O'Hara and Secretary, Department of Social Services (Social services second review)
[2018] AATA 1350
•24 May 2018
O'Hara and Secretary, Department of Social Services (Social services second review) [2018] AATA 1350 (24 May 2018)
Division:GENERAL DIVISION
File Numbers: 2017/5933
Re:Michael O'Hara
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member D K Grigg
Date:24 May 2018
Place:Brisbane
The decision under review is affirmed.
..........................[SGD]..............................................
Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance – overpayment – where applicant spent time overseas – where no administrative error – whether special circumstances – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Dranichnikov v Centrelink [2003] FCAFC 133
Scott v Secretary, Department of Social Security [2000] FCA 1241
Secretary, Department of Social Security v Hales [1997] FCA 1565; (1998) 82 FCR 154
Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
SECONDARY MATERIALS
Family Assistance Guide (2018, Cth)
REASONS FOR DECISION
Member D K Grigg
24 May 2018
BACKGROUND
Since 1998 Mr O’Hara has intermittently been a recipient of the Newstart Allowance.[1]
[1] Exhibit 1, ST Documents, ST1 at p 3, Centrelink records.
In 2002 Mr O’Hara was diagnosed with delusional disorder – grandiose type.[2]
[2] Exhibit 1, T Documents, T14 pages 140 - 207, Applicant’s medical reports from 20 April 2001 to 2 November
2016.
Between 2004 and 2009 Mr O’Hara had several trips overseas.[3] During this time,
Mr O’Hara received numerous Centrelink notices informing him that, as he was receiving Newstart Allowance, he was obliged to notify Centrelink if he left Australia at any time.[4][3] Exhibit 1, T Documents, T16, page 318, Immigration Advised Movements.
[4] See for example: Exhibit 1, T Documents, T15 at pages 217, 233, 269, 282, 293, Newstart
application forms, reporting statements an d supporting documents completed by the applicant from 9 February 2002 to 20 May 2005.
On 22 December 2010, Mr O’Hara made a claim for the Disability Support Pension (“DSP”), but, following a Job Capacity Assessment (“JCA”) his claim was rejected by the Department of Human Services (“Centrelink”) on 20 January 2011.[5]
[5] Exhibit 1, ST Documents, ST4, pages 128-129, Centrelink rejection notice dated 20 January 2011.
The JCA report indicates that the assessor noted that Mr O’Hara suffered from delusional disorder, but found that the condition was only temporary and the only medical evidence available at the time was a medical report by Dr Bagchi, which described the condition as “presumptive” (which would indicate that the condition had not been fully diagnosed during the qualification period – one of the requirements for a DSP).[6]
[6] Exhibit 1, ST Documents, ST3, pages 123-127, JCA report dated 7 January 2011.
The rejection notice sent to Mr O’Hara on 20 January 2011 also provided the following information:
“…if you do not ask for the decision to be reviewed within 13 weeks of being told about it, any change to the decision, or any back payment, might only be able to take effect from the date you ask”.[7]
[7] Exhibit 1, ST Documents, ST4, pages 128-129, Centrelink rejection notice dated 20 January 2011.
Mr O’Hara did not appeal this decision to reject his claim for DSP.[8]
[8] Exhibit 1, T Documents, T8, pages 88 – 89, Decision of Authorised Review Officer and notes dated
26 October 2016.
As a result of Mr O’Hara’s overseas trips, he was notified by Centrelink on 2 December 2011, that:[9]
(a)as he had been overseas between 14 March 2004 and 19 March 2004, he had not been entitled to receive Newstart Allowance from 11 March 2004 and therefore had been overpaid $110 which Centrelink was required to recover;
(b)as he had been overseas between 4 August 2007 and 16 August 2007, he had not been entitled to receive Newstart Allowance from 31 July 2007 and therefore had been overpaid $333.37 which Centrelink was required to recover;
(c)as he had been overseas between 29 October 2007 and 23 November 2007, he had not been entitled to receive Newstart Allowance from 23 October 2007 and therefore had been overpaid $736.80 which Centrelink was required to recover;
(d)as he had been overseas between 18 March 2008 and 21 April 2008, he had not been entitled to receive Newstart Allowance from 11 March 2008 and therefore had been overpaid $1029.79 which Centrelink was required to recover;
(e)as he had been overseas between 15 December 2008 and 27 December 2008, he had not been entitled to receive Newstart Allowance from 16 December 2008 and therefore had been overpaid $439.61 which Centrelink was required to recover;
(f)as he had been overseas between 8 May 2009 and 25 May 2009, he had not been entitled to receive Newstart Allowance from 5 May 2009 and therefore had been overpaid $645.15 which Centrelink was required to recover; and
(g)as he had been overseas between 9 November 2009 and 20 November 2009, he had not been entitled to receive Newstart Allowance from 3 November 2009 and therefore had been overpaid $405.57 which Centrelink was required to recover.
(“the Debts”)
[9] Exhibit 1, T Documents, T5, pages 78 – 84, Centrelink notice dated 2 December 2011; the debt
explanation and information used by Centrelink to calculate the debt is at T4, pages 67 – 77.
On 11 April 2013, Mr O’Hara lodged another claim for DSP which was granted from 12 April 2013.[10] Centrelink’s record was subsequently amended to reflect Mr O’Hara’s revised date of birth and therefore the Age Pension, instead of the DSP, was granted from 12 April 2013.[11]
[10] Exhibit 1, T Documents, T19, page 492, Centrelink records.
[11] Exhibit 1, T Documents, T16, page 309, Centrelink records.
Mr O’Hara wrote to Centrelink on 14 September 2016 and advised that:[12]
(a)in 2001 he was diagnosed by Dr Walton, Consultant Psychiatrist, with Delusional Disorder – Grandiose Type;
(b)he was unemployable in Australia and overseas because of his criminal non-custodial conviction and had been advised to apply for the DSP;
(c)Centrelink erroneously directed him to apply for Newstart Allowance, despite the fact that he told Centrelink officers repeatedly that he would not be able to work again because of his mental illness and criminal record;
(d)he had been placed on a Newstart Allowance, during the course of which, he had several overseas trips to establish his true identity;
(e)when he returned to Australia, Centrelink informed him that money would be taken from his regular fortnightly Age Pension payment until all overpaid Newstart Allowance money was repaid in full;
(f)in 2014, he was diagnosed as suffering from a further mental illness known as Focal Dyscognitive Seizure, which is a chronic mental illness and a form of epilepsy;
(g)Professor McConnell, Head of Neuroscience at St Vincent’s Hospital Brisbane, directs that he should be placed on a permanent DSP; and
(h)he seeks reimbursement of all monies already deducted for his time overseas, when he should have been on a DSP not Newstart Allowance.
[12] Exhibit 1, T Documents, T6 – T7, pages 85 – 86, Letters from Mr O'Hara to Centrelink dated 14
September 2016 and 3 October 2016.
Claims History
In October 2016 an Authorised Review Officer (“ARO”) affirmed Centrelink’s decision to raise the Debts on the grounds that Newstart Allowance was not payable to Mr O’Hara whilst overseas, as he was travelling in order to establish his identity. The ARO concluded that he had been overpaid in the periods he was outside Australia, and found that there was no basis to waive the debt.[13]
[13] Exhibit 1, T Documents, T8, pages 87 – 93, Decision of Authorised Review Officer and notes dated
26 October 2016.
Mr O’Hara sought a further review with the Social Services and Child Support Division of this Tribunal (“SSCSD”) on 8 April 2017 and submitted, in addition to the arguments outlined in paragraph 10 above, medical evidence of his mental health conditions and stated that he should have been placed on the DSP in 2002. Mr O’Hara further argued that because Centrelink failed to act, it was guilty of negligence.[14]
[14] Exhibit 1, T Documents, T9, pages 94 – 117, Application for first review of decision enclosing
submissions and exhibits dated 8 April 2017.
The SSCSD rejected Mr O’Hara’s claim and affirmed the ARO’s decision on 29 August 2017.[15]
[15] Exhibit 1, T Documents, T2, pages 6 – 15, SSCSD’s Decision and Reasons for Decision dated 29
August 2017.
On 5 October 2017, Mr O’Hara lodged an application for review of the SSCSD’s decision to this Tribunal.[16]
[16] Exhibit 1, T Documents, T1, pages 1 – 5, Application for Review dated 5 October 2017.
RELEVANT LEGISLATION
Pursuant to section 37 of the Social Security (Administration) Act 1999 (Cth) (“Administration Act”), the Secretary must determine whether an applicant is eligible for a social security benefit, such as the DSP.
Pursuant to section 11 of the Administration Act, a person who wants to be granted a social security payment must make a claim for payment. Section 16 of the Administration Act sets out the manner in which a claim must be made and essentially provides that the claim must be written and in accordance with a form approved by the Secretary and lodged by being delivered at a place approved by the Secretary. A claim may be deemed to have been made in limited circumstances and these are set out in section 12 of the Administration Act. Section 12 provides:
(1) The Secretary may determine that, for the purposes of the social security law, a person is taken to have made a claim for an income support payment (the new payment ), if:
(a) the person became qualified for the new payment while receiving another income support payment; or
(b) the person became qualified for the new payment immediately after ceasing to receive another income support payment.
Section 15 of the Administration Act provides relevantly:
(1) For the purposes of the social security law, if:
(a) a person makes an incorrect claim; and
(b)the person subsequently makes a claim for a social security payment for which the person is qualified; and
(c)the Secretary is satisfied that it is reasonable that this subsection be applied;
the person is taken to have made a claim for that social security payment on the day on which he or she made the incorrect claim.
(2)For the purposes of this section, a claim made by a person is an incorrect claim if:
(a) the claim is for a social security payment…; and
(b)when the claim was made, the person was not qualified for the payment claimed but was qualified for another social security payment...
(emphasis added)
Therefore, if a person makes an “incorrect claim” and subsequently makes a claim for a social security payment for which they are qualified, a person may be taken to have made a claim for that social security payment on the day on which they made the incorrect claim. However, to be an “incorrect claim” the person must not have been qualified for the original claim made.
Pursuant to section 107 of the Administration Act, where a determination has been made to reject an application, and the person has been given notice of the rejection, the applicant has 13 weeks to appeal the decision. If an appeal is lodged more than 13 weeks after the date of the determination, and the result of the appeal is that the claim be granted, that latter decision takes effect from the date the appeal was made.[17]
[17] Section 107(1) and (3), Administration Act.
In relation to Newstart Allowance payments, section 1217 of the Social Security Act 1991 (“Act”) (as it was between 2004 and 2009) sets out a person’s maximum portability period in which their social security payment will be paid. The portability of social security payments table in section 1217 stipulates that if a person who is a recipient of the Newstart Allowance is temporarily absent for reasons other than to seek eligible medical treatment, to attend to an acute family crisis or for a humanitarian purpose, payment of their Newstart Allowance will be suspended.[18] Additionally, during relevant periods, a person was not allowed a temporary absence if they were subject to a Job Search Agreement.[19]
[18] Section 1217 of the Act.
[19] The number of weeks permitted for temporary absences has changed a lot between 2004 and 2009
If a person exceeds their maximum portability period allocation, their social security payments are not payable for the period of absence as occurs after the end of the person's portability period for the payment.[20]
[20] Section 1215 of the Act.
Pursuant to section 1158 of the Act, DSP and Newstart Allowance is not payable to a person in respect of a day on which the person is in gaol or undergoing psychiatric confinement because the person has been charged with an offence.
ISSUES FOR DETERMINATION
The issues for determination are whether or not:
(a)Mr O’Hara can be paid DSP prior to 12 April 2013;
(b)Mr O’Hara has been overpaid his entitlement to Newstart Allowance, resulting in the Debts; and, if yes
(c)the Debts are recoverable; and
(d)the Debts should be waived due to administrative error pursuant to section 1237A of the Act; or
(e)“special circumstances” exist, such that the Debts should be waived pursuant to section 1237AAD of the Act.
IS MR O’HARA ENTITLED TO DSP PRIOR TO 12 APRIL 2013?
The Secretary submits that there is no evidence in the Centrelink records that Mr O’Hara claimed or enquired about the DSP before his DSP application dated 22 December 2010.
The claim for DSP made by Mr O’Hara on 22 December 2010 was rejected, a notice was sent to Mr O’Hara and Mr O’Hara did not request a review. A new claim for DSP was lodged on 11 April 2013 and granted from 12 April 2013.[21]
[21] Exhibit 1, T Documents, T19, page 492, OCR archive notes for the period 12 March 2004 to 1 July
2013.
As no request for a review of the rejection was ever lodged by Mr O’Hara, there is no basis upon which he can be paid DSP any earlier than 12 April 2013. However, because Mr O’Hara commenced receiving the age pension from 12 April 2013, DSP is not payable from that date.
Mr O’Hara contends that he attended Centrelink with medical reports on three occasions (24 June 2002, 8 July 2002 and 4 November 2002) demonstrating his mental health impairment and that Centrelink should have placed him on DSP at the time, but instead directed him to apply for Newstart.[22] The Tribunal notes the Full Federal Court decision in Scott v Secretary, Department of Social Security[2000] FCA 1241 (“Scott”) where the appellants claimed that Centrelink had misled them as to their "most appropriate payments”[23]. Beaumont and French JJ held: [24]
“…the Act is not to be interpreted as indicating an intention to confer a private right of action for a breach of any of its provisions now in question, given especially the existence in the legislation of particular mechanisms for the review of decisions made within the Department… [And] there was no general common law duty of care to advise the appellants of benefits that might potentially be available under the Act”.
[22] Exhibit 3, Statement of Applicant and annexures provided at hearing.
[23] At [1].
[24] [2000] FCA 1241, at [19]-[20].
Even if Mr O’Hara should have been placed on DSP at that time, the question is whether the decision to grant him Newstart Allowance on 8 July 2002 can be substituted with a decision that he should have been placed on DSP.
The Centrelink records indicate that Mr O’Hara claimed Newstart on 8 July 2002, which was accepted.[25] Section 15 of the Administration Act, referred to earlier, which allows claims to be deemed to have been made on the day that an incorrect claim was made, does not apply here because Mr O’Hara’s Newstart Allowance claim was accepted.[26] That is, his claim for Newstart Allowance is not an “incorrect claim” as defined in section 15(2) of the Administration Act. Further, there is no evidence of any correct claim form being used for a DSP claim any earlier than 22 December 2010.
[25] Exhibit 1, T-documents, T15, pages 228-240, Newstart application forms, reporting statements and
supporting documents completed by the applicant from 9 February 2002 to 20 May 2005.
[26] Exhibit 1, Supplementary T Documents, ST2, page 104, Centrelink records.
The only other way in which payments can be “backdated” is pursuant to section 107 of the Administration Act. That section requires that a determination has been made to reject a claim and then subsequently, for the applicant to have applied for a review of that decision. The first determination to reject a claim made by Mr O’Hara for DSP was on 20 January 2011. However, no request for a review of that decision was ever made by
Mr O’Hara.The complaint now made by Mr O’Hara was made after he was subsequently granted DSP on 12 April 2013. Therefore, there is no means by which DSP payments could be backdated any earlier, even if he would or should have qualified for DSP at an earlier time.
The Secretary also contends that, despite medical evidence submitted by Mr O’Hara regarding his mental health, he was not qualified for DSP in 2002 because:[27]
(a)Mr O’Hara was operating a company in October 2001;
(b)Mr O’Hara lodged fortnightly forms for the period 6 October 2001 to 22 February 2002, which confirmed he was not unfit for work or study or sick or injured during that period; and
(c)there is no evidence to indicate that Mr O’Hara did not qualify for Newstart Allowance at or around the time he applied for Newstart Allowance.
[27] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 28 February 2018, paras 26-28.
The Secretary relies on Centrelink file notes which indicate that Dr Walton's reports dated 30 May 2001 and 30 August 2002 were not provided to Centrelink. Mr O’Hara provided the Tribunal with copies of those medical reports, which indicated that they were stamped by a Centrelink officer on the dates he says he attended in person at Centrelink.[28] Mr O’Hara also provided copies of diary entries he says he made between 24 June 2002 and 6 November 2002, to support his claim that he attended Centrelink to claim DSP.[29] The Secretary contends that even if it were accepted that the reports were provided on the dates indicated by the stamps, this evidence is insufficient to conclude Mr O’Hara satisfied the requirements of section 94(1) of the Act, given there was evidence he had worked, studied and, despite periods of unemployment, declared himself fit for work on fortnightly forms.
[28] Exhibit 3, Statement of the Applicant and annexures provided at hearing, Attachments A-C, Medical
reports of Dr Walton stamped at Centrelink Biggera Waters on 24 June 2002, at Centrelink Southport on 8 July 2002 and at Cenrelink Runaway Bay on 4 November 2002.
[29] Exhibit 3, Statement of the Applicant and annexures provided at hearing Attachments D-F,
Photocopies of diary entries.
The Tribunal agrees that it is difficult to ascertain whether Mr O’Hara would have qualified for DSP in 2002, but that, as explained to Mr O’Hara during the hearing, even if he did, the issue becomes whether the Act permits a backdating or acceptance of a DSP claim at that time. For the reasons already outlined, the Act does not permit a backdating as requested by Mr O’Hara.
WAS MR O’HARA OVERPAID NEWSTART ALLOWANCE PAYMENTS?
If a person is not entitled to the social security benefit they have obtained, 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.[30]
[30] Section 1223(1) of the Act.
It is not in dispute that Mr O’Hara travelled overseas on the dates set out on the Debt notice.[31]
[31] Exhibit 1, T Documents, T5, pages 78 – 84, Centrelink notice dated 2 December 2011.
In relation to Newstart Allowance payments, section 1217 of the Act (as it was in 2004) sets out that for a person in receipt of Newstart Allowance, the allowable absences are only for a temporary absence for any of the following purposes - to seek eligible medical treatment, to attend to an acute family crisis or for a humanitarian purpose.
If a person is absent for other purposes, their social security payments are not payable for the period of absence.[32]
[32] Section 1215 of the Act.
Mr O’Hara told the Tribunal he was temporarily absent from Australia to attend to an acute family crisis, namely the illness and subsequent passing of his brother. There is no corroborating evidence that Mr O’Hara was overseas on those occasions for this purpose. Mr O’Hara told the ARO that the reason for his overseas trips was to establish his true identity and he made no mention of his brother.
Mr O’Hara certainly did not inform Centrelink of his intended absences from Australia and the reasons he needed to be absent. As a result he was overpaid his Newstart Allowance and the overpaid amounts are debts due to the Commonwealth.
IS THE NEWSTART DEBT RECOVERABLE?
Even if a debt is owed, the Secretary may write off a debt in certain circumstances set out in section 1236 of the Act which provides:
1236Secretary may write off debt
(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.
(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…
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
The Secretary must also 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.[33]
[33] Section 1237A of the Act.
Further, the Secretary may exercise its discretion to waive the right to recover all or part of the debt if satisfied that:[34]
(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.
SHOULD THE NEWSTART DEBT BE WRITTEN OFF (PURSUANT TO S 1236)?
[34] Section 1237AAD of the Act.
Is the debt irrecoverable at law?
Section 1236(1B) sets out when a debt is taken to be irrecoverable at law:
(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
Mr O’Hara’s debt is currently being repaid through withholdings of $15/fortnight from his Age Pension payments.[35] None of the circumstances set out in section 1236(1B) of the Act exist in this case and therefore, the Tribunal finds that the debt is not irrecoverable at law.
[35] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 28 February 2018, para 49.
Further, sections 123(1) and 123(3) of the Administration Act state as follows:
123(1) A determination that:
(a) a person’s claim for social security payment is granted; or
(b) the social security payment is payable to a person;
continues in effect until:(ba) the payment is cancelled by section 38M of the 1991 Act; or
(c) a further determination in relation to the payment under section 80, 81 or 82, subsection 95C(1) or section 124H, 124M or 124NF takes effect; or
(d) the payment ceases to be payable under section 90, 91, 93, 94 or 95; or
(e) the end of the day immediately before the day on which the person dies.(3) A determination of the rate of a social security payment continues in effect until:
(a) a further determination in relation to the payment under section 78, 79, 81A or 85A takes effect; or
(b) the payment becomes payable at a lower rate under section 98, 99 or 100.
Pursuant to section 100(1) of the Administration Act:
100 Automatic rate reduction—recipient not complying with subsection 68(2) notice
(1) Subject to subsection (2), if:
(a) a person who is receiving a social security payment is given a notice under subsection 68(2); and
(b) the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(c) the event or change of circumstances occurs; and
(d) the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(e) because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.
Mr O’Hara was under an obligation to advise Centrelink of his absences and he did not do so. Because he failed to comply with his obligations, he ceased to qualify to receive a social security payment during those periods of absence.
Because Mr O’Hara was not entitled to the social security benefit he received during his absences from Australia, the amount of the payments he received during those periods are debts due to the Commonwealth and arose when he obtained the benefit of the payment.[36]
[36] Section 1223(1) of the Act.
Does Mr O’Hara have the capacity to repay the debt?
Section 1236(1C) of the Act provides that if a debt is recoverable by means of deductions from the debtor’s social security payment, 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.
Severe financial hardship needs to involve severe or extreme financial suffering and that a person’s entire financial position would need to be materially less than the current rate of their pension.[37]
[37] Re Lumsden and Secretary, Department of Social Security [1986] AATA 228; Stubbs and Secretary,
Department of Family and Community Services [2003] AATA 729; L and Department of Social Security [1995] AATA 159; Secretary, Department of Family and Community Services and Birgden [2003] AATA 67.
In May 2017 Mr O’Hara provided a statement of financial circumstances which indicated that:[38]
(a)he is currently an aged pensioner and does not have a partner;
(b)he receives $852.70 a fortnight from Centrelink;
(c)his fortnightly household expenditure and transport expenses total approximately $384; and
(d)he owns a car valued at $3000.
[38] Exhibit 1, T Documents, T 11, pages 120 – 124, statement of financial circumstances dated 24 May
2017.
Mr O’Hara has been paying approximately $15/fortnight towards repaying the Debts out of his Age Pension.
The Secretary also referred me to the Family Assistance Guide (“the Guide”) which is used by Centrelink in interpreting and administering the Act. The Tribunal is not bound to apply the Guide, but it may, and it should apply it in exercising its discretion, unless it is unlawful or “tends to produce an unjust decision”.[39]
[39] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645.
The Guide sets out in section 1.1.S.45 that there must be clear evidence that severe financial hardship would result after reasonable expenses are deducted from income.
Based on the Guide, Mr O’Hara does not suffer from severe financial hardship.
Is it cost-effective for the Commonwealth to recover the debt?
There is no indication from the Secretary that it is not cost-effective for the Commonwealth to recover the debt.
Conclusion
There is no basis for the debt to be written off under section 1236 of the Act.
DID MR O’HARA RECEIVE THE OVERPAYMENT IN GOOD FAITH AND WAS THE DEBT, OR A PROPORTION OF THE DEBT, ATTRIBUTABLE SOLELY TO AN ADMINISTRATIVE ERROR? (S 1237A)
Was the debt attributable solely to an administrative error?
If administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt.[40] The debt “must be "attributable solely" to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes”.[41]
[40] Section 1237A of the Act.
[41] Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76, per Wilcox J (at
[41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190.
The Debts arose due to a failure to comply with the relevant notification requirements. As a result, the debt owed by Mr O’Hara was not ‘attributable solely to an administrative error made by the Commonwealth’[42] and cannot be waived for this reason.[43]
[42] Section 1237A(1) of the Act.
[43] See Wecker v Secretary, Department of Education Science and Training[2008] FCAFC 108, at
ARE THERE SPECIAL CIRCUMSTANCES WHICH MAKE IT DESIRABLE TO WAIVE THE DEBTS? (S 1237AAD)
There are a few elements to be satisfied under section 1237AAD of the Act before a debt may be waived. First, the debt must not have arisen from the debtor; that is Mr O’Hara must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act. Second, there must be “special circumstances” (other than financial hardship alone) that make it desirable to waive. Third, it must be more appropriate to waive than to write off the debt or part of the debt.
The Act does not define what constitutes “special circumstances”.
However, decisions of the Federal Court make it clear that “special” denotes something different from the usual or ordinary.[44]
[44] Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per
Kiefel J, Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639, at [51], Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, at [37].
French J (as he then was) said in in Secretary, Department of Social Security v Hales[1997] FCA 1565; (1998) 82 FCR 154, at 162:
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion. ... 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. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. 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.
The Administrative Appeals Tribunal has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at [3] (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[45]
[45] See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at [19]; Papps
and Secretary, Department of Family and Community Services [2005] AATA 660, at [37]
Mr O’Hara contends that Centrelink should have known in 2002 that he was seriously mentally ill and granted him DSP not Newstart Allowance. He told the Tribunal that Centrelink officers had an obligation to have requested more information when presented with the reports of Dr Walton and they failed to do so. As referred to earlier, in paragraph 27, Scott makes it clear there was no duty of care owed to Mr O’Hara in this regard.
The Secretary submitted that: [46]
“…the Tribunal must have regard to the fact that the recovery provisions have been included in the social security legislation to ensure that money which had been paid to people who were not entitled to receive that money can be recovered. That purpose should be considered along with the observation that taxpayers are entitled to expect that debts due to the Commonwealth will be recovered. Therefore, the discretion to waive the right to recover a debt should only be used in cases which are markedly different from the usual run of cases. The Secretary submits that, when the circumstances of this case are considered in their entirety, including the circumstances giving rise to the overpayment (Dranicknikov v Centrelink (2003) 75 ALD 134), it cannot be said that the circumstances in this case warrant the exercise of the discretion in section 1237AAD of the Act”.
[46] Exhibit 2, Secretary’s Statement of Facts and Contentions dated 28 February 2018, paras 58-59.
The medical and other evidence available to the Tribunal of Mr O’Hara’s situation indicates that:
·in 2001 and 2002 Mr O’Hara was seen by Dr Walton, Psychiatrist, after being charged with attempting to obtain property by deception in relation to a hoax[47];in 2011 Mr O’Hara was charged with 72 counts of fraud - dishonest application of property valued at $30,000 or more, possession of weapons and possession of tainted property.[48]
·Dr Barnes reported in 2012 that Mr O’Hara had been suffering from delusional disorder for approximately 20 years[49];
·Mr O’Hara was in custody between 4 March 2010 and 12 April 2013 and attended psychiatric appointments with Prison Mental Health Services.[50] Dr Barnes reported in May 2012 that Mr O’Hara appeared to be acutely aware of the damage his behaviour had caused to himself and those he loved and is also acutely aware of the short amount of time he has left due to his age. Dr Barnes also reported that Mr O’Hara was aware of his profound losses economically and socially and the need to try to rebuild in the time he has left;[51]
·Dr Mann, Forensic Psychiatrist, reported in 2012 that Mr O’Hara’s “longstanding delusional beliefs did not appear to affect his decision making processes in prison”[52] and that he did not believe Mr O’Hara “was deprived of the capacity to know that he ought not to do the act or make the omission in relation to any of the alleged offences. He was aware that what he did was against the law and took steps to avoid being discovered”;[53]
·Dr Watson, Consultant Psychiatrist, reported in 2002 that in his opinion Mr O’Hara “fully appreciates the nature of both legal and moral wrongfulness and…does not have a mental impairment defence available to him”[54]; and
·in 2011 Dr Barnes concluded that at the time he committed his fraud offences there was no evidence that he was deprived of the relevant capacities at the time” and that Mr O’Hara stated that “he knew what he was doing was wrong and that it was fraudulent”.[55]
[47] Exhibit 3, Statement of Applicant and annexures provided at hearing, see Annexure A, Report of Dr
Walton, dated 30 May 2001.
[48] Exhibit 1, T Documents T 14, page 152. Report of Dr Barnes, dated 22 June 2011; page 163, Report
Dr Mann, dated 1 March 2012.
[49] Exhibit 1, T Documents, T 14, page 143, Confidential Medical Report from treating doctor, Dr Barnes,
dated 2 February 2012.
[50] Exhibit 1, T Documents, T 14, pages 152 – 155, Report of Dr Barnes dated 22 June 2011.
[51] Exhibit 1, T Documents, T 14, pages 150 – 151, Report of Dr Barnes dated 31 May 2012.
[52] Exhibit 1, T Documents, T 14, page 169, Report of Dr Mann dated 1 March 2012.
[53] Exhibit 1, T Documents, T 14, page 171, Report of Dr Mann dated 1 March 2012.
[54] Exhibit 1, T Documents, T 14, page 201, Report of Dr Watson dated 30 August 2002.
[55] Exhibit 1, T Documents, T 14, pages 154, Report of Dr Barnes dated 22 June 2011.
The Full Federal Court pointed out in Dranichnikov v Centrelink [2003] FCAFC 133 that whether circumstances are special depends on how the error (or debt) came about; that is, what gave rise to the overpayment. Hill J, with Kiefel and Hely JJ concurring, provided that “Whether those circumstances were or were not special will obviously be a matter for the decision maker when the factual circumstances have been ascertained”.[56]
[56] Dranichnikov v Centrelink [2003] FCAFC 133, at [67]. See also [2003] FCAFC 133, at [79]
While the Tribunal acknowledges that Mr O’Hara has a longstanding mental illness for which there is no hope of recovery, there is no indication in the medical evidence to suggest that his illness is what gave rise to or contributed to the overpayment. The evidence indicates that Mr O’Hara did comprehend his actions. During the periods in which he was overpaid, Mr O’Hara was engaging in the fraudulent activity which resulted in his becoming incarcerated in 2010.
Given the above evidence, it cannot be said that Mr O’Hara is not responsible for his actions. There is no evidence that his mental illness explains his non-compliance with his reporting obligations.[57] The Tribunal is not satisfied that Mr O’Hara’s circumstances surrounding his mental health are “special circumstances”” for the purpose of section 1237AAD of the Act.
[57] Secretary, Department of Social Security v Hales [1997] FCA 1565; (1998) 82 FCR 154.
For the above reasons, the Tribunal finds special circumstances do not exist within the meaning of section 1237AAD.
DECISION
The decision under review is affirmed.
I certify that the preceding 73 (seventy-three) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg
..............................[SGD]..........................................
Associate
Dated: 24 May 2018
Date of hearing: 28 March 2018 Applicant: In person Advocate for the Respondent: Jasmine Forsyth Solicitors for the Respondent: Department of Human Services
(the periods during which Mr O’Hara was absent):
Travel Dates Centrelink Payment Periods Applicable s 1217(5) Item 15 Amendment history 14 Mar 2004 – 19 Mar 2004 11 March – 24 March 2004 SSA in force from 1/1/04 – 24/3/04 Item 15 allows temporary absence for 26 weeks for all applicants for usual reasons Item 15A allows any temporary absence for 26 weeks if the Applicant (of at least 50 years of age) is not subject to Job Search Agreement 4 Aug 2007- 16 Aug 2007 31 July – 27 August 2007 SSA in force from 1/7/07 – 17/08/07 and SSA in force 18/08/07 – 19/09/07
Item 15 of both iterations of the Act allow a 13 week absence for all persons for usual reasons Item 15A no longer in force 29 Oct 2007 – 23 Nov 2007 23 Oct – 3 Dec 2007 SSA in force 1/10/07 – 7/12/07
As above – Item 15 allows a 13 week temporary absence for all persons for usual reasons 18 Mar 2008 – 21 April 2008 11 March – 21 April 2008 SSA in force from 1/1/08 – 19/03/08 and SSA in force from 20/03/08 – 25/05/08
Item 15 of both iterations of the Act allows a 13 week absence for all persons on usual grounds 15 Dec 2008 – 27 Dec 2008 16 Dec – 29 Dec 2008 SSA in force from 1/12/08 – 31/12/08 – up to Act no. 131 of 2008
SSA in force from 1/12/08 – 31/12/08 – up to Act no. 144 of 2008Item 15 allows a 13 week absence for all persons on usual grounds
8 May 2009 – 25 May 2009 5 May – 1 June 2009 SSA in force from 1/4/09 – 3/06/09
Item 15 allows a 13 week absence for all persons on usual grounds 9 Nov 2009 – 20 Nov 2009 3 Nov – 30 Nov 2009 SSA in force 21/9/09 – 3/12/09 Item 15 allows 13 week absence for all persons on usual grounds **NB: usual reasons = temporary absence for the purpose of (a) seeking eligible medical treatment; (b) to attend to an acute family crisis or (c) for a humanitarian purpose
[102].
Key Legal Topics
Areas of Law
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Appeal
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Judicial Review
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Procedural Fairness
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Statutory Construction
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