Pastura and Secretary to the Department of Family and Community Services

[2005] AATA 374

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 374

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/962

GENERAL ADMINISTRATIVE DIVISION

Re:           MARIA SALVATRICE PASTURA

Applicant

And:           SECRETARY TO THE
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             28 April 2005

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) G.D. Friedman

Member

SOCIAL SECURITY - overpayment of disability support pension - recovery of debt - write off of debt - waiver - whether special circumstances exist 

Social Security Act 1991 ss 8, 1064, 1223(1), 1223(5), 1236(1), 1236(1A), 1237A(1), 1237AAD

Social Security (Administration) Act 1999 s 68

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

REASONS FOR DECISION

28 April 2005  G.D. Friedman, Member

1.      This is an application by Maria Salvatrice Pastura (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 19 July 2004.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 10 May 2004 to raise and recover a debt of $19,107.23, being overpayment of disability support pension (DSP) between 10 June 1999 and 7 October 2003 (the relevant period).

2.      At the hearing on 13 April 2005 the applicant represented herself and Ms K. Paul, an advocate with Centrelink, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T39), together with four exhibits (Exhibits A1-A4) tendered by the applicant and one exhibit (Exhibit R1) tendered on behalf of the respondent. 

BACKGROUND

4.      On 1 April 1999 the applicant was granted DSP.  On 3 May 2000 the applicant’s payments were suspended because her income was over the allowable limit as a result of her declared earnings of $620.76 per week and income from interest on her investments.  On 24 July 2000 Centrelink restored her payments because her earnings had fallen to $391.67 per fortnight.  This was an error by Centrelink because the applicant had provided information that she was working 26.5 hours per week at $14.78 per hour.

5.      On 26 July 2000 Centrelink sent a letter to the applicant stating that the annual income used to calculate her DSP was $15,161.42.  On 14 June 2001 Centrelink advised her that the annual income used to calculate her DSP was $15,417.11.  Between 12 April 2002 and 19 March 2003, Centrelink sent six letters to the applicant advising of annual income amounts varying between $13,948.38 and $10,397.47 being used to calculate her DSP. This was due to a reduction in the deemed rate of interest on her investments and changes in savings accounts notified by her.

6.      On 17 April 2003 Centrelink received an Income and Assets Update form in which the applicant stated that her gross weekly earnings were $416.00.  Centrelink recorded her earnings as $416.00 per fortnight.  Between 24 July 2000 and 17 April 2003 Centrelink has no record of correspondence from the applicant advising of changes to her income.  On 29 April 2003 Centrelink advised the applicant that the annual income used by Centrelink was $10,871.67.

7.      On 13 October 2003 Centrelink decided to raise and recover a debt of $19,107.23 due to overpayment of DSP because of under-declared earnings during the relevant period.  On 10 May 2004 an authorised review officer affirmed the decision.

8.       On 26 May 2004 the applicant unsuccessfully sought review by the SSAT.  On 18 August 2004 she lodged an application with the Tribunal for review of the decision.

9.      The issues before the Tribunal are whether the applicant owes a debt to the Commonwealth, and, if so, whether the debt should be recovered. 

EVIDENCE

10.     The applicant gave oral evidence that until October 2003 she was not aware that Centrelink had made an error in recording her income; although she did not dispute the information provided by her employer which showed that her earnings were greater than the amount she notified to Centrelink.  She said that, at the time, she did not understand that her rate of DSP would depend on her level of earnings, and she averaged her income, using her payslips, to provide the information sought by Centrelink.  She acknowledged that her DSP changed from time to time, but said that she did not question the reason.  In relation to the requirement to notify Centrelink of changes in circumstances, the applicant acknowledged receiving notices from Centrelink, but stated that she filed the notices without reading them, because her mental state at the time prevented her from acting rationally.

11.     The applicant told the Tribunal that she had worked full-time as a bank officer for a number of years until her repetitive strain injury in 1993, after which she changed to part-time employment, before accepting a redundancy package in 1994.  She said that, after six months, she obtained part-time employment with another bank, and she still works there, although she has reduced her hours to two days per week.

12.     Under cross-examination, the applicant agreed that in September 1999 and May 2000 she contacted Centrelink when her DSP had decreased.  She said that at the time she was suffering from depression as a result of her injury and the breakdown of her marriage, and that these factors had prevented her from understanding her obligations under social security law.  The applicant stated that her health is poor and is deteriorating.  She said that her financial circumstances are difficult, especially as deductions are being made from her DSP payments to repay the debt, and she has mortgage repayments to meet.  She said that these matters constitute special circumstances to justify waiving the debt.

13.     In a statutory declaration dated 1 November 2004 (Exhibit A1) Mrs G. Pastura, the applicant’s mother, said that the applicant started to suffer pain in her wrists in 1993 and developed stress and depression which caused her to cease work, although after six months of treatment she obtained part-time employment with a bank as a customer service officer.  Mrs Pastura stated that the applicant’s marriage broke down and her condition deteriorated, leading the applicant to apply for DSP, which was granted in April 1999.

14.     She said that the applicant’s condition improved and she was able to purchase her own home in March 2003.  However, in October 2003 the letter from Centrelink claiming overpayment caused the applicant's health to deteriorate once more, leading to depression and the need for medication and other treatment.  Mrs Pastura said that she is very concerned for her daughter’s well-being.

15.     In a written report dated 29 September 2004 (Exhibit A2) Dr R. Maulucci, psychologist, stated that since 1999 the applicant has presented with depression, anxiety and stress, and that she found difficulty in coping with her divorce and other aspects of her life.  Dr Maulucci stated that the applicant has been taking anti‑depressant medication since 1993 and has also takes medication for her physical conditions.  She said:

…People with depression, especially if they are on anti-depressants will suffer mental and psychological lapses frequently and are often in a ‘daze’.  Maria’s account of what was going on in her life matched this description.    

Dr Maulucci said that she believes that the applicant will continue to improve her life, although the applicant feels the stigma attached to her disability and her depression will be a continuous source of stress in her life.

16.     In a written report dated 16 June 2004 (Exhibit A3) Dr R. Wardlaw, general practitioner, stated that he has been treating the applicant for depression and stress since 1995, and that she also suffers from chronic low back pain and repetitive strain injury to both wrists.  Dr Wardlaw said that the applicant presented on 9 June 2004 with marked depression and anxiety and her deterioration appears to be related to a difficult financial position involving a debt to Centrelink.  He said that she is just coping with part-time work, and may be forced to stop work altogether in the future if the problem cannot be resolved.

17.     In a further written report dated 27 October 2004 (Exhibit A4) Dr Wardlaw stated that, between June 1999 and October 2003, the applicant was being treated for anxiety and depression.  He said:

…

As a consequence of her condition she appears to have had difficulty in managing her affairs.  She was only just coping with her work and had little energy or ability to do anything else and had largely withdrawn from life outside of her work.

A consequence of this was that she failed to read correspondence from Centrelink but just filed them away.  She thus did not comprehend that she had a requirement to communicate her changing financial position to them.  She formed the idea that her tax returns would provide enough information to Centrelink and so she did not provide any other details.

Dr Wardlaw concluded that the applicant’s psychological state was closely related to her marriage breakdown and it was understandable that in her mental state she avoided reminders of her situation.

18.     Documents on the Centrelink file show that in 1999 the applicant sold her house after separation from her husband, and the net proceeds were invested until late 2002 or early 2003.  Interest from the investment was included as income in the calculation of the applicant’s DSP.  Documents also show that Centrelink sent letters to the applicant on numerous occasions setting out the income used to calculate her DSP and informing her of her obligation to notify Centrelink if her income was incorrect or increased.

CONSIDERATION OF THE ISSUES

19.     Payment of DSP is calculated using the rate calculator (s 1064 of the Social Security Act 1991) (the Act)), and is subject to an income test.  Income is defined in s 8 of the Act. Section 68 of the Social Security (Administration) Act 1999 (the Administration Act) provides that a person receiving DSP must notify Centrelink of the correct level of gross earnings.

20.     Ms Paul submitted that the applicant was overpaid DSP during the relevant period because the information provided by her regarding her actual income was incomplete and inaccurate.  Therefore, the debt to the Commonwealth could not be attributable solely to administrative error by Centrelink, although Centrelink admitted making two errors in recording amounts received.  She submitted that there was no basis upon which the debt should be waived or written off.

21.     In reaching its decision the Tribunal takes into account the oral and written evidence and the submissions made at the hearing.

22. The Tribunal finds that the applicant received notices from Centrelink under s 68 of the Administration Act informing her of the amounts recorded as her income, from time to time, for the calculation of her DSP. The Tribunal also finds that the notices stated that she was required to inform Centrelink of any increases in her income. On the applicant’s own evidence she did not read the notices carefully. The Tribunal finds that the applicant did not comply with the notices, and that the information provided by the applicant to Centrelink about her earnings during the relevant period was incomplete and inaccurate.

23. The Tribunal notes the documentary evidence of earnings by the applicant during the relevant period, including deemed interest on her investments. The calculations made by Centrelink were not disputed by the applicant and the Tribunal accepts those calculations. The Tribunal finds that, under s 1223(1) and s 1223(5) of the Act, DSP payments to the applicant during the relevant period constitute an overpayment, resulting in a debt to the Commonwealth of $19,107.23.

24. Section 1236 of the Act provides for a write-off of a debt owed to the Commonwealth under certain circumstances. The Tribunal finds that the applicant has the capacity to repay the debt by deduction from ongoing social security payments, and that the debt is not irrecoverable at law. Therefore, those circumstances are not present.

25. Section 1237A of the Act provides for waiver of a debt arising from 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

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

(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

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

whichever is the later.

In view of its findings that the debt arose because the applicant provided incomplete and inaccurate information to Centrelink, the Tribunal finds that the applicant’s debt to the Commonwealth was not attributable solely to administrative error by Centrelink, even though Centrelink admitted to making two errors in recording her earnings. Therefore, the debt cannot be waived under s 1237A of the Act.

26. Section 1237AAD of the Act provides for waiver of the debt in certain other 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 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.

27.     In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held that the special circumstances, referred to in s 1237AAD(b), must be unusual, uncommon or exceptional. The Tribunal takes into account the applicant’s evidence and the evidence from her mother, Dr Wardlaw and Dr Maulucci that, during the relevant period, she was suffering from physical injuries, anxiety and depression, following the breakdown of her marriage. The Tribunal accepts that the applicant may have formed the view that Centrelink would calculate her correct entitlement to DSP from her employer’s documents and her tax returns. The Tribunal also accepts that the applicant’s physical and psychological conditions may have had an impact on her ability to engage in everyday activities, and that her financial situation is difficult because of the cost of medication, counselling and treatment and her mortgage repayments.

28.     However, during the relevant period the applicant was working part-time as a customer service officer in a bank, which required a degree of awareness and responsibility, as well as daily contact with the public and attention to detail.  The Tribunal notes the applicant's evidence that, in March 2003, she increased her hours of work and ceased taking anti-depressant medication, and felt sufficiently confident and in control of her life that she purchased her own home and lived independently.  If she did not understand her obligations under social security law as set out in the notices from Centrelink, there were numerous avenues of assistance available to her, including her mother, Dr Maulucci (whom she consulted on a regular basis), Dr Wardlaw and Centrelink itself.

29.     The applicant’s overall situation may have been difficult.  However, persons receiving DSP are normally in difficult circumstances.  On balance, the Tribunal is satisfied that the circumstances in this case are not unusual, uncommon or exceptional, and do not constitute special circumstances (other than financial hardship alone). Therefore, the waiver provisions of s 1237AAD of the Act do not apply.

30.     Therefore, the applicant owes a debt to the Commonwealth in the amount of $19,107.23, which cannot be written off or waived.

DECISION

31.     The Tribunal affirms the decision under review.

I certify that the thirty‑one [31] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  13 April 2005

Date of decision:  28 April 2005
Advocate for applicant:                Self-represented
Advocate for respondent:            Ms K. Paul, Centrelink