Najdova and Secretary, Department of Employment and Workplace Relations

[2006] AATA 687

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 687

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2005/1526

GENERAL ADMINISTRATIVE DIVISION		)
Re		LENCE NAJDOVA

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Rear Admiral A R Horton AO, Member

Date9 August 2006  

PlaceSydney

Decision The decision of the Social Security Appeals Tribunal to raise and recover a debt for overpayment of the disability support pension is affirmed.  

[SGD] Rear Admiral A R Horton AO
  Member  

CATCHWORDS

SOCIAL SECURITY – disability support pension – overpayment - declared earnings – advice from employer of applicant’s husband as to earnings – recalculation of disability support pension – raising of debt – debt affirmed by SSAT - consideration of circumstances – no special circumstances – decision affirmed

Social Security Act 1991 - sections 1223, 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 – section 5

Acts Interpretation Act 1901 – section 28A

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Director-General of Social Services v Hales (1983) 78 FLR 373

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

Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

Beadle (and others) v Director-General of Social Security (1985) 7 ALD 670

Re Ivovic and Director-General of Social Services (1981) 3 ALN N95

REASONS FOR DECISION

9 August 2006   Rear Admiral A R Horton AO, Member   

1.      This is an application by Mrs Lence Najdova (“the Applicant”) for review of a decision of the Social Security Appeals Tribunal (“SSAT”) on 10 November 2005 that affirmed a decision of an Authorised Review Officer (“ARO”) on 18 August 2005 to raise and recover a Disability Support Pension (“DSP”) debt of $7,821.41 for the period 27 November 1997 to 9 March 2004.   The original decision in this matter was made by a delegate of Centrelink on 8 April 2004.

2. At a hearing before me on 7 July 2006, Mrs Najdova was self-represented. Ms Pankaj Sharma, an advocate of the Legal Services Branch of Centrelink, represented the Secretary, Department of Employment and Workplace Relations (“the Respondent”). The Tribunal was assisted by Mr Boris Petrusev, an interpreter fluent in the Macedonian language. The documents pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T1 –T22) were taken into evidence, as was the Respondent’s Statement of Facts and Contentions, with Annexures A and B, dated 9 June 2006 (Exhibit R1).

BACKGROUND

3.        Mrs Najdova claimed the disability support pension on 23 February 1995, declaring the earnings of her husband, Mr Gorgi Najdov, and hence their combined earnings, as $481.64 per week.   DSP was subsequently granted effective that date, the letter of advice (Exhibit R1 Annexure B) recording a combined yearly income of $25,275, made up of $25,045 earnings (at $481.64 per week) and $230 bank interest.

4.        Further letters to Mrs Najdova on 6 March 1997, 16 November 1998, 7 June 1999 and 19 December 2003 reflected changes in payment rates.  The first three letters referred to total yearly income; the last letter reflected a change to reporting procedures and referred to combined regular fortnightly earnings.

5.        On 16 March 2004, and on request from Centrelink, Maritime Container Services provided advice as to the earnings of Mr Najdov from 14 April 1999 to 10 March 2004.  The response identified that Mr Najdov had been an employer since 30 January 1992, that he worked full-time, and that he periodically worked overtime.   Further data was subsequently provided by Maritime Container Services for the period 10 December 1997 to 30 June 1999.   

6.        On 8 April 2004, Centrelink raised a debt of $7,821.41 for overpayment of the DSP for the period from 27 November 1997 – this being the earliest date to which Maritime Container Services could provide pay details - to 9 March 2004, because Mrs Najdova had not properly declared the income of Mr Najdov. Mrs Najdova was informed of this decision on 13 April 2004.  On 20 May 2004, Mrs Najdova was advised by Centrelink that although she had failed to advise changes in her circumstances, the matter was not being referred to the Director of Public Prosecutions.  

LEGISLATION

7. The legislation in respect of a debt due to the Commonwealth is that in section 1223 of the Social Security Act 1991 (“the Act”), wherein it relevantly states:

“ SECT 1223
Debts arising from lack of qualification, overpayment etc

1223(1) 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.”

8. The Act provides for a debt to be written off or waived as follows:

“SECT 1236
Secretary may write off debt

1236(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

1236(1A) 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.

...
SECT 1237A
Waiver of debt arising from error

Administrative error

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 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).

1237A(1A) Subsection (1) only applies if:

(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.

…

SECT 1237AAD
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.”

9. Section 5 of the Social Security (Administration) Act 1999 (“the Administration Act”) refers to notices and section 28A of the Acts Interpretation Act 1901 to the serving of notices, thus:

“SECT 5
Manner of giving notice

(1) If a provision of the social security law requires that a written notice be given to a person, it is sufficient compliance with that provision if the notice is given in a manner approved by the Secretary.

(2) Nothing in subsection (1) prevents a notice being given in accordance with section 28A of the Acts Interpretation Act 1901.”

“ACTS INTERPRETATION ACT 1901
SECT 28A
Service of documents

(1) For the purposes of any Act that requires or permits a document to be served on a person, whether the expression "serve", "give" or "send" or any other expression is used, then, unless the contrary intention appears, the document may be served:

(a) on a natural person:
(i) by delivering it to the person personally; or
(ii) by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document; or
(b) on a body corporate—by leaving it at, or sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate.

(2) Nothing in subsection (1):

(a) affects the operation of any other law of the Commonwealth, or any law of a State or Territory, that authorizes the service of a document otherwise than as provided in that subsection; or
(b) affects the power of a court to authorize service of a document otherwise than as provided in that subsection.”

EVIDENCE

10.      Mrs Najdova arrived in Australia from Yugoslavia in 1971, aged 20 years.   She worked until 1976 when she injured her hand in a workplace accident; she stated that was unable to work thereafter because of her injury.  In 1981 she returned to Yugoslavia, her mother being in poor health.  She returned to Australia in 1992.  Resulting from her injured hand, she has not been able to work since her return.  Mrs Najdova is married to Gorgi Najdov; they have two children, one being born in Yugoslavia, and one in Australia.  They own their own home at Rockdale.  She described her English reading and speaking skills as very poor.

11.      On 23 February 1995, Mrs Najdova claimed the DSP, this being granted effective from that date.   Centrelink advised Mrs Najdova of the granting of DSP vide the letter of 29 December 1995 (Exhibit R1 Annexure B).  Mrs Najdova gave evidence that she could not recall receipt of this letter, but may possibly have done so.  If so, and with any other letters, one of her sons, who were at the time both living with her, would have read the important parts to her, and would tell her if she needed to go to Centrelink. When asked whether she understood the relevance of income and assets to her rate of DSP, she replied that she did not, and the connection with her pension rate had never been explained to her.  

12.      Mrs Najdova further stated that she was not aware of the significance of her husband’s role in her eligibility for the DSP, and was not asked for his income. When asked how Centrelink obtained the $25,045 combined yearly income noted in the 29 December 1995 letter (which when added to bank interest of $230 resulted in a fortnightly pension rate of $80.80). Mrs Najdova said she would have provided it on her claim form. 

13.      The second letter before me, dated 6 March 1997, gives a fortnightly pension rate of $92.40.   It can reasonably be assumed that this increase represented a periodic increase in the DSP rate, as well as taking account of a small increase in financial investment interest.  A third letter of 16 November 1998 advised that the fortnightly rate of payment from 26 November 1998 would be $298.10 per fortnight, “because of a change in circumstances”.  This change resulted from Mrs Najdova and her husband returning to Yugoslavia for compassionate reasons, and hence he had no earnings until they returned, and he resumed work.  Mrs Najdova stated that she had straight away informed Centrelink of his return to work.

14.      On 7 June 1999, Centrelink advised a fortnightly DSP payment of $39.60 commencing on 24 June 1999, the letter recording earnings of $32,108.96.  Mrs Najdova could not recall receipt of this letter, but in response to Ms Sharma, agreed that she and her husband may have returned from Yugoslavia in May 1999.   She confirmed that she was aware of her husband’s net salary as they maintained a joint bank account.  She was not aware of his overtime payments, and in any event, did not consider that such payments had any relevance to Centrelink and her social security payments.

15.      On 19 December 2003, Centrelink again advised a change to the DSP fortnightly rate, this time based on fortnightly earnings of $1,967.14 or $51,145.64 annually.  There is no explanation as to the significant increase in the annual earnings of Mr Najdov nor is it reflected in the payment details subsequently provided by his employer.  It may have originated from Mrs Najdova but there is no evidence before me to confirm that or otherwise.

16.      As recorded in a subsequent letter to Mr Najdov’s employer, Maritime Container Services (“MCS”) dated 12 March 2004, the first request by Centrelink for information was made on 13 February 2004.  The response dated 16 March 2004 confirmed permanent full-time employment at 38 hours per week with periodic overtime.  MCS provided earnings data from 10 December 1997, this being the earliest date from which the company held records, until 10 March 2004, and from this information, Centrelink calculated an overpayment of DSP of $7,821.41 for the period 27 November 1997 to 9 March 2004.   Mrs Najdova did not dispute this calculation - although in my view she was unlikely to have the skills or ability to be able to confirm its accuracy - but rather she believed she was not responsible for the overpayment and hence there should be no debt.  

17.      Mrs Najdova further expressed concern that it was not until April 2004 that she was informed of the raising of the debt, some 7 years after the overpayments commenced.  She could not understand why Centrelink had not informed her much earlier.  She indicated that she had always presented Mr Najdov’s payslips to Centrelink, but this was clarified in evidence to confirm that this procedure had not occurred prior to the advice of the debt. Mrs Nadjova stated that had she been aware of the reporting requirements, she would have reported accordingly.

18.       In respect of present financial circumstances, Mrs Najdova initially stated that she thought her husband earned about $1,400 gross per fortnight, but only if he was working overtime.  She subsequently stated that his net pay to the bank was in the order of $1,200 to $1,600 per fortnight, again depending on overtime.   Her present DSP payment is $90 per fortnight, and a further $70 per fortnight is being retained by Centrelink to pay back the debt.  After her accident in 1976, and until the granting of the DSP in 1995, Mrs Najdova was able to utilise compensation payments that resulted from the accident.  She had not sought social security benefits in that period, but believed she should have had some entitlement.  

19.     She and her husband have an outstanding mortgage on their home of $37,000, but they are under no obligation to pay this off at a particular rate or by particular amounts.  Mrs Najdova indicated that they could draw up to $50,000 from this loan facility.  Other costs relate to water, electricity and insurance, some of which she has been unable to pay, because of lack of money, until receipt of Mr Najdov’s next periodic payment.

20.  Their home at Rockdale is old and has termite problems, with the associated costs in repair and replacement.  Recently they borrowed $1,800 to renovate a room and replace the floor.  Her husband does most of the work.   She owes about $2,000 to friends.  She owns an old car, given to her by one of her sons.  Her last visit to Macedonia was for three months in 2002.

SUBMISSIONS

21.      Mrs Najdova reiterated her views that she could not recall receipt of the various letters from Centrelink, and if she had, she was not aware of the relevance of combined income to the calculation of DSP debt and the requirement to advise Centrelink of changing circumstances.  Perforce she relied on her sons to interpret correspondence, and therefore she may not have been made aware of particular requirements.  Overpayments had escalated over the 7 years that occurred before Centrelink informed her there was a problem, and hence she should not have to pay for that delay. 

22.      Following her left hand injury, her whole life has been affected.  From that time she has been totally dependent on her husband.  She has to beg for money.   Apart from the hand injury, her health is not good.  She has been diagnosed and treated for cancer, has suffered stress over a long period of time, has high cholesterol and recently has suffered shingles.  What with those health concerns, ongoing financial commitments, and the difficulty in obtaining financial help from her husband, she stated that her life is very difficult.   In respect of the debt under review, she expressed confusion at the advice she received from Centrelink as to eligibility for legal representation. 

23. The Respondent submitted that whilst Mrs Najdova gave evidence that some Centrelink letters may have been received, some not, they were all forwarded to her address, and hence met the delivery criteria in section 5 of the Administration Act. That Mrs Najdova had to rely on her sons to interpret those letters, did not prevent her from seeking advice whenever necessary from Centrelink. In the view of the Respondent, Mrs Najdova also understood the connection between her husband’s earnings and DSP, this being reflected in the periodic letters changing DSP payment rates, and the fact that she appreciated that the increase of DSP to about $300 per fortnight in late 1998 resulted from her husband earning no income. The Respondent submitted that there was no evidence of administrative error on the part of Centrelink.

24.      In respect of “special circumstances” under section 1237AAD of the Act, the Respondent submitted that the identified factors of financial hardship, legislative changes, incorrect legal advice and ill health as in Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 should be considered. Whilst Mrs Najdova was in ill health, and had the sympathy of the Respondent, there was nothing unusual in her circumstances, given she was in receipt of the DSP; the reasoning of the tribunals in Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464 and Re VYS and Secretary, Department of Social Security (1995) 40 ALD 745 were relevant.

25.      As to the financial situation of Mrs Najdova (and hence Mr Najdov), his fortnightly net earnings were in the order of $1,200 to $1,600 as given in evidence by Mrs Najdova.  They own their own home and the outstanding mortgage has flexibility as to the requirements for payment.  The $1,800 for renovations to the home were, on the evidence, a one-off.   Suffice, in the view of the Respondent, the situation of Mrs Najdova did not meet the “exceptional” criteria evinced by the Full Federal Court in Director-General of Social Services v Hales (1983) 78 FLR 373. In summary, there was no evidence that could support a conclusion of “special circumstances” and hence a waiver of the debt. 

CONSIDERATION

26.      At the outset, I was particularly concerned to establish whether Mrs Najdova was able to read and understand letters received from Centrelink,  and if not, what steps she took to ascertain the contents of those letters and any obligations on her that might be contained in the letters.  Her explanation that her sons interpreted the letters satisfied me that she was made aware of their contents; as to whether they selectively interpreted the contents was a matter between herself and her sons, in terms of the instructions she may have given them.  Had she been dissatisfied with that process, she had recourse to Centrelink for further advice. 

27. As to whether the letters before me as referred to in these Reasons for Decision were received by Mrs Najdova, her evidence was to agree that they had possibly been received. Section 5 of the Administration Act requires appropriate written notice to be given to a person, and that occurred. From the evidence before me, the criteria in subsection 28A(1)(a)(ii) of the Acts Interpretation Act 1901 whereby letters may be forwarded by pre-paid post to the address of the place of residence (of Mrs Najdova) has also been met, her residence at Rockdale being of long standing.

28.       Mrs Najdova stated at times during the hearing that she was not aware of the connection between her husband’s work earnings and the amount of periodic DSP payment that she was eligible to receive.  The wording in the letters forwarded by Centrelink may at times present some difficulty to the applicant depending on their circumstances and background;  in this instance, the computer generated letter of 29 December 1995, that is, the letter before me which advises the granting of DSP, notes the composition of “payment details” and “your combined yearly income”.  If the letter to Mrs Najdova was in this format, it may have been better worded with a statement to the effect that “the payment rate is based on the combined yearly income of … and …(interest or investment as appropriate)”.   But that observation does not detract from the fact that the letter requires changes in income to be advised, thereby indicating a connection with payment rate; it also gives instructions to seek advice from Centrelink if necessary.

29.      It is clear that when Mrs Najdova and her husband went to Yugoslavia in late 1998, she informed Centrelink accordingly and her DSP rate was adjusted upwards.  The letter of 16 November 1998 which advised the new payment rate notes “because of your changed circumstances”, this coinciding with her travel overseas and her husband temporarily ceasing work. It would be unrealistic to suggest that travel overseas in its own right would lead to a significant increase in the DSP payment rate.  The subsequent significant reduction in DSP payment on her return, when her husband resumed employment, is shown in the Centrelink letter of 7 June 1999.  That letter states “Your pension has been reduced because the combined income of you and your partner has changed.  Details are on the back of this letter”.   The connection between DSP payments and combined income was clearly defined.

30.      On the evidence, I cannot accept that Mrs Najdova was not aware that her DSP payment rate was related to the income of her husband, she not being in employment, and hence having no income at any time.   Thus the onus for correctly advising Centrelink of his income rested with her.  

31.      The amount of debt has not been disputed, but I have previously made comment that it could well be beyond the capability of Mrs Najdova to agree or otherwise with the calculations.  The documentation before me shows the combined annual income (that is the salary of Mr Najdov) as $32,108.96 on 7 June 1999 and $1,967.14 per fortnight ($51,145.64) on 19 December 2003.  These letters pre-date the request to MCS for information as to Mr Najdov’s earnings. 

32.      The pay data provided by MCS from 1997 to 2004 reflected reasonably consistent levels of earnings, taking account of varying overtime payments and periodic increases in wages.  From that, it might be assumed that the $32,108.96 figure in the letter of 7 June 1999 takes account of the 6 months or so in that final year when Mr Najdov was not employed.  If this combined income figure was used in subsequent years until 19 December 2003 – and here I assume it was calculated on information provided by Mrs Najdova - then a higher level of overpayment would have resulted.  That is, should the figure of $32,108.96 been used in subsequent years until December 2003?  Again the responsibility for informing Centrelink should that income base not be correct lay with Mrs Najdova, but a check of the accuracy of the amount of the assessed debt by Centrelink would be appropriate.

33. Section 1236 of the Act provides for the debt to be written off in certain circumstances. None of those circumstances apply to Mrs Najdova. Section 1237A of the Act provides for the debt or a portion thereof to be waived should that debt be solely attributable to an administrative error by the Commonwealth. That direction cannot be exercised if there were other factors such as error by the debtor that caused that debt to arise. In this matter, even were there some error on the part of the Respondent in the calculation of the yearly income (paragraph 32 above refers), Mrs Najdova had a responsibility to ensure that Centrelink was properly informed of her husband’s earnings. That had not occurred.

34. In 2004, the Respondent considered whether prosecution was appropriate. In the event this was not pursued and before this Tribunal the Respondent elected to make no submission in respect of whether or not Mrs Najdova knowingly made a false statement. Accordingly, I consider the matter can be properly considered under the provisions of section 1237AAD of the Act as it refers to waiver under “special circumstances”. 

35.      The term “special circumstances” is not defined in social security law.  The view of the tribunal in Re Beadle and Director General of Social Security (1984) 6 ALD 1, presided over by Toohey J (and later endorsed by the Full Court in Beadle (and others) v Director-General of Social Security (1985) 7 ALD 670 wherein the Full Court stated at 674 “we do not think it possible to lay down precise limits or precise rules”), is widely accepted as providing appropriate guidelines. Of relevance, that tribunal stated (at 3):

"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."

36.      In an earlier decision, the Tribunal in Re Ivovic and Director-General of Social Services (1981) 3 ALN N95 took perhaps a more liberal line whilst nonetheless requiring a consideration of the wider aspects of the matter before it, stating in part:

“the use of the word ’special’ is, we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case… whilst keeping the dominant principle of s 115 [of the then Act] in mind, he [the decision maker] must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate.”

37.     The medical conditions of Mrs Najdova are recognized by the granting of the DSP.  Even were it not, this alone is not necessarily enough to be a special circumstance: Re Bolton (supra).  Indeed as Senior Member Dwyer stated in Re VYS (supra) “there is nothing special or unusual about recipients of DSP being in ill health” (at 757). 

38.      Financially, Mrs Najdova’s situation is neither unusual, uncommon or exceptional.  She owns her own home, the mortgage of which is relatively small and from her evidence, there is considerable flexibility in the payment of that mortgage.  She and her husband’s income is in the order of $1200 to $1600 per fortnight, he being in full-time employment; in addition she receives about $90 per fortnight DSP.  Their outgoings, except for occasional expenses to do with the home, would seem to be well within their ability to pay, and the credit card debt as stated is not of great magnitude. Further, the debt is being paid off at $70 per fortnight, with no suggestion that this payment causes financial difficulty. I observe her concern that she has to beg her husband for money, but there was no evidence to suggest that the marriage was otherwise strained.

39. I acknowledge the concern of Mrs Najdova that the raising of the debt did not occur for some years, but that does not make the debt any less relevant. In the light of the evidence before me, I am not persuaded that special circumstances exist, and hence the discretion under section 1237AAD of the Act to waive the debt or part thereof cannot be exercised. However, it seems to me to be appropriate that the Respondent undertake a further check to ensure that the debt has been correctly calculated (paragraph 32 refers).

40.      The decision to raise and recover a debt for overpayment of the disability support pension is affirmed.

I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Rear Admiral A R Horton AO, Member.

Signed:         A. Garcia       
  Associate

Date of Hearing  7 July 2006
Date of Decision  9 August 2006          
Representative for the Applicant               self represented

Advocate for the Respondent  Ms P. Sharma