Mundine; Secretary, Department of Family and Community Services

[2004] AATA 898

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 898

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/387 

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Secretary, Department of Family and Community Services

Applicant

And Richard Mundine

Respondent

DECISION

Tribunal Ms N Bell, Senior Member

Date27 August 2004

PlaceSydney

Decision The decision under review is set aside and in substitution therefor the Tribunal decides that the debt owed by the Respondent should be recovered. 

...........................................

Ms N Bell,
  Senior Member

SOCIAL SECURITY – overpayment of disability support pension – special circumstances – whether the SSAT was correct in determining that there were special circumstances to warrant the waiver of an overpayment – examination of the Respondent’s circumstances – examination of the evidence

Social Security Act 1991 ss 1184K, 1223(1), 1237AAD

Administrative Appeals Tribunal Act 1975 s 43(6)

Beadle v Director-General of Social Security (1985) 60 ALR 225

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Re Martin v Secretary, Department of Social Security (1990) AAT 6482

Re Minda v Secretary, Department of Social Security (1989) 49 SSR 641

Re Secretary, Department of Social Security v VYS (1995) 40 ALD 745

REASONS FOR DECISION

27 August 2004 Ms N Bell, Senior Member 

1.      This is an application by the Secretary of the Department of Family and Community Services (“the Applicant”) for a review of a decision of the Social Security Appeals Tribunal (“the SSAT”), made on 31 January 2003, that set aside a decision made by an authorised review officer and remitted the matter to the Applicant with a direction that the debt owing to the Applicant by Richard Mundine (“the Respondent”) be waived from the date on which it was raised.

2. At the hearing, the Applicant was represented by Mr John Kenny of Centrelink, and the Respondent was represented by Mr Terry Tomlin, solicitor, of the Hunter Community Legal Centre. The documentary evidence before the Tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the T Documents”).

background

3.      In July 1995, the Respondent, Mr Mundine was injured in a work-related accident.  On 28 October 1999, he received damages arising out of a civil claim in the sum of $258,880.68 (T17 p40).

4.      On 10 November 1999, Centrelink informed the Respondent that he was precluded from obtaining any social security benefits for the period commencing 10 October 1999 and ending 30 August 2003 (T17 p41).

5.      On 1 February 2000, the Respondent and his wife, Mrs Debbie Lee Mundine, jointly purchased a property at Edgeworth for the sum of $140,000 (T5 p17).  They subsequently sold this property on 14 September 2001 for the sum of $168,000 (T5 p17).  On the same day, they settled a purchase of a property at Coutts Crossing for the sum of $140,000 (T5 p17).  The Respondent and his wife subsequently sold the property at Coutts Crossing, via Grafton, for $155,000 and used the proceeds to purchase a property at Stroud and, on 28 February 2002, to contract for the building of a home on the land for $133,426 (T5 p15).

6.      In 2001, the Respondent appealed the preclusion period to the SSAT who, on 29 March 2001, found that there were special circumstances in the Respondent’s case and shortened the preclusion period to end on 29 March 2001 (T p59).  As a consequence of this decision, the Respondent was paid disability support pension from 6 August 2001 until 19 March 2002 (T24 p59).

7.      On 19 July 2001, this Tribunal heard an application by Centrelink for a Stay Order in respect of the SSAT’s decision and the payment of disability support pension to the Respondent.  After hearing the evidence in the matter, the Tribunal refused the application (T6 p20).  When applying for the Stay Order, Centrelink informed the Respondent that if it were successful at the substantive hearing of the application, a debt would be raised against him (T6 p18).

8.      On 20 July 2001, Centrelink granted a disability support pension to the Respondent with payments commencing from 8 June 2001 (T24 p59).

9.      On 20 March 2002, following the hearing of the substantive application, the Tribunal set aside the decision of the SSAT and, on 26 March 2002, a debt was raised against the Respondent in the sum of $8,284.83 (T20 p48).  This was for the amount of pension paid to him for the period from August 2001 until 20 March 2002 (6 p18).  The decision was affirmed by a compensation recovery officer on 16 April 2002 (T22 p54) and, on 8 May 2002, by an authorised review officer (T23 p56). 

10.     The Respondent subsequently appealed the decision to the SSAT who, on 31 January 2003, decided to set aside the decision and substitute a new decision that the debt be waived from the date on which it was raised (T2 p2).  The Respondent was notified of this decision on 10 February 2003 (T2 p2).  On 7 March 2003, the Applicant lodged an application for a review of this decision by the Tribunal (T1 p1).

11.     The Respondent conceded that he was overpaid disability support pension in the amount calculated by the Applicant and that the overpayment constitutes a debt due to the Commonwealth.  His contention was limited to his special circumstances which, he submitted, justified waiver of recovery of the debt.

legislation

12. Subsection 1223(1) of the Social Security Act 1991 (“the Act”) provides for the overpayment of a pension to constitute a debt due to the Commonwealth.  However, provision is also made for the recovery of the whole or part of a debt to be waived in certain limited circumstances.

13.     Section 1237AAD provides:

“

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 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.”

respondent’s evidence

14.The Respondent said that his back injury causes ongoing pain which incapacitates him variably, with some days being close to normal and others leaving him unable to do anything.  He said he takes no medication and treats it only with warm showers.

15.The Respondent said he has had casual employment for 12 months with a haulage company and just last week was made a permanent driver.  He is unsure how long his back will let him do this work.  The Respondent said his pay in the last week was $622 net and depends on the shifts he does.  His is the only income in his household.  The Respondent has a 100km round trip to work daily.  He said he has always tried to work and in the past has attempted work on a chicken farm, as a mechanic’s offsider and on a fishing trawler.

16.The Respondent described his marriage as a day to day proposition.  He said he and his wife had separated previously and, whilst separated she had a car accident, causing injury to her neck.  It was for this reason that the Respondent and his wife made a decision to move to Grafton, where the Respondent’s family is, so that the Respondent’s wife could get some support.  The Respondent lived with his mother and not with his wife during this time.  Eventually his wife began to have some problems with members of the Respondent’s family and it became necessary to move again.  They now live in a house built (for $155,000) on land owned by the Respondent’s wife at Stroud.  The block is the size of about 3 house blocks but, given the slope of the land, only one dwelling could be built on it.  He confirmed that he had purchased new furniture for the house and had not set anything aside to live on.

17.The Respondent said that whilst waiting for the house at Stroud to be built for some 12 months, his wife and children lived in rented accommodation and he was essentially homeless.

18.The brick veneer house they built comprises 5 bedrooms, a rumpus room, a lounge and a double garage.

19.The Respondent and his wife are living together again because, according to the Respondent, he does not want to be away from his children aged 6, 9 and 11 years.  He said that most of his marriage problems have arisen from his back condition which he described as another burden on the household.

20.The Respondent said that the house he lives in with his family is not in his name, because it is built on land owned by his wife, although he pays the mortgage of $200 per week.  He said his credit card is overdrawn, he has $100 in the bank and lives from week to week.

21.The Respondent acknowledged that Centrelink had warned him that, notwithstanding that its stay application had been refused, it would seek to recover any disability support pension paid to the Respondent if Centrelink’s substantive application was successful.  He also said that an officer at Centrelink had advised him to obtain advice from the Welfare Rights Centre.  He said the advice given to him was that if he claimed and received the pension and Centrelink was successful on the substantive application, then it would write the overpayment off.  He was advised that he should claim disability support pension straight away.  He said he had never heard of the Welfare Rights Centre before, thought they were a government organisation and would not have contacted them but for Centrelink’s advice to do so. 

22.The Respondent said that if he had to repay the money he would probably get by somehow.  It was also the Respondent’s evidence that he is Aboriginal.

consideration

23.     The issue for the Tribunal to consider is whether there were “special circumstances” such that the debt to the Applicant should be waived. Although the Act provides no guidance as to the meaning of “special circumstances”, this has been the subject of statutory interpretation by the Federal Court and the Tribunal.

24.     The leading case is Beadle v Director-General of Social Security (1985) 60 ALR 225, a decision of the Full Federal Court. In Beadle (supra), the Court did not think it possible to lay down precise limits or precise rules but considered it would depend on the circumstances of the particular case as to whether there were special circumstances.  Moreover, the Court held, even though the phrase “special circumstances” lacks precision, it “is sufficiently understood in our view not to require judicial gloss” (at 228).

25.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle (supra 1985), observed that special circumstances:

“

would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case… it would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

26.     I accept the Respondent’s evidence as to his dealings with the houses he has purchased over the last few years and his reasons for those dealings.  I accept that his marriage has been and continues to be troubled and that his back injury continues to cause him difficulty.  I also accept the Respondent’s evidence as to his current financial circumstances which are, on a low wage with a wife and three children to support.  There is, however, nothing unusual or extraordinary about these circumstances.  Unfortunately, many people who have experienced an injury of the kind suffered by the Respondent also experience health, financial and marital difficulties.

27.     The Applicant submitted against the argument, relied on by the SSAT in its reasons for decision, that comments in the Guide to Social Security Law, the Applicant’s internal policy guide, to the effect that it is inappropriate for a person to be liable for a debt arising out of action in the AAT which was not initiated by that person, amounted to an overriding special circumstance making it desirable to waive the debt.  The entry in the Guide referred to is:

“

Section 1223AB only applies where it is the customer who has pursued the matter in the AAT and not the Department.

This reflects the view that it is inappropriate for a customer to be liable for a debt arising out of an action in the AAT which was not initiated by the customer.” (paragraph 6.7.1.60)

28. Section 1223AB provides:

“

If:

(a)       a person applies to the Administrative Appeals Tribunal for review of a decision; and

(b) the Administrative Appeals Tribunal makes an order under subsection 41(2) of the Administrative Appeals Tribunal Act 1975; and

(c)       as a result of the order, the amount that has in fact been paid to the person by way of social security payment is greater than the amount that was payable to the person;

the difference between the amount that was in fact paid to the person and the amount that was payable to the person is a debt due to the Commonwealth.”

29.     Mr Kenny for the Applicant referred the Tribunal to an update of that entry in the Guide, made on 1 September 2003, which says:

“

Section 1223AB refers to a person who:

·Applies to the AAT for a review of a decision, and

·The AAT has granted a stay order, and

·As a result of the stay order the person has been paid a social security payment that is greater than the amount that was payable to them

Section 1223AB only applies where it is the customer who has pursued the matter in the AAT and not the Department.” (6.7.1.60)

30. There was no argument, at the hearing before the Tribunal, that section 1223AB applies in the circumstances of this application. The debt is conceded by the Respondent and I note it was found by the SSAT to have arisen under section 1223 of the Act. This was not contested by the Respondent.

31. I note that the debt did not arise as a result of the operation of section 1223AB, to which the comment in the Guide refers, that the Respondent claimed disability support pension on 8 June 2001 (just prior to the Tribunal’s decision on 19 July 2001 to refuse the stay sought by the Applicant), that he did so in knowledge of the stated intention of the Respondent to seek to recover any overpayment made to him and that the reference in the Guide to the appropriateness or otherwise of a person being liable for a debt arising out of action in the AAT not initiated by them was removed in 2003.  In the circumstances of this application, I do not consider that the now superseded comment in the Guide constitutes circumstances that warrant the waiver of the debt.

32.     The remaining aspect of the Respondent’s circumstances is the advice he received from both Centrelink and the Welfare Rights Centre following the Tribunal’s refusal to grant a stay on the decision of the SSAT.  The Respondent does not deny, and I accept, that Centrelink was clear in its repeated advice that it would seek to recover an overpayment if its substantive application to the Tribunal was successful.  I also accept that, when the Respondent was considering whether to claim disability support pension following the SSAT’s decision on the preclusion period, he was advised by an officer of Centrelink that he should obtain advice from the Welfare Rights Centre.

33.     Mr Tomlin, for the Respondent, submitted that this advice by Centrelink to the Respondent to obtain legal advice somehow amounted to an error on the part of Centrelink and gave rise to the overpayment.  I do not consider that it could ever be an error on the part of a government instrumentality to suggest the obtaining of independent legal advice to an individual whose rights will be affected by the actions or decisions of that instrumentality.

34.     According to the Respondent, the advice he received from the Welfare Rights Centre was that he should proceed with a claim for disability support pension because, even if the preclusion period is reinstated with the result that the Respondent is overpaid, Centrelink would write off the overpayment rather than seek to recover it.

35.     I consider that the Respondent was entitled to rely on and follow the advice given by his independent legal advisers.  The question remains whether, as incorrect legal advice on which the Respondent did rely, it renders the Respondent’s circumstances sufficiently special, within the meaning of section 1237AAD, to justify waiver of the debt.

36.     In previous decisions the Tribunal has taken the view that a legal adviser’s failure to properly advise is a matter between the individual and his or her legal adviser rather than a factor relevant to the question of whether a person’s circumstances are “special” (see Re Martin v SDSS (1990) AAT 6482 and Re Minda v SDSS (1989) 49 SSR 641).  I note, however, the decision of the Tribunal in Re SDSS and VYS (1995) 40 ALD 745 where it was concluded that:

“38. If delay on the part of a solicitor is not necessarily "to be visited upon a client" whose only remedy would be action against the solicitor, but may constitute "an acceptable explanation for delay", it would seem that incorrect advice from a solicitor may, in an appropriate matter, constitute an acceptable special circumstance within the meaning of that term in s 1184 of the Act. That is a more realistic response than one which requires an impecunious client to commence action against a solicitor or else suffer the consequences.”

37.     While I am persuaded that the reasoning of the Tribunal in Re SDSS v VYS (supra) is, with respect, sound, I consider that the circumstances of this matter are distinguishable.  Here, the Respondent is now working and earning (notwithstanding that he still suffers the effects of his injury).  He has a comfortable home with his family (notwithstanding that his relationship with his wife is troubled).  The legal advice he relied on brought about the benefit of the payment of a pension to him rather than, as in the cases noted above, the spending or divesting of compensation monies intended for the meeting of living expenses.  The Respondent has had the benefit of disability support pension payments which Mr Kenny, for the Applicant, told the Tribunal may be repaid in a flexible and accommodating manner, having regard to the Respondent’s financial circumstances.  I also note, with regard to any action the Respondent may wish to take in relation to the legal advice he received, that he now has the benefit of further legal advice from another community legal centre that is fully appraised of the circumstances in which the debt arose.

38.     Given these matters, I am not satisfied that the Respondent’s circumstances are sufficiently “special” or that something sufficiently “unfair, unintended or unjust” has occurred to justify the exercise of the discretion under section 1237AAD.  I take careful note, however, of Mr Kenny’s assurance that the debt will be recovered in a manner that recognises the Respondent’s straightened financial circumstances which may, depending on his ability to maintain paid employment, deteriorate further.

decision

39.     The decision under review is set aside and in substitution therefore the Tribunal decides that the debt owed by the Respondent should be recovered.

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member

Signed:         Linda Blue........................................................
  Associate

Date of Hearing  28 July 2004
Date of Decision  27 August 2004

Representative for the Applicant               Mr T Tomlin

Representative for the Respondent          Mr J Kenny