Michael Conway and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2013] AATA 403
•17 June 2013
[2013] AATA 403
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/1007
Re
Michael Conway
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Regina Perton, Member
Date 17 June 2013 Place Melbourne The Tribunal affirms the decision under review.
[sgd]........................................................................
Regina Perton, Member
SOCIAL SECURITY – disability support pension – overpayment – debt to Commonwealth waiver – whether sole administrative error by Centrelink – whether special circumstances exist – decision affirmed
Legislation
Social Security Act 1991 sections 8(1), 1223, 1236, 1237A, 1237AAD
Acts Interpretation Act 1901 section 29Cases
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9
Conway and Secretary of Family and Community Services [2004] AATA 811Dranichnikov v Centrelink (2003) 75 ALD 134Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
REASONS FOR DECISION
Regina Perton, Member
17 June 2013
Michael Conway has been receiving disability support pension (DSP) for more than two decades. He suffers from a number of physical and psychological conditions. On 4 February 2005 Centrelink, which delivers services for the respondent, determined that Mr Conway had been overpaid DSP from 1 July 1994 to 4 December 2002. Centrelink calculated that Mr Conway had been overpaid $30,174.07 and raised a debt to the Commonwealth for that amount.
Centrelink allows pension recipients to receive a limited amount of income from other sources before it affects their rate of payment. Centrelink reduces a recipient’s rate of pension once his earnings from other sources exceed the specified limited amount. Mr Conway’s debt arose because his income from sources other than DSP had not been taken into account.
From time to time, Centrelink informs pension recipients in writing that they are required to advise the agency within 14 days when specified circumstances change or if the figures Centrelink is using to calculate their entitlements are wrong. These specified changes include increases or decreases in income. Mr Conway was sent such letters on a number of occasions or asked to fill in forms concerning his income and personal details.
Forced to retire early due to his medical conditions, Mr Conway received superannuation payments during the period in which the debt was incurred. Mr Conway had informed Centrelink of his superannuation payments when he first qualified for DSP in 1988. He was subsequently ineligible for DSP for a period of time due to imprisonment. When Mr Conway’s DSP payments resumed in 1990, Centrelink did not initially record that he was receiving superannuation payments and paid him a higher rate of DSP than that to which he was entitled.
Mr Conway believed that Centrelink was still taking his superannuation payments into account and did not query his rate of payment or check if the correct income figure was being used. Once Centrelink realised that there was another source of income, it started taking into account Mr Conway’s superannuation payments to determine his rate of DSP. The amount of superannuation Centrelink used for calculating Mr Conway’s rate of DSP was slightly less than the actual amount received, as the rate of superannuation payments went up periodically.
Mr Conway did not notice and/or was not aware of the amount specified in Centrelink’s letters as being the amount of income Centrelink recorded for him and the requirement to let them know if the amount specified in their letters was incorrect. His situation was exacerbated during the period in which the debt was accumulated as his daughter was his correspondence nominee for some of the time. Both she and he had similar letters sent to them each time Centrelink corresponded with them. Mr Conway believes that some letters which are shown in Centrelink records as being sent to him and his daughter were not received.
Mr Conway’s situation was made more complex because of an earlier debt imposed by Centrelink following compensation received in late 1994 as the result of a motor vehicle accident in 1992. Centrelink declared that there had been a preclusion period ending on 29 June 1994 and sought repayment of $15,298.28 (the first debt) that Mr Conway had received as DSP. There were negotiations about repayment of the first debt following its imposition, as Mr Conway did not have the funds readily available.
Mr Conway believes that the over-zealousness of a Centrelink employee in pursuing the first debt has had severe negative consequences. That matter is not before this Tribunal. There was consideration of that debt in an earlier Tribunal decision where Mr Conway unsuccessfully sought the shortening of a preclusion period (Conway and Secretary of Family and Community Services [2004] AATA 811). Notwithstanding Mr Conway’s request that the Tribunal consider both debts, the Tribunal is not able to reconsider the first debt. Nonetheless, the Tribunal accepts that issues arising from the first debt continue to trouble Mr Conway and have exacerbated his lack of trust in Centrelink’s handling of the matter currently before the Tribunal.
The debt under review was initially raised in February 2005. There was ongoing communication between Mr Conway and Centrelink over the ensuing years over this debt, the first debt and other matters. On 27 October 2011 a Centrelink officer reconsidered the imposition and amount of the debt under review before this Tribunal. The period during which the debt was accumulated was shortened (ending on 25 March 2002 rather than 4 December 2002) but the amount owing was higher. Mr Conway’s debt was recalculated to be $34,221.67 for the period 1 July 1994 to 25 March 2002 (the relevant period).
Mr Conway sought review by authorised review officer (ARO) of Centrelink who affirmed the Centrelink officer’s decision on 22 November 2011. Mr Conway lodged an application with the Social Security Appeals Tribunal (SSAT) on 28 November 2011. On 14 February 2012 the SSAT affirmed the ARO’s decision. On 16 March 2012 Mr Conway lodged an application for review of the SSAT decision by this Tribunal.
The issues before the Tribunal are:
·Does Mr Conway have a debt to the Commonwealth?
·Should the Tribunal waive the debt because it arose as the result of Centrelink's administrative error?
·If not, should the Tribunal waive the debt due to special circumstances?
DOES MR CONWAY HAVE A DEBT TO THE COMMONWEALTH?
Mr Conway is of the view that the much of the overpayment has not arisen because of any inaction or error on his part. He advised Centrelink about his superannuation income when he first applied for DSP. If the amount of superannuation increased or decreased, he believes Centrelink should have been aware of it without further action on his part. He also doubts that the amount of the debt could be as high as it is given the amount of superannuation he receives.
Section 8(1) of the Social Security Act 1991 (the Act) defines income. The Tribunal is satisfied that the definition of income includes payments such as the superannuation payments Mr Conway received as income from income streams defined under s 9(1F) of the Act. It is also satisfied that it is gross income rather than taxable income that must be taken into account (see s 1072 of the Act).
Regardless of the reason for Mr Conway’s failure to update Centrelink of the exact amount of his income or to assume it was being taken into account in calculating his DSP entitlement, the Tribunal must consider that income when calculating the amount of DSP to which he was entitled during the period of overpayment.
Section 1223(1) of the Act (the wording of which changed slightly during the relevant period but essentially had the same impact) allows the Commonwealth to raise a debt against a person, if that person is paid a higher social security payment than that to which he or she is entitled. The Tribunal is satisfied that Mr Conway was overpaid DSP between 1 July 1994 and 25 March 2002.
Mr Conway is convinced that Centrelink’s debt calculations are incorrect. He believes that Centrelink mistakenly recorded him as receiving $150 a week in rent from his daughter which he did not receive and have used that figure to calculate the debt. He also pointed to differences in figures used by Centrelink to calculate the debt at various points in the process.
As a result of Mr Conway’s expressed concerns at the hearing and on viewing various figures in the documentation highlighted by Mr Conway in his written and oral submissions, the Tribunal asked Centrelink to undertake a recalculation of the debt to ensure its accuracy.
On 24 January 2013 the Tribunal received an email from Mr Blunt, the solicitor representing the respondent, in which he stated:
…We refer to Member Perton’s request for a recalculation of the debt under review…
… The Secretary has instructed us that after a further review of the material contained within the T-Documents, a complete recalculation of the debt is not required and any confusion caused by the production of differing figures (in particular, what figures were used to calculate the overpayment) can be explained by considering T78, pp210-211.
On 27 October 2011, an entry on Mr Conway's file was made, in part, as follows:
Findings of fact:
There is no record on either cus or computer files of cus advising of Vic Super payment until 5 FEB 1999. The amount of $625.53 per fortnight was recorded from 4/2/99 … then subsequently updated to $337.54 p/f from 1/7/01… Debt required recalculation and based on gross annual amounts [of Vic Super payments] from 1 JUL of each year as per Vic super statement dated 28/9/04 (See: T3, page 17 and T4, page 42). Previously debt was calculated from taxable amounts & incorrect dates of effect used for CPI increases. Centrelink letters sent to cus from 20/9/93 are on file & advise cus of obligations to notify of any changes to income within 14 days. [emphasis added]
…
The decision after reconsideration is:
Debt recalculated using a gross annual income from 1 July 1994 to 25 March 2002 and debt amount increased to $34,221.67 [emphasis added]
In summary – initially the customers taxable annual income (being his annual Vic super payments) were used to calculate the overpayment of disability support pension (“DSP”). That was corrected by using the applicant's gross annual income from Vic super to calculate the overpayment of DSP. The attached document produced by the applicant during the hearing reflects his annual taxable income from Vic super where is the correct figures and T4, page 42 use his gross annual income. The latter figures were used to calculate the overpayment of DSP with the relevant annual CPI increases.
On 18 February 2013 during a telephone directions hearing, Mr Conway said that he had not received the hard copy of the above email which Mr Blunt indicated had been sent to him. Even though the above email was read out to Mr Conway at the telephone directions hearing, he remains unconvinced about the accuracy of the calculations of the debt.
Notwithstanding Mr Conway’s submissions and concerns, the Tribunal is not satisfied that Centrelink's calculations are flawed. The calculations are complex but have been checked and rechecked more than once. The Tribunal does not accept Mr Conway’s assertions that Centrelink has deliberately miscalculated and/or escalated the debt to be higher than it should be. The Tribunal is satisfied that Mr Conway has incurred a debt of $34,221.67 to the Commonwealth during the relevant period.
SHOULD THE DEBT BE WAIVED DUE TO ADMINISTRATIVE ERROR?
Section 1237A(1) of the Act provides for waiver of a debt arising solely from administrative error:
1237(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).
Centrelink confirmed that Mr Conway provided documentation from the State Superannuation Board of Victoria showing his Vic Super payments when he first sought an invalid pension (as DSP was then called) in 1988. His pension payments were initially calculated taking into account his superannuation income. Mr Conway lost his entitlement to social security benefits in July 1989 when he was imprisoned but reclaimed DSP on 9 March 1990.
The ARO, in his decision of 22 November 2011, has provided a summary of Mr Conway’s payments since March 1990:
…
. although at the time of your 9 March 1990 DSP(Invalid Pension) claim you advised on your claim form that you receive superannuation payments, superannuation payments were not taken into account in the assessment of your rate;
. on 20 September 1993 you are issued with a letter which noted that your fortnightly pension at the single rate was $316.20, which at the time was the maximum standard rate. This letter advised that you could get the full pension if you had income below $44 per week and you should advise Centrelink if your income went above this amount;
. on 26 September 1995 a debt of $15,298.28 was raised, due to the imposition of a compensation preclusion period from 20 August 1992 to 29 June 1994 and this amount has been recovered;
. on 16 November 1995 you and your nominee were issued with letters which noted that your fortnightly pension at the single rate was $335.90, which at the time was the maximum standard rate. The letter advised that you could get the full pension if you had income below $47 per week and that you should advise Centrelink if your income went above this amount;
. on 30 July 1996 you in your nominee were issued with letters which advise that you should advise Centrelink of any changes to your circumstances;
. on 11 February 1998 you and your nominee were issued with letters which noted that your fortnightly pension at the single rate was $347.80, which at the time was the maximum standard rate. This letter advised that you should notify Centrelink of any changes to your circumstances;
. an overpayment for $30,174.07 which you are currently requesting to be reviewed was raised on 4 February 2005 for the period 1 July 1994 to 4 December 2002 due to your superannuation payments not being correctly taken into account in the assessment of your rate;
. the debt was raised more than 6 weeks after the first payment that caused the debt;
. in relation to the debt period, the records that information about your Vic Super Pension payments was provided to Centrelink on 2 February 1999, however I have been unable to locate any evidence that you advised Centrelink of your superannuation payments for that portion of the debt period that covers 1 July 1994 to 1 February 1999 and I note that the most significant portion of the debt is due to undeclared income from superannuation payments for this period;
. on 1 July 2001 and 5 July 2001 there are records that you advised Centrelink of Vic Super payments;
. on 4 October 2011 you sought a review of the debt and as a consequence the debt was recalculated based on available evidence (such as the gross annual amounts itemised in the Victorian Superannuation statement of 28 September 2004), and then varied (increased) to $34,221.67.
Centrelink provided Mr Conway and the Tribunal with copies of letters sent to Mr Conway during the relevant period stating the bases for the calculations of the amount of DSP he was receiving and advising him to notify Centrelink if the details were incorrect. A selection of the correspondence sent during the relevant period is provided below.
In a letter dated 16 November 1995, a copy of which was sent to Mr Conway’s daughter, Mr Conway was advised that he must advise Centrelink if his income from sources other than DSP, was more than $47.00 per week (which it was).
On 30 July 1996 Centrelink wrote to Mr Conway’s daughter to advise that following her father’s request to do so, payments would be made to an account she managed. She was instructed to keep records of money spent and to advise Centrelink if his income increased. Centrelink also wrote to Mr Conway directly on the same day to confirm that payments would be made to the account as he had directed and with an identical text concerning his obligations to advise Centrelink of certain changes. He was advised of that obligation again on 11 February 1998.
Centrelink also sent other letters during the relevant period concerning medical appointments Mr Conway needed to attend, as well as advising him how much he had paid off the first debt and how much was still outstanding.
On 6 January 1999 Centrelink wrote to Mr Conway, who had moved to Queensland, as well as to his daughter advising of the outstanding amount on the first debt and seeking repayment. On 19 January 1999 Centrelink wrote to Mr Conway indicating his DSP payments would cease two days later as he could not be paid …for the time being pending enquiries about your future entitlement. His yearly income was listed in the letter as Super/Income Streams $16,263.78. He was required to inform Centrelink if his income increased or if the amount given in the letter was wrong.
Mr Conway’s DSP was reinstated on 5 February 1999 and back payment made as from 21 January 1999. However, the rate of payment was much lower than previously as Centrelink withheld $10 from Mr Conway’s fortnightly pension to service the first debt and adjusted the payment to reflect his income. Centrelink’s letter specified that Mr Conway must advise Centrelink if his yearly income was higher than the amount given in the letter, namely $16,263.78. A copy of Mr Conway’s correspondence continued to be sent to his daughter.
On 5 March 1999, Centrelink again wrote to Mr Conway and his daughter. He was again advised to notify Centrelink if his yearly income was higher than $16,263.78.
On 16 June 1999, Centrelink wrote to Mr Conway and his daughter advising that his payment from the next fortnight would be $104.00 and withholdings to service the first debt would also be $104.00. His income was shown as a yearly figure of $16,263.78 and the letter included the general advice concerning notification to Centrelink if the figure stated was wrong or the amount increased.
On 16 July 1999, Centrelink wrote to Mr Conway listing his yearly income as $16,263.78 with the usual specified requirement.
On 14 September 2001 Centrelink wrote to Mr Conway at an address in Victoria (his letters from January 1999 had been sent to a Queensland address). The letter stated that Centrelink records indicated he had sufficient assets or savings to repay the outstanding amount on the first debt which was then $10,634.58. The letter demanded he repay the monies within two weeks or else legal action of various specified varieties would be taken.
On 16 October 2001 Mr Conway was invited to an appointment with a Customer Service Officer concerning his DSP. On 19 October 2001, Centrelink wrote to Mr Conway advising him of payment of his DSP from 1 July 2001 to 8 October 2001. His annual income was now recorded as $8,776.04 and he was advised of the requirement to inform Centrelink if the figure was wrong or increased.
On 14 December 2001 Centrelink wrote to Mr Conway to advise him of his rate of DSP, with the usual advice to inform Centrelink if his recorded annual income of $8,942.70 was incorrect. A similar letter was sent on 5 February 2002 with the same recorded annual income.
Originally Centrelink determined that Mr Conway had been overpaid until 4 December 2002. However that changed after Centrelink’s review in late 2011, so the correspondence from the period between 25 March 2002 and 4 December 2002 is not relevant in determining whether the debt arose wholly due to Centrelink error.
Correspondence from Centrelink to Mr Conway and his daughter during the relevant period provided evidence that Mr Conway had been advised of his obligation to advise Centrelink if the figures on which they were relying to calculate DSP payments were incorrect. Mr Conway did not respond in a timely fashion presuming that Centrelink had the correct figure. He also stated that he did not become aware of many items of correspondence given there were difficulties in receipt of mail. However, s 29 of the Acts Interpretation Act 1901 allows for a presumption that where a letter has been sent to the address provided by the recipient for his or her mail, it is presumed that proper service has been undertaken. In this case Mr Conway nominated a correspondence nominee (his daughter) and letters were sent to her as well as to the address Centrelink had in its records for him. Regardless of whether Mr Conway and/or his daughter received, or read, the Centrelink letters advising him of his obligations, it is deemed that Centrelink informed him of his obligations.
It may well be that there were errors by Centrelink in how it dealt with Mr Conway during the relevant period. However, there were also errors on Mr Conway’s part in failing to realise that he had to keep Centrelink updated of increases in his income and to tell the agency if the figures it was using to calculate his entitlements were wrong. The Tribunal can only waive a debt, or part of a debt, on the basis of administrative error if the situation was solely the fault of Centrelink. That is not so in this case. The Tribunal finds that the debt was not attributable solely to administrative error by the Commonwealth. The debt therefore cannot be waived on this ground.
SHOULD THE DEBT BE WRITTEN OFF?
Section 1236(1A) of the Act allows a debt to be written off. This may occur where the debt is irrecoverable at law, the debtor has no capacity to pay, the debtor’s whereabouts are unknown, or if it would not be cost-effective to take action to recover a small debt. However, none of these provisions apply to Mr Conway’s circumstances.
SHOULD THE DEBT BE WAIVED DUE TO SPECIAL CIRCUMSTANCES?
Section 1237AAD of the Act provides for waiver of the debt 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.
…
The Tribunal accepts that Mr Conway did not deliberately fail to keep Centrelink updated as to the amount of superannuation income he was receiving. The Tribunal is therefore satisfied that Mr Conway did not knowingly or deliberately fail to inform Centrelink of the actual amount of income he earned. Therefore, he meets the requirements of s 1237AAD(a) of the Act.
The term special circumstances is not defined in the legislation. For the Tribunal to exercise its discretion to determine that Mr Conway’s situation constitutes special circumstances, it must be satisfied that there is something to make the case stand out from the usual or the ordinary (Dranichnikov v Centrelink (2003) 75 ALD 134; Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9). In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases (at [26]). Branson J stated that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case (at [26]).
Mr Conway has serious health issues and debts. His sources of income are DSP payments and some superannuation income. The length of time Mr Conway has been dealing with debt issues with Centrelink and the amount of energy expended in the process of attempting to have his viewpoint and arguments accepted by Centrelink, has clearly taken its toll on him. The debt under consideration was imposed in 2005 but because Mr Conway has still been dealing with issues arising with the first debt and the preclusion period, all of the disputes have become intertwined.
The Tribunal accepts that because of the length of time that has elapsed and the large amount of money involved, it is more difficult for Mr Conway to deal with the situation than if the incorrect payments had been identified at an earlier stage and the overpayment was a smaller amount. The Tribunal accepts that he feels frustrated and let down by the system.
However, the Tribunal is not satisfied that the situation Mr Conway finds himself in is vastly different from the situation of other social security recipients who have incurred debts due to overpayments. In the Tribunal's experience, it is, unfortunately, not unusual for debts to arise in circumstances where income from other sources was not taken into account at the appropriate time, due to a lack of awareness on the part of the recipient that such was the case. It is also not unusual for a large debt to be imposed after several years of overpayments. Mr Conway remains on social security benefits and is able to repay his debt in instalments taken out of his fortnightly payments. The amount Centrelink is to withhold per fortnight is negotiable.
The Tribunal is not satisfied that the circumstances in this case constitute special circumstances (other than financial hardship alone). Hence, the Tribunal decides that the waiver provisions of s 1237AAD of the Act should not be invoked.
The Tribunal finds that Mr Conway owes a debt of $34,221.67 to the Commonwealth, part of which may have already been repaid.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 48 (forty‑eight) paragraphs are a true copy of the reasons for the decision herein of Regina Perton, Member. [sgd]..................................................................
Administrative Assistant
Dated 17 June 2013
Date of hearing 2 October 2012 Date final submissions received 19 February 2013 Applicant In person Advocate for the Respondent Mr A Blunt Solicitors for the Respondent Australian Government Solicitor
Key Legal Topics
Areas of Law
-
Administrative Law
Legal Concepts
-
Judicial Review
-
Compensatory Damages
0
3
0