Morel and Secretary, Department of Family and Community Services

[2003] AATA 1253

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1253

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/336

GENERAL ADMINISTRATIVE DIVISION		)
Re		MARIANNE MOREL

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date12 December 2003 

PlaceBrisbane

Decision The decision under review is affirmed.  This means Ms Morel's application for review is unsuccessful.

(Sgd) EK Christie
  Member

CATCHWORDS

PRACTICE AND PROCEDURE – jurisdiction – decision of Centrelink to issue a garnishee notice – powers of AAT and SSAT on review - limited review powers – not merits review – Tribunal’s powers limited to reviewing decisions for errors of law or fact

SOCIAL SECURITY – debt – recovery by garnishee notice – no error of law or fact made in decision to issue the garnishee notice – garnishee notice lawfully issued – decision affirmed

Social Security Act 1991, s 1230C and s 1233

Social Security (Administration) Act 1999, s 151

Walker v Secretary, Department of Social Security (1997) 147 ALR 263

REASONS FOR DECISION

12 December 2003  Dr EK Christie, Member    

1.      This is an application by Marianne Morel for a review of a decision made by the Social Security Appeals Tribunal (“SSAT”) on 27 February 2003 in which the SSAT decided to affirm the decision under review.  The SSAT determined that Centrelink was entitled to issue the garnishee notice to Ms Morel’s bank.  In addition, the SSAT found that it’s powers under the Social Security (Administration) Act 1999 were limited to determining whether, in law, the garnishee notice could be issued rather than to determine on the merits whether it was appropriate for the notice to have been issued (Exhibit 1, T2, Folios 12-13).

2.      At the hearing Ms Morel represented herself and gave evidence by conference telephone.  Mr J Howard, a Departmental Advocate, represented the respondent.

3. At the hearing the Tribunal had in evidence before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (Exhibit 1) and the various documents tendered by the parties.

4.      In addition to her oral evidence, Ms Morel provided detailed statements setting out her case and which were confirmatory of her oral evidence: see T1, as well as supplementary submissions in response (29 July 2003, 26 August 2003).  The respondent provided supplementary submissions in response (8 August 2003).

Facts

5.      Based on its assessment of all the available evidence, the SSAT made the following findings of fact:

“(a)     Ms Morel had outstanding debts to Centrelink of $6,150.18.

(b)The debts comprised amounts owing since 1997.

(c)On or about 5 March 1997 Ms Morel was notified of a debt of $5,891.60 owing to Centrelink.

(d)An amount of $25.00 was recovered from Ms Morel for this debt between 19 September 2002 and 18 November 2002.

(e)On or about 22 April 1997, Ms Morel was notified of a further debt of $2,093.50 owing to Centrelink.

(f)An amount of $1,834.92 was recovered from Ms Morel for this debt between 27 August 1998 and 5 September 2002.

(g)On 20 October 2002, Ms Morel offered to pay $5.00 a fortnight in repayment of the debts.

(h)By letter dated 14 November 2002, Centrelink gave Ms Morel a copy of a garnishee notice to the ANZ Bank.

(i)On 18 November 2002, Centrelink recovered $6,150.18 from an account in Ms Morel’s name with the ANZ Bank.

(j)The ANZ Bank account comprised funds borrowed by Ms Morel to carry out repairs to one of her two investment properties.”  (Exhibit 1, T2, Folio 12)

6.      At the commencement of the hearing, Ms Morel gave the following responses to the Tribunal in relation to the above findings of fact made by the SSAT.

(a)Acknowledged.

(b)No response.

(c)Did not know.

(d)Disagreed as to this amount.  Only a part of what was recovered.

(e)Cannot recall.

(f)Wrong, more was recovered.

(g)Acknowledged.

(h)Acknowledged.

(i)Amount recovered was before 18 November 2002.

(j)Acknowledged except not an investment property.  Funds also used to pay mortgage. 

Statutory Framework and Legal Principles

7.      The relevant legislation is the Social Security Act 1991 (“the Act”) and the Social Security (Administration) Act 1999 (“the Administration Act”).

8. Section 1233 of the Act provides for the circumstances for the issue of a “garnishee notice”:

“(1)  If a debt is recoverable from a person (in this section called the ‘debtor’) by the Commonwealth under section 1227A or 1230C of this Act, under the 1947 Act or under the Social Security (Fares Allowance) Rules 1998, the Secretary may by written notice given to another person:

(a)       by whom any money is due or accruing, or may become due, to the debtor; or

(b)who holds or may subsequently hold money for or on account of the debtor; or

(c)who holds or may subsequently hold money on account of some other person for payment to the debtor; or

(d)       who has authority from some other person to pay money to the debtor;

require the person to whom the notice is given to pay the Commonwealth:

(e)an amount specified in the notice, not exceeding the amount of the debt or the amount of the money referred to in the preceding paragraph that is applicable; or

(f)such amount as is specified in the notice out of each payment that the person becomes liable from time to time to make to the debtor until that debt is satisfied; or

(g)such percentage as is specified in the notice of each payment that the person becomes liable from time to time to make to the debtor until that debt is satisfied.

(2)  The time for making a payment in compliance with a notice under subsection (1) is such time as is specified in the notice, not being a time before the money concerned becomes due or is held or before the end of the period of 14 days after the notice is given.

(3)  A person who fails to comply with a notice under subsection (1) is guilty of an offence.

…

(4)  If the Secretary gives a notice to a person under subsection (1), the Secretary must give a copy of the notice to the debtor.”  (Emphasis added)

9. Accordingly, under section 1233 of the Act, where a debt is recoverable from a person under the Act, the Secretary may give a garnishee notice to a person “who holds … money on account of the debtor”..  The notice can require the person holding the money to pay it to the Commonwealth up to the amount of the debt.  It is an offence to not comply with the notice.  A copy of the notice must be given by the Secretary to the debtor.

10.     Section 1233(7A) provides generally for a garnishee notice to be issued within six years of the debt arising “starting on the first day on which an officer becomes aware, or could reasonably be expected to have become aware, of the circumstances that gave rise to the debt”. 

11. Section 1230C of the Act provides for “Methods of recovery of debt (due to the Commonwealth)”. Section 1230C(1)(a) prescribed a “garnishee notice” as one such method.

“(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 social 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.”  (Emphasis added)

12. Section 1230C(2) of the Act prescribes the requirements for the use of these methods of recover a debt:

“(2)  Subject to subsection (3), a debt due to the Commonwealth under this Act is recoverable by means of a method mentioned in paragraph (1)(d) or (e) only if the Commonwealth:

(a)has first sought to recover the debt by means of a method mentioned in paragraph (1)(a), (b) or (c); and

(b)       can establish that the person who owes the debt:

(i)        has failed to enter into a reasonable arrangement to repay the debt; or

(ii)after having entered into such an arrangement, has failed to make a particular payment in accordance with the arrangement.”

13. The application of section 1230C(1) and (2) of the Act means that before a garnishee notice can be issued, the Commonwealth must first have sought to recover the debt by deductions from Centrelink payments or by payment of instalments and the debtor must have failed to enter into a reasonable arrangement to repay the debt – or, having entered into such an arrangement, fails to make a payment.

14. However, a limitation on the SSAT’s powers of review is provided for in section 151(2) of the Administration Act.

“151(1)  Subject to subsection (2), the SSAT may, for the purpose of reviewing a decision under the social security law, exercise all the powers and discretions that are conferred by the social security law on the Secretary.

151(2)  The reference in subsection (1) to powers and discretions conferred by the social security law does not include a reference to a power or discretion conferred by:

(a)       a provision dealing with the form and place of lodgment of a claim; or

(b)a provision dealing with the manner of payment of a social security payment; or

(c)       section 1233 of the 1991[Social Security] Act; or

(d)       a provision dealing with the giving of a notice requiring information; or

(e)       section 1100 of the 1991 Act; or

(g)       section 131 or 145 of this Act; or

(h)a provision dealing with the imposition of requirements before the grant of a social security payment; or

(i)a provision dealing with the deduction of amounts from payments of a social security payment for tax purposes.” (Emphasis added)

15. The operation of section 151(2) of the Administration Act limits the SSAT’s powers to determine only whether, in law, the garnishee notice could be issued – rather than for the SSAT to determine on the merits whether it was appropriate for the notice to have been issued.

16. The Tribunal’s powers in relation to a review of the decision by the respondent to garnishee the debt owed by Ms Morel from her bank account are limited by the operation of section 1253(4) of the Act. The Full Court of the Federal Court of Australia in Walker v Secretary, Department of Social Security (1997) 147 ALR 263, contains the following comments by Drummond and Mansfield JJ:

“We therefore think that s 1253(4) should be read as permitting the SSAT to review decisions within s 1253(4) for any error of fact or law, but as preventing the SSAT, even where is identifies error in such a decision, from making any decision of its own on the merits. That is the sole province of the Secretary. But that the SSAT cannot do more than set aside an erroneous DSS decision within s 1253(4) and remit it to the DSS [Department of Social Security] for reconsideration does not absolve the SSAT from examining the DSS decision for error. It follows that the only orders the SSAT may make on the review it can conduct of decisions within s 1253(4) are either to affirm the decision or to set it aside and, if it sets the decision aside to remit the decision for reconsideration, with or without non-binding recommendations.

It is with some diffidence that we have reached this conclusion.  Section 1253(4), however, neither permits unrestricted merit review by the SSAT of the various decisions of the Secretary referred to in the sub-section nor does it prohibit all review of those particular decisions.  It is not possible to discern why this intermediate approach was adopted with respect to the unrelated decisions listed in s 1253(4).  But the sub-section is, in our opinion, intractable in so far as it can only be read as providing for a limited review of the decisions there referred to which is less expansive than full merit review, but a review nevertheless.

Ordinarily, the AAT, in exercising its review powers under s 43 of the Administrative Appeals Tribunal Act, can conduct a full merit review of its own.  But s 1283(1) and (2) [of] the Social Security Act limit the AAT’s authority to review of the relevant DSS decision as dealt with by the SSAT. It follows that, since the SSAT, on review of a decision within s 1253(4), can only determine whether the DSS decision in question is erroneous or not, the AAT cannot conduct a merit review itself of the DSS decision and is confined to determining whether the DSS decision as dealt with by the SSAT is erroneous in fact or law.”

Issues to be Decided

17.     Based on a review of the statutory framework and legal principles, the only issue for the Tribunal to decide is whether or not the respondent issued the garnishee notice correctly, that is, in accordance with the requirements prescribed by the legislation.

18.     To determine this issue, the Tribunal must consider whether the following procedures for the issue of the garnishee notice, as prescribed by the legislation, have been adhered to by the respondent:

(i)whether a bank held money on account of Ms Morel [section 1233(1)(b) of the Act];

(ii)in issuing the garnishee notice, whether the respondent:

(a)had first sought to recover the debt from Ms Morel through a social security payment [section 1230C(a)];

(b)whether repayment had been sought by instalments under an arrangement entered into under section 1234 [section 1230C(c)]; and

(c)whether Ms Morel had failed to enter into a reasonable arrangement to repay the debt [section 1230C(2)(i)].

(iii)whether a garnishee notice was issued to Ms Morel and the ANZ Bank in accordance with prescribed procedures [section 1233(4)];

(iv)whether the garnishee notice was issued within six years of the debt arising [section 1237(7A)].

Consideration of the Issues

Whether a bank held money in account of Ms Morel

19.     Ms Morel completed a Statement of Financial Circumstances on 20 October 2002 (T13).  Under Part D – Your Assets, Ms Morel gave no balance for moneys held in any financial institution.  In addition she did not respond to question relating to:

§  Bank accounts held, in terms of

(i)The Branch Account Number;

(ii)The Branch Account Holder Details; and

(iii)Current Balance.

However, she did make a notation on this question that “much more is owed than money in bank.  Situation unchanged” (T13, Folio 33).

20.     However, a Departmental file note, at much the same time (T17, Folio 40, 11 November 2002), records that Ms Morel had the following amounts in three ANZ Bank Accounts:

(a)$2,257.66 Cr

(b)$9,887.65 Cr

(c)$3.38 Cr

21.     The file note (T17, Folio 41, 11 November 2002) refers to a telephone conversation directed at the question of bank balances held by Ms Morel and contains the following notation:

“I stated that there was no entries in the section of the Statement of Financial Circumstances form headed Money in Financial Institutions.  Did this mean I asked [Ms Morel] that she had no current Bank accounts and no money in any Bank account.  [Ms Morel] replied that she had no money in any Bank savings accounts.”

22.     Ms Morel’s oral evidence to the Tribunal was that she had not been asked what the money was for when asked this question.

23.     The Tribunal concludes, on analysis of the above facts, that the ANZ Bank held money, in three accounts, in Ms Morel’s name.  Furthermore, the Tribunal finds Ms Morel’s oral evidence in this regard to be inconsistent with her response contained in the Statement of Financial Circumstances she had completed as well as with the record of her telephone conversations with the Centrelink employee.  The Tribunal considers the question asked of Ms Morel, in both situations, to be clear and unambiguous and that her response in oral evidence cannot be justified.

Whether recovery of the debt due to the Commonwealth had firstly been sought through a social security payment

24.     This issue is not in dispute.  Withholdings over the period December 1997 to September 2002 - $5 per fortnight to $48.80 per fortnight (but predominantly $5 to $20 per fortnight) – averaging around $15 per fortnight over the entire period (see respondent’s supplementary submissions, 8 August 2003).  At times, withholdings ceased to allow Ms Morel to arrange her financial affairs because of factors such as illness (T10, Folio 26).  From supplementary documents provided by the respondent (8 August 2003), as well as Ms Morel’s statements, it can be clearly adduced that recovery of the debt was made by disbursements from a variety of social security entitlements over time: sole parent pension, family allowance, parenting payment, family tax payment and family tax benefit.

25.     Accordingly, the Tribunal concludes that the respondent had first sought to recover the debt from Ms Morel through disbursements from a range of social security benefits she received over the period December 1997 to September 2002.

Whether repayment by instalments had been sought by an arrangement entered into under section 1234

26.     The Tribunal concludes that repayments by instalments to recover the debt due to the Commonwealth had been made over the period 1997 to 2002. The amount of instalments varied from $5 to $48.80 per fortnight , averaging around $15 per fortnight, and sometimes ceased following application by Ms Morel (see paragraph 24).

Whether Ms Morel has failed to enter into a reasonable arrangement to repay the debt

27.     Ms Morel has had two debts totalling $8,010.10 (T4, Folio 20, 5 March 1997;  T5, folio 21, 22 April 1997) that have been outstanding since 1997.  From the time overpayments were raised in 1997, she has purchased two properties but has not cleared the debt due to the Commonwealth.  Ms Morel owns property at Zillmere purchased for $115,000 on 1 June 1998 (T18, Folio 43) and at Wavell Heights purchased for $212,000 on 18 January 2001 (T18, Folio 42).  She also owns property at Bray Park (T18, Folio 44).  In her Statement of Financial Circumstances (T13, Folio 33, 20 October 2003), she states the total value of these properties to be $452,000 to $462,000. 

28.     A telephone conversation with a Centrelink staffer (T19, Folio 41, 11 November 2002) contains the following notation:

“I asked [Ms Morel] if the figure of $429,489 on her Statement of Financial Circumstances form completed by [her] for outstanding mortgages was correct.  [Ms Morel] replied that it was at the time of completing the form.”

29.     However, the ANZ Bank records the following loan accounts held by Ms Morel at much the same date (T17, Folio 40, 13 November 2002):

$ 14,872.60
$ 47,213.67

$160,000.00             $222,086.27

30.     A current Title Search (T18, Folios 45, 46, 47) indicates that mortgages on all three properties are held by the ANZ Bank.

31.     The discrepancies in these property values, particularly the outstanding amount of mortgage, is a further example of inconsistent evidence by Ms Morel.

32.     Ms Morel’s final offer (20 October 2002) with respect to a “reasonable repayment arrangement” was $5 a fortnight.  Moreover, the record of the telephone statement says that she would not agree to a lump sum payment (T19, Folio 40).

33.     Oral evidence to the Tribunal, in this regard, was given by Mr Alan Clements, a DSS employee since 1991 and Head of the Debt Recovery Section since 2001.  The Tribunal finds Mr Clements to be a witness of truth.

34.     Mr Clements explained that Departmental policy was for a debtor to pay in full provided a debtor had the capacity to pay.  Mr Clements said that instalment payments were appropriate when a debtor only had a limited capacity to pay.

35.     The Tribunal concludes that given the long-term nature of the debts and Ms Morel’s financial history, the Tribunal can make no other conclusion than to find:

(a)that the respondent has made genuine attempts to contact the customer to negotiate an alternative arrangement (T9, T14, T17); but that

(b)the offer of Ms Morel to pay $5 per fortnight to pay the debt due to the Commonwealth is not a reasonable arrangement.

36.     Accordingly, the Tribunal finds Ms Morel has not entered into a reasonable arrangement to repay the debt.

Whether a garnishee notice was issued to Ms Morel and the ANZ Bank in accordance with prescribed procedures

37.     Ms Morel has conceded she was given a copy of the garnishee notice [see paragraphs 5(h) and (6)(h)].  The Tribunal accepts Mr Clement’s oral evidence that a garnishee notice was delivered to the ANZ Bank and Ms Morel on the same day.

38.     Furthermore, the Tribunal accepts Mr Clements’ oral evidence that prior to the garnishee notice being issued to the ANZ Bank and to Ms Morel:

(a)he had made genuine attempts to negotiate an alternative arrangement with Ms Morel;

(b)he had advised Ms Morel of the actions that could be taken to recover the debt, for example, garnishee, debt collector, legal proceedings (see also T14);

(c)he had warned Ms Morel of the foundations for any of the above courses of action;

(d)      he was delegated with the power to authorise garnishee notices; and

(e)when all statutory procedures had been complied with and there was a failure to enter into a reasonable arrangement, then and only then, had he authorised the issue of the garnishee notice.

39.     Mr Clements’ oral evidence that all warnings in relation to the issue of a garnishee notice as commencement of legal proceedings are corroborated by a file note of a telephone discussion with Ms Morel on 7 November 2002 (T14, Folio 35).  Accordingly, the Tribunal does not accept Ms Morel’s statement that a garnishee notice had not been mentioned to her (T1, Folio 3).

40.     The Tribunal concludes that it is satisfied that the garnishee notice was issued to Ms Morel and the ANZ Bank in accordance with prescribed procedures.

Whether the garnishee notice was issued within six years of the debt arising

41.     The Tribunal finds that this statutory requirement is met given that the garnishee notice was issued on 14 November 2002 (T21, Folios 50-53) and the two overpayments in question were raised in March 1997 and April 1997.

42.     Based on all of the above findings, the Tribunal can find no error in fact or law to prevent the respondent from deciding to issue a garnishee notice on 14 November 2002 to the ANZ Bank to recover the outstanding debt due to the Commonwealth owned by Ms Morel.  The Tribunal finds that the garnishee notice was correctly issued in accordance with the requirements as prescribed by the legislation.

43.     The Tribunal affirms the decision under review.

I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  22 July 2003
Date of Decision  12 December 2003       

The Applicant represented herself and appeared at the hearing by telephone
For the Respondent                  Mr J Howard, Departmental Advocate