Nabilzadeh and Secretary, Department of Family and Community Services

[2004] AATA 1032

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1032

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   S2004/129

GENERAL  DIVISION		)
Re		Shalha Nabilzadeh

Applicant

And Secretary, Department of Family & Community Services

Respondent

DECISION

Tribunal L Hastwell, Senior Member
D Trowse, Member

Date30 September 2004

PlaceAdelaide

Decision The Tribunal affirms the decision under review.

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

Senior Member

CATCHWORDS

SOCIAL SECURITY – overpayment of benefit – debt to Commonwealth – waiver of outstanding debt – sole administrative error – special circumstances – write-off – capacity to repay – hardship – Decision affirmed

Social Security Act s. 1223, 1235, 1236, 1237AAD

Re Reynolds, Re Beadle, Groth v Secretary, Department of Social Security.

REASONS FOR DECISION

30 September 2004     L Hastwell, Senior Member
  D Trowse, Member            

1.        This is an application to the Tribunal by Shalha Nabilzadeh for a review of a decision of the Social Security Appeals Tribunal (SSAT) made on the 16^th March 2004 that an overpayment of disability support pension had been made to Mrs Nabilzadeh in the sum of $8425.42 in the period commencing the 15^th April 1999 and concluding on the 28^th January 2003(the relevant period) thereby resulting in a debt to the Commonwealth under s. 1223(1) of the Social Security Act (the Act)

2.        The SSAT found that Mrs Nabilzadeh had contributed to this debt and so s. 1237A of the Act which requires mandatory waiver of a debt caused solely by Commonwealth administrative error did not apply.

3.        The SSAT considered whether a waiver of the debt was appropriate under the provisions of s. 1237AAD of the Act. Their findings were not clear on this point. They stated at paragraph 34 of their decision

“s. 1237AAD(a)(ii) requires the debt is not due to the person failing to comply with a provision of the Act. That subsection may mean that s. 1237AAD does not apply in this case.’

4.        What the Tribunal meant by this statement is not clear as they then went on to consider waiver under s. 1237AAD (b).

5.        The SSAT found that there were no special circumstances that justified waiver and affirmed the decision under review.

6.        The SSAT in paragraph 6(ii) of its decision outlined one of the issues to consider as being write off. It then did not specifically address the issue of write off pursuant to s. 1236 of the Act at any other point in its decision.

7.        The statements of facts issues and contentions filed by the parties set out the issues to be determined by the Tribunal.

ISSUES TO BE DETERMINED IN THIS CASE AND THE RELEVANT LEGISLATION

8.        Whether Mrs Nabilzadeh has been overpaid disability support pension of $8425.25 such that a debt is owed to the Commonwealth pursuant to s. 1223 of the Act.

9.        Whether that overpayment has arisen solely as a result of an administrative error by the Commonwealth and has been received in good faith by the applicant such that a mandatory waiver of the debt must occur under s. 1237A(1) of the Act.

10.      Whether the applicant knowingly made a false statement or representation or failed or omitted to comply with a provision of the Act which, if so, waiver under s. 1237 AAD of the Act is not possible.

11.      If the applicant did not contribute knowingly to the overpayment then whether the debt or part of it should be waived pursuant to s. 1237AAD (B) of the Act   because there are special circumstances in this case.

12.      If there are no special circumstances that would justify waiver whether there should be a write off of the debt pursuant to s. 1236 of the Act. This would require consideration in this case of s. 1236(1A)(b) and whether the debtor has the capacity to repay the debt as set out in that section.  The Tribunal in making that determination must have regard to s 1236(1C) of the Act.

WITNESSES

13.      The Applicant attended the hearing and represented herself. She gave evidence on her own behalf. Her son Naysan Mortazavi gave evidence. The Tribunal had in evidence before it as Exhibit “A” the documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 (T Documents). Other exhibits were tendered by the applicant and where relied on the Tribunal will refer to them.

14.      The respondent called evidence from an authorized Review Officer Mr Robert Martin and from Mr Mark Shephard, who is a debts recovery expert employed by Centrelink. The respondent also tendered a number of exhibits and where relied on the Tribunal will refer to them.

DISCUSSION OF THE EVIDENCE

15.      The applicant stated at the outset that she could not be confident as to whether the quantum of the overpayment was correct as she was not an expert in the area. Her main contention was that the overpayment was caused solely by the administrative error of the Department and therefore the debt must be waived and she should not be held responsible for someone else’s mistake.

16.      The applicant stated that she was an interpreter by occupation and that during the relevant period she had regularly and accurately reported her earnings to Centrelink. She said that her earnings as an interpreter were from different sources and the space on the Centrelink reporting forms was limited and so she frequently attached extra pieces of paper and payslips and handwritten notes to the reporting form.

17.      She gave evidence that during some of the relevant period she was ill and suffering severe panic attacks and anxiety but in her evidence she denied that this could have affected her memory in any way. It was common ground that she was granted a disability support pension in January 1999 for anxiety and depressive disorder. Nevertheless, she continued to do regular casual work during the relevant period.  Under cross examination with respect to the forms that she had been required to lodge and the types of benefits that she was receiving she was vague but explained this on the basis that a part of her anxiety condition was poor memory.

18.      She stated that her illness post dated her separation from her first husband in 1997. Sometimes she posted her forms to Centrelink but usually she took them in personally to the office and would speak to someone behind the counter. She was taking medication during the relevant period and receiving regular counselling. She said that she was not familiar with how entitlements were calculated and she trusted Centrelink to get it right. She then went on to tell the Tribunal that she had had problems with Centrelink from a very early stage and on a number of occasions.  When her son turned 16 and the nature of her benefit changed, Centrelink lost her tax return and her citizenship certificate. When her son was applying for Youth Allowance in or around 1999 when going to Darwin for a period they lost his documents. In 2000 when she remarried and submitted documents to Centrelink they lost them.   She then moved house and Centrelink lost her lease and failed to pay her the correct rental allowance for a period of time.  Late in her evidence, she tendered a recent letter received by her from Centrelink (exhibit A2) showing her earnings and other income for May to August 2004. She pointed to two entries that she claimed were incorrect. She said that she had specifically saved this recent letter to show the Tribunal as it showed yet another error by Centrelink.  She acknowledged that she had not yet advised Centrelink of the error.

19.      It became quite clear in the course of her evidence that she did not trust Centrelink and on her own account had experienced problems with the agency throughout the relevant period and ongoing. 

20.      During cross examination the applicant was shown some of the documents in part T 4 of the T Documents which were examples of letters sent to her by Centrelink on a regular basis as a follow up when she reported income. These letters and others (exhibits R2and R3) set out the income reported and the calculation of her entitlement to pension based on the reported income. She acknowledged regularly receiving letters of that type. She stated that sometimes she checked the information but at other times she did not.

21.      The applicant’s attention was drawn in cross examination to an on-line record of a conversation recorded at page 207 of the T documents. It was a record of a conversation that took place on the 31^st January 2000. It was put to her that the record indicated that she reported that her earnings in the last 12 months had been “approximately $2,100.00 gross”. It was put to her that this was significantly different to the sum of at least $4,499.50 independently reported by her employers as being payments to her for the same period. Her response was that she did not recall the conversation.

22.      It was put to her that during the relevant period she had 35 contacts with Centrelink and on each occasion her earnings were incorrectly recorded. Her response was that she was on medication during the relevant time and that Centrelink must have made a mistake on each occasion. She rejected the proposition that she could have inadvertently or mistakenly given wrong information to Centrelink. When asked why she did not check thoroughly the confirmatory letters sent to her by Centrelink she restated her trust in Cenrelink. She acknowledged that the letters included the clear statement that if a number of events occurred or if the income as shown in the letter was incorrect it must be reported within 14 days to Centrelink. She repeated that she always informed Centrelink of her income and so did not check the figures.

23.      She gave evidence about her financial situation. She described it as terrible She said that her husband had not worked for 6 – 7 months due to a work related injury. He was now working 3 to 4 hours per day 3 days per week. He has an ongoing Workcover claim that is being pursued for medical expenses and legal costs. The claim had thus far been rejected by Workcover. Her 22 year old son still lives with her. He is working and receiving some training but is not yet receiving a significant income and she does not ask any contribution from him towards household expenses. He is marrying in 2 months and leaving the household.   She made it clear that she considered that she had an obligation to support her son and she did not expect him to contribute to the household.  She said it was a cultural expectation that she do so and that she pays for his wedding. The anticipated cost of the wedding is $6000.00.

24.      The Tribunal adjourned the matter to enable the applicant to produce more detailed information about her financial situation.  The Department had not previously requested that she provide them with this information and so issues of financial hardship had not been fully explored by the Department.

25.      When the hearing resumed the applicant tendered as exhibit (A4) a Centrelink financial information form that she had prepared. She also tendered two recent pay slips (exhibit A3).

26. The form she had prepared (exhibit A4) showed her own average fortnightly income as varying between $1,109.02 and $1,038.90. The variable related to the amount of pension she received.  She specifically stated on the form that her pension amount varied from $180.00 to $250.00 per fortnight. It showed her partner’s income as being $249.00 per fortnight. She did not indicate any variable in his income. $39.00 of that sum represented his fortnightly NewStart Allowance. The total of the fortnightly household income on her evidence varied on average between $1,287.90 and $1,358.02.

27.      Taxation was shown as $80.00 per fortnight for the applicant and tax (GST) of $23.10 per fortnight for her partner. A superannuation contribution of $152.00 per month was shown as a deduction. The Tribunal is satisfied that the superannuation contribution was incorrectly shown on exhibit A4 as a deduction.  It appeared on her payslip as an employer contribution and an addition to her income. It should not be treated as a deduction.  It is an amount paid to a superannuation fund by the employer on her behalf.

28.     The applicant showed outgoings for her and her family (which includes some of the household expenses of her adult son such as his share of utilities and food) totalling $1,252.30 per fortnight. Amongst this expenditure was an allowance for parking fees, private medical insurance (extras cover) motor vehicle expenses including comprehensive insurance and rental of around $240.00 per week and medical expenses.  The allowance for medical expenses appeared high and the applicant explained that the medicine she now took was mainly natural medicines as distinct from the prescription medicine that she had previously taken and so it was very expensive. She said that she and her husband rent a three bedroom house.  She acknowledged that was probably not necessary once her son left home. The total outgoings amounted to $1355.40 per fortnight.  Her Centrelink debt was being withdrawn at the rate of $60.00 per fortnight and was already taken into account in the above figures as her Centrelink payment was net of the deduction.

29.      The applicant showed three debts being a personal loan to the ANZ bank with a principal sum owing of around $14,781.00 and two credit card debts.  She services these debts by paying the minimum monthly commitment.  The total sum owed on credit cards was around $6,000.00.

30.      Payment summaries tendered as Exhibits R4 and R5 summarized Centrelink payments to the applicant and her husband over a period of time.   The summary chart for Mrs Nabilzadeh’s husband showed payments that were consistently higher than the sum shown on the Centrelink financial information statement.  For the period 18th May to 27th July, being a period of twelve weeks, the average payments made to her husband were in fact $118.26 per fortnight.  For the same period, the average payments made to the applicant were $298.00 per fortnight. The Tribunal accepted that she had given a snapshot of just one fortnight when filling in the form but when one looked at the overall figures, the household income was on average better than entered on the financial information form.

31.      The applicant went on to give evidence that she had a motor vehicle and usual household furniture and she acknowledged that she and her husband both had mobile phones and that they had a television in the house.

32.      She acknowledged that she still undertook some independent translating work in addition to her contract job with the Australian Refugee Association (ARA).  Frequently the independent work clashes with the days that she works at the ARA and so she does not do a lot of additional work. She pointed out to the Tribunal that there was a number of expenses that they had not allowed for.  In weeks when she does additional work her income would be higher although additional income would also reflect in a reduction in social security income.

33.      Naysan Mortazavi, the applicant’s son then gave evidence.  He acknowledged that he was living with his mother during the relevant period save for a period of 6 months when he went to Darwin.  He recalled going to Centrelink with her on perhaps one or two occasions and he said that she would discuss issues with him at the end of the day and would sometimes mention that she had been to Centrelink or that she had been working.

34.      He acknowledged that he was currently living with his mother and that he was not contributing much to the household although he stated he did contribute $30.00 - $40.00 on occasions by purchasing groceries.

35.      He confirmed that he will be leaving home in 2 months when he marries and he will be setting up home with a new family.  He made it clear he would not be in a position to contribute financially to assist his mother.

36.      He stated that during the relevant period the applicant did not discuss family finances in detail with him. He recalls her as being fragile at times and not very confident with herself during the relevant period.

37.      He confirmed that he received incorrect information from Centrelink when he went to Darwin for a period of 6 months initially being told that he was not eligible for an allowance and after three contacts with Centrelink he was told that he was eligible.  He confirmed that Centrelink had lost his documents on one occasion.

38.      His own current income is $589.00 per fortnight comprising payment from part-time work and Centrelink payments. He runs his own motor vehicle and is required to travel in the course of his employment.

EVIDENCE FOR THE RESPONDENT

39.      The first witness called for the respondent was the Authorized Review Officer, Mr Martin.  He stated that he had carefully checked the calculations of the overpayment and was satisfied that he had accurately assessed the overpayment in this case and the period during which that overpayment had arisen.

After checking all relevant data from both sources, i.e. as reported by the applicant and as independently reported by employers, he had slightly varied the original overpayment.  He indicated that he had sought additional evidence regarding the applicant’s health from the applicant’s solicitor at that time.  This was in the context of considering “special circumstances”.  The evidence was not forthcoming.  On all the evidence he had available to him he did not consider that there was anything that warranted a finding that there were special circumstances in this particular case.

Mark Shephard who is a Debts Recovery expert also gave evidence.

He confirmed the way in which debts were calculated with the use of a software programme known as Multical to calculate debts once the information is input into the computer. He stated that that information is entered into the computer as information is given by the person reporting their income and then when independent verification is obtained from employers that information is fed into the programme and Multical will then do a calculation to see if discrepancies occur.  Multical will calculate an overpayment using this data input.

SUBMISSIONS

40.      The applicant submitted that the overpayment was caused solely by the administrative error of Centrelink and asked the Tribunal to accept that she was a victim of Centrelink’s mistakes.  She contended she was in no position to make the repayment and pleaded severe financial hardship.

41.      The respondent made the concession that the applicant had not knowingly given incorrect information to Centrelink but had inadvertently or mistakenly given wrong information to Centrelink.   The respondent did not seek to explore in detail the applicant’s frame of mind when providing the incorrect information.  The respondent’s submission with respect to sole administrative error was that during the relevant period there were 35 notifications of income to Centrelink and on all occasions incorrect information was provided.  There were 28 notification letters generated by Centrelink and sent to the applicant setting out Centrelink’s understanding of her income and setting out clearly the applicant’s obligation to advise if the figures in those notifications were incorrect.  The respondent submitted that the applicant did not advise Centrelink of any errors on any occasions.

42.      The respondent submitted during the relevant period no specific instances of administrative error could be pointed to by the applicant.

43.      In relation to special circumstances the respondent submitted that the circumstance of the applicant were not so special that waiver was appropriate under s.1237AAD of the Act.   

The respondent submitted that the applicant is in reasonable health and although suffering from an anxiety disorder she is not so disabled that she cannot work.   The respondent submitted that the applicant is in stable accommodation with stable employment and a good employment history and was earning significantly more than any person on a disability support pension who was not working. He described her as having a well functioning family and he pointed out that even the husband’s working future is not pessimistic.

44.      With respect to write off under s. 1236 of the Act and the issue of severe financial hardship the respondent submitted that Exhibits R4 and R5 showed the financial situation was not as gloomy as presented although not particularly strong. The respondent referred to a number of cases and pointed out that the words “severe financial hardship” as set out in s 1236(1C) of the legislation are to be interpreted in accordance with ordinary meaning.

In particular the respondent referred to Re Reynolds (1986) AATA (2656) where Deputy President Jennings pointed out that severe financial hardship is likely to be demonstrated by someone whose income is materially less than the maximum rate of pension.   The respondent pointed out that in this instance the applicant’s household income was substantially more than maximum rate of Centrelink benefit that would otherwise be available to the couple.

FINDINGS ON MATERIAL QUESTIONS OF FACT AND APPLICATION OF THE LAW

45.      s 1223(1) of the Social Security Act provides:

Subject to this section, if:

(a)       a social security payment is made; and

(b)       a person who obtains the benefit of the payment was not entitled

for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by

the person and the debt is taken to arise when the person obtains the

benefit of the payment.

46.      The Tribunal is satisfied based on the evidence in the T Documents and the evidence of Mr Martin and Mr Shepherd that an overpayment of DSP has occurred and that it had been correctly calculated by the Authorised Review Officer, Mr Martin.  The applicant at no stage raised any serious issue with the amount of the overpayment or with the period during which the overpayment had accrued. In the circumstances, the Tribunal is satisfied that there is debt due to the Commonwealth pursuant to s. 1223(1)(a) & (b) of the Act.

47.      The Tribunal went on to consider s.1237(A)(1) of the Act and sole administrative error.  Section 1237(A)(1) of the Act provides as follows:

“1237A(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 a debt that is attributable solely to an administrative error made by the Commonwealth.”

The Tribunal is not satisfied that any instances of administrative error have been shown to have occurred in the relevant period.”

The applicant has given anecdotal accounts of experiencing Centrelink errors such as them losing documents. The Tribunal does not accept that on 35 separate occasions Centrelink made an error in recording income declared by her. The number of contacts with Centrelink and the consistency of incorrect information being recorded over the relevant period are in the Tribunals view suggestive of the applicant consistently failing to properly report income. Her failure to properly check the follow up letters and report the errors to Centrelink also goes to the issue of sole administrative error in that even had she supplied correct information (which the Tribunal does not accept) she could have remedied the defect on most occasions had she been more meticulous in her attention to her correspondence from Centrelink.  She acknowledged receipt of such letters and her answer was simply that she trusted Centrelink.  Nevertheless, it was quite clear on the evidence of both the applicant and her son that they had a mistrust of Centrelink from a point early in the relevant period if not before due to Centrelink regularly losing their documents.  The Tribunal is satisfied that at the best, the applicant was reckless and/or negligent in her provision of information regarding her finances to Centrelink during the relevant period.  She does not satisfy the provisions of s.1237(A)(1)

48.      The Tribunal went on to consider whether a waiver of the debt was appropriate under the discretionary provisions set out in s. 1237AD of the legislation, which provides that a waiver of the debt can occur if:

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 partially from the debtor oranother person knowingly;

(i)        making a false statement or false representation or;

(ii)       failing or omitting to comply with a provision of this Act or the 1947 Act;

(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.

49.      The Tribunal notes with some apprehension the respondent’s concession that the applicant did not knowingly make false statements or representations or failed or omitted to comply with the provisions of the Act.  Rather, in the respondents view, the errors in information supplied to Centrelink resulted from reckless or negligent reporting by the applicant.

50.      The concept of special circumstances has been considered on many occasions by the Tribunal and the Tribunal looked to the decision in Re Beadle and the Director General of Social Security (1984) 6 ALD1, which is considered a leading authority. In that case the Tribunal 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. With the circumstances any answer to 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 particularly quality of unusualness that permits them to be described as special”.

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

“would require something to distinguish Mr Goth’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.”

52.      On all the evidence put before it, the Tribunal can find no facts in this case which could be described as unusual, uncommon, or out of the ordinary.  The Tribunal’s view is that the applicant had an obligation to be mindful of her responsibility to accurately report income and she failed to do so on numerous occasions. This has left her with a debt which is unfortunate from her perspective.  The debt is being deducted over a substantial period of time from her income and in the Tribunal’s view she is not significantly prejudiced by the deductions.  During the relevant period, she was unwell, but she was still capable of working on a part-time basis and earning quite a reasonable independent income.  In her evidence to the Tribunal, it was obvious that the applicant is an intelligent woman and quite capable of correctly reporting information to Centrelink if she had put her mind to it.  There is nothing in this case that would distinguish it from other cases to make it unusual or exceptional.  The Tribunal is therefore not in a position to exercise their discretion contained in s. 1237AD of the Act and waive the debt in question as the Tribunal is not satisfied that there are any special circumstances in this case that would justify the Tribunal exercising discretion to waive the debt.

53.      The only other basis on which the Tribunal could consider writing off the debt pursuant to s. 1236 (1A) of the Act.  s1236(1A) is as follows:

The Secretary may decide to write off a debt under subsection (1) if, and only if:

(a)       the debt is irrecoverable at law; or

(b)       the debtor has no capacity to repay the debt; or

(c )      the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

(d)       it is not cost effective for the Commonwealth to take action to recover the debt.

54.      The only relevant provision would be s 1236(1A)(b) where the Secretary may decide to write off the debt if the debtor has no capacity to repay that debt.  The other three provisions (a), (c) and (d) have no application on the evidence in this case.  The Tribunal then looked to paragraph 1236(1C) which provides that for the purposes of paragraph 1236(1A)(b) of the Act.

“if a debt is recoverable by means of:

(a)       deductions from the debor’s social security payment; or

(b)       deductions under section 84 of the A New Tax System (Family Assistance)

(Administration) Act 1999; or

(c )      setting off under section 84A of that Act;

the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.”

The debt is being repaid by way of deductions from Social Security Payments and thus the issue of severe financial hardship arises.

55.      The Tribunal specifically asked for additional evidence with respect to severe financial hardship and received a reasonably full picture of the applicant’s household financial position.  The Tribunal is not satisfied that there is severe financial hardship in this case.  The income received into the applicant’s household in each week is substantially more than the combined pension of a husband and a wife.  If the applicant chooses to support her adult son and accept no board from him, she cannot then bring this into account as adding to her financial plight.  Her son is clearly in a position to make some contribution to expenses, albeit a modest sum.  The applicant and her husband and her son have a comfortable life, albeit modest.  They own a motor vehicle, they can afford to have some level of medical cover and they maintain a three bedroom home.  Severe financial hardship requires something considerably more than simply being under some financial pressure in each week.  The applicant’s future prospects are good.  Her husband has returned to some level of employment and his health appears to be improving as he has returned to taxi driving.  The applicant is capable of taking on some additional employment if she wishes to do so and if she manages to fit that employment in with her current contract employment.  The applicant is in some financial difficulties but they do not come within the concept of severe financial difficulties.  The applicant’s own health appears to be better managed in that she is no longer taking large quantities of prescription medication and she has been successful in maintaining consecutive contracts of employment with ARA. 

56.      The Tribunal adopts the reasoning in Reynolds case as set out previously which is that “severe financial hardship” is likely to require a level of household income that is less than the maximum pension rate.  The maximum pension rate does represent what is seen by government as being the minimum sum a person needs to manage and be kept above the poverty line in each week.  The income in the applicant’s household is considerably higher and she appears to enjoy a comfortable middle class lifestyle.  The Tribunal accepts that money is “tight” in the applicants household but some of the financial pressure is created by the applicants own choices, such as declining to require board from her son.  The Tribunal is not satisfied that the applicant suffers from severe financial hardship such that the debt should be written-off.

57.      The Tribunal affirms the decision under review which means that the applicants claim is unsuccessful.