King; Secretary, Department of Employment and Workplace Relations and

[2007] AATA 1437

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1437

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S 200600213

GENERAL ADMINISTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

And JAMES ROBERT KING

Respondents

DECISION

Tribunal Mr J G Short (Member)

Date19 June 2007

PlaceAdelaide

Decision The Tribunal affirms the decision under review.

..............................................

J G SHORT
  (Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – overpayment of Newstart Allowance – special circumstances exist to waive recovery of a portion of the debt – decision affirmed

Social Security Act 1991 s 1237AAD

Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Re Beadle and Director-General of Social Security (1984) 6 ALD 1

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

REASONS FOR DECISION

19 June 2007   Mr J G Short (Member)

introduction

1.      Mr James King had received Disability Support Pension and his wife, Mrs Elizabeth King, Newstart Allowance during a period when they were undergoing drug and alcohol rehabilitation at a rehabilitation centre known as Karobran New Life Centre (Karobran) situated near Naracoorte in the south-east of South Australia.  They continued to receive those payments for a period after leaving Karobran.  Mrs King is currently in receipt of Disability Support Pension and Mr King receives Newstart Allowance during periods when he is unable to find work.  The applicant (the Department) contends that Mr and Mrs King had been overpaid sums totalling, in Mrs King’s case $2,828.52 for the period 9 July 2003 until 15 August 2005, and in Mr King’s case, $2,190.78 for the period 20 August 2003 until 12 September 2005.

2. Mr and Mrs King appealed to the Social Security Appeals Tribunal (the SSAT). That Tribunal decided that although a debt existed, there were special circumstances warranting the favourable exercise of the discretion prescribed in s 1237AAD of the Social Security Act 1991 (the Act), to waive recovery of that portion of the debt which accrued while Mr and Mrs King resided at Karobran (a very small portion of the debt), in Mrs King’s case from 9 July 2003 until 31 January 2004 and then for a further period of 6 months thereafter until 31 July 2004.  In Mr King’s case, the SSAT made a decision to waive recovery of that portion of the debt which accrued while Mr King was a resident at Karobran from 20 August 2003 until 31 January 2004 and then for a further period of 6 months until 31 July 2004. 

3.      Mr and Mrs King have repaid the remaining portion of the debt.

issue for determination

4.      The parties were able to agree certain aspects of the SSAT decisions and as a result identified the area of dispute as whether it was appropriate for the SSAT to waive recovery of that portion of the debt in each case extending from the time Mr and Mrs King left Karobran on 31 January 2004, until 31 July 2004.  It was conceded by the Department that there was currently no money owing in respect of any earlier period and the respondents indicated that they did not seek waiver of recovery of either debt in respect of any period after 31 July 2004.

5. Put simply, the issue before me is whether the circumstances of this case provide me with the discretion prescribed in s 1237AAD to waive recovery of the abovementioned portion of the debt, and if so, whether that discretion should be exercised.

factual background to the dispute

6.      Mr and Mrs King provided evidence during which they described as correct the summary of the information recorded by the SSAT in paragraph 8 of that Tribunal’s decision in each case.  The only exception taken related to a point which is not now directly relevant to the outcome of this appeal.  The SSAT’s summary of information reads as follows:

“…

·Mr and Mrs King met in 2000 at a Rehabilitation Centre in the Adelaide Hills, and married in April 2001.

·Mrs King moved to Karobran in August 2001 and Mr King moved there in September 2001.

·Karobran does not receive any government funding.  People decide to move in to obtain treatment for their drug and alcohol addictions.  They are asked to sign documents which give to Karobran the right to collect their Centrelink payments, and manage this money.  In addition Mr King made Karobran his Nominated Person for Centrelink purposes.  During the period that they resided at Karobran, Mr and Mrs King had no direct contact with Centrelink, and did not handle any Centrelink matters.

·While at Karobran Mr and Mrs King did not have access to their money.  They needed to ask staff for money if they required it.  Money was only given for a specific purpose.

·Ms Clarke had tried to get information from Karobran and spoke to a Mr John Ruck.  He had told her that no group certificates were issued.

·They were allowed to make telephone calls to their family members on Sundays, but could not use the telephone at other times.  They did not make any calls to Centrelink.

·They undertook some work with local vineyards for which they received what was described by Karobran as “volunteer allowance”.  Mr King told the Tribunal that Karobran received payment from the vineyards into its bank account.  Mr and Mrs King were provided with a weekly statement settling out amounts of allowance received.  The statement did not contain information about their Centrelink benefits.

·Mr King had his own bank account during this time but it was inactive.  He opened a new account with Savings and Loans the day after he left Karobran on 1 February 2004.

·Mrs King kept her bank account and arranged for Karobran to make direct payments into it to cover her life insurance premiums.  Karobran was not always regular in making these payments.

·Mr and Mrs King left Karobran on 31 January 2004.  They found the next few months very difficult as no support was offered to assist them to return to the community even though they had been living in an institutional arrangement for almost two and a half years.

·They did get a house in Mount Gambier through the South Australian Housing Trust and this was arranged just before they were discharged from Karobran.

·After leaving Karobran Mr King continued working in vineyards near Mt Gambier earning him income in addition to his disability support pension from Centrelink.  Mrs King was handling the household finances, including stating Mr King’s details of income earned on her newstart forms.  Mr King was told that as his earnings were recorded on his wife’s Newstart forms he did not have to declare his income to Centrelink separately.  At the time Mrs King was taking painkillers for her back.

·During this period Mr King thought that he might have provided gross figures to his wife and not net figures.

·Mr King had been in prison prior to being at Karobran.  He told the Tribunal that he had difficulties with his short-term memory as a result of his abuse of drugs and alcohol.

·Mr King was originally granted disability support pension due to an injured wrist.  He is now working four hours per day grading timber.  His hours vary from week to week.

·Mrs King is now on disability support pension.  She does not work.

·Both Mr and Mrs King were keen to get on with their lives and Mr King wanted to work.

·They are currently repaying the debt at the rate of $40 per fortnight from Mr King’s benefit, and $25 per fortnight from Mrs King’s benefit.

·They are finding it difficult financially especially when Mr King does not get work.

·Mrs King said that the large discrepancies in Mr King’s income reported on her newstart allowance forms could be explained by her taking a lot of medication.  She said that the painkillers that she takes make her drowsy.

·In October 2005 they bought a house and recently won an award for their garden.”

7.      In addition to agreeing with the summary drawn by the SSAT, Mrs King told the Tribunal that at the time she entered Karobran in 2001 she was 48 years of age.  She is now 52 years of age.  She said that from the age of 16 years she had experienced significant problems with both drug and alcohol addiction. 

8.      Mrs King said she continued to battle drug and alcohol problems after 1972 and entered a rehabilitation program in the Adelaide hills which lasted for about 5 months almost immediately prior to entering a 2½ year residential drug rehabilitation program at what was virtually a closed community at Karobran. 

9.      Mr and Mrs King said that they had met during drug and alcohol rehabilitation programs.  Their relationship had blossomed and they are now married, buying their own home and, it appears from the SSAT’s reasons for decision, have been successfully managing that home, at least to the extent of winning an award for their garden. 

10.     Mr and Mrs King said that for the first 3 months of their 2½ year residence at Karobran they had not been permitted any contact with the outside world.  After 3 months, they were able to travel to Naracoorte (under the supervision of Karobran staff) for approximately 2 hours shopping on a Saturday morning.  Mrs King said that after 2½ years at Karobran they had been used to being treated like children.  She gave as an example a rule whereby if she swore, she would not be allowed to visit the town on the following Saturday morning. 

11.     Karobran had dealt with Centrelink on Mr and Mrs King’s behalf and received their Centrelink payments.  They were not able to control their own money.  On some occasions Mr and Mrs King were taken to a different and larger town, Mount Gambier.  Mrs King described that as a privilege and “scary”.

12.     Mr King said that just prior to leaving Karobran Mrs King and he had made enquiries about obtaining Housing Trust accommodation.  The property they had been offered had been in a section of the town where a great deal of drug and alcohol abuse occurred.  Mrs King said that for obvious reasons this was not appropriate accommodation for her or her husband.  Fortunately they were able to find alternative Housing Trust accommodation.  Mr King said that after a few months, and with the help of a Christian based organisation, he had found some work grape picking.

13.     Mr King said that he had never been able to manage finances.  He said he had been addicted to heroin and alcohol from the age of 16 years.  He entered Karobran at age 45 years.  He said that prior to entering Karobran he had spent a total of about 6 years in prison.  He had also unsuccessfully attempted rehabilitation on 4 or 5 occasions prior to entering Karobran.

14.     Both Mr and Mrs King told the Tribunal that they considered that their treatment at Karobran had been successful.  For the first time in their lives, drugs and alcohol were no longer a problem.  Although they managed on a day-to-day basis they said it was extremely difficult for them to find their way back into society as sober people. 

15.     Mr King said that he still could not manage money and that Mrs King continued to deal with Centrelink on his behalf.  Mr King said that he has so far managed to find work in a vineyard, in a piggery and at a timber mill.  These have been casual positions and he was currently not working, although he hoped to find further casual work in the future.

16.     Mr King said that he could not understand how the debt had occurred.  He said he was shocked and both he and Mrs King felt that the debt presented yet another obstacle in re-entering the general community. 

17.     Both Mr and Mrs King indicated that although Karobran had been successful in allowing them to regain their sobriety, they still battled daily with their addictions and with their difficulties in rejoining society.  They are proud of the steps they have taken.  Mr and Mrs King said that although Karobran had been beneficial in these ways, such a long period of dependence upon Karobran staff and isolation from the general community had meant that they were initially ill-prepared for all of the tasks required of them in re-establishing themselves as sober people within the community and in their dealings with Centrelink. 

18.     Mr King said that their sources of income are currently Newstart Allowance and Carers Allowance for himself and a Disability Support Pension for Mrs King.  Mr and Mrs King said that neither is currently working and that their mortgage and other commitments mean that they do not have money to spare.  They struggle to make ends meet.

special circumstances

19. Section 1237AAD of the Act provides that a decision-maker may waive recovery of a debt in some circumstances. The debt must not have occurred because the recipient or another person knowingly  made a false statement or failed or omitted to comply with a requirement of the Act.  If so, then the decision-maker must consider whether special circumstances exist and if so, whether it is desirable to exercise that discretion.  The decision-maker must also be satisfied that is it more appropriate to waive recovery of the debt than to write-off (delay) such recovery.

20.     In this case the Department has not conceded that Mr and Mrs King or another person on their behalf, did not knowingly make a false statement or representation or fail or omit to comply with the provision of the Act.

21.     The meaning of “knowingly” has been considered by the Tribunal in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 where Deputy President Forgie stated (at page 445):

“There is nothing in section 1237AAD which suggests that the word ‘knowingly’ should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with the provision of the Act.  That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act of or omission.”

22. It is accepted by the respondents, that during the period of 6 months after they left Karobran, they did not in all instances provide factual advice concerning casual income they had been receiving. It appears that in most cases income had been understated, and in some cases, overstated. Mr King said that it may be that on some occasions he advised Mrs King of his net income rather than gross income. However the debt occurred, I am satisfied, and find as a fact, that neither Mr or Mrs King were aware that they had understated income. I accept that neither Mr or Mrs King understated income “knowingly”. Section 1237AAD also provides that a debt cannot be waived if it would be more appropriate to write-off the debt. I accept on the evidence before me that in this case it is more appropriate to waive recovery of the debt than to write it off.

23.     Having entered upon the field of discretion, I must now consider whether special circumstances exist in this case which make it desirable to waive recovery of the debt (s 1237AAD(b)).

24.     The expression “special circumstances” has been considered in many cases.  The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 has been commonly quoted as containing an appropriate interpretation of this phrase. In that case the Tribunal said (at page 3):

“An expression such as ‘special circumstance’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

25.      Further guidance may be obtained from the Explanatory Memorandum (“EM”) to the Social Security Legislation Amendment (Carer Pension and Other Measures) Bill 1995 under 2. Background (special circumstances), the EM states:

“The problem is that there are some cases involving an innocent mistake by a debtor that makes waiver desirable although not possible under the current waive of provisions.  Accordingly, it is proposed to insert a new special circumstances waiver provision, but with some restrictions on the circumstances under which the new clause can be used.  The new special circumstances clause will be available where:

·there are special circumstances other than financial hardship alone;

·the Secretary is satisfied that the debt did not arise wholly or partly because of deliberate fraud by the debtor (including deliberate non-compliance with the principle Act); and

·it is more appropriate to waive the debt than write-off the debt pursuant to section 1236.”

26. The intended effect of s 1237AAD has also been considered by French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154. At page 162 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. …”

Hales’ case is also authority for the proposition that in the usual run of cases taxpayers have a legitimate right to expect that debts owed to the Commonwealth are repaid.

the department’s submission

27.     The Department submitted that Mr and Mrs King’s circumstances from 1 February 2004 until 31 July 2004, that is for the 6 months immediately after leaving Karobran, were not unusual.  The Department pointed out that they were able to find accommodation, and that Mr King found some casual employment.  The Department also pointed out that as Mr King has found some casual employment and that that portion of the debt which accrued from 1 August 2004 has now been repaid, it cannot be said that financial hardship makes it desirable to waive recovery of the portion of the debt under consideration.  The Department submitted that departure from institutional care is not of itself a special circumstance and if it were considered to be a special circumstance, then that would open to gate to a general period of reprieve from the obligations imposed upon welfare recipients, to all people leaving institutions.  It was also submitted that Mr and Mrs King’s ill health was not a special circumstance as ill health was common amongst people who are dependent upon Disability Support Pension.  The Department concluded by contending that even if special circumstances were found to exist, it is not desirable in the circumstances of this case to waive recovery of that portion of the debt under consideration.

tribunal’s consideration

28.     As mentioned, the Tribunal has found that Mr and Mrs King did not knowingly make a false statement or representation or knowingly fail or omit to comply with a provision of the Act.  Mr and Mrs King are now middle aged and have spent virtually all of their adult lives until leaving Karobran in 2004 in the grip of severe alcohol and drug addictions.  These addictions ravaged their lives.  They have managed to find strength from each other and it appears, to have overcome their addictions.  It is to their very great credit that they have been able to do so.  During the years of their addictions, Mr and Mrs King were unable to successfully function as members of the general community.  Upon entering Karobran, they commenced a 2½ year period of virtual withdrawal from society.  This appears to have had a significant benefit in assisting them to end their addictions.  However, it further alienated them from society and did not equip them with all of the resources they would need to make a smooth unchallenged re-entry into society.  It was in this background that Mr and Mrs King did their best, but failed in all instances, to provide accurate advice concerning their income.  This resulted in both Mr and Mrs King incurring a debt to Centrelink, approximately one half of which has now been recovered.

29.     In my view, Mr and Mrs King’s circumstances are special in that they are unusual.  Special circumstances relate to the genesis of the debt, and to their ability to repay that debt.  The circumstances which I have described and those to which the SSAT referred in its decisions as comprising special circumstances, do in my view, make it desirable to waive recovery of that portion of the debt which accrued during the 6 months immediately following Mr and Mrs King’s departure from Karobran.  It is not only in Mr and Mrs King’s interests, but also in society’s interest that no further obstacles be placed in the way of Mr and Mrs King’s continued re-integration into the community after decades of turmoil.

30.     In the light of the above mentioned circumstances, the Tribunal affirms the decision under review.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short (Member)

Signed:         .............J Coulthard...........................................
  Associate

Date of Hearing  26 April 2007
Date of Decision  19 June 2007

Advocate for the Applicant       Ms M Welfare

Centrelink Legal Services Branch

Advocate for the Respondent   Ms S Clark

South East Community Legal Service