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

Panetta and Secretary, Department of Social Services (Social services second review) [2018] AATA 22 (16 January 2018)
Division:GENERAL DIVISION
File Number(s): 2017/0024
Re:Jessica Panetta
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member D. J. Morris
Date:16 January 2018
Place:Melbourne

The decision under review is affirmed.
........................................................................
D. J. Morris
SOCIAL SERVICES – DSP – Debt – income and assets test – income stream product not declared – overpayment of DSP – whether special circumstances applicable – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth), ss 164, 1072, 1223, 1236, 1227A, 1237AAD
Social Security (Administration) Act 1999 (Cth), s 68(2)
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Ward v Commissioner of Taxation [2016] FCAFC 132
REASONS FOR DECISION
Senior Member D. J. Morris
16 January 2018
PRELIMINARY

The Applicant, Miss Jessica Panetta, sought a review of a decision of the Social Services and Child Support Division of this Tribunal (AAT1) dated 12 December 2016 which affirmed a decision made by the Department of Human Services (the Department) to raise and recover a debt of $27,124.89 in respect of Disability Support Pension (DSP) paid to her in the period between 24 July 2011 and 23 July 2013.
A hearing was held on 27 September 2017. Miss Panetta represented herself, with assistance from her father, Mr Rosario Panetta. The Respondent was represented by Mr James Henderson.
BACKGROUND
On 22 June 2011 Miss Panetta was granted DSP, payable from 2 June 2011. On 9 June 2011, Miss Panetta signed an Income and Assets form with the Department as part of her claim for DSP, which was lodged the following day. When she was advised of the grant of the DSP, the Department issued Miss Panetta with a notice pursuant to section 68(2) of the Social Security AdministrationAct 1999 stating that the calculation of the rate of DSP payable to her was an annual income of $48.75 and that she was required to notify the Department of changes to her income.
On 30 November 2011 and 22 February 2012, the Department issued Miss Panetta with a Centrelink Statement and a notice advising her that she was required to notify Centrelink if she received any money from any other source.
On 15 April 2013, the Applicant sent an email to the Department stating:
I currently receive DSP. As well as Aust Super (TAL) payments. My Aust Super payment will end in July. Without the Super payment I cannot afford my mortgage.
The Tribunal had before it a file note created by the Department on 2 May 2013 regarding a review of Miss Panetta’s entitlement on the basis of earned income. This document notes that the Applicant advised Department officers that she is not employed and the income from Tower Life “was income protection payments which she says we [the Department] were made aware of”.
The Respondent argued in its Statement of Issues, Facts and Contentions that this telephone contact from the Applicant on 2 May 2013 was the earliest evidence of advice from Ms Panetta regarding the payments as she had previously failed to comply with the notice dated 22 June 2011.
On 8 October 2015, the Department received copies of Australian Super statements indicating payments of “Total Disability Benefit” made to the Applicant from 24 October 2011. The Department requested advice from TAL Life Ltd about what payments it had made to Miss Panetta. On 9 June 2016, TAL Life Ltd advised that Miss Panetta was paid a total and permanent disability (TPD) benefit and that the TPD benefit was a lump sum payment. It went on:
Ms Panetta also received an Income Protection benefit (IP) […] IP benefits were paid for the period 24/7/11 to 23/7/13 at $2,574.76 per month.
On 16 June 2016, the Department issued a notice to Miss Panetta advising her that she had a legally recoverable debt of $27,124.89 in respect of payments made in the period 24 July 2011 to 23 July 2013 of $2,574 per month.
Miss Panetta sought a review of this debt decision by an Authorised Review Officer (ARO), an officer of the Department not involved in the original decision. On 12 August 2016 the ARO affirmed the decision. As mentioned above, Miss Panetta sought a review by AAT1 and, as is her statutory entitlement, has sought a review by the General Division.
Common ground
There was certain common ground between the parties that was agreed at the hearing. There was no dispute about Miss Panetta’s qualification for DSP; she has a range of health conditions that provide daily challenges for her and give her a continuing inability to work. There was also no dispute by Miss Panetta that she received the monies that TAL Life Ltd had advised the Department she had received in the relevant period.
Miss Panetta made two major contentions. The first of these is that she said she had contacted the Department and was told that the payments she received from TAL Life Ltd were superannuation and she said that the officer she spoke to said that as these funds were not paid for work performed, she did not have to disclose them. The second contention of the Applicant was that she faces significant financial hardship, additional costs because of her medical conditions, and that her ageing father was her carer and her parents did not have the financial resources to additionally support her.
CONSIDERATION
The rate at which DSP is payable is calculated in accordance with sections 1064 and 1072 of the Social Security Act 1991 (the Act). There is a rate calculator in the Act which takes into account a person’s ordinary annual income and the value of the person’s assets. Ordinary income acts to reduce the amount of DSP to which a person is entitled to be paid. It is clear to the Tribunal from the documents provided by the Respondent in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 and the legislation that the calculation of the overpayment to Miss Panetta was correctly made, therefore the Tribunal finds that a recoverable debt has been raised.
Miss Panetta told the Tribunal that when she contacted the Department she mentioned that she was receiving ‘super income’. In her initial claim for DSP, Miss Panetta marked the box to indicate she was not receiving any income stream product payments. The ARO recorded that at the time she was completing this paperwork, Mr Panetta said that his daughter was under heavy medication and the Applicant agreed that this was the case at this hearing.
The Respondent advised that no record of the original telephone contact Miss Panetta said she made with the Department can be found. The Applicant did not provide a date of this earlier contact at the hearing.
In cross-examination at the hearing, Miss Panetta said she had had income protection payments and two early release payments of her superannuation. In answer to the direct question as to whether she knew the income she was receiving was for income protection, as distinct from superannuation, the Applicant responded “Yes”.
Miss Panetta said that the Department officer asked her if she had physically worked for the money and when she responded that she had not, she said the officer told her she did not have to report it. She told the Tribunal she did not tell the officer the amount of the income protection payments she was receiving.
When pressed about whether she would reasonably have expected her DSP payments to be reduced on the basis of the other income she was receiving, Miss Panetta said she did not. She said she was focussed at the time on building a house and she had to buy a new automatic car as she was no longer able to drive a manual vehicle because of her health conditions.
While the Tribunal accepts that not every contact with Centrelink to its general inquiry line is recorded, Miss Panetta remarked at the hearing that she had contacted the Department “several times” over this matter. It is not plausible that at least one of these contacts would not have been recorded by the Department and would have raised a flag in regard to how the other significant fortnightly income Miss Panetta was receiving would affect the rate of her DSP. While I am prepared to accept that a general, open-ended question about how superannuation may be treated might be responded to in an equally general way, the usual practice would be that, if the caller identified that she or he was a Centrelink customer, their Centrelink Reference Number would be requested and that would allow the officer to look at the person’s information held by the agency and record that contact had been made, and the nature of the contact.
In the period the subject of the debt, the Tribunal calculates that Miss Panetta received a gross amount of $61,794 in income protection payments. After tax, the amount she received was $56,082.24. This is a not insignificant amount and should have prompted the Applicant to consider that it would have an impact on the social security benefit she was receiving, which she knew was subject to an income and assets test because she had filled in the form when she was initially granted DSP.
The Act also sets out, at section 1223(1) as follows:
(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.
At section 1236(1A), the Act has specific provisions giving the Secretary discretion to write off of a 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
(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.
Section 1236(1C)(a) of the Act provides that if a debt is recoverable by means of deductions from a 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 severe financial hardship. The phrase “severe financial hardship” is not defined in the Act, but the purport has been considered judicially and by the Tribunal on numerous occasions.
Section 1237A(1) of the Act provides that debts may be waived where the debt is caused solely by administrative error:
(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).
(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.
There are also provisions for all or part of a debt to be waived owing to special circumstances. Section 1237AAD provides:
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.
[…]
The phrase “special circumstances” in section 1237AAD(b) is not otherwise defined in the Act but again, this phrase has been considered judicially and by the Tribunal on many occasions. Justice Besanko, in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 (Angelakos), warned against requiring there to be exceptional circumstances before there may be said to be special circumstances:
... I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
In Ward v Commissioner of Taxation [2016] FCAFC 132, the Federal Court has cautioned decision-makers against taking too narrow a view of what may constitute “special circumstances” within the meaning of an Act of Parliament. Their Honours stated, in that context:
In our opinion, the Tribunal erred in law by taking too narrow a view of what may constitute “special circumstances” within the meaning of the statute. This may have been caused by unnecessarily considering factors in isolation before focusing on the entirety of the circumstances said by the applicant to be special.
The Tribunal notes that the recovery of the debt from Miss Panetta was temporarily written-off by the Respondent due to short-term financial hardship until 23 September 2016. From that date, Miss Panetta has repaid the debt through a temporary withholding in the amount of $15 per fortnight from her DSP.
The Tribunal is sympathetic to the Applicant’s personal circumstances and was impressed by the genuine way that Mr Panetta spoke in support of his daughter. The health conditions she faces are clearly significant and present continuing challenges, as evidenced in the medical report from Dr Alex Ades dated 10 October 2014, which was provided to the Tribunal. However, the Tribunal must look at this matter in the context of the general category of persons who receive DSP to consider whether there is something unusual or uncommon in Miss Panetta’s case (to borrow the words in Angelakos) that might enliven the discretion to find that special circumstances are applicable, and that all or part of the debt should be waived.
It is axiomatic that recipients of DSP must be unable to work because of their functional impairment, and without for a moment discounting the series of health misfortunes that have befallen Miss Panetta, that is not an uncommon feature of this cohort. Miss Panetta was in a much more advantageous financial circumstance than most individuals in this category for a significant period because she was receiving an additional income stream as well as the payment of DSP. The Tribunal appreciates that she was building a house and purchased a replacement motor vehicle and on the evidence did not spend the money in a profligate way, but the fact remains that she was significantly better off for a period because the DSP had not been recalculated to reflect her additional income as required by the Act.
Even if the Tribunal were to accept Miss Panetta’s evidence that she had been told something on one occasion by a Department officer that misled her, that assertion is overtaken by the fact that she received further correspondence from Centrelink on 30 November 2011 and 22 February 2012. The letters state:
Your Centrelink Statement
This gives you information about your payments, income and other details. You need to let us know if any of these details change to ensure you are receiving the correct entitlement.
Under the heading Income and Asset Details, the letters list two bank accounts with deposits totalling $2,675.00, household and personal effects in the amount of $500 and motor vehicles valued at $18,500. In spite of these letters reminding the Applicant of her obligation to notify the Department if she received any money from any other source, she did not do so. She argued at the hearing that nothing had changed so she had nothing to inform Centrelink. This is somewhat disingenuous because it was clear that the income protection payments were not recorded in the Centrelink Statement, so it therefore was incomplete, in terms of Miss Panetta’s own knowledge about her income.
This fact also evaporates the contention made by the Applicant to the ARO that the Department should have realised she was being overpaid earlier than it did and thus the debt incurred would be lower. It is very clear to the Tribunal that the obligation is on the recipient of the social security benefit to provide all the relevant information on his or her income to the Department that is in their knowledge.
While I accept that additional medical costs Miss Panetta incurs put pressure on her household income, I consider that the debt recovery payment of $7.50 per week withheld from her DSP payments is not onerous, and is reasonable given the significant amount of the overpayment.
DECISION
The Tribunal affirms the decision under review.

I certify that the preceding 33 (thirty-three) paragraphs are a true copy of the reasons for the decision herein of Mr D. J. Morris

...........................................................
Associate
Dated: 16 January 2018

Date of hearing:

Applicant:

Solicitor for the Respondent:

27 September 2017

In person

Mr James Henderson, Department of Human Services, FOI and Litigation Branch

[2018] AATA 22

16 January 2018

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Judicial Review

Procedural Fairness

Standing

Statutory Construction