Manal Madanat and Secretary, Department of Social Services

[2015] AATA 180

[2015] AATA 180

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2014/1577
Re	Manal Madanat
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Professor R McCallum, AO, Member
Date	27 March 2015
Place	Sydney

The decision under review is affirmed.

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

Professor Ron McCallum, AO, Member

CATCHWORDS

SOCIAL SECURITY – debt – compensation affected payments – whether debt should be waived in whole or in part – whether special circumstances exist – decision affirmed

LEGISLATION

Social Security Act 1991 ss 17, 23, 1174, 1184K, 1237AAD

CASES

Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531

Dranichnikov v Centrelink (2003) 75 ALD 134
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95; (AAT 492, 15 July 1981)

Re Topp and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 99

REASONS FOR DECISION

Professor R McCallum, AO, Member

27 March 2015

BACKGROUND

1. The Applicant, Mrs Manal Madanat, is married to Mr Luai Madanat. They married in 1995 and they have two sons and one daughter.

2. On 27 June 1999, Mr Madanat suffered a compensable workplace injury.

3. On 7 April 2009 the Applicant made a claim for newstart allowance (NSA). The Applicant was granted NSA from the date of her claim.

4. On 24 November 2010 the Applicant made a claim for carer payment, and the Applicant was granted carer payment from 23 November 2010.

5. On 7 June 2013, Mr Madanat agreed to settle his workers compensation claim. Under the terms of settlement which was made by consent orders, Mr Madanat was entitled to an additional $300 per week in periodic compensation for the period from 1 July 2008 to 5 June 2013. This periodic compensation was to be paid in addition to the compensation monies which he had already received.

6. Centrelink became aware of these consent orders on 21 June 2013.

7. On 8 July 2013, Centrelink wrote to Allianz Australia Workers’ Compensation (NSW) Limited (Allianz) to inform Allianz that Centrelink’s recovery in respect of the arrears of periodic compensation to be paid to Mr Madanat was nil. Subsequently, the arrears of periodic compensation were paid to Mr Madanat.

8. Despite the letter to Allianz dated 8 July 2013, it does appear that on or around 23 June 2013, Centrelink came to the conclusion that the Applicant had been overpaid benefits. Centrelink decided to raise and recover two debts because of her husband’s receipt of the periodic compensation arrears. The first debt was for $13,723.83, being an overpayment of NSA from 3 April 2009 to 22 November 2010. The second debt was for $15,606.55, being an overpayment of carer payment from 23 November 2010 to 6 June 2013.

9. On 21 August 2013, the Applicant made a request by telephone for a review of the debt recovery decision by an Authorised Review Officer (ARO). Centrelink wrote a letter to the Applicant dated 28 August 2013, informing the Applicant that Centrelink’s decision dated 23 June 2013 to raise and to recover the two debts had been referred to the ARO.

10. On 6 December 2013 the ARO decided to affirm the original decision.

11. On 20 December 2013, the Applicant applied to the Social Security Appeals Tribunal (SSAT) for review of the ARO decision. On 7 March 2014, the SSAT affirmed the decision under review and published its reasons on 19 March 2014.

12. On 28 March 2014, the Applicant applied to this Tribunal for review of the decision of the SSAT.

    BASIS FOR AND CALCULATION OF THE DEBT

13. The Applicant did not challenge the basis for or the calculation of the debts in this matter. The debts have arisen because NSA and carer payments are compensation affected payments as defined in sections 17 and 23 of the Social Security Act 1991 (SS Act). Put simply, the effect of section 1174 of the SS Act is to reduce the amount of NSA and carer payment that was payable to Mrs Madanat because Mr Madanat received periodic compensation payments. A formula is used to calculate an amount of the periodic compensation payments received by Mr Madanat which is treated as ordinary income of Mrs Madanat. This reduces the rate of payment of the compensation affected payments to her under the ordinary income test.

14. If a person receives a social security benefit to which they are not entitled it is a debt due to the Commonwealth. As stated above, Mrs Madanat has a debt of $13,723.83, arising from overpayment of NSA from 3 April 2009 to 22 November 2010 and a debt of $15,605.55, arising from overpayment of carer payment from 23 November 2010 to 6 June 2013.

    THE ISSUE TO BE DECIDED

15. The issue which this Tribunal is required to decide is whether there are special circumstances in the Applicant’s case to warrant the waiver of the whole or part of the debt.

    THE LEGISLATION

16. The decisions of the ARO and of the SSAT held that there were no special circumstances in the Applicant’s case. Both the ARO and the SSAT referred to section 1184K of the SS Act. Subsection 1184K(1) provides:

    (1)For the purposes of this Part, the Secretary may treat the whole or part of a compensation payment as:

    (a)   not having been made; or

    (b)   not liable to be made;

    if the Secretary thinks it is appropriate to do so in the special circumstances of the case.

17. Subsection 1184K(1) begins with the words, “For the purposes of this Part”. This provision appears in Chapter 3 titled “General provisions relating to payability and rates”, Part 3.14 titled “Compensation recovery”, Division 6 titled “Miscellaneous”.

18. However, in the Secretary’s Statement of Facts and Contentions, the Respondent relies upon section 1237AAD of the SS Act when arguing that no special circumstances exist.

19. Section 1237AAD provides:

    Section 1237AAD Waiver in special circumstances

    The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

    (a)the debt did not result wholly or partly from the debtor or another person knowingly:

    (i)    making a false statement or a false representation; or

    (ii)   failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and

    (b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

    (c)it is more appropriate to waive than to write off the debt or part of the debt.

20. This provision appears in Chapter 5 titled, “Overpayments and debt recovery”, in Part 5.4 titled, “Non-recovery of debts”.

21. While both provisions concern special circumstances their wording differs. The Tribunal in Re Topp and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 99 made the following remarks regarding the distinction between ss 1184K and 1237AAD:

    [50] The debt and discretion provisions of Part 3.14 of the Act have an uncertain relationship with the more general overpayment and debt recovery provisions in Chapter 5. The provisions in ss 1178, 1180 and 1184F provide that benefit payments affected by compensation receipts only give rise to a debt if the Secretary gives a notice. On the other hand, s 1223(1) provides that a debt automatically arises where a person receives the benefit of any social security payment the person “was not entitled for any reason to obtain”. Whatever the precise origin of the liability, any debt can be dealt with under the non-recovery provisions in ss 1235 – 1237AB. Within those provisions the Secretary may write off the debt, in the limited circumstances provided for in s 1236. Alternatively, the Secretary may waive the right to recover a debt if, amongst other things, there are “special circumstances (other than financial hardship alone) that make it desirable to waive”: s 1237AAD.

    [51] The discretionary powers conferred by ss 1184K and 1237AAD of the Act could be regarded as primarily directed towards different purposes. They are (i) the preclusion or rate reduction consequences of a compensation payment (in the case of s 1184K) and (ii) the debt consequences (in the case of s 1237AAD). One circumstance offering some support for that view is the conceptual distinction between the preclusion period and the debt. Another is the reality that a preclusion period may be triggered merely where a person has claimed, rather than actually received, a “compensation affected payment”: ss 1169(1)(a) and 1184L. At least in such a case, and also where the preclusion period applies prospectively to periods for which no social security payments have been made, the s 1184K discretion has a somewhat different scope and purpose to the waiver power granted by s 1237AAD.

    [52] However the s 1184K discretion is conferred “[f]or the purposes of” Part 3.14 of the Act, and it is a discretion to treat a compensation payment as “not having been made”. The former expression necessarily includes the purpose of the Secretary giving a debt notice under s 1178 or s 1180. The later expression is particularly apt to include that power because s 1170 is worded so as to create a preclusion period that is an automatic consequence of a compensation payment, rather than one dependent on, or even amenable to, the Secretary’s satisfaction or decision. Moreover, since any debt can only arise if a preclusion period applies and, at least in the case of lump sum payments, a preclusion period will almost inevitably have a retrospective operation, the s 1184K discretion is necessarily concerned with the practical waiver of debt obligations. Indeed it may very well be that the initially apparent incongruence between the ss 1178 and 1180 pre-conditions (requiring the Secretary to have first given a debt notice) and the more general “automatic” debt provided for in s 1223(1), is deliberate. Its purpose is to confirm that the s 1184K discretion is intended to permit consideration of the “debt” issues that potentially arise from the existence of a preclusion period. It is also intended to confirm that the s 1184K discretion, unlike the waiver discretion conferred by s 1237AAD, may be exercised in “special circumstances” that are, amongst other things, constituted by financial hardship alone.

22. In the circumstances of this case I consider that section 1237AAD is the appropriate provision to apply.

    THE CASE LAW

23. The words “special circumstances” exist in several provisions of the SS Act and in its predecessor statutes. These words not only concern discretions relating to debt recovery and overpayments, but they also operate with respect to compensation preclusion periods. There are many decisions concerning the manner in which “special circumstances” discretions should be exercised in social security matters.

24. In Re Ivovic and Director-General of Social Services (1981) 3 ALN N95; (AAT 492, 15 July 1981), the Tribunal commented upon the phrase “special circumstances” with respect to debt recovery under section 115 of the Social Services Act 1947 (Cth). The Tribunal said at [45]:

    It is, in our view, the plain intention of s 115 of the Act that in cases such as the present the amount of the liability properly determined in accordance with sub-section (4) of that section must be paid unless the Director-General (or on review this Tribunal) is satisfied that special circumstances exist by reason of which the person should be released in whole or in part from that liability [s 115(4A)]. Whilst it would be unwise, if not impossible, to attempt to lay down any precise delineation of what may amount to ‘special circumstances’ for the purposes of s 115(4A) [cf. Re Norman (1886) 16 QBD 673 at 677 per Lopes LJ], the use of the word ‘special’ is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case [cf. Ex parte Bucknell (1936) 56 CLR 221 at 224]. Whilst we agree that hardship is a relevant consideration in the exercise of the discretion conferred by s 115(4A), we reject the submission by Mr Watkins that we should ignore the circumstances out of which the alleged hardship is said to have arisen. The reference to special circumstances ‘by reason of which’ a person liable ‘should be released’ requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes. In the exercise of the discretion which s 115(4A) confers, the decision-maker must have regard to whether, by exercising the discretion in a particular case, he will be achieving or frustrating ends or objects which are conformable with the scope and purpose of the Social Services Act 1947: cf. Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 per Dixon J. Thus whilst keeping the dominant principle of s 115 in mind, he must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate.

25. More recently in Dranichnikov vCentrelink (2003) 75 ALD 134, Hill J (with Kiefel and Hely JJ agreeing) said at [66]:

    … Other cases which have considered analogous words such as “special reasons” has tended to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary …

26. In Boscolo vSecretary, Department of Social Security (1999) 90 FCR 531, French J (as he then was) stated at [18]

    The word “special” conditioning “reasons” or “circumstances” guards the entrance to the exercise of many different statutory discretions. It is generally futile to search for its meaning in terms of other words. It is in essence instrumental, a direction to the decision-maker that the discretion it constrains is not lightly to be enlivened. A Full Court has spoken of it as having content which is “... sufficiently understood not to require judicial gloss”: Beadle v Director-General of Social Security (1985) 60 ALR 225 at 228. If helpful to speak in terms of its meaning almost all of it comes from context.

27. In essence, the words “special circumstances” as they appear in section 1237AAD of the SS Act bestow upon decision-makers latitude to examine the circumstances of applicants to ensure that out of the ordinary factors do not lead to unjustifiable hardship.

    THE EVIDENCE

28. The Applicant gave sworn evidence and I found her to be a truthful witness.

29. I have examined the following documents which are before this Tribunal: Secretary’s Statement of Facts and Contentions; the documents produced by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (Cth), which are known as the T documents; and the supplementary T documents.

    CONSIDERATION

30. For completeness I note that since the debt is being recovered by deductions from Mrs Madanat’s ongoing benefit the debt cannot be written off under section 1236 of the SS Act. I also note that even if there was an error by Centrelink, discussed further below, for waiver under section 1237A the debt must be solely attributable to Centrelink’s error which is not the case since the debt is attributable to the payment of the compensation payment.

31. I have set out above section 1237AAD of the SS Act which provides that the Secretary (or Tribunal) may waive all or part of a debt if there are special circumstances (other than financial hardship alone). The Tribunal accepts that the debt did not arise as a result of Mrs Madanat or another person knowingly making a false statement or a false representation or failing to comply with a provision of the Act.

32. Mrs Madanat argues that a special circumstance in her case is that Centrelink’s letter to Allianz on 8 July 2013 that Centrelink’s recovery in respect of the arrears of periodic compensation to be paid to Mr Madanat was nil was sent in error. While Centrelink never sought to recover a debt from Luai Madanat, on or about 23 June 2013, it decided to raise and recover two debts from the Applicant. It is my understanding that the letter informing the Applicant of this decision cannot be located. However, the Applicant must have been aware of this decision by 21 August 2013 because on that date the Applicant made a telephone request for a review of the debt recovery decision.

33. Although the letter dated 8 July 2013 to Allianz may have been sent in error I do not consider that this gives rise to special circumstances in the Applicant’s case. Given that the Applicant was made aware of the debt recovery decision on or before 21 August 2013, any confusion which the 8 July letter may have engendered in the Applicant was short lived and there was no evidence that Mrs Madanat had acted in reliance to her detriment as a result of the letter.

34. The Applicant and her family live in subsidised housing provided by the NSW Housing Commission. Mr Madanat receives Disability Support Pension, and the Applicant receives carer payments. The family also receives family tax benefits. In her evidence, the Applicant said that initially the debt was being paid back through reduction in social security payments of $90 per fortnight. However, after discussions with Centrelink, the fortnightly reduction was reduced to $50 per fortnight.

35. The Applicant gave evidence that the repayment of this debt caused her some stress. She said that she had some health problems, including high blood pressure and something wrong with her glands. In her view, the stress of this debt has caused mood swings in her husband and in herself which have affected the children. Furthermore, the reduction in social security payments made their financial circumstances more difficult. In my view, these health issues are not sufficient of themselves to warrant special circumstances here. They are still receiving social security payments and are in subsidised housing.

36. After examining all of the evidence, I find that there is nothing in the Applicant’s circumstances which is out of the ordinary. I find that no special circumstances exist to enliven the discretion under section 1237AAD of the SS Act.

    DECISION

37. The decision under review is affirmed.

I certify that the preceding 37 (thirty -seven) paragraphs are a true copy of the reasons for the decision herein of Professor R McCallum, AO, Member

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

Associate

Dated 27 March 2015

Date of hearing	24 February 2015
Applicant	In person
Solicitor for the Respondent	Mr S Davidson, Department of Human Services