both Mr and Mrs Karanikolas provided full details of their earnings on their taxation returns.

4.      In November 2002 Centrelink conducted a data match with the Australian Taxation Office. It indicated that Mrs Karanikolas’s earnings had not been taken into account in calculating the applicant’s pension.  Mr Karanikolas provided group certificates which were used to re-assess his pension payments.  A further notice was issued in February 2003 requiring the applicant to notify Centrelink within 14 days of any increases in his wife’s earnings.  Mr Karanikolas did not respond to that notice.   Centrelink performed a further data match in September 2003 which revealed that Mrs Karanikolas’s earnings exceeded those advised earlier.  Mr Karanikolas was then required to attend meetings with Centrelink to provide all the information required.  Centrelink subsequently advised Mr Karanikolas of a debt to the Commonwealth of $23,380.49 due to the overpayment of his pension and commenced recovery of the debt by withholding his pension payments.

5.      Mr Karanikolas asked for this decision to be reviewed.  On 12 October 2004 an authorised review officer decided to vary the original decision and reduce the debt to $23,158.52, for overpayments between 9 July 1998 and 21 October 2003.  Mr Karanikolas applied to the Social Security Appeals Tribunal (SSAT) for a review of that decision.  On 7 February 2005 the SSAT affirmed the decision of the authorised review officer.  That decision is the subject of this appeal.

6.      Mr Karanikolas was represented by Ms L Bolkas of counsel.  Mr and Mrs Karanikolas gave evidence at the hearing and were assisted by an interpreter in the Greek language.

THE ISSUES

7.      The issues in this matter are :

·   Is there a debt to the Commonwealth?

·   May the debt be written off?

·   Must the debt be waived?

·   Should the debt be waived?

8.      The standard of proof for the consideration of these issues is on the balance of probabilities.

IS THERE A DEBT TO THE COMMONWEALTH?

9. The first issue to be decided is whether there is a debt due to the Commonwealth. Section 1223(1) of the Social Security Act 1991 (the Act) provides:

1223(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.

10.     In this case it is not in dispute that Mr Karanikolas has been paid in excess of his entitlement.  There is no dispute that Centrelink has correctly applied the Rate Calculator such that the amount overpaid between 9 July 1998 and 21 October 2003 is $23,158.52 (T50, T52).  There is also no dispute between the parties that the applicant has no entitlement to the payment received.  There is no evidence of administrative error in determining the benefits paid, calculated on the basis of the information provided to Centrelink by Mr Karanikolas.  There are also no issues of contraventions of social security law, false statements or misrepresentations.

11.     On the evidence presented, I find that a payment has been made to Mr Karanikolas to which he was not entitled; and that Mr Karanikolas owes a debt to the Commonwealth.

MAY THE DEBT BE WRITTEN OFF?

12.     Section 1236(1A) of the Act provides that the Secretary may decide to write off a debt if, and only if:

·     the debt is irrecoverable at law, or

·     the debtor has no capacity to pay, or

·     the debtor’s whereabouts are unknown, or

·     the debtor is not receiving a social security benefit and it is not cost effective to recover the debt.

13.     None of the provisions relating to the issue of whether the debt is irrecoverable at law are relevant to Mr Karanikolas’s situation.  His whereabouts are known and he is receiving a social security payment under this Act.  The only question remaining under this section is whether he has a capacity to pay.

14.     Mr Karanikolas made no submissions in this issue.  The respondent’s advocate, Mr D Perdon, submitted that there is capacity to repay the debt by deductions from ongoing entitlement without severe financial hardship to Mr Karanikolas.  Mrs Karanikolas remains in employment and they continue to receive rental income.  Mr and Mrs Karanikolas also have considerable unencumbered assets.

15.     I find that Mr Karanikolas has the capacity to repay the debt; and as a result none of the provisions of s 1236(1A) apply.  Unless one or more of the provisions apply the Secretary does not have a discretion under this section of the Act to write off the debt.  Accordingly I find that the debt may not be written off.

MUST THE DEBT BE WAIVED?

16.     Section 1237A(1) of the Act provides that:

…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... (emphasis added)

17.     Mr Karanikolas contends that the respondent must waive the right to recover the debt as it is attributable solely to an administrative error made by the Commonwealth.  In his written statement (Exhibit A3) Mr Karanikolas stated that his wife was being paid a partner allowance until May 1998 and during that time was lodging fortnightly statements of earnings.  Centrelink used these statements of his wife’s earnings to reassess his disability support pension.  In May 1998 Centrelink stopped sending fortnightly forms to Mrs Karanikolas and she stopped informing Centrelink of her fortnightly earnings.  Mr Karanikolas stated that he was not aware of a requirement for him to disclose changes in his wife’s income.  In regard to the letter sent by Centrelink dated 24 March 1998 Mr Karanikolas stated that he was not able to say whether or not he had received it.  In any case as he cannot read English he could not have understood the letter.  He never questioned the payments he received and relied on Centrelink to inform him of any requirements.  When Mr Karanikolas received a further letter from Centrelink in 2002 he provided the information they requested.  Until then he was satisfied that he was doing the right thing.  He concluded his statement (Exhibit A3) with the following contention:

Centrelink was well aware that my wife was working and could have requested the details of her income at any time.  The reason that the debt arose was solely due to an administrative error on behalf of Centrelink in not properly informing me of the need of me to disclose any changes in my wife’s income.

18.     In his cross-examination, Mr Perdon asked Mr Karanikolas to confirm whether he had received the 24 March 1998 letter from Centrelink.  Mr Karanikolas replied, through the interpreter, “No, never such letter came home … not that letter, never, never” (trans p 23).  When asked how Centrelink would know his wife’s earnings and the revenues from his rental property he answered that they put it all on their taxation returns every year.

19.     Mrs Karanikolas stated that when her husband began receiving the disability support pension she also received the partner allowance from Centrelink.  Each fortnight Mrs Karanikolas went to Centrelink to fill out forms and submit her pay slips.  In May 1998 Centrelink stopped sending the fortnightly forms and the partner payment stopped.  Mrs Karanikolas did not say anything to Centrelink about the cessation o the partner payment.  She just accepted the situation.  Mrs Karanikolas was asked if she remembered a Centrelink letter dated 24 March 1998 being sent to the house.  She answered “I can’t remember that.  I don’t think there is a letter come” (trans p 53).  The first letter from Centrelink that Mrs Karanikolas can remember after her partner payment stopped was received in October 2002.  This was the letter that required them to make an appointment to see someone in Centrelink.

20.     Mr Bolkus submitted that:

… between May 1998 and October 2002 no correspondence was entered into between the applicant and Centrelink.  … the applicant doesn’t recall receiving the letter of March 2004 (sic) … during the period that there has been an overpayment, the applicant has not received any communication from Centrelink.  … there has been an administrative error by Centrelink, and that error has been solely Centrelink’s fault.  They didn’t contact the applicant.  They, at no time, were told that the applicant’s wife was no longer working.  And in my submission, there ought to be a finding that any error that has occurred in assessing the applicant’s income, it should only be an error has been caused by Centrelink” (trans p.61-62).

21.     In summary, the applicant’s contentions on the issue of an error attributable solely to the Commonwealth are that:

·Centrelink made an error in that it did not notify the applicant of the requirement to provide information on changes in his wife’s earnings; and

·Centrelink made an error in assessing the combined income by not taking his wife’s earnings into account, even though they were aware of those earnings.

DID CENTRELINK NOTIFY THE APPLICANT?

22.     In his submissions Mr Perdon stated:

The applicant was granted a pension in 1995. According to the Tribunal documents … he was sent recipient obligation notices at T4, T5 and T6, which all occurred in 1996, and 1997. There is the relevant notice prior to the debt starting, which has been mentioned many times. That is T9. That is the letter of 24 March 1998. And so that one doesn’t miss the point, there were in fact two further recipient notices sent during this relevant debt period. … those notices are deemed to be given the applicant, even if he did not receive them. There are various provisions in the Social Security law which make it so, and they are reinforced by provisions of the Acts Interpretation Act and the Commonwealth Evidence Act. The specific Social Security provisions are section 23(12) of the Social Security Act, which states that:

Notices are taken to be given, even if they are not received.

… There is also section 237 of the Social Security Administration Act, which provides that if a letter is sent by Centrelink, by pre-paid post, to the last known address of a person, then it is deemed to be given under sections 28A and 29 of the Acts Interpretation Act (trans p 64).

23.     In their evidence the applicant and his wife contended that they did not receive the letter from Centrelink dated 24 March 1998 (T9).  This in no way refutes the evidence that the letter was sent in accordance with the provisions of the Social Security (Administration) Act 1999 (the SSA Act). T9 is a computer generated file document that shows the text of a letter addressed to the applicant. This format is standard throughout the T documents. There has been no evidence advanced to indicate that a letter of the identical text was not prepared and sent. It is clear that the letter contains a notice of decision as required by s 237(3) of the SSA Act. In the absence of evidence to the contrary, I accept that the file document T9 is sufficient evidence that a notice with the wording of T9 was prepared and sent. On that basis I find that, under the provisions of the SSA Act, notice has been given. On this point no error can be attributed to the Commonwealth.

DID CENTRELINK MAKE AN ERROR IN ASSESSING THE COMBINED INCOME?

24.     The applicant contends that over all of the relevant period Centrelink was aware that Mrs Karanikolas was in employment and that at no time was Centrelink told that she was no longer working.  Centrelink made an error in not taking Mrs Karanikolas’s earnings into account in calculating Mr Karanikolas’s pension.

25.     Mr Perdon submitted:

Now, in 1998, there was an administrative oversight, in that Centrelink knew that the applicant’s wife was working, but when her partner allowance stopped, there was not any follow up done.  Now, that does constitute an oversight.  In my submission, it may not constitute an error, because there is no statutory obligation that a person’s entitlement should be reviewed.  And indeed, the position is protected by the recipient obligations, which were contained in the letters of 1998, 2002, and 2003.

26.     It is clear that Centrelink made an error that contributed to the magnitude of the debt, if not the existence of a debt.  Centrelink also erred prior to the period in question.  Although Centrelink had information regarding Mrs Karanikolas’s employment since 1995, the notices issued on 1 July 1996 (T5) and 4January 1997 (T6) showed combined earnings of only $2,436, clearly not taking Mrs Karanikolas’s earnings into account.  Mr Perdon’s explanation was:

Well the earnings always should have affected.  So, the earnings should be in all those letters, but they are not, which means at some stage, after the ’96 notice, the earnings fell off the record … we don’t know the reason for that” (trans. P.71).

Had Mrs Karanikolas’s earnings been included in the combined income, even unchanged, over the period in question, the amount of the debt would have been considerably reduced.

27.     The existence of an error by Centrelink raises the question of whether the debt is solely attributable to that error.

IS THE ERROR BY CENTRELINK THE SOLE ERROR CONTRIBUTING TO THE DEBT?

28.     The three notices of 1996 (T4), 2002 (T17) and 2003 (T20) all imposed an obligation on  Mr Karanikolas  to notify Centrelink within 14 days if the stated combined income being used to calculate his DSP was incorrect.  Mr Karanikolas’s evidence is that he did not respond to the notices because he did not receive them.  Regardless of the reason, Mr Karanikolas does not dispute that he did not provide the required information to Centrelink until after the period in question.

29.     On this issue Mr Perdon submitted:

As found by Deputy President Forgie in the matter of Jonauskas, to which the Tribunal has been referred, once that recipient obligation is triggered, then it cannot be said that the overpayment is solely due to administrative error thereafter, with solely bearing its ordinary common meaning.  … Deputy President Forgie found that as soon as the first grant notice was sent, then it was no longer solely administrative error, because the notice showed that there may be an error, and the error should be corrected by applicant notification.

30.     In this case I accept the respondent’s submission that notice was given; and that notice triggered the obligation on the applicant to provide the required information.  Mr Karanikolas did not provide the information and that constitutes an error which has contributed to the existence of the debt.

31.     I have found therefore that the debt has been caused by more than one error;   an error by Centrelink in not acting on information available to it and an error by Mr Karanikolas in not providing information to Centrelink as he was obliged to by the notices.  In considering a situation of a debt being attributable to more than one factor I am bound by the provisions of the note to s 1237A(1) which specifically precludes the “waiver of a part of debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor)”.

32.      I have found that the debt is attributable to more than one error and as such it is not attributable solely to an administrative error made by the Commonwealth.  It follows that the Secretary does not have an obligation to waive the debt.

33.     As I have found that the debt is not attributable solely to an administrative error made by the Commonwealth there is no need to consider the second element of s 1237A(1), that being whether the debtor received the payment in good faith.

SHOULD THE DEBT BE WAIVED?

34.     Section 1237AAD of the Act 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.

DID MR KARANIKOLAS KNOWINGLY MAKE A FALSE STATEMENT OR REPRESENTATION?

35.     There is no contention by the respondent that Mr Karanikolas at any time made a false statement or representation to Centrelink.  Although he did not provide the information required by the notices, he and his wife provided full disclosure of their earnings to the Taxation Department.  I am satisfied that the debt did not arise from the debtor knowingly making a false statement or representation.

DID MR KARANIKOLAS KNOWINGLY FAIL OR OMIT TO COMPLY WITH A PROVISION OF THIS ACT?

36.     In his written submission Mr Perdon does not address this issue.  During his cross-examination of the witnesses Mr Perdon sought to demonstrate that Mr Karanikolas had received the relevant notices and that he would have known of his obligations.  The evidence of Mr and Mrs Karanikolas, however, is that they did not receive the notices in question and therefore they were not aware of their obligations under the Act to provide the information required.  Mr Karanikolas stated that, in the absence of any contact from Centrelink, he assumed that Centrelink had all the information it required.  Even if the notices were received, Mr Karanikolas contends that he would not have understood them properly because of his poor English.  Mr Karanikolas said, on many occasions, that had he known of these obligations he would have complied with them.  In support of that position he stated that at all times he had provided complete details of income to the Taxation Department.  Additionally, when he became aware of the requirement to go to Centrelink for interview he immediately complied.  Furthermore, while his wife was receiving the partner payment and they were providing fortnightly information to Centrelink Mr Karanikolas provided details of all their earnings including income from their rental property.

37.     From the evidence I am satisfied that the debt did not arise from the debtor knowingly making a false statement or representation.

ARE THERE SPECIAL CIRCUMSTANCES (OTHER THAN FINANCIAL HARDSHIP) THAT MAKE IT DESIRABLE TO WAIVE THE DEBT?

38.     The applicant contends that the following issues should be considered as special circumstances in this case:

·Mr Karanikolas’s illness;

·Mrs Karanikolas’s limited ability to continue in employment; and

·Mr Karanikolas’s limited English.

Mr Karanikolas’s illness

39.     In his evidence Mr Karanikolas stated that he spent 15 days in Monash Medical Centre and that he just managed to survive.  He is taking warfarin and blood pressure medication.  The applicant submitted two reports by Dr Kounnas dated 2 June 2005 (Exhibit A1) and 11 June 2005 (Exhibit A2) into evidence.  The reports state that Mr Karanikolas is suffering from a number of conditions namely: high blood pressure, heart disease, atrial fibrillation, and hypercholesterolaemia.  The reports verify that Mr Karanikolas was admitted to Monash Medical Centre on 29 January 1998 with a retro-peritoneal haematoma and that he is being treated with warfarin.  Exhibit A1 states that Mr Karanikolas now also has:

secondary psychological stress associated with financial entanglement with Centrelink … he is suffering from insomnia, difficulty concentrating, … irritability … to his problems with Centrelink.

40.     Mr Perdon’s submissions on this issue were:

In respect of the medical conditions, well it is obvious that having a large debt would create a stressor for most people.  However, it should be noted that, of course, these appeal proceedings are being brought by the applicant.  In respect of his receipt of disability support pension, he qualifies for that pension, and a person only qualifies for disability support pension if they have a serious medical condition which attracts at least 20 impairment points on the impairment tables, and if they are completely unable to do any work for at least the nest two years.  So in my submission, there is nothing of significance in the applicant’s medical condition as indicated by the exhibits A1 and A2 from Dr Counis (sic) – as may be compared to the general disability support pension population.

41.     From the evidence, there is no doubt that Mr Karanikolas is suffering from a number of medical conditions.  However, I can see no medical condition that would prevent Mr Karanikolas from complying with the requirements of the notices from Centrelink.  I note Dr Kounnas’s connection between the applicant’s psychological stress and his entanglement with Centrelink. However, I accept Mr Perdon’s submission that the entanglement is being occasioned by the applicant.  I see no evidence that the waiver of the debt will disentangle Mr Karanikolas from Centrelink any more than the finalisation of this matter.  I also accept the position put by Mr Perdon that there is nothing of significance in the applicant’s medical condition that distinguishes him from the general disability support pension population.  That being so I find that Mr Karanikolas’s medical condition is not sufficient to be considered a special circumstance.

MRS KARANIKOLAS'S LIMITED ABILITY TO CONTINUE IN EMPLOYMENT

42.     In his submissions for Mr Karanikolas on this issue, Mr Bolkus said:

His wife is working, and you heard she earns what can be considered almost minimum wage, $473 net, after working eight hours straight a day, standing on her feet, at the age of 59, and she now has herself been diagnosed with osteoarthritis of the knees.  And the reality is that this lady is not going to be able to continue working standing up on her feet eight hours a day, for very much longer.  She is not able to sit.  It is a process line.  They are all of a sudden faced with a debt of $23,000.  Now, if she was no longer to work, they would have no income, effectively, other than the $130 a week that is being received by them by way of rent from this holiday house at Dromana (trans. p 62)

43.     This argument is essentially one of financial hardship.  Mr Perdon’s written submissions on this issue were:

The applicant is not in financial hardship.  In any case, financial hardship alone cannot satisfy s 1237AAD(b) … the debt is well below the total of gross earnings for the period which was in excess of $140,000 … the applicant has a part-rate DSP entitlement, his wife remains in employment and they continue to receive rental income.

44.     In his oral submissions Mr Perdon stated:

The applicant is receiving rent from a rental property, he owns his own home, the rental property is clear title, his wife is working, and no matter what may happen to her work in the future, the Tribunal is asked to make a decision today on whether the debt is recoverable or not today.

… The final submission is to deal with the applicant’s wife’s medical condition, however she is working a full week, she is working 8 hours a shift.  If she were to stop work, she is not of aged pension age, but she would be entitled to claim either a Newstart allowance, or a disability support pension. And that means that even if she were to cease work, then there would still be moneys coming in to the family from two social security sources, which would be subject to the withholdings provisions (trans. p 68).

45.     On the evidence of the applicant’s current financial position and current and future income I find that Mr Karanikolas would not suffer financial hardship to an extent that could be considered a special circumstance.

THE APPLICANT'S LIMITED ENGLISH LANGUAGE ABILITY

46.     On the issue of his limited ability with the English language, Mr Karanikolas gave evidence that he could not read English, he relied on his children to translate letters and notices, and at the workplace he relied on others to interpret important documents.  Mr Bolkus submitted:

So what you have is a situation where an applicant whose English you were able to assess yourself, is quite limited, and relies entirely on others to explain to him what is going on … a person with limited English and limited understanding of how things work … indeed it is more than limited English.  There seems to be quite clearly a very little ability to really understand the bureaucratic process (trans. p 61-62).

47.     In his submissions Mr Perdon responded:

… the applicant’s children are adults, at least one of them seems to have tertiary qualifications, and the applicant is not unable to draw assistance from various professionals, such as his accountant, his solicitor, when dealing with government requirements or government forms. … this case is very similar to the case in Kilinckiran … a case of a non-English-speaking pensioner who was advising the Tax Office of her husband’s earnings but thought it was up to the Department to do the reviews, not for her.  And in my submission, the facts in the Kilinckiran matter are very similar to the case that is before you today (trans. p 65-66).

48.     Mr Perdon’s written statement of case included:

It is not unusual for a recipient of DSP to come from a non-English speaking background, with the latter comprising 18% of the social security payment-base (source: Centrelink Multicultural Services Business Team).  There is no evidence that the applicant was not capable of complying with the notices.  He is able to adequately function within Australian society and has been capable of the timely and proper exercise of his review rights, and of accessing various support eg local Member (T48), Freedom of Information (T55) etc.

49.     I accept Mr Perdon’s submissions that the applicant’s difficulties with the language are not such as to prevent him from adequately functioning within Australian society.  I find that his language difficulty is not sufficient to be considered a special circumstance.

50.     In reaching my findings that none of the claimed circumstances are sufficient to be considered as special circumstances, I am guided by the matter of Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 (28 June 2005) in which Branson J stated:

24.      The intended effect of s 1237AAD has been considered by French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 (‘Hales”) at 162 where his Honour observed:

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.  …

…

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. …

. . .

26.      …  While, as French J pointed out in Hales, the evident purpose of s 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for ‘special circumstances’ discloses an intention to proscribe waiver in ordinary cases.  The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.

51.     In regard to the claimed areas for consideration of special circumstances I find no sufficient degree of hardship or unfairness to justify departure from the general rule to be applied.  In considering the general rule to be applied I had regard to Director-General of Social Services v Hales 47 ALR 281 at 322, where Shepherd J said:

There is not to be found in the Tribunal’s reasons any indication that it did put into the scales the consideration that the respondent had, for whatever reason, received public moneys to which she was not lawfully entitled.  To me, notwithstanding considerations of hardship, which there are in this and many other cases,, that must always be a paramount consideration.

52.     Having regard to the above I find that none of the circumstances claimed as special circumstances are sufficient to be considered special circumstances in the terms of s 1237AAD(b) of the Act.

IS IT MORE APPROPRIATE TO WAIVE THAN TO WRITE-OFF THE DEBT OR PART OF THE DEBT?

53.     The final issue raised by s 1237AAD to be determined is that contained in sub-paragraph (c): whether it is more appropriate to waive than to write off the debt or part of the debt.  The note to s 1237AAD refers to s 1236 which allows the Secretary to write off a debt of behalf of the Commonwealth.  In paragraph 13 I found that none of the provisions of s 1236(1A) applied to Mr Karanikolas’s circumstances and this gave the Secretary no discretion to write off the debt.  The decision in Re SDSS and McAvoy (1996) 44 ALD 721 considered a number of circumstances in which it could be more appropriate to waive than to write off the debt or part of the debt, thereby releasing the applicant from liability for repayment of the debt. Those circumstances were:

·Where strict enforcement of the liability might be unjust, unreasonable or otherwise inappropriate;

·Where the quantum of the debt might have a crushing effect if immediate repayment were required; and

·Where the repayment over a long period might cause extreme burden.

54.     The same decision included arguments against waiver:

·The interest of the community in the recovery of public moneys; and

·The capacity of the applicant to repay in future.

55.     I have seen no evidence in this case that the strict enforcement of the liability would be unjust, unreasonable or inappropriate.  The liability has been incurred due in part to Mr Karanikolas not providing Centrelink with information regarding his wife’s earnings.  The fact that Centrelink did not review the case earlier contributed to the quantum of the debt but does not make the recovery of the debt unjust.  The size of the debt is considerable but is not unreasonable when compared to the assets and income of Mr and Mrs Karanikolas.  Immediate repayment is not being sought by the Department with repayment being effected by withholding Mr Karanikolas’s pension payments.  Although repayment will take some time to complete Mr and Mrs Karanikolas have other means of income available to them.  The withholding of Mr Karanikolas’s pension should not cause extreme burden.

56.     In considering the capacity of the applicant to repay the debt I find that the interest of the community in the recovery of public moneys is not overturned by any of the circumstances of the applicant.  Hence, I find that in this case it is not more appropriate to waive than to write off the debt.

57.     After considering all the elements of s 1237AAD I find that none of them have been satisfied.  Accordingly, I find that the there are no grounds on which the debt should be waived.

FINDINGS

58.     I make the following findings in this case:

·that a payment has been made to Mr Karanikolas to which he was not entitled; and that, as a result, Mr Karanikolas owes a debt to the Commonwealth;

·that none of the provisions of s 1236(1A) apply and that as a result the Secretary may not write off the debt;

·that the debt is attributable to more than one factor and as such it is not solely attributable to an administrative error  by the Commonwealth.  It follows that the Secretary does not have an obligation to waive the debt; and

·that there are no grounds on which the debt should be waived.

DECISION

59.     As a result of the findings the applicant’s appeal is not successful and the decision under review is affirmed.

I certify that the fifty-nine [59] preceding paragraphs are a true copy of the reasons for the decision of:

C. Ermert, Member

(sgd)     Catherine Lake

Clerk

Date of hearing:  10 October 2005

Date of decision:  22 December 2005
Advocate for the applicant:          NIL – Self represented

Advocate for respondent:            Mr D. Perdon, Centrelink