Liszikam and Secretary, Department of Families, Community Services and Indigenous Affairs
[2006] AATA 396
•3 May 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 396
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/696
GENERAL ADMINISTRATIVE DIVISION ) Re RITA LISZIKAM Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Dr EK Christie, Member Date3 May 2006
PlaceBrisbane
Decision The Tribunal decides to set aside the decision under review and in substitution thereto to write off the overpayments of age pension received over the period 23 May 2001 to 19 November 2002 for a period of eighteen months. This means that the recovery of Mrs Liszikam’s debt due to the Commonwealth has now been suspended for a period of eighteen months.
The Tribunal also makes a Direction that the matter be remitted to the Respondent at the end of the “eighteen month write off period” to determine whether the debt due to the Commonwealth is to remain further suspended or recovered.
..........[Sgd].......
Member
CATCHWORDS
SOCIAL SECURITY – age pension –- overpayment – debt due to the Commonwealth – administrative error - special circumstances - write off.
Social Security Act 1991 ss 1236, 1237A, 1237AAD
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Haidar v Secretary, Department of Social Security (1998) 157 ALR 359 at 367
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Dranichnikov v Centrelink [2003] FCFCA 133
Re L and Secretary, Department of Social Security (1995) 21 AAR 412Director-General of Social Services v Hales (1983) 47 ALR 281
Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26WRITTEN REASONS FOR ORAL DECISION
3 May 2006 Dr EK Christie, Member 1. This is an application by Rita Liszikam for review of the decision of the Social Security Appeals Tribunal (the “SSAT”) made on 17 October 2005, in which the SSAT decided that overpayments of Age Pension entitlements paid to Mrs Liszikam were a debt due to the Commonwealth that could be recovered. Following an internal review by Centrelink after the SSAT decision the overpayments of Age Pension entitlements were recalculated as $1,673.95 and the period varied to 23 May 2001 to 19 November 2002.
2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” Documents) [Exhibit 1] and the various exhibits lodged by the parties.
3. The applicant was represented by her husband, Mr J Liszikam at the hearing. The respondent was represented by Ms J Forsythe, a Departmental Advocate.
Issues Before The Tribunal
4. The only issues for the Tribunal to decide were whether the age pension debt could be waived, in part or in full, under the “administrative error” or the “special circumstances” provisions of the Social Security Act 1991 (“the Act”). Alternatively, whether this amount could be “written off” under the “write off” provisions of the Social Security Act.
5. During the hearing held on 27 March 2006, it became clear that Mrs Liszikam’s past coronary history may be a relevant consideration with respect to the write off provisions of the Social Security Act. With the consent of Mrs Liszikam the Tribunal exerted its inquisitorial powers to obtain professional opinion from her treating cardiologist Dr M Mardini, who had treated her in the past, with respect to Mrs Liszikam’s state of coronary health. Dr Mardini’s report was filed on 19 April 2006.
6. In addition, Mr J Liszikam filed further documentation (on 30 March 2006) relating to calculation of income for social security recipients for members of a couple but where only one member of the couple received benefits.
7. These materials were subject of submissions at a resumed hearing by telephone held on 3 May 2006.
BACKGROUND FACTS
8. On the basis of the evidence before it the SSAT made the following Findings of Fact [T2, Folio 8]:
“(i) At all material times, Mrs Liszikam was in receipt of age pension.
(ii)From 1 August 2001 to 27 February 2002, Mrs Liszikam’s rate of age pension was calculated on the basis of a combined annual income of $44,558.38.
(iii)Mrs Liszikam was notified by letter dated 7 June 2001 that that was the case.
(iv)By letter dated 14 February 2002, Mrs Liszikam was notified that her rate of age pension was to be calculated on the basis of a combined annual income of $44,519.82.
(v)Mr Liszikam earned in excess of the amounts taken into account by Centrelink in calculating Mrs Liszikam’s rate of age pension.
(vi)Mrs Liszikam did not inform Centrelink of changes to her husband’s fortnightly earnings.”
9. At the commencement of the hearing, Mrs Liszikam gave the following responses to the Findings of Fact made by the SSAT:-
§Finding (i): She agreed with this finding.
§Finding (ii): She believed that she was not entitled to age pension as her husband was working and so had no reason to inform Centrelink.
§Finding (iii): She did not look at the letters that Centrelink sent to her but passed them on to her husband. She had become distraught by the attention she had been subjected to by Centrelink and it had affected her health over time.
§Finding(iv): She cannot remember receiving this letter.
§Finding (v): She had no idea about this situation.
§Finding (vi): She saw no reason to inform Centrelink about changes in her husband’s fortnightly earnings. She had been told by Centrelink, if her husband worked, that she was not entitled to age pension. She could not understand why Centrelink had been “so careless” to have created a situation of overpayments of age pension entitlements for her.
Statutory Requirements And Case Law
10. The Tribunal applies the following legal requirements and principles in its interpretation of the law in its consideration of the outcome for Mrs Liszikam’s factual situation.
The Tribunal’s Decision Making Powers§
11. There are a number of decisions possible in this application for review: whether the debt due to the Commonwealth can be waived under the “administrative error” or “special circumstances” provisions of the Social Security Act 1991; in addition, whether the debt could be “written off”.Accordingly, the question for the determination of the Tribunal is whether the decision under review is the preferred one.
[See Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68]
12. In this application for review, the Tribunal considers all the evidence and information before the Tribunal as at the date of the hearing, and supplementary submissions following the hearing - to the extent those facts are relevant to the decision by reference to the subject matter, scope and purpose of the legislation pursuant to which the discretion is conferred.
[See Haidar v Secretary, Department of Social Security (1998) 157 ALR 359 at 367]
13. The Tribunal firstly considers the legal principles contained in the Social Security Act for waiver of debts of the debts due to the Commonwealth, before considering the legal principles for write off.
§ The Administrative Error Waiver Provision
14. In this application for review the “administrative error” provision is one issue in dispute for the Tribunal to decide. Section 1237A of the Social Security Act provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “administrative error”:
15. For this section of the Social Security Act to apply to Mrs Liszikam’ factual situation, Mrs Liszikam must not have contributed, in any way, to the administrative error that led to the overpayment. In addition, Mrs Liszikam must have received his overpayments of social security entitlements in “good faith”. Both these requirements must be satisfied in order for Mrs Liszikam to succeed under the “administrative error”, waiver provision of the Social Security Act.
The “Special Circumstances Waiver” Provision §
16. In this application for review, the “special circumstances” provision is another issue in dispute for the Tribunal to decide. Section 1237AAD of the Act provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “special circumstances”. For this section of the Social Security Act to apply to Mrs Liszikam’s factual situation, there must be “special circumstances” that led to the overpayment of social security entitlements. In addition, Mrs Liszikam must not have “knowingly” made a false statement or false representation - or “knowingly” failed to have complied with a provision of the Act. Both these requirements must be satisfied for Mrs Liszikam to succeed under the “Waiver in Special Circumstances” provision of the Social Security Act.
17. The common law meaning and application of the expression “special circumstances” has been considered by the Federal Court and the Tribunal on many occasions. The relevant legal principles that have emerged, over time, that have been applied to provide a meaning for “special circumstances” can be summarised as follows:-
(a)“The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional…”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.” [Emphasis added]
[See Re Beadle and Director-General of Social Security (1984) 6 ALD (at 3)]
(b)“To some extent the question whether there were special circumstances must depend on how it came about that the error occurred …
“There will be a requirement that the circumstances are such that takes the case out of the ordinary” [Emphasis added].
[See Dranichnikov v Centrelink [2003] FCAFC 133]
18. The meaning of the term “knowingly” has been considered by the Tribunal in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 where the Tribunal stated (at 445):
“There is nothing in s 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 a 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”. [Emphasis added]
The Write Off Provision
19. The Explanatory Memorandum [“EM”] to the Social Security Legislation Amendment (Carer Pension and Other Measures) Bill 1995 is significant in relation to the pathway for the Tribunal to consider in deciding the preferred decision for Mrs Liszikam’s factual situation. Under “4. Explanation of the Changes”, the EM states that “consideration as to the circumstances of a debtor are central to a decision to write off a debt under section 1236 of the [Social Security] Act and should not be the basis for a decision to waive [the debt]”.
20. Section 1236(1) of the Social Security Act sets out the requirements for a debt due to the Commonwealth to be written off. A former President of the Tribunal, Mathews J, has commented on the write-off provisions of the Social Security Act in Re L and Secretary, Department of Social Security (1995) 21 AAR 412. Mathews J summarised the position as follows (at 428):
“The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned. Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation? If an affirmative answer is reached to this question, then it would be appropriate to defer recovery [by write off]”
Consideration of the Issues
(a) Circumstances the Overpayments Arose
21. Mrs Liszikam said that she passed all the letters addressed to her from Centrelink on to her husband. She acknowledged that she had seen the letters Centrelink had sent to her but had no idea that she was being paid by Centrelink. In addition she said that she did not raise any queries with Centrelink about the letters that had been sent to her.
22. Mrs Liszikam said that the reason she did not read the Centrelink letters sent to her was because she left all of the financial aspects of their marriage to her husband and had always placed her trust in her husband to do so.
23. Mrs Liszikam agreed that she was aware that her husband’s income fluctuated because his work periods varied widely over different periods of time.
24. Mr Liszikam said that he thought his wife was entitled to age pension because of her age (Mrs Liszikam turned 61 on 21 June 1998). In addition, Mr Liszikam believed that as Centrelink did “the working out so that they should know what she was entitled to.”
25. Mr Liszikam said that he had never contacted Centrelink about his fluctuating income as he did not receive any social security entitlements over the period of time that the overpayments of age pension were made to his wife. The reason for this was that he had been told by Centrelink that his wife was entitled to age pension and so he did not worry about it. In addition, Centrelink was aware that he was working and not receiving any social security benefits.
26. Mr Liszikam said that he was aware that the amount of social security entitlements paid to a person depended on the amount of income and so varied when the income received fluctuated. Mr Liszikam said that such a situation, for age pension entitlements did not apply in Germany, the country from which Mr and Mrs Liszikam had migrated to Australia. Mr Liszikam emphasised that he had assumed Centrelink were the experts and would have correctly calculated the age pension entitlements paid to Mrs Liszikam.
27. Mr Liszikam acknowledged that he had looked at notification notices that Centrelink had sent his wife – but had not raised any queries with Centrelink or contacted them about these notices.
28. Mr Liszikam was referred to a Centrelink file note, by Ms Forsyth, recording a telephone conversation with Mrs Liszikam (T8, Folio 37; 3 October 2001) which recorded the following text:
“I asked a/n if she was aware about fully declaring her partner’s income. A/N said that she comes from Germany, and in Germany once you are on age pension no incomes affect your rate and she thought same is applicable here. A/N also said that moreover Centrelink never told her about the rules and what she needs to tell. A/N said that her partner declared all earnings to the correct details and she lodged the forms for him as he was working. A/N said that she had no knowledge that she was receiving incorrect rate of pension and had she known, she could have gone to Centrelink to get it corrected. I advised a/n that all the information is explained in Centrelink letters.”
29. Mr Liszikam said that he could recall his wife telling him that Centrelink had telephoned her, but could not recall the details of the conversation between his wife and Centrelink.
(b) Current Financial Circumstances of Mr and Mrs Liszikam
30. Mr and Mrs Liszikam prepared a Statement of Financial Circumstances that was filed with the Tribunal on 16 March 2006 (Exhibit 2).
31. Their combined net income (both on age pension) is $816 per fortnight. Total household expenditure is around $984 per fortnight.
32. They have no debts and have two motor vehicles, a 1988 Toyota Corolla and a 1988 Nissan Pathfinder, valued at $300 and $2,000 respectively; both cars would be difficult to sell at market value. They have stocks and bonds to the value of $5,200.
33. Unforeseen costs they have recently incurred have been for eye cataract surgery ($1,682) and dental needs ($177).
34. Mrs Liszikam has a coronary condition requiring care and medical attention.
35. Mr Liszikam suffers from severe osteoarthritis in his knees shoulders and ankles and has daily medication needs. He also suffers from Type I Diabetes and his eyesight problems.
36. The age pension debt is currently being recovered at $60 per fortnight. Mr Liszikam said that Centrelink did not consult with them in determining what would be an appropriate amount for recovering the debt through fortnightly payments.
37. Mr and Mrs Liszikam both turn 67 in 2006.
(c) Calculation of the Debt due to the Commonwealth
38. The accuracy of the debt calculations have been an ongoing source of uncertainty for Mrs Liszikam and had been queried by Mr Liszikam at the SSAT hearing. In its “Discussion of the Evidence” the SSAT concludes:
“Mr and Mrs Liszikam challenge the calculation of the debt. After the hearing the Tribunal went through Mr and Mrs Liszikam’s submissions in relation to the debt calculations but was unable to locate any error in the Centrelink debt calculations which would favour the applicant. The Tribunal had difficulty determining how Centrelink had arrived at the figure of $1,935.99 per fortnight for income from 1 July 2002 as listed in the ‘Summary of Changes’ page of the debt calculations. However, the Tribunal’s calculations resulted in a slightly larger figure, which would not have the effect of reducing the debt.” (T2, Folio 7)
39. The components of the $1,637.95 debt due to the Commonwealth are as follows for the period 23 May 2001 to 19 November 2002 are as follows (Exhibit 3, Attachment 3):
§ Basic Pension $170.80 (underpaid)
§ Pension Supplement $330.99 (overpaid)
§ Rent Assistance $1,484.82 (overpaid)
§ Pharmaceutical Allowance $28.94 (overpaid)
40. A close review of the fortnightly calculations for each of these four entitlements, as summarised for the entire period 23 May 2001 to 19 November 2002, indicates that they varied over time – sometimes, quite considerably. That is, there were periods of “debit” and “credit” in fortnightly entitlements received that cannot be shown on the summary for the entire period (Exhibit 3, Attachment 3).
41. Mr Liszikam challenged that the formula used by Centrelink to calculate the debt may not have used the correct discount rate (20% or 40%) that applies to situations in which both members of a couple received social security benefits compared to a situation where only one member of a couple received benefits.
42. Ms Debbie Greer, a debt officer of the Business Integrity Branch of Centrelink was responsible for calculating Mrs Liszikam’s overpayment. The calculations she made on 10 January 2006 were based on payslips provided by Mrs Liszikam.
43. The debt calculations she made were audited by a senior Centrelink officer and her debt calculations were verified as being correct.
FINDINGS OF FACT AND CONCLUSIONS
44. The Tribunal has considered all the factual evidence and information before the Tribunal and applied these facts to the requirements prescribed by the Social Security Act 1991 as well as the legal principles that have been developed by our Courts.
45. The first issue for the Tribunal to consider is whether the debt could be waived under the “administrative error provisions” of the Social Security Act.
46. With respect to the Age Pension debt due to the Commonwealth and waiver for “administrative error”, the Tribunal notes that both Mr and Mrs Liszikam have failed to correctly inform Centrelink of the fluctuating amounts of earnings that Mr Liszikam received, each fortnight, over the period 23 May 2001 to 19 November 2002.
47. Whilst the Tribunal understands that there is a degree of confusion between age pension entitlements in Australia compared with the situation in Mr and Mrs Liszikam’s birthplace (Germany), the facts before the Tribunal are clear. Neither Mrs Liszikam (nor Mr Liszikam) raised any query with Centrelink or contacted Centrelink in relation to whether Mrs Liszikam was receiving the correct age pension entitlement during the period her husband’s income fluctuated widely. Unfortunately, for Mrs Liszikam this can only lead to a finding by the Tribunal that she has contributed to the error that has led to overpayment of age pension entitlements over the period 23 May 2001 to 19 November 2002.
48. Consequently, given the above finding, the Tribunal can make no other finding than to conclude that Mrs Liszikam has contributed to the “administrative error” that has led to her receiving overpayments of Age Pension over the 23 May 2001 to 19 November 2002.
49. Because of this finding, Mrs Liszikam cannot rely on the provisions relating to specified time periods that apply to the waiver of a debt for administrative error [s1237A(1A)].
50. The next issue for the Tribunal to consider whether the debt could be waived under the “special circumstances provisions” of the Social Security Act.
51. In this regard, the decision-maker must consider how the error occurred i.e. the circumstances which gave rise to the overpayment.
52. The Tribunal has considered all of the evidence and information that are relevant in understanding how the overpayments arose and, based on the following findings, concludes that there are no facts in Mrs Liszikam’s case that could be described as “unusual”, “uncommon” or “exceptional” that would take her case “out of the ordinary”:
(a)A failure by either Mr or Mrs Liszikam to raise a query with Centrelink, or to contact Centrelink, about the wide fluctuations in his fortnightly earnings over time given that Mr Liszikam was aware that the amount of earnings affected social security entitlements; and
(b)An acknowledgement of Mr Liszikam that he had looked at notification notices that Centrelink had sent him but, in response, had not contacted Centrelink or raised any queries with Centrelink about obligations Mrs Liszikam had, as a social security recipient that needed to be adhered to. These obligations were set out in the notification notice.
(c)An awareness by both Mr and Mrs Liszikam of a telephone conversation that Mrs Liszikam had with Centrelink in October 2001 that informed Mrs Liszikam of the need to have her husband’s earnings correctly declared at all times.
53. The Tribunal concludes that based on the above findings, that there is no basis to waive the debt for “special circumstances” as the circumstances as to how the age pension overpayment arose are not “special circumstances” when the above findings are related to the relevant legal principles:
(i)The factual circumstances do not meet the description of being “unusual;” or “uncommon”;
(ii)That the factual circumstances do not take Mrs Liszikam’s case out of the ordinary given that no contact had been made with Centrelink to raise a query about the amount of entitlements Mrs Liszikam received in the circumstances of the fluctuating income paid to Mr Liszikam; and
(iii)That Mrs Liszikam’s cardiac condition, in itself, is not a “special circumstance”.
54. In considering its discretion for write-off under the Act, the Tribunal has applied the following factors commonly referred to as the “Hales Factors” [See Director-General of Social Services v Hales (1983) 47 ALR 281; and Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26 at 42] and makes the following findings:
(a)The overpayments of age pension payment to Mrs Liszikam arose as a result of an innocent mistake – not fraud;
(b)The following financial circumstances of Mrs Liszikam (see para 31-33):
Their combined net income (both on age pension) is $816 per fortnight. Total household expenditure is around $984 per fortnight. Apart from expenses for groceries (which sometimes had a very small surplus – which was then banked), the expenses for necessaries of life claimed appear modest. Currently, there is a net negative balance of income of around $170 per fortnight. Should this trend continue, their savings for future emergencies ($5,200) will be lost in about 15 months.
(c)There is no evidence before the Tribunal of any offer of a compromise;
(d)There are no prospects that Mrs Liszikam’s financial circumstances may improve in time; and
(e)Mrs Liszikam is now aged 67 and has received treatment by a cardiologist for an existing condition of “arrhythmia” and “supraventricular tachycardia”, in the past [See Dr M Mardini’s Report, 6 April 2006]. The accepted body of published medical literature on these conditions indicates there may be a likelihood for either hospitalisation or further surgery in Mrs Liszikam’s circumstances [See: European Heart Journal (2001) 22, 1852-1923; Medicine Net.com].
55. For the above reasons and the reasoning of Mathews J in Re L and Secretary, Department of Social Security, the Tribunal concludes that the evidence before the Tribunal is that recovery of the age pension debt accrued over the period 23 May 2001 to 19 November 2002 would cause “such personal hardship to Mrs Liszikam as to run contrary to the beneficial nature of the [Social Security Act]”. Consequently, the Tribunal finds that the debt due to the Commonwealth, for the period 23 May 2001 to 19 November 2002, should be written off.
56. However, the write off of the debt for the period should be for a period of eighteen months from this decision of the Tribunal.
57. After this eighteen month period, the status of write off should be subject to an internal review by Centrelink in order to determine whether the debt due to the Commonwealth should be either written off for a further period of time - or whether the debt due to the Commonwealth should be recovered, by considering the relevant statutory requirements and common law principles for write off.
58. In this regard, the Tribunal’s findings should be considered (particularly the findings in relation to the “Hales Factors” at paragraph 54), with some independent assessment of Mrs Liszikam’s current status of health, together with an updated Statement of Financial Circumstances. Ideally, Ms Liszikam should obtain a report for Centrelink, from her treating GP, as to the current state of her coronary health including any likelihood she may require some form of medical intervention (e.g. surgery, hospitalisation) in the future.
59. The question whether the amount of overpayment calculated by Centrelink over the period 23 May 2001 to 19 November 2002 has been the subject of internal reviews by Centrelink, a review by the SSAT and further submissions before the Tribunal. The Tribunal concludes that it is satisfied that the appropriate procedures as prescribed by the Social Security Act have been adhered to by Centrelink in calculating each component of the overpayments made to Mrs Liszikam. In addition, the Tribunal accepts the evidence of Ms Greer that the calculations she made on 10 January 2006, then later audited and verified as being correct by a Senior Centrelink officer, are correct. It is significant that the recalculation by Ms Greer, and the later audit, were based on payslips provided by Mr Liszikam and led to a reduction in the amount of the debt as considered by the SSAT. The Tribunal makes the further observation that the calculation of age pension entitlements when one member of a couple does not receive entitlements may be a little confusing as there are alternate pathways to carry out the calculations. However, the alternative pathways, as discussed and explained at the Tribunal hearing, will give the same final answer.
60. For all of the above reasons, the Tribunal decides to set aside the decision under review and in substitution thereto to write off the overpayments of age pension received over the period 23 May 2001 to 19 November 2002 for a period of eighteen months.
61. The Tribunal also makes a Direction that the matter be remitted to the Respondent at the end of the “eighteen month write off period” to determine whether the debt due to the Commonwealth is to remain further suspended or recovered.
I certify that the 61 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed: Jeff Mills
Legal Research Officer
Date/s of Hearing 27 March 2006, 3 May 2006
Date of Decision 3 May 2006
Date of Written Reasons 3 May 2006
The Applicant was unrepresented by Mr J Liszikam (her husband)
For the Respondent Ms J Forsyth, Departmental Advocate
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