McCracken and Secretary, Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2002] AATA 833

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/1398
) No N2001/1399

GENERAL ADMINISTRATIVE DIVISION       )
           Re      GEORGE EDWARD MCCRACKEN AND DAPHNE ANN MCCRACKEN
  Applicants
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr M J Sassella, Senior Member

Date24 September 2002
PlaceSydney

Decision      The tribunal affirms the decisions under review.
   [SGD] M J SASSELLA
  Senior Member
CATCHWORDS
SOCIAL SECURITY –Debts due to the Commonwealth – pensioners failed to notify of rises in income – whether debts can be waived- special circumstances not present

Social Security Act 1991 ss 68, 660XIC, 1224(1), 1236, 1237AAD

Beadle and Director-General of Social Security, Re (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 7 ALD 670

REASONS FOR DECISION

24 September 2002 Mr M J Sassella, Senior Member

THE APPLICATIONS

Application N2001/1398 is an application to the Administrative Appeals Tribunal ("the tribunal") by George Edward McCracken ("the first applicant"), born 24 June 1930, for review of a decision of the Social Security Appeals Tribunal ("the SSAT") dated 5 September 2001 (T2) which affirmed the decision of an authorised review officer ("ARO"), a sub-delegate of the Secretary, Department of Family and Community Services ("the respondent"), dated 16 July 2001 (T22, T24). The decision under review was that Mr McCracken owes a debt to the Commonwealth in an amount of $4,453.90.
Application N2001/1399 is an application to the tribunal by Daphne Ann McCracken ("the second applicant"), born 18 August 1934, for review of the same SSAT decision as in Mr McCracken's application.
THE HEARING
The tribunal convened a hearing in Newcastle in this matter on 7 March 2002. Mr McCracken represented himself and Mrs McCracken. Mr G Lozynsky from the Centrelink Advocacy and Administrative Law Team represented the respondent. The tribunal heard oral evidence from Mr McCracken and took into evidence the following documents:

Exhibit TD1 – Section 37 Statement and associated documents (exhibits T1 – T32) provided by the respondent.
Exhibit A1 – Correspondence from the applicants and their daughter to the tribunal, 9 November 2001, 8 December 2001.
Exhibit R1 – Respondent's statement of facts and contentions, 21 February 2002.

FINDINGS ON MATERIAL QUESTIONS OF FACT WITH REFERENCE TO THE EVIDENCE AND OTHER MATERIAL IN SUPPORT OF THOSE FINDINGS

On 20 January 1994 Mr McCracken lodged with the Department of Social Security ("DSS") a claim for Mature Age Allowance (T3). On the same date Mrs McCracken lodged a claim for Mature Age Partner Allowance (T4).
On 21 March 1994 DSS sent a notice (T5) to Mr McCracken and another notice (T6) to Mrs McCracken informing them of the grant of the payment each had applied for. The grant actually occurred on 24 March 1994 (T5, T6).
On 25 August 1994 Mrs McCracken was granted Age Pension (T7).
On 2 September 1994 Mr McCracken commenced providing home care services for his injured daughter, Leanne (T10/65). On 11 October 1994 MMI Insurance Group ("MMI") began paying Mr McCracken for providing those services. The services were provided initially in the McCracken home. However, Leanne later moved into a caravan at a caravan park. Mr McCracken cleaned Leanne's caravan, charging MMI $20 an hour for this work which, he said, he performed for seven hours a week. He also accompanied his daughter to medical appointments, charging MMI $20 an hour for this assistance. A Ms L Gilchrist of MMI told Centrelink that MMI paid Mr McCracken an average of $250 a week (T10/66).
In June 1995 Mr McCracken was granted an Age Pension (T8).
MMI cancelled their payments as of July 1996 because they were not satisfied that Mr McCracken was actually doing the work he claimed. MMI conducted surveillance of Leanne's caravan and their suspicions were confirmed to MMI's satisfaction. Ms Gilchrist of MMI sent a letter with attachments to DSS on 7 August 1996 (T10) suggesting that DSS may wish to follow up on matters of interest to it.
On 21 August 1996 DSS decided to raise a debt of $4,453.90 in respect of each of the applicants (T11, T12). On 27 August 1996 each party was sent a notice of the decision to raise the debts (T11, T12).
In 2001 the applicants then proceeded through the review and appeals process. In the hearing Mr McCracken explained that they had been repaying the debts at a rate of $10 each a week but the introduction of the GST in 2000 had meant that "finances were killing them". They have experienced stress, are on medication and have too little to live on. Mr McCracken estimated that the GST had raised their living costs by $24 a week but that the two pensions had risen only $5 a week each.
Sections 68 and 660XIC of the Social Security Act 1991 ("the Act"), as in force in 1996, permitted the respondent to require respectively a mature age allowee or a pensioner to give notice to DSS or, now, Centrelink, of the happening of an event or a change of circumstances of a type listed in the notice. A notice in accordance with s 6660XIC of the Act was sent to Mr McCracken on 21 March 1994 (T5). This clearly required notification by Mr McCracken if his and Mrs McCracken's combined income became more than $76.00 a week (T5/29). The same can be said of the letter of the same date to Mrs McCracken (T6). This was reiterated when Mrs McCracken was transferred on to Age Pension in a letter dated 22 August 1994 when the combined income was quoted as $78.00 a week (T7/48). This was true also for Mr McCracken when he was sent a letter dated 16 June 1995 about the grant of Age Pension (T8/54).
Section 1224(1) of the Act, as it was at the relevant time, provided that a debt due to the Commonwealth arises where an amount has been paid to a recipient by way of a social security payment and the amount was paid because the recipient or another person made a false statement or false representation or failed or omitted to comply with a provision of the Act. In the present case the evidence was that Mr McCracken had received some $250 a week in income from MMI that had not been notified to DSS. This was despite the notices contained in various letters to Mr and Mrs McCracken telling them to notify DSS if combined income rose above $78 a week.
The tribunal finds that each applicant has a debt due to the Commonwealth as a result of s 1224(1) of the Act.
The Act operates in such a way that once a person owes a debt to the Commonwealth the debt must be recovered unless the respondent waives or writes off the debt. However, preparatory to looking at waiver and write off, it is necessary to consider Mr McCracken's evidence.
The source of Mr and Mrs McCracken's failure to notify DSS was their encounter with a neighbour who was looking after an invalid. She was receiving money for this work but that had no impact on her pension. Mr McCracken assumed that the applicants were in a similar position.
Mr McCracken was critical of MMI officer, Ms Gilchrist. She had allegedly said to Mr McCracken that he was "living off" his daughter. She had been chastised for this and, as revenge, said Mr McCracken, she had written to DSS on 7 August 1996 to inform on the applicants.
Mr McCracken had noted that the Commonwealth Government had decided not to collect up to $1,000 of any Family Tax Benefit debts in 2001 caused by understated income. He queried why he was being pursued whereas these other debtors were not. He sought waiver of $1,000 of the debt the applicants owe.
Mr McCracken called for the exercise of compassion in his case. If the debt must stand, Mr McCracken sought to have the repayment rate halved to $10 each per fortnight.
In cross-examination it emerged that the neighbour in receipt of a carer payment was a Mrs Snape. It seems that she was receiving a carer allowance valued at $82 a fortnight. This is a successor to an earlier payment, Domiciliary Nursing Care Benefit, which was paid at an even lower rate in 1986. As the SSAT noted, Mr McCracken was receiving some $500 a fortnight from MMI.
Mr McCracken had not read the notices from DSS as applying to home care payments. That is to say, Mr McCracken did not understand from the DSS notices that it was necessary to report money received in respect of care provided to another. He had not checked this out with DSS.
Mr and Mrs McCracken have no debts other than these to Centrelink. They receive pensioner concessions. They do not call on social agencies such as the Smith Family for help. Mr McCracken told the tribunal that he thinks he is as good as a debt counsellor in handling money. The applicants attend bingo which costs then $2 a week.
The tribunal finds that it cannot write off the debts under s 1236 of the Act. The debts are legally recoverable. The applicants have a capacity to repay the debts via deductions from ongoing payments of pension. The whereabouts of the applicants are known. The applicants are in receipt of social security payments and recovery would be cost effective.
The tribunal finds that the only ground for waiver remotely applicable in these cases was waiver in special circumstances in accordance with s 1237AAD of the Act:
1237AAD.      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 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.
Note:   Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
Mr Lozynsky's view was that s 1237AAD could not apply because the applicants had knowingly failed to notify of increases in their combined income. The SSAT took a similar position. The tribunal disagrees. The tribunal accepts that Mr and Mrs McCracken honestly believed that they did not have to notify DSS of the income received from MMI. While it is true that they could, and should, have checked the position with DSS, they did not. Thus, they had no actual knowledge of the correct situation. The tribunal does not see their failure to contact DSS as recklessness. It was an ill-advised route to take, but the tribunal accepts the tenor of Mr McCracken's evidence to the effect that the applicants believed they knew the correct position.
However, although the operation s 1237AAD is not precluded in these cases because of the application of s 1237AAD(a)(ii), s 1237AAD(b) of the Act does cause problems for the applicants. The tribunal can find no special circumstances, as required by law, in the situation of the first or second applicant.
The tribunal and the Federal Court have said the following about the requirement for special circumstances. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 Toohey J said at page 3:
"An expression such as 'special circumstances' 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 on 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."

This passage was largely endorsed by the full Federal Court in Beadle v Director-General of Social Security (1985) 7 ALD 670, 675.

There is nothing in the circumstances of the first or second applicant to make them markedly different from the usual run of pensioner circumstances. The applicants' financial difficulties are shared by many pensioners and the GST impacted in the same way on most pensioners. Mr Lozynsky advised that pensioners received an additional $13 a fortnight to meet the increased cost of living for pensioners resulting from the GST. The applicants had no extraordinary family responsibilities and were not badly affected, at least on the evidence presented, by ill health.
CONCLUSION
The tribunal therefore finds that the applicants owe the debts as raised to Centrelink. The tribunal has no jurisdiction to consider the rate of recovery of the debts. The applicants must approach Centrelink on this matter. If they are dissatisfied by what Centrelink or an ARO is prepared to do for them then they can appeal again to the SSAT and, if necessary, the tribunal.
DECISION
The tribunal affirms the decisions under review.
I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M J Sassella, Senior Member
Signed:         .....................................................................................
  Associate
Date of hearing  7 March 2002
Date of decision  24 September 2002
Advocate for the applicant       Mr G E McCracken, one the applicants
Advocate for the respondent    Mr G Lozynsky, Centrelink Advocacy and Administrative Law Team

[2002] AATA 833

24 September 2002

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Administrative Law

Jurisdiction

Appeal

Social Security