O'Meley and Secretary, Department of Family and Community Services
[2004] AATA 660
•25 June 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 660
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2003/1758
GENERAL ADMINISTRATIVE DIVISION ) Re SYDNEY O'MELEY Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal P.J. Lindsay, Senior Member Date25 June 2004
PlaceSydney
Decision The Tribunal extends the time for lodgment of the application for review to 5 November 2003.
..............................................
Senior Member
CATCHWORDS
Social Security – recovery of debt through garnishee action – application for extension of time to apply to AAT for review – application granted
Administrative Appeals Tribunal Act 1975 ss.3(4), 29
Social Security Act 1947 s.246
Social Security Act 1991 ss.1230C, 1233, 1234, 1234A, 1237A, 1237AAD,
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
Zizza v Commissioner of Taxation 99 ATC 4711
Brown v Commissioner of Taxation 99 ATC 4516
Commissioner of Taxation v Brown 99 ATC 4852
Comcare and A’Hearn (1993) 119 ALR 85
Walker v Secretary, Department of Social Security (1997) 147 ALR 263
Kuljic v Secretary, Department of Social Security (1994) 33 ALD 121
REASONS FOR DECISION
P.J.Lindsay, Senior Member
1. Sydney O’Meley would like the Administrative Appeals Tribunal to review a decision made by the Social Security Appeals Tribunal, but he lodged his application late. He is now asking the AAT for an extension of time to lodge the application. The Secretary to the Deparment of Family and Community Services is opposed to additional time being granted. Centrelink, who act as the Secretary’s representative in this matter, submit that it would be futile to grant the extension because Mr O’Meley’s substantive case is without merit.
2. At the hearing, Mr O’Meley informed me that he was dissatisfied with two aspects of the SSAT’s decision. First, he says he did not owe the full amount of the debt that Centrelink recovered through garnishee action. In that respect he referred to errors he thought Centrelink had made in taking into account income that his wife had earned at relevant times and his own income from employment. Secondly, he claims that Centrelink did not comply with a 28 day period of notice to inform him that a garnishee notice was to be issued.
3. The SSAT’s decision was dated 10 September 2003 but notes its ‘date of despatch’ was 22 September 2003. Mr O’Meley’s application to the tribunal was dated 28 October 2003 and received on 5 November 2003. It appeared, therefore, that he had not lodged the application within 28 days after receiving the SSAT’s decision and statement of reasons. Mr O’Meley wrote a letter to the tribunal on 17 November 2003 to explain the apparent delay in lodging his application. He stated that he received the SSAT’s decision on 13 October 2003.
issue
4. Should the tribunal exercise the discretion given to it by s.29(7) Administrative Appeals Tribunal Act 1975 (the Act) and extend the time for Mr O’Meley to make his application for a review of a decision made by the SSAT.
applicable legislation
5. Under s.29(7) of the Act, the tribunal has discretion for making an application for a review of a decision: ss.29(7) and (8) provide:
(7) The Tribunal may, upon application in writing by a person, extend the time for the making by that person of an application to the Tribunal for a review of a decision (including a decision made before the commencement of this section).
(8)The time for making an application to the Tribunal for a review of a decision may be extended under subsection (7) although that time has expired.
6. Where the Social Security Act 1947 (the 1947 Act) expressly provided that an amount was a debt due to the Commonwealth, s.1222A of the Social Security Act 1991 (the 1991 Act) provides that the amount is considered also to be a debt due to the Commonwealth under the 1991 Act. Under s. 1230C of the 1991 Act, where a debt is due to the Commonwealth under the 1991 Act it may be recovered by a number of alternative methods, including garnishee notice. Section 1230C relevantly reads:
Methods of recovery of debt
1230C(1) Subject to subsection (2), a debt due to the Commonwealth under this Act is recoverable by the Commonwealth by means of one or more of the following methods:(a) if the person who owes the debt is receiving a social security payment— deductions from that person's social security payment;
(b) if, in respect of the debt, section 1234A applies to another person who is receiving a social security payment—deductions from that other person's social security payment;
(c) repayment by instalments under an arrangement entered into under section 1234;
(d) legal proceedings;
(e) garnishee notice.
1230C(2) Subject to subsection (3), a debt due to the Commonwealth under this Act is recoverable by means of a method mentioned in paragraph (1)(d) or (e) only if the Commonwealth:
(a) has first sought to recover the debt by means of a method mentioned in paragraph (1)(a), (b) or (c); and
(b) can establish that the person who owes the debt:
(i) has failed to enter into a reasonable arrangement to repay the debt; or
(ii) after having entered into such an arrangement, has failed to make a particular payment in accordance with the arrangement.
1230C(3) If the Secretary determines that the recovery of the debt by means of a method mentioned in paragraph (1)(a), (b) or (c) is not appropriate having regard to the circumstances of the case, paragraph (2)(a) does not apply in respect of the recovery of the debt.
7. Chapter 5 of the 1991 Act is about ‘Overpayments and debt recovery’. Section 1233 of the 1991 Act is in that chapter at Part 5.3 ‘Methods of recovery’ and deals with garnishee notices.
Garnishee notice
1233(1) If a debt is recoverable from a person (in this section called the debtor) by the Commonwealth under section 1227A or 1230C of this Act, under the 1947 Act or under the Social Security (Fares Allowance) Rules 1998, the Secretary may by written notice given to another person:
(a) by whom any money is due or accruing, or may become due, to the debtor; or …
require the person to whom the notice is given to pay the Commonwealth:
(e) an amount specified in the notice, not exceeding the amount of the debt or the amount of the money referred to in the preceding paragraph that is applicable; or …
1233(4) If the Secretary gives a notice to a person under subsection (1), the Secretary must give a copy of the notice to the debtor.
There is no provision for the debtor to be notified before the garnishee notice is issued. But s.1234, also in Part 5.3 of the 1991 Act, provides:
Arrangement for payment of debt
1234(1) The Secretary may, on behalf of the Commonwealth, enter into an arrangement with a person under which the person is to pay a debt, owed by the person to the Commonwealth, or the outstanding amount of such a debt, in a way set out in the arrangement.
1234(2) An arrangement entered into under subsection (1) has effect, or is taken to have had effect, on and after the day specified in the arrangement as the day on which the arrangement commences (whether that day is the day on which the arrangement is entered into or an earlier or later day).
1234(3) If an arrangement entered into under subsection (1) does not specify a day as mentioned in subsection (2), it has effect on and after the day on which it is entered into.
1234(4) The Secretary may terminate or alter an arrangement entered into under subsection (1):
(a) at the debtor's request; or
(b) after giving 28 days' notice to the debtor of the proposed termination or alteration; or
(c) without notice, if the Secretary is satisfied that the person has failed to disclose material information about his or her true capacity to repay the debt.
1234(5) In subsection (1):
debt means:
(a) a debt recoverable by the Commonwealth under Part 5.2; or
(b) a debt under the 1947 Act.
8. Other relevant provisions in the 1991 Act include:
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.
Waiver in special circumstances
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 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.
Note: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
background
9. This summary is based on the material in the SSAT’s decision of 10 September 2003. Mr O’Meley’s disagreement with Centrelink goes back to 1989. The Department of Social Security claimed that he was overpaid the unemployment benefit from 31 October 1986 to 21 April 1989 because he did not tell the Department that he and his wife had been working. He disputed the amount that the Department said he earnt. Mr O’Meley made a statement in May 1989 in which he admitted not disclosing income while being paid unemployment benefits, also not disclosing some income that his wife had received and by way of explanation of these actions, referred to his need for money to support his alcoholism. Eventually Mr O’Meley and the Department agreed that he would repay the overpaid unemployment benefit by fortnightly instalments. The Department raised a debt of $14,268.96 on 28 August 1989 for the overpaid unemployment benefits.
10. Centrelink became aware during 2002 that Mr O’Meley was to be paid a lump sum in compensation. On 26 July 2002 Centrelink called him to find out whether he would commit to paying the debt in full from his settlement but he would not make that commitment (Attachment B to the respondent’s statement of facts and contentions filed herein). Centrelink told him that the agreement to accept repayment of the debt by instalments of $10 a fortnight was being cancelled as they noted that he would have the capacity to repay the debt in full on receiving the compensation sum. By letter dated 26 July 2002, Centrelink informed Mr O’Meley that “I wish to confirm that I have cancelled your agreement to repay at the rate of $10.00 per fortnight as we have been advised that your lump sum compensation settlement will be finalized soon. … I note our records indicate that in August 2001, you made an undertaking to repay the amount owing upon receipt of your compensation settlement.” He was also told by Centrelink in a separate letter dated 26 July 2002 if he could not repay the debt, then amounting to $13,228.41, within fourteen days Centrelink may take action including by way of garnishee action against his bank account. (Copies of the letters were provided to the tribunal by Centrelink prior to the hearing). There was no reference in the letter to notifying him in advance of taking garnishee action.
11. Ultimately through garnishee notice to his building society on 22 August 2002, Centrelink recovered $13,228.41, of which $11,453.66 related to the unemployment benefits debt and the balance related to overpaid disability support pension.
12. Mr O’Meley informed the SSAT that he could not read or write and did not understand the statement he gave the Department in May 1989. However, the SSAT accepted the Department’s calculation of Mr O’Meley’s debt arising from non disclosure of income from October 1986 to April 1989, that it was a ‘debt’ as defined by s.246 of the 1947 Act and is recoverable under the 1991 Act. The SSAT found the debt could not be waived on account of administrative error by Centrelink, nor could it be waived if the applicant had special circumstances, because Mr O’Meley had made a false representation or omission and did not comply with the legislation. Further, the SSAT would not in any event have found special circumstances on the facts. Finally, the SSAT found that the respondent had lawfully exercised its power under s.1233 of the 1991 Act to issue a garnishee notice in the circumstances of Mr O’Meley’s case.
consideration
13. Mr O’Meley told me that although he disputed the amount of the debt, he agreed that he did owe the Department some money. In relation to his wife’s earnings as a cleaner, he told me that the Department’s information was wrong because his wife had not worked for as many businesses as the Department thought. When everything was considered, however, Mr O’Meley agreed that he owed a debt to the Department but that Centrelink has taken too much from him through its garnishee action. In addition, he was concerned that the garnishee notice had not been issued within the required period. It was submitted by Mr A Zhang, representing the respondent, that a reasonable explanation for the delay in commencing his appeal to the tribunal had not been provided and Mr O’Meley’s case had little prospects of success and thus an extension of time should not be granted.
14. In general, Mr O’Meley’s evidence was not at all clear and he frequently failed to address the questions asked in cross-examination or by the tribunal. He said his mail goes missing all the time and vandals have taken the lid off his mailbox. This would not necessarily explain the delay in receiving the SSAT’s decision. It was despatched on 22 September 2003 but Mr O’Meley said he did not receive it until 13 October 2003. He did not respond straight away to the decision and filled in an application to the tribunal on 28 October 2003. He explained that he was fully occupied with caring for his wife who suffers from cancer and for their three year old granddaughter whom they have taken in. He did not answer the questions on the application asking him when the SSAT’s decision was made and when he received the decision. The tribunal received the application on 5 November 2003. I do not accept his evidence that he received the SSAT’s decision on 13 October 2003. I am reasonably satisfied that the SSAT’s decision would not have been received on 13 October 2003, 21 days after its despatch and find it reasonable to infer that it would have been received 2-3 days after despatch, by 25 September 2003. This would be the date by which the document would have been delivered in the ordinary course of post (see s.3(4) of the Act). Accordingly, as his application was not received until 5 November 2003, it was not lodged within the 28 day period from receipt of the decision being furnished, as required by s.29(2) of the Act. Pursuant to s.29(7) of the Act, however, the Tribunal may grant an extension of time to lodge an application for review.
15. When considering whether to exercise the discretion in s.29(7) the tribunal is guided by the principles identified by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344. It would be an error, however, to regard those principles as complete or to treat each principle as necessarily applicable in every application for an extension of time (Zizza v Commissioner of Taxation 99 ATC 4711). The principles are:
· Prima facie, proceedings should be commenced within the prescribed period and an applicant must advance an acceptable explanation for the delay.
· Any action that the applicant has taken, apart from applying for the extension, is relevant in considering whether there is an acceptable explanation for the delay.
· Prejudice to the respondent, if any, is a relevant factor although its absence is not enough to justify granting an extension.
· Public considerations, including the unsettling of established practices or of other people, may be taken into account.
· It is relevant to have regard to the merits of the application for review.
· Considerations of fairness as between the applicant and others in a similar position are relevant.
16. In explaining the delay, Mr O’Meley emphasised how his time was occupied in looking after his wife and grandchild. It should also be noted that he suffers from prostate cancer and has had surgery to his back in February 2002. His application was lodged on 5 November 2003, 11 days late. The 28 day period would allow most applicants sufficient time to organise their affairs to complete the relevant paperwork and lodge it at the tribunal. I am mindful that there should be finality in government decision making and time limits are presumably fixed with such a policy in mind. I am sympathetic to Mr O’Meley’s family and personal circumstances and take them into account, but there has been a delay, the explanation for which is not acceptable. However, the lack of a satisfactory explanation alone is not fatal to his application (Comcare v A’Hearn (1993) 119 ALR 85).
17. As to the merits of the application for review, I must consider whether Mr O’Meley can show an arguable case on the merits, taking his case at its highest (Commissioner of Taxation v Brown 99 ATC 4852). His main contention is that the amount of the overpayment of unemployment benefits was wrongly calculated. The statement he made in May 1989 acknowledged that unemployment benefits had been overpaid because he had not disclosed his employment income and income of his wife. Based on his confirmation of most of the matters in the statement, the SSAT found that the statement faithfully recorded the information Mr O’Meley provided the Department at the time. In his evidence to the tribunal, he said that the income his wife earnt was none of his business. I agree with the SSAT that, in the context of reviewing social security benefits where a spouse’s income is required to be taken into account, Mr O’Meley should have made it his business to find out about his wife’s earnings. The SSAT concluded that, since there was no evidence to the contrary put forward by him, the Department’s estimate of Mr O’Meley’s earnings was correct.
18. When asked if he would have any additional evidence to put before the tribunal to support his arguments, Mr O’Meley told me he hoped to have a solicitor representing him. But he was unable to nominate any fresh evidence that would demonstrate his wife’s earnings were incorrectly estimated and he said some records can no longer be produced. Employment paperwork he gave the Department at the time has since been lost. Mr O’Meley said that he also gave the Department a letter from his mother in law, who was in a cleaning business with his wife, but it too has been lost. With the passing of time from 1989, there are additional evidentiary difficulties to be overcome if he is to establish that the amount of debt was raised through error. For example, his mother in law is now dead.
19. I am not satisfied that, even at its highest, Mr O’Meley has an arguable case that the amounts taken into account by the Department in 1989 in calculating the overpaid unemployment benefits were incorrect. Similarly a submission that the debt was raised solely through administrative error, the amounts were received in good faith and thus the debt should be waived under s.1237A of the 1991 Act has little prospect of success. Further, there is little merit in arguing, contrary to the SSAT’s finding, that he did not make a false statement or fail to comply with the provisions of the 1947 Act regarding household income. That being the case, there could be no waiver of the debt under s.1237AAD of the 1991 Act even if the tribunal found special circumstances. If this were the only argument raised by the applicant, I would accept the respondent’s submission that there would no prospect of success, so it would be futile to grant an extension of time and unjust to subject the respondent to the costs of defending a pointless appeal (Kuljic v Secretary, Department of Social Security (1994) 33 ALD 121).
20. I come next to the applicant’s contention regarding the garnishee notice that was issued to the Greater Building Society Limited on 22 August 2002. Mr O’Meley’s case was not clearly made but it concerned the power of the respondent to issue the garnishee notice without first giving him 28 days notice. Centrelink’s representative submitted that there was no such requirement in s.1233 of the 1991 Act (cf s.1233(4)) and could not refer me to any other provision that might be considered relevant.
21. I suspect that Mr O’Meley was referring to s.1234 of the 1991 Act which allows the respondent to alter or terminate an arrangement made by a person to repay a debt due to the Commonwealth after giving the debtor 28 days notice of the intended alteration or termination. The 1991 Act provides for a number of methods by which a social security debt may be repaid. Section 1231 allows recovery through reductions from the debtor’s social security payments. With consent the debt can be recovered from another person’s social security payments (s.1234A). Alternatively, the debtor can make an arrangement to pay by instalments (s.1234).
22. Although Mr O’Meley did not give evidence about his arrangement to pay by instalments, nor was he cross-examined about it, in an extension of time matter it would be wrong for the tribunal to embark upon a trial of the merits (Brown v Commissioner of Taxation 99 ATC 4516). I am satisfied on the material before me that it would be open to find that there was an arrangement made for the applicant to pay his debt by fortnightly instalments and finalise it on receipt of his compensation settlement. The payments are referred to in Centrelink’s note of a call that he made to them on 10 August 2001 (attachment B referred to above). The arrangement was cancelled on 26 July 2002 because Centrelink had been advised that Mr O’Meley would soon receive the lump sum payment and he would not commit to the debt being repaid from the settlement. On 22 August 2002, some 27 days later, Centrelink acted under s.1233 to issue the garnishee notice to the Greater Building Society requiring payment of $13,228.41 from moneys held for the applicant.
23. There was no evidence before me of Mr O’Meley’s failure to disclose material information about his true capacity to repay the debt (see s.1234(4)(c)). It would appear, therefore, that the garnishee notice was issued to the building society without 28 days notice elapsing from the respondent’s notification that the repayment arrangement was being cancelled (s.1234(4)(b)). The respondent cited Walker v Secretary, Department of Social Security (1997) 147 ALR 263 in support of the argument that the tribunal cannot direct Centrelink to take certain action regarding garnishee notices. The court held that it would be surprising if Centrelink would be obliged to notify a debtor before it takes garnishee action, as opposed to informing the debtor after that action has been taken. Section 1234(4), however, does not require notice of such action, simply that 28 days notice be given before Centrelink takes whatever action it contemplates. At its highest, the applicant has an arguable case that s.1234 has not been complied with. Whether Centrelink must repay Mr O’Meley the amount received from the building society and whether Centrelink would again be able to take garnishee action in that event, are matters that do not arise on an application for an extension of time.
24. While there may be prejudice to the respondent if witnesses and documents relating to the raising of the debt in 1989 are unable to be found, such problems would not be as acute so far as evidence of the telephone conversations in 2001 and 2002 regarding the repayment arrangement and its termination are concerned. I find that the respondent would not be prejudiced by the grant of an extension of time. The delay in lodging the appeal was a matter of days. Further, I do not consider that granting the application for an extension of time would unsettle established practices regarding the respondent’s debt recovery procedures and their review. There was no evidence to that effect. I am also not persuaded that by granting the application I would not be acting fairly as regards others who find themselves in a similar position.
25. In exercising the discretion in s.29(7) I am conscious of the need to balance the various matters raised by the principles in Hunter Valley Developments. After weighing up those matters I must be satisfied “ … that it is ‘fair and equitable in the circumstances’ to extend time” (Hunter Valley Developments at 348). I find it is appropriate here to grant the extension of time. The time for lodgment of the application for review is extended to 5 November 2003.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision of P J Lindsay, Senior Member
Signed: .....................................................................................
AssociateHearing 25 March 2004
Decision 25 June 2004
Applicant Self represented
Respondent ‘s representative Centrelink
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