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

[2019] AATA 4357

Klewer and Secretary, Department of Social Services (Social services second review) [2019] AATA 4357 (25 October 2019)

Division:GENERAL DIVISION

File Number:           2018/0263

Re:Robert Klewer

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Bill Stefaniak AM RFD, Senior Member

Date:25 October 2019  

Place:Sydney

The decision under review is affirmed.

..............................[sgd]..........................................

Bill Stefaniak AM RFD, Senior Member

CATCHWORDS

SOCIAL SECURITY – debt – overpayment of disability support pension – where debt arose due to not disclosing income or interests in property to Centrelink – where applicant was later found to qualify for disability support pension (blind) – whether debt can be waived – sole administrative error – special circumstances – decision affirmed

LEGISLATION

Social Security Act 1991 (Cth) – ss 1236, 1237A, 1237AAD

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

REASONS FOR DECISION

Bill Stefaniak AM RFD, Senior Member

1. The applicant was born in 1988.

2. He was granted a Disability Support Pension (DSP) when he was 16 with effect from 11 February 2004. The grant was on the basis of him having a “right homonymous hemianopia“ condition following treatment of a brain tumour in 2004.

3. Since childhood the applicant has lived with his mother who remains his carer and Centrelink nominee.

4. The applicant’s treating ophthalmologist in 2004 was Dr Young, but he had seen on several occasions in 1994-5, (with the first visit being in September 1994) another ophthalmologist, Dr Singh.

5. Dr Young in 2004 felt that the applicant did not have corrected visual acuity of less than 6/60 in each eye thus making him ineligible for a DSP (blind). He was however entitled to a normal DSP as a result of his eyesight problems.

6. On the basis of a report from the Department’s Health Professional Advisory Unit dated 15 July 2016, the applicant was transferred to a DSP (blind) with effect from 1 June 2016.

7. There was no dispute that he was entitled to a DSP (blind) from that date.

8. DSP (blind) is not subject to a means test.

9. On 15 May 2017, the Department raised a debt of $7,313.98 against Mr Klewer based on an overpayment of DSP for the period of 22 October 2013 to 31 May 2016. They claimed the debt arose due to undeclared deposits into his St George bank accounts and his equity in two investment properties being the Park Beach Road property and the Pacific Bay Resort property.

10. The applicant challenged this decision but it was affirmed by an Authorised Review Officer (ARO) on 20 June 2016. On 23 June 2017, the applicant’s mother Mrs Klewer applied on her son’s behalf to the Social Security and Child Support Division of the Tribunal (AAT1) for a review of the decision.

11. On 5 December 2017 the AAT1 affirmed the ARO’s decision. On 19 January 2018, Mrs Klewer, on her son’s behalf, appealed to this Tribunal and stated that:

    (a)the DSP (blind) should have been backdated to 2/2/2006, i.e. the date Robert would have become eligible to it due to his age;

    (b)the funds in the account had largely been deposited by her into her son’s account to be transferred to the trustee in bankruptcy;  and

    (c)as Robert had very little funds the debt should be waived.

12. Mrs Klewer represented her son at the hearings of this matter and spoke on his behalf. The matter was heard on 30 November 2018, 18 December 2018, 5 July 2019 and 2 September 2019.

    RELEVANT LEGISLATION AND ISSUES

13. The representative for the Respondent conceded in his final submissions that as a result of Dr Singh’s evidence, the Applicant was (in accordance with the legally accepted definition of legal blindness as set out in the departmental criteria to qualify a person for a DSP (blind)), legally blind and in fact had been so since 1994 (although he would not be eligible to apply for a DSP blind until 2006 when he came of age). As a result, he was certainly legally qualified to obtain a DSP (blind) prior to 2013, the year the debt owed started.

14. If that was all there was to it, it would be logical to assume that the debt would have to be waived. Indeed, had Dr Singh’s notes been available to Dr Young in 2004, the result may well have been different as well.  However, they were not.

15. Despite the apparent logic of this, the Respondent’s representative submitted that legally, the applicant should still be required to repay the debt.

16. He submitted that the applicant had to satisfy the special circumstances test as the error, if there was one, was not solely based on an administrative error by the Department.

17. He said there was also a false representation or at the very least, a failure or omission to comply with a provision of this Act, by the applicant’s mother and this precluded her on the applicant’s behalf, from claiming special circumstances

18. He did however concede that as a result of what she had been told by the representative of the Department at Coffs Harbour (and perhaps taking into account other factors as well) , the applicant may well qualify for compensation under the Defective Administration Compensation Package (CDDA Scheme) the Department oversees for situations such as this.

19. However, that scheme is totally separate to what this Tribunal has to consider.

20. He went on to say that the applicant’s mother could have put funds she received into her own bank account and/or set up a separate account instead of putting funds in Robert’s account.

21. Had she done so, he would not have earnt the interest that led to him being assessed as owing a debt to the Department, and would not have been requested to pay it back.

22. Whilst Mrs Klewer explained that she would use Robert’s accounts to deposit monies into which were not actually his for the sake of administrative convenience in managing his and her finances and that there was no ulterior motive in any of this, the Tribunal was not fully convinced by her explanations.

23. At the end of the day I was left with a situation where she put into Robert’s account monies she said were hers. She is his Guardian and looks after his affairs.

24. She should in my view have put these monies in her own account or set up a separate one for him – maybe some kind of trust account that would not be subject to the assets test applied.

25. She did not in my view explain in a way that satisfied me as to why she did not. Maybe she felt it was more beneficial to the family to do it this way and looking at the debt involved, she may have been correct in that view for all I know.

26. However by depositing the funds in the applicant’s account he became subject to the income test for a DSP.

27. Mrs Klewer submits that the matter clearly now comes within the provisions of Section 1237A of the Social Security Act 1991 (Cth) (the Act) which relevantly says:

    Waiver of debt arising from error

    Administrative error

    (1)  Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

    Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

    ……………

28. However the fact that Departmental officials may have given her incorrect information does not constitute sole administrative error. There may well be partial administrative error which may well entitle her to a refund of the debt pursuant to the CDDA scheme, but there are too many actions she took or did not take on Robert’s behalf to indicate any error was solely the Department’s .

29. She may still be entitled to have the debt waived due to special circumstances.

30. Section 1237AAD of the Act says:

    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.

31. I must say this Tribunal finds that there are special circumstances (other than financial circumstances alone - which don’t really apply here as the applicant is not destitute) that make it desirable to waive the debt and as a result of the facts in this case it is more appropriate accordingly to waive the debt rather than write the entirety of it or part of it off .

32. The fact is that this young man, had Dr Singh’s notes been available in 2004 to Dr Young or indeed to any other doctor subsequently, would have qualified for DSP (blind) from 2 February 2006 onward.

33. The fact that in 2013, he clearly was entitled to a DSP (blind) if he had applied and Dr Singh’s notes been available, in my view means that paragraph (b) of section 1237AAD is satisfied.

34. As none of the criteria contained in section 1236 of the Act in relation to the possibility of writing off the debt are satisfied, it is more appropriate to waive than to write off the debt, which means that paragraph (c) of section 1237AAD is also satisfied. Section 1236 relevantly states:

    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

    (c)the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

    (d)it is not cost effective for the Commonwealth to take action to recover the debt.

35. Whilst it seems strange to me why there is a non means tested DSP (blind), the system allows for one and this applicant would have been entitled to it had all the facts of his case been known (i.e. full medical records available to the relevant departmental officials and medical practitioners) and I believe on balance his circumstances can be described as ‘unusual’ or ‘uncommon’ or perhaps ‘exceptional’ as defined in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25. That case emphasises the need to emphasise the words unusual or uncommon as opposed to exceptional.

36. However the third part of the test that must be satisfied is in paragraph (a) of section 1237AAD. Namely, that 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 the Act, the Administration Act or the 1947 Act.

37. Mrs Klewer was not in my view convincing in her explanation for the applicant’s failure to disclose his income and assets, which can be summarised as she did not realise that her son needed to disclose all the relevant information sought, either because she was not aware she needed to and/or because of what she had been told by the Centrelink  officer at Coffs Harbour,

38. The respondent submits that the applicant, through another person, namely his mother, knowingly failed to comply with his obligation to inform Centrelink from time to time of his true financial circumstances.

39. The information supplied by St. George bank showed that the applicant, through his mother, did not report any of the relevant deposits into four of his St George Savings Accounts during the debt period (see T4/73, T4/77, T4/106, T4/123, T4/144, T4/170, T4/173), nor did he disclose nor advise the Department,  when sent numerous stock standard letters asking him to do so,   when his assets varied by $2,000 or more ,or when      his income  changed.

40. Despite the logic of waiving the debt due to the obvious fact that he was always entitled to a DSP (Blind) from 2006 onwards if the relevant medical documentation had been available, the lack of disclosure alone means he fails to satisfy (a) of section 1237AAD and for that reason the debt cannot be waived.

41. In regards to an officer of the Department incorrectly informing the applicant that he could earn up to  $1,000 per week without needing to disclose  it to Centrelink, that amounts to a possible  entitlement under the CDDA scheme should his mother wish to pursue that course of action. This will involve more paper work for her with perhaps no  guarantee of success, but clearly that course of action is open to Mrs Klewer and the Tribunal commends it to her. 

42. In my view, the evidence is simply not there to enable me to find the debt arose solely due to administrative error. The standard forms sent to the applicant were clear and as I said during the hearing people are often told different things by departmental officials which are unfortunately not necessarily always accurate.

43. The moral of this story is, make full disclosures and don’t put money in other people’s accounts if it’s yours, as any benefits or obligations that arise will in most situations be the responsibility of the account holder, as was the case here.

44. The Act is quite clear on this and precludes this Tribunal from allowing this appeal as to do so would fly in the face of the legislation governing it, despite the logic of the applicant being entitled all along to a DSP (blind) which, as can be seen from the factual situation already discussed in this case, he unfortunately did not pursue  until  mid - 2016.

45. For the reasons given above, the decision under review is affirmed.

I certify that the preceding 45 (forty - five) paragraphs are a true copy of the reasons for the decision herein of Bill Stefaniak AM RFD, Senior Member

............................[sgd]............................................

Associate

Dated: 25 October 2019

Dates of hearing:	30 November 2018, 18 December 2018, 5 July 2019, and 2 September 2019
Advocate for the Applicant:	Mrs L Klewer
Advocate for the Respondent:	Dr S Thompson
Solicitors for the Respondent:	Department of Human Services