Negash and Secretary, Department of Social Services (Social services second review)

[2018] AATA 4204

Negash and Secretary, Department of Social Services (Social services second review) [2018] AATA 4204 (9 November 2018)

Division:GENERAL DIVISION

File Number(s):      2017/6809 & 2017/6831

Re:Rahel Negash

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

File Number(s):      2017/6584

Re:Gabriel Fantaye

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Bill Stefaniak AM RFD, Senior Member

Date:9 November 2018

Place:Sydney

The two decisions of the AAT1 dated 24 October 2017 are affirmed.

..........................[sgd]..........................................

Bill Stefaniak AM RFD, Senior Member

CATCHWORDS

SOCIAL SECURITY – overpayment – debt to the Commonwealth – lump sum workers compensation benefit – fortnightly compensation payments – reporting obligations – failure to notify of change in circumstances – whether debt can be written off or waived – whether special circumstances – financial hardship – no special circumstances found – decision affirmed

LEGISLATION

Social Security Act 1991 (Cth) ss 1236, 1237A, 1237AAD

CASES

Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114

Department of Social Security v Hales (1998) 82 FCR 154

Skinner and Secretary, Department of Social Services [2015] AATA 569

REASONS FOR DECISION

Bill Stefaniak AM RFD, Senior Member

9 November 2018

1. This is a review of two decisions of the AAT1 dated 24 October 2017. One affirmed the decision of the respondent department requiring the applicant Mr Fantaye to repay debts relating to his Disability Support Pension (DSP) whilst the other affirmed the department’s decision to require the applicant Ms Negash to repay debts relating to her parenting and carer payments incurred as a result of overpayments made to her partner Mr Fantaye.

2. The debts were incurred over the period 5 December 2013 to 14 February 2017 (the debt period) and in Ms Negash’s case amounted to $24,927.64 and in Mr Fantaye’s case $43,750.45, of which $1,510.79 was for the period 14 January 2017 to 14 February 2017. Mr Fantaye agreed he was responsible for repaying the $1,510.79 but not the earlier debt.

3. Both parties did not dispute the amounts calculated but the applicants argued they should not have to repay the debt due to departmental error or alternatively, special circumstances.

   BACKGROUND

4. Mr Fantaye is 54 years old and suffered a workplace injury in 2005. The workplace insurer was Allianz Australia and Mr Fantaye received $55,000 from them on 22 September 2010 and subsequently netted fortnightly payments of $773.30 until 5 December 2013 when they rose to $1,517.60 per fortnight.

5. Expressed in weekly terms, the initial payments until 5 December 2013 were $394.65 per week before tax and on 11 February 2013 in the course of applying for a DSP Mr Fantaye declared his workers compensation payments as $394 per week. He also supplied to Centrelink four remittance notices from Allianz showing weekly payments to him of $394 covering the period 16 December 2012 to 10 February 2013. As a result Centrelink wrote to him in April 2013 advising that he would be paid at the combined annual income rate of $20,522.30.

6. Ms Negash was granted parenting payments at the partnered rate (PPP) on 6 February 2013 and carer payment (CP) on 26 July 2016. The couple have 2 children aged 5 and 10.

7. Both applicants were advised by Centrelink by letters dated 30 April 2013 that they had an obligation to advise Centrelink within 14 days of any changes of circumstances including any change in their or their partner’s income. Ms Negash was specifically told to tell Centrelink if “your partner’s total personal income goes over $789.30 per fortnight”.

8. Both applicants received a number of such letters during the debt period. At no stage during the debt period from December 2013 to February 2017 did either applicant advise Centrelink of any change of income or circumstances.

9. On 10 January 2017 Mr Fantaye received a lump sum payout from Allianz of $288,000 and this was duly notified to Centrelink by Allianz and also it seems, by Mr Fantaye at some stage as well.

10. Accordingly, the above debts (see paragraph [2]) were incurred for overpayment of benefits to the applicants.

11. As Mr Fantaye received a total gross settlement of $343,000 from Allianz, half of which is $171,500 and as the lump sum divisor is $959.10 in this case, the preclusion period whereby Mr Fantaye cannot claim a pension is 178 weeks which takes him up until 12 June 2020.

12. It became apparent to the tribunal that there was no issue with anything the applicants did or did not do up until 5 December 2013, nor after February 2017.

13. The issue for determination therefore revolves around the non-notification of changes of circumstances and income for the debt period.

    CAN THE APPLICANTS AVOID REPAYING THE DEBT?

14. As ably set out by the AAT1, pursuant to section 1236 of the Social Security Act 1991 (Cth) the respondent may write off a debt in certain circumstances, none of which it is alleged by either party exist here, save for the applicants arguing to some extent that they have no capacity to repay the debt (section 1236(1A)(b)).

15. As the applicants own property worth considerably more than the total debt this argument does not have legs and was not strongly pushed.

16. Accordingly, a write off of the debt does not apply, but section 1237A of the Act provides in the alternative for a waiver if the debt arose solely as a result of administrative error by the Commonwealth, provided the debtor received the money in good faith. The applicants could not point to any error by the respondent save not having a record of a form Mr Fantaye said he thought he signed giving the respondent authority to obtain any information they needed from Allianz and anyone else they needed to get information from.

17. The hearing was adjourned to enable this issue to be investigated further, but it appeared that no such form existed and it was most likely Mr Fantaye was getting the documents he submitted mixed up. In fact further T-documents supplied to the tribunal dated 28 June 2018 indicated that Mr Fantaye in answer to a question (see Supplementary T-documents Pages 104 and 160 on 2 forms signed on 8 March 2013 and 11 February 2013 respectively) asking who should the department contact if it needed more information about his and his partner’s income and assets form – answered – “Myself”.

18. The tribunal is comfortably satisfied, there being no evidence to the contrary, that there was no such form as suggested by Mr Fantaye.

19. In addition to the provisions mentioned above, section 1237AAD of the Act states as follows:

    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, the Administration Act or the 1947 Act; and

    (b)  there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

    (c)  it is more appropriate to waive than to write off the debt or part of the debt.

    Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

    Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt.

20. Accordingly, the applicants argued that special circumstances apply to their case.

21. All parties accepted that the debt did not result wholly or partly from the applicants or another person knowingly making a false statement or false declaration as such but the respondent contended that it was incurred as a result of the applicants’ omission to, at any relevant stage, advise the department of their change of circumstances. That is, they failed to comply with their legal obligations.

22. Mr Fantaye, did not sign any authority to the department to obtain any information it needed from any other entity, nor did his niece and carer, whom he said he entrusted his dealings with the department ever tell Centrelink about his income as he said he told her to do. His niece it seemed suddenly departed for Ethiopia in 2016 much to the surprise and consternation of Mr Fantaye.

23. Whilst the respondent at the hearing did not suggest the applicants’ failure to disclose their true financial position was deliberate (although Mr Fantaye’s responses to some questions and explanations as to why he didn’t in my view did leave something to be desired and were vague and a little confused) it could be said that by failing to advise as required, both applicants, by their omission to do so, ensured that the respondent continued to act on what had become after 5 December 2013, a false statement or representation with the passage of time and with the increase in the Allianz payments to Mr Fantaye from that date.

24. A waiver can also apply if there are special circumstances, other than financial hardship.

25. Special circumstances, as the case law tells us is not easy to define and deliberately so to enable a decision maker some latitude in each particular case.

26. As French J said in Department of Social Securityv Hales (1998) 82 FCR 154 at 162:

    “The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words…But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose”.

27. Individual circumstances, the consideration of the general administration of the social security system and the fact that a debt is a debt and that the applicants have had the benefit of monies they have no legal entitlement to, are probably the main considerations that need to be looked at in the context of considering special circumstances (see DP Forgie in Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114 at para [80]).

28. Special circumstances are a combination of factors, and not just the applicants’ circumstances during the debt period but also their current circumstances.

29. The term “special” implies something out of the ordinary, something that distinguishes the case from others.

30. Health (especially health not related to the original compensable injury), severe financial circumstances, actions of other parties beyond the control of the party, unexpected calamities that could not be foreseen – all these can form special circumstances.

31. The applicants, in their evidence on oath spoke of a number of problems.

32. Mr Fantaye clearly has significant health issues largely arising from the work injury and his subsequent depression. The tribunal accepts this as being a real handicap to him. But he is not Robinson Crusoe in that regard. It is sadly common for people in similar circumstances to him to suffer ailments and his health issues are similar to many others in his situation.

33. He also complained about bad legal advice, another regular complaint in these types of matters. If it is any consolation, the settlement he achieved does seem to the tribunal to be in the ball park for this type of injury and his legal fees seem reasonable, but he can always get legal advice from Legal Aid and/or the NSW Law Society and if he has been hard done by he can then take the appropriate action against his lawyers.

34. From the evidence before me it is hard to find severe financial hardship.

35. Ms Negash is paying off her debt now at the rate of $30 per fortnight. The respondent has a commendable history in these types of matters of agreeing to a repayment scheme whereby debtors pay as little as $30 per fortnight off debts, specifically to take into account the fact that people in the applicants’ situation are usually struggling.

36. The tribunal notes that as at this time last year (when the AAT1 made its decisions) Mr Fantaye still had $230,000 in the bank left after paying off his credit cards, lawyers’ fees, loans to friends and other debts. This in itself could have been used to repay the whole debt owed which is $68,678.09, less repayments made to date by Ms Negash.

37. It appears most of that money was used to purchase a half share in a unit in Wylie Park for $401,000 of which slightly more than $200,000 was put up by his female friend who lives there and pays the mortgage, and the rest (he says $180,000 plus stamp duty costs) for his half share by him.

38. He receives no income from but pays no expenses for that unit.

39. The tribunal is not being critical of him not paying off the debt in a lump sum – obviously he wanted to take the matter further to this tribunal which is fair enough. It merely explains why there is now little or no money left. At the end of the day it is all a matter of choice. Hopefully it will turn out to be a sound investment.  

40. It certainly gives him and his family options.

41. The applicant also bought (it seems with the $55,000 he got in 2010 and some other monies he had) a one acre plus rural block of land in Dalesford, Victoria for $120,000 in February 2013. He told the tribunal it is now worth $150,000. It is unencumbered and he pays rates of $700 p.a. plus some unspecified sum for slashing the grass.

42. Both applicants live in public housing and pay no more than 25% of their weekly income in rent.

43. Mr Fantaye also receives $1000 per month from his superannuation fund and will continue to do so until he turns 60 in 6 years’ time (well after the preclusion period is over).

44. Ms Negash in her sworn evidence said she left all the paperwork up to her partner. She had worked as a packer until she had her eldest child and then became, and remains, a full-time mum.

45. She gets carer payment and Family Tax Benefit (FTB) and after initially repaying $90 per fortnight for the debt now pays $30 per fortnight.

46. She owns a 2010 Toyota Corolla, they pay rent of $343 per week but she also gets rent from a niece and her child who reside with them. The niece is a single mother.

47. The applicants send their two children to a Catholic primary school and this costs $4000 a year. They also give their church $150 per month.

48. Ms Negash had some knowledge of the documentation sent by Centrelink, although she mostly left this to Mr Fantaye. She told the tribunal in cross examination that she did recall when his payments went up “in October 2014”.

49. She further stated she had suffered from stress for 12 years, had problems with her left leg which was in pain and other medical problems as well (although not nearly as bad as her partner). She also told the tribunal that her English was not very good.

50. The tribunal would agree that her English was not good and she appeared to have difficulty understanding some of the questions asked and the documents shown to her. Whilst her partner’s English was a lot better, it was clearly his second language and he was not 100% fluent by any means.

51. The tribunal finds that whilst the applicants’ circumstances are difficult in some ways, mainly regarding their health, they cannot be described as special.

52. Even now there is income coming into the house, they own one and a half properties between them, and they have a car.

53. They are in a much better position than most people who come before this tribunal seeking a waiver of a debt to the department.

54. Finally, the tribunal agrees with the respondent that the applicants owe debts that should be neither waived nor written off either in whole or in part.

    CONCLUSION

55. For the reasons given above there is no part or sole error attributable to the respondent. The respondent did everything at all times one would expect of it, including sending the appropriate notices to both applicants clearly telling them what they needed to do and what their obligations were and whilst the tribunal accepts that a lot of all this was foreign to the applicants, it should have been clear on or about 5 December 2013 that it would be a good idea to tell the respondent that Mr Fantaye’s income had suddenly increased.

56. However, the tribunal cannot say that either applicant really appreciated their obligations and perhaps were under some misguided illusion that they had either given the department all they had to, or maybe that Allianz would give the respondent all the documentation needed so any adjustments would happen naturally. Ignorance of the law is no excuse though and nor is (usually) it a special circumstance.

57. One thing is clear, taking the matter as whole, the tribunal finds nothing in this case to encourage it to depart from those wise words of DP Deutsch in Skinner and Secretary, Department of Social Services [2015] AATA 569 at para [48] when he said: “It is important to recognise the need to ensure the integrity of the social security system and the public interest. This means that those recipients who have received monies to which they are not entitled, are generally expected to repay those monies unless the repayment is in the specific circumstances unjust, unreasonable or inappropriate”.

58. In this case, the repayment of the debts owed by each applicant is neither unreasonable, unjust or inappropriate and it could indeed be argued that it would be at least inappropriate, if not unreasonable and unjust to the Australian Taxpayer if this did not occur.

59. Accordingly, the order of this tribunal is that the two decisions of the AAT1 dated 24 October 2017 are affirmed.

I certify that the preceding 59 (fifty-nine) paragraphs are a true copy of the reasons for the decision herein of Bill Stefaniak AM RFD, Senior Member

.......................[sgd].............................................

Associate

Dated: 9 November 2018

Date(s) of hearing:	25 June 2018
Applicant:	In person
Solicitors for the Respondent:	Department of Human Services