Maria Kokl and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2010] AATA 524
•13 July 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 524
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/0074
GENERAL ADMINISTRATIVE DIVISION ) Re Maria Kokl Applicant
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
Respondent
DECISION
Tribunal Senior Member Jill Toohey Date13 July 2010
PlaceSydney
Decision 1. The decision that the applicant has a debt to the Commonwealth is affirmed.
2. The decision to issue a garnishee notice is set aside and the matter remitted for reconsideration with the recommendation that Centrelink attempt to negotiate with the applicant a reasonable alternative arrangement for repayment..................[sgd].............................
Senior Member
CATCHWORDS
SOCIAL SECURITY – AGE PENSION – applicant employed – overpayment – debt raised – applicant did not dispute debt – whether grounds to write off or waive any or all of the debt – garnishee notice – debt recovered in full – whether Centrelink correct to issue garnishee notice – Tribunal’s limited power to review decision to issue garnishee notice – whether applicant failed to enter into a reasonable arrangement to repay the debt – Tribunal not satisfied that applicant had failed to enter into a reasonable arrangement to repay the debt – Centrelink decision to issue garnishee notice not correct – decision that no grounds to write off or waive debt affirmed – decision to issue garnishee notice set aside – matter remitted for reconsideration with recommendation that Centrelink attempt to negotiate a reasonable alternative arrangement for repayment
Social Security Act 1991, ss 1230C, 1233,1236, 1237
Social Security (Administration) Act 1999, s 151
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25.
Beadle v Director-General of Social Security (1985) 7 ALD 670.
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Walker v Secretary, Department of Social Security (No 2) (1997) 48 ALD 512
REASONS FOR DECISION
13 July 2010 Senior Member Jill Toohey Background
1. Ms Maria Kokl is 76 years old. She has been receiving an age pension since March 1994 and, since February 2006, has received a part pension from Slovenia.
2. In December 2008, Centrelink learned, through a data-matching exercise, that Ms Kokl was receiving income from ten hours employment each week. The income was such that, if correct, it would have had the effect of reducing the amount of age pension to which she was entitled.
3. On 3 April 2009, having confirmed the information with Ms Kokl’s employer, Centrelink decided she had been overpaid the age pension and had a debt of $8,768.07.
4. On 14 May 2009, Centrelink commenced deductions of approximately $225 a fortnight from Ms Kokl’s pension and, shortly after, recovered the balance in full by means of a garnishee notice to St George bank.
5. Ms Kokl does not dispute the debt itself, although she says she did not know that she was required to advise Centrelink of her earnings. She says when she asked Centrelink how much she could work without affecting her pension, she was advised she could work “for two hours” but she did not know whether this meant daily, weekly or fortnightly. Some time later, she started working two hours each weekday. I accept what Ms Kokl says but, clearly, she ought to have clarified her position with Centrelink before she started work.
6. Ms Kokl is aggrieved mainly by the manner in which Centrelink recovered most of the debt in full by means of a garnishee notice. Further, she says, she should not be required to repay the debt in full because of her special circumstances.
7. On 7 December 2009, the Social Security Appeals Tribunal (SSAT) affirmed Centrelink’s decisions in relation to the debt. Ms Kokl seeks review of the SSAT’s decision.
The issue
8. There is no dispute, and I am satisfied, that by reason of her employment Ms Kokl was paid age pension to which she was not entitled and, at 3 April 2009, had a debt to the Commonwealth of $8,768.07.
9. The issues to be decided in this case are:
(i) whether any or all of Ms Kokl’s debt can be written off or waived; and
(ii)whether Centrelink should have issued a garnishee notice to recover the debt.
Whether any or all of the debt can be written off or waived
10. Section 1236 of the Social Security Act 1991 (the Act) provides that a debt may be written off if, and only if:
(a) it is irrecoverable at law; or
(b) the person has no capacity to repay the debt; or
(c)the person’s whereabouts are unknown after all reasonable efforts have been made to locate them; or
(d)it is not cost-effective for the Commonwealth to take action to recover the debt.
11. A debt is recoverable by means of deductions from the debtor’s social security payment. A person who is receiving a social security payment is taken to have the capacity to repay the debt unless recovery by that means would result in severe financial hardship: s 1236(1C).
12. As Ms Kokl receives an age pension, and as none of the other conditions that might enable the debt to be written off apply in her case, I am satisfied that her debt cannot be written off.
13. Section 1237 concerns waiver of debts. A debt must be waived if it is attributable solely to administrative error and the debtor received the payment in good faith: 1237A(1). Ms Kokl maintains that she received the full age pension in good faith. It is not necessary finally to decide whether her failure to clarify her position with Centrelink means she cannot avail herself of this provision because there is no suggestion that the overpayment was solely attributable to an administrative error. There is, therefore, no requirement that the debt be waived.
14. Section 1237AAD relevantly provides that a debt may be waived if the Secretary is satisfied that it did not result wholly or partly from the debtor making a false statement or representative or failing to comply with the Act and there are special circumstances, other than financial hardship alone, that make it desirable that it be waived.
15. At the time the garnishee notice was issued, Ms Kokl had approximately $30,000 in a term deposit with St George bank. After garnishment of the debt, she withdrew the balance and now has approximately $9500 cash in her possession. It is not clear how she has spent the rest of the money and it does not matter for present purposes. She owns her home and car. She receives an Australian age pension of approximately $701 each fortnight and a pension from Slovenia of approximately 84 euros each month. She has no debts.
16. The special circumstances on which Ms Kokl relies are, firstly, that she has been waiting for some time to have dental treatment and, secondly, that she has to buy expensive creams for her for skin conditions. Finally, she would like to be able to visit her brothers and sister in Slovenia before she dies.
17. Whether circumstances are special for the purpose of the waiver provisions depends on the particular case but they must be at least unusual or uncommon: Beadle v Director-General of Social Security (1985) 7 ALD 670. Something is required to distinguish the take the applicant’s case out of the usual or ordinary: Groth v Secretary, Department of Social Security (1995) 40 ALD 541; Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25.
18. I accept that Ms Kokl has to wait for dental treatment and that she has to buy expensive medications. However, there is nothing to suggest that she is actually unable to meet these costs. I accept that she might want to retain what remains of her savings for emergencies and the like. However, even if it depleted her savings entirely, she has the means to visit her family in Slovenia if she chooses.
19. I can see nothing in Ms Kokl’s circumstances that takes them out of the usual or ordinary. Section 1237AA specifically excludes financial hardship alone but, even if it did not, I am not satisfied that Kokl’s circumstances constitute financial hardship that is unusual or out of the ordinary.
Whether the Tribunal has power to review the decision to issue a garnishee notice to recover the debt
20. Section 1230C sets out the methods by which a debt arising under the Act may be recovered. It provides:
(1)Subject to subsection (2), a debt due to the Commonwealth under this Act is recoverable by the Commonwealth by means of one or more of the following methods:
(a)if the person who owes the debt is receiving a social security payment – deductions from that person’s socials security payment;
(b)if, in respect of the debt, section 1234A applies to another person who is receiving a social security payment--deductions from that other person's social security payment;
(c)repayment by instalments under an arrangement entered into under section 1234;
(d) legal proceedings;
(e) garnishee notice.
21. A debt is recoverable by means of a garnishee notice only if the Commonwealth has first sought to recover the debt by means of a method mentioned in paragraph (1)(a), (b) or (c), and it can establish that a debtor has failed to enter into a reasonable arrangement to repay the debt or, after having entered into such an arrangement, has failed to make a particular payment in accordance with the arrangement: s 1230C (2).
22. The Tribunal’s power to review a decision concerning a garnishee notice is limited by s 151 (1) of the Social Security (Administration Act) 1999 (SSA Act) which provides that, subject to s 151(2), the SSAT may, for the purposes of reviewing a decision under the social security law, exercise all of the powers and discretions conferred on the Secretary by that law.
23. Section 151(2) provides that the reference in s 151(1) to powers and discretions conferred by the social security law does not include a reference to certain powers and discretions including powers and discretions under s 1233 of the Act: s 151(2)(c). Section 1233 concerns garnishee notices.
24. The Tribunal’s powers of review in relation to garnishee notices was considered by the Full Court of the Federal Court in Walker v Secretary, Department of Social Security (No 2) (1997) 48 ALD 512. The lengthy history of Mr Walker’s application is detailed in the judgment and it is not necessary to repeat it here. The Court held that s 151 (2) precludes the Tribunal from substituting its own decision for that of the original decision-maker but not from reviewing a decision to determine whether a power or discretion has been properly exercised. It is confined to determining whether the decision, as dealt with by the SSAT, is erroneous in fact or law. It cannot do more than set the decision aside and remit it for reconsideration with or without non-binding recommendations.
25. The background to the garnishee notice in this case is as follows.
26. On 9 December 2009, Centrelink learned that Ms Kokl was employed. On the same day, Centrelink wrote to Ms Kokl and to her employer asking for details of her employment and earnings. The letter to Ms Kokl concluded by saying that, if it turned out that she had been overpaid, Centrelink would write to her again.
27. On 8 April 2009, having decided Ms Kokl had a debt on account of the overpayment, Centrelink wrote to her to say that she had been overpaid $8768.07 and that Centrelink therefore was required to recover this amount. Nothing in the letter indicated how the debt was to be recovered or what Ms Kokl was required to do in response.
28. On 5 May 2009, Ms Kokl contacted Centrelink by telephone. She gave evidence before the Tribunal that she telephoned Centrelink several times but it was not until 5 May 2009 that she was able to speak to someone. The file note of this conversation made by the Centrelink officer is before the Tribunal. It is brief and contains various abbreviations. The “Primary activity reason” (apparently a reference to the reason for the conversation) is noted as “Big debt”. The note records that Ms Kokl called and wanted to know why she had the debt. It continues:
Have advised her that she will need to speak to [Office of Debt Management] and will be transferring her to ODM. [Customer] did not want to make an arrangement and has been warned of the consequences – have emailed legal team re svs amounts, cust has stated 40,000 amount. Have advised cust that because of her asserts she will need to pay in full. Cust does not want to make an arrangement.
29. Ms Kokl gave evidence that, as soon as she said why she was calling on 5 May 2010, the Centrelink officer told her she was required to pay the debt in full. He did not ask her anything about her circumstances or about making an arrangement to repay the debt. She says he scared her and she said “No, no” when he said the debt was to be repaid in full. She says the conversation was brief and she did not refuse to repay the debt but the only option presented was repayment in full.
30. On 11 May 2009, Centrelink wrote to St George bank for details of Ms Kokl’s accounts. On 14 May 2009, Centrelink started fortnightly deductions of approximately $225 from Ms Kokl’s pension.
31. On 18 May 2009, Centrelink issued a garnishee notice to St George. As the funds were held in a term deposit that matured at the end of July, Centrelink estimated that the balance owing at the end of July, after fortnightly deductions, would be $7416.27 and issued the notice for that amount. On 27 July 2009, the bank wrote to Ms Kokl to advice that the notice had been served and the funds transferred to Centrelink.
32. Centrelink’s records show that a copy of the garnishee notice was sent to Ms Kokl. She disputes this and says she did not receive a copy. She appears, from the files of correspondence she brought to the hearing, to be someone who keeps good records. It is possible that she did not receive a copy of the notice for some reason but, in the end, nothing turns on this. Section 1233(4) provides that, if a garnishee notice is given to a person, the Secretary must give a copy to the debtor. There is no legislative requirement to notify the debtor in advance. As the Full Court pointed out in Walker (above), s 1233(4) expressly contemplates that notice will be given only after the power has been exercised.
33. Ms Kokl says she expected to receive a letter from Centrelink after her telephone call on 5 May 2009 but she heard nothing further until she received the bank’s letter advising that the garnishee notice had issued and the funds transferred to Centrelink.
Consideration
34. Section 1230C(2) makes clear that a debt can only be recovered by means of a garnishee notice if Centrelink has first sought to recover the debt by another means – relevantly in this case by deductions from Ms Kokl’s pension – and if Centrelink can establish that Ms Kokl has failed to enter into a reasonable arrangement to repay the debt.
35. Centrelink maintains that Ms Kokl’s conversation with the officer on 5 May 2010 constituted a failure to enter into a reasonable arrangement. Further, that it was open to her to contact Centrelink again after the conversation and offer to repay the debt by deductions.
36. Centrelink further says that it is required to recover debts as quickly as possible and it was reasonable, in the circumstances, to require Ms Kokl to repay the debt in full; in particular, it was reasonable because she had sufficient funds on term deposit to cover the full amount.
37. The critical question in this case is whether Centrelink can establish that Ms Kokl failed to enter into a reasonable arrangement to repay the debt.
38. I accept that the conversation on 5 May 2009 happened as Ms Kokl describes it. The note made by the Centrelink officer broadly reflects her account of a brief conversation that started with the demand that she repay the debt in full. I accept that her response “No, no” reflected her shock at being asked to repay the debt in full and was not a refusal to repay. It was not a failure to enter into an arrangement in any meaningful sense.
39. The telephone conversation on 5 May 2009 was Ms Kokl’s sole discussion with Centrelink about repayment. The notation that “cust has stated 40,000 amount. Have advised cust that because of her assets she will need to pay in full.” appears to refer to Ms Kokl’s term deposit (although she says she had $30,000 in a term deposit). However, there is nothing to indicate that the officer asked her anything further about her financial position or attempted to assess what arrangement might be reasonable.
40. I do not accept Centrelink’s contention that it fell to Ms Kokl to contact Centrelink again after this conversation and to offer to repay the debt by instalments and that her failure to do so constitutes a failure to enter into a reasonable arrangement. I accept Ms Kokl’s evidence that she thought she would receive a letter from Centrelink after this conversation and that she would then have to make some arrangement for repayment. As it happened, the fortnightly deductions started about a week later and, four days after that, Centrelink issued the garnishee notice.
41. I accept that Centrelink policy requires it to recover debts as quickly and efficiently as possible. However, I am not satisfied that Centrelink has established that Ms Kokl failed to enter into a reasonable arrangement to repay the debt. It follows that the requirement in s 1230C (2) of the Act was not satisfied and the garnishee notice should not have issued.
Conclusion
42. Ms Kokl has a debt to the Commonwealth of $8786.07 (now reduced by the amount of any fortnightly deductions).
43. There is no ground on which the debt can be written off, and Ms Kokl’s circumstances do not warrant waiver of any part of the debt.
44. Ms Kokl did not fail to enter into a reasonable arrangement to repay the debt. The decision of the SSAT in respect of the garnishee notice is set aside and the matter remitted for reconsideration with the recommendation that Centrelink attempt to negotiate with Ms Kokl a reasonable alternative arrangement for repayment.
I certify that the 44 preceding paragraphs are a
true copy of the reasons for the decision
herein of Senior Member Jill TooheySigned: .....[sgd].......................................................................
Diana Weston AssociateDate of Hearing 28 June 2010
Date of Decision 13 July 2010
ApplicantSelf-represented
Representative for the Respondent: Ms Rhadikha Prasad, Centrelink Advocacy Branch
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