Perks and Department of Family and Community Services - [2000] AATA 671

DECISION AND REASONS FOR DECISION [2000] AATA 671

ADMINISTRATIVE APPEALS TRIBUNAL )

) 1. No. N1998/1304

GENERAL ADMINISTRATIVE DIVISION ) 2. No. N1998/1375

1. Re SECRETARY, DEPARTMENT of FAMILY AND COMMUNITY SERVICES
Applicant

AndDonald Henry PERKS
Respondent

2.Re Donald Henry PERKS
Applicant

And SECRETARY, DEPARTMENT of FAMILY AND COMMUNITY SERVICES
Respondent

DECISION

Tribunal Mrs M T Lewis, Senior Member Mr J Barber, Member

Date8 August 2000
PlaceSydney

Decision The Tribunal – 1. Sets aside the decision of the Social Security Appeals Tribunal dated 10 August 1998. 2. In substitution therefor determines that the debt of Donald Henry Perks in the amount of $81,252.53, with outstanding balance of $73,168.47 be recovered by means of fortnightly withholdings of $60 from his pension.

..............................................
M T Lewis
Presiding Member
CATCHWORDS
SOCIAL SECURITY – fraud - whether debt should be written off – whether capacity to repay debt – whether withholdings would cause "severe financial hardship"

Social Security Act 1947 s140
Social Security Act 1991 ss1224, 1231, 1236
Social Security and Repatriation Legislation Amendment Act 1984
Crimes Act 1914 s29B

Director-General of Social Services v Hales (1983) 47 ALR 281
Re Secretary, Department of Social Security and Wornes (AAT 12395, 14 November 1997)
Re Pepi and Director –General of Social Security (1984) 7 ALD 155
McAuliffe and Secretary, Department of Social Security (1991) 23 ALD 284
Re L and Secretary, Department of Social Security (1995) 21 AAR 412

REASONS FOR DECISION

8 August 2000 Mrs M T Lewis, Senior Member Mr J Barber, Member

This matter involves two applications. The first is an application by the Secretary, Department of Family and Community Services ("the Department") against a decision of the Social Security Appeals Tribunal ("the SSAT") dated 10 August 1998 which determined that the debt of Donald Perks be written off. The second is an appeal by Mr Perks, also against the decision of the SSAT dated 10 August 1998, in relation to the amount of the debt.
The Tribunal had before it documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975. Mr Perks was unrepresented and gave oral evidence at the hearing.
The following documentary evidence was tendered on behalf of the Department:

Letter from the Dust Diseases Board ("the DDB") dated 24 May 2000 and letter from the Department to the DDB dated 6 April 2000 (exhibit A);
Letters from Centrelink to Mr Perks dated 6 April 2000 and 6 June 2000 (exhibit B), and
Computer printout of calculations of payment summary in respect of Donald Perks with handwritten notes (exhibit C).

Mr Perks tendered sundry documents comprising of four bundles (exhibit 1), and an extract of transcript of criminal proceedings in 1986 (exhibit 2).
issues

The parties agree that Mr Perks owes a debt to the Commonwealth but there is an issue as to the amount of the debt. In deciding to write off the debt, the SSAT did not review the quantum of the debt determined by the Authorised Review Officer ("ARO") on 28 October 1993. In the appeal lodged by Mr Perks, he argued that the amount of the debt should be $935, and hence the Department has over-recovered the debt by withholdings made from his pension previously. In the alternative Mr Perks' argued that the debt should be $68,000, being the amount for which he was prosecuted in criminal proceedings in the District Court.
The second issue is whether the outstanding amount of the debt should be written off. In particular whether Mr Perks has "no capacity to repay the debt" on the grounds that recovery of the debt by means of withholdings from his disability support pension would cause "severe financial hardship".
If the Tribunal finds that the debt should not be written off, there is an issue as to the appropriate rate of recovery.
background
Mr Perks was born on 6 February 1936 and was aged 64 years at the time of the hearing.
Following an investigation by the Australian Federal Police ("AFP"), Mr Perks was charged with having lodged 12 false claims for unemployment benefit. On 15 September 1986 he was convicted in the District Court on 8 counts of imposition. He was sentenced to eight years imprisonment for this offence, with a non-parole period of four years (T5, p40). The New South Wales Court of Criminal Appeal upheld the conviction on 8 May 1987 and Mr Perks was prosecuted for the amount of $68,000 (T9).
The names under which Mr Perk received unemployment benefits and the amounts paid to him in each name were as follows (T14):
John Bergin             $8,141.20
Philip Calvert           $8,275.40
Peter Cockerill         $5,845.00
Donald Deadman    $18,512.80
Neil Fisher                $9,105.30
Donald Jamieson     $5,120.90
Lance McGrath        $3,514.45
Keith Perks               $10,913.00
Adrian Rawson       $9,234.10
George Richards     $6,266.75
William Ryan           $5,773.40
Robert Smith           $5,836.90
TOTAL  $96,539.20

On 20 November 1986, a debt was raised against Mr Perks in the amount of $96,539.20, under s140 of the Social Security Act 1947 ("the 1947 Act"). He sought review of the decision to recover the debt on 20 August 1993 (T13). An ARO affirmed the decision on 28 October 1993 (T14).
On 10 August 1998 the SSAT decided that the recovery of the debt should be "written off" pursuant to s1236 of the Social Security Act 1991 ("the 1991 Act"). On 15 September 1998 the Department sought review by this Tribunal.
evidence of mr perks
In his oral evidence Mr Perks said that he did not claim unemployment benefit in his own name during the relevant period because he alleged that previously he had been "tracked down" by his ex-wife and other relatives through the Department of Social Security. He said he did not receive any payments during the relevant period other than in respect of those 12 names listed in para 9. Prior to 1982 he had claimed social security payments under "any numerous names that I was using at the time", including "Florentine", "Norwick" or "Freeman", but he could not recall whether he had used his own name to make claims prior to 1982. In 1982 he was living under the name of "John Bergin" and that is what everybody knew his name to be at the time.
Prior to 1982 Mr Perks said he worked some of the time", and had had some savings which he "lost". He was a heavy drinker until 1979. He said he did a day's work "here and there" to survive, but eventually he could not work. The last time he recalled working was sometime between 1979 and 1981 as a carpenter on the renovations at Parliament House. He ceased work due to his breathing problems. He said that he did not work during the period 1982 to 1985, or indeed afterwards, because of his health problems.
Mr Perks suffers from asbestosis and receives $473.20 per fortnight, after tax, from the DDB. In addition he receives $226.11 per fortnight from Centrelink, of which $76 per fortnight is rent assistance. He said he had credit card debts totalling approximately $9,000. At the commencement of the hearing on 30 March 2000 Mr Perks stated that he would have to leave his current caravan park accommodation because he could no longer afford it and had not paid the rent for a week. He said he would then be living "on the streets" and considered that such a life would kill him. However, when the hearing was resumed on 28 June 2000 he continued to reside at the caravan park.
Mr Perks said he had a claim before the DDB for loss of income dating back to 1982 and that he might receive a lump sum of approximately $120,000. At the hearing of this Tribunal on 30 March 2000 he said that his solicitor was attempting to obtain assistance with accommodation and housekeeping expenses from the DDB.
Mr Perks provided what he termed a "conservative estimate" of his average weekly expenditure (exhibit 1), viz. –
Pharmaceutical expenses (concession rate)           $9.00
Pharmaceutical expenses (full rate)  $10.00
Doctors visits (specialists)   $10.00
Rent and electricity  $120.00
Food  $50.00
Telephone  $10.00
Taxis twice a week (1 shopping 1 doctor's visit)       $20.00
Train and bus fares for doctor's visit  $6.60
Housekeeping   $40.00
Rent for storage at Port Macquarie  $20.00
Laundromat  $10.00
Private Health insurance  $12.25
Interest on credit card debt  $50.00
TOTAL EXPENSES  $367.85
Mr Perks said that he needed private health insurance for medical expenses not covered by the DDB. Additionally, he said he needs special shoes that cost $350, and he needs to replace these each year. He has a post office box costing $60 a year. He needs a new set of dentures, which have to be replaced yearly because of shrinking gums, costing $1,000 per year. No documentary evidence was provided in support of this claim.
Mr Perks tendered a medical report from Dr David Malikoff dated 8 June 1999 (exhibit 1) which listed the following medical conditions from which Mr Perks suffered and the medication required, viz. –
1. Chronic airways disease – emphysema and restrictive lung features suggestive of asbestosis. This is moderately severe and will gradually deteriorate:
Treatment –    Atrovent
2. Back pain secondary to scoliosis and generalised osteoarthritis. This is at times quite disabling for him and will gradually deteriorate.
          Treatment –    Doxepin 50mg nocte
  Orudis 200mg daily
  Panadeine Forte
  Kapanol (Morphine) when severe.
3. Ischaemic heart disease – the degree of this is hard to properly assess due to his inability through arthritis to undertake a treadmill stress test. His former specialist Dr Johnson states that he had two acute myocardial infarctions in the 1980's. He gets intermittent anginal sounding chest pain which he states responds to sublingual nitrates and is lessened overall by taking the anti-anginal Cardizem. Because of his cardiac disease, his hypercholesterolaemia warrants therapy. His cardiac status will not improve.
          Treatment -     Cardizem 240 mg
  Astix
  Nitrolingual
  Pravachol 40mg
4. Oesophagitis – endoscopy has shown his gastro-oesophageal valve to be patulous allowing free reflux. As this is a mechanical problem and he is unfit for surgery, it cannot improve. He originally had severe ulceration as a result of acid reflux and analgesics for his back. Symptoms have been controlled on Zoton (acid suppression).
5. Glaucoma – requires permanent treatment.
          Treatment -     Propine.
Mr Perks also tendered a report from Dr Michael Clark dated 29 January 1999. Mr Perks first attended Dr Clark in April 1997 because of exacerbation of obstructive lung disease. He has attended subsequently on thirteen occasions for nebulised medications for his lung condition and a fungal infection of his feet. Dr Clark noted that in April 1997 Mr Perks gave a history of having suffered from osteoporosis, osteoarthritis, ischaemic heart disease, chronic obstructive lung disease secondary to asbestosis, glaucoma and depression. He was at that time on the following medication:
Nitro lingual spray and Transiderm Nitro patches for his heart condition
Pulmicort, Ventolin and Atrovent puffers for his lung problems
Kapanol for his osteoarthritis
Deptran for his depression
Zoton for indigestion

the relevant legislation

Section 140 of the 1947 Act provided:
140(1) Where, in consequence of a false statement or representation, or in consequence of a failure or omission to comply with any provision of this Act, an amount has been paid by way of pension, allowance, endowment or benefit which would not have been paid but for the false statement or representation, failure or omission, the amount so paid shall be recoverable in a court of competent jurisdiction from the person to whom, or on whose account, the amount was paid, or from the estate of that person, as a debt due to the Commonwealth.
The relevant sections of the 1991 Act are as follows:
Debts arising from recipient's contravention of law
1224(1) If:
(a) an amount has been paid to a recipient by way of social security payment; and
(b) the amount was paid because the recipient or another person:
(i) made a false statement or a false representation; or
(ii) failed or omitted to comply with a provision of the social security law or this Act as in force immediately before 20 March 2000 or the 1947 Act;
the amount so paid is a debt due by the recipient to the Commonwealth.

Deductions from debtor's pension, benefit or allowance

1231(1) …
1231(1A) If the social security payment is not a pension bonus, the Secretary is to decide in each case the amount by which each payment of the person's social security payment is to be reduced, and may vary the amount from time to time.
1231(2) Subject to subsections (2A) to (2E), the debt or overpayment must be deducted unless:
(a) the Secretary takes action under Part 5.4 (write off and waiver) in relation to the amount; or
(b) the amount is recovered by the Commonwealth under another provision of this Chapter.

1231(2A) Subject to subsections (2B), (2C), (2D) and (2E), action under this section for recovery of a debt or overpayment is not to be commenced after the end of the period of 6 years starting on the day on which the debt or overpayment arose.

Secretary may write off debt

1236(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.
1236(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 incapacity 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) the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt.

1236(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrevocable at law if, and only if:
(a) the debt cannot be recovered by means of deductions from a person's youth training allowance, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(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 discharge 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.

1236(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of deductions from a person's social security payment, the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
1236(2) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision – on the day which the decision is made; or
(b) if a day is specified in the decision – on the day so specified (whether that day is before, after or on the day on which the decision is made).

1236(3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.

submissions
The Department
Quantum of the debt

The SSAT did not review the decision regarding the quantum of the debt. It was submitted that no significance should be attached to the fact that Mr Perks was not prosecuted for the full amount of the debt.
Mr Perks' debt to the Commonwealth was raised on 20 November 1986 under s140 of the 1947 Act. The amount of $96,539.20 was calculated on the basis that he was paid unemployment benefit under 12 assumed names during the period 1 June 1982 to 18 April 1985.

Mr Perks was prosecuted under s29B of the Crimes Act 1914 (Cth) for the lesser amount of $68,000. Justice Ward in his summing up (T22 p96) directed the jury to find Mr Perks not guilty with respect to three charges relating to payments received by Mr Perks in the names of William Ryan (T3 p32), Neil Fisher (T3 p27) and Peter Cockerill (T3 p25). Justice Ward gave the following reasons for his direction (T22 p96):
It comes about this way, in June 1984 they amended the Social Security Act, that Act is the Act which deals with a lot of things including the payment of unemployment benefits and sickness benefits. It is (sic) a very lengthy definition of income … meaning money, coming from anywhere, but then it went on to say what it does not include and a whole lot of things were listed and eventually they amended the Act in June 1984 and went on, things they said it did not include as from that time was any payment made under the Social Security Act.
So, fortunately, we found that out since the end of this case, we are going to give the accused the benefit of that because the actual document he is charged with in relation to three people is dated after June 1984. It is true that they were still using the old forms which still have the guide to people to fill in which was income included any benefit from Government assistance or something like that. They had not caught up with the proper forms but the accused is entitled to the benefit in law and as from June 1984 for the purpose of unemployment benefit legislation, income did not include unemployment benefits but it did until that amendment as a matter of law.

The amendment to which Justice Ward refers is the Social Security and Repatriation Legislation Amendment Act 1984 that received Royal Assent on 25 June 1984.

Prior to this amendment, "income" was relevantly defined for the purposes of unemployment benefit in s106 of the 1947 Act. Unemployment benefit was not excluded under the definition of income at that time. From 25 June 1984, "income" definitions were included in s3 of the 1947 Act. Section 3 relevantly states that "income" does not include among other things "a payment under this Act".
Because "income" did not include "a payment under this Act" after 25 June 1984, Ward J determined that the relevant question on the unemployment benefit form that asked whether Mr Perks had received any "income" in that period could not, as a matter of law, refer to unemployment benefit received in other names. Therefore, Ward J determined that false statements made by Mr Perks after 25 June 1984 were not "false" for the purposes of the Crimes Act 1914 as s29B of that Act requires the relevant statement to be an "untrue representation".
It is noted in a Departmental minute dated 19 November 1986 (T8 p49) that –
… Judge Ward's decision does not inhibit civil recovery proceedings being taken for the full amount ($96,539.20) fraudulently obtained by Perks as a Civil Claim action does not afford the same high level of protection and findings in this jurisdiction are generally based on the balance of probabilities.
In Re Pepi and Director–General of Social Security (1984) 7 ALD 155 the Tribunal noted that liability created by s140(1) was a separate matter to any penalty imposed under s138 of the 1947 Act (which dealt with offences under the 1947 Act). It was submitted that the same distinction arises when dealing with a conviction under the Crimes Act 1914. In Re Pepi the Tribunal said –
The sub-section is one directed to the recovery in a court of competent jurisdiction of a debt by civil process. In this respect, it is to be contrasted with s138, which creates criminal offences punishable by fine or imprisonment. In addition, a person convicted under that section may be ordered to pay to the Commonwealth an amount equal to any amount paid by way of pension, allowance, endowment or benefit in consequence of the act, failure or omission in respect of which he was convicted.
Criminal proceedings under s138 would, it appears, involve the establishment of mens rea on the part of the person charged (see Cameron v Holt (1980) 28 ALR 490).
It appears to me that s140(1) is not confined in its operation to those cases in which a criminal offence of making a false or misleading statement may be established. Section 140(1) does not, in its literal terms, make reference to the author of the false statement or representation, nor does it connect the person to whom, or on whose account, money is paid in consequence of the false statement or representation with the author of that statement. The policy underlying the sub-section appears to me to be the protection of a review against unjust payments out of public funds made in consequence of false information supplied to the administering Department.

Von Doussa J in the Federal Court decision of McAuliffe v Secretary, Department of Social Security (1991) 23 ALD 284 noted with approval the reasoning of the Tribunal in Re Pepi.

It was submitted for the Department that where a person lodges a claim for unemployment benefit under an assumed name, the person has made an "untrue representation" even if the answers to the relevant questions about income may not be "false" in the legal sense. Whilst Mr Perks may not have been found guilty under the Crimes Act with respect to the false claims under the names of William Ryan, Neil Fisher and Peter Cockerill, he remains liable to repay unemployment benefits falsely obtained under those names. Hence the debt remains payable to the Commonwealth under s1224 of the 1991 Act.
With regard to Mr Perks' reference to a debt in the amount of $935, the Department submitted that it is possible that $935 represents one unemployment form (representing a fortnight's payment) in each name for each of the 8 guilty findings. The Department is unable to locate a more specific explanation of the amount of $935. In any event this amount does not represent the limit of Mr Perk's liability to the Commonwealth pursuant to s1224 of the 1991 Act.
In their judgement dated 8 May 1987 the New South Wales Court of Criminal Appeal (Street CJ, Carruthers and Brownie JJ) made reference to an amount of $935 (T9 p56) -
…The period covered by the offences themselves resulted in the appellant obtaining $935, but the totality that was recovered pursuant to the fraudulent intent that accompanied each of the offences added up ultimately to $68,000.
The Department informed Mr Perks in a letter dated 6 April 2000, that despite doubts as to whether he would satisfy the activity test for unemployment benefit during the period of the debt, the debt has been reduced by the amount equivalent to a single person's entitlement during the relevant period. The earliest relevant date is 1 June 1982 being the date Mr Perks first received unemployment benefit in the name of John Bergin, and the last relevant date is 16 April 1985 being the date to which Mr Perks was last paid in the name of George Richards. Hence, the Department considers the relevant period to be 1 June 1982 to 16 April 1985 (T3).
During the period 1 June 1982 to 15 August 1983 Mr Perks was paid the amount of $8,141.20 in the name of John Bergin. During the period 29 September 1983 to 16 April 1985 he received $6,266.75 in the name of George Richards. During the interim period - 16 August 1983 to 28 September 1983 - a single person was entitled to receive unemployment benefit at the rate of $274.60 per fortnight (T3 p26). An amount of $878.72 was payable to Mr Perks during that period. The Department has calculated Mr Perks' entitlement during the period 1 June 1982 to 16 April 1985 as follows:
$8,141.20 + $6,266.75 + $878.72 = $15,286.67

Therefore the revised gross amount of the debt is:

$96,539.20 - $15,286.67 = $81,252.53

An amount of $8,084.06 has been recovered by the Department by way of withholding's, leaving the outstanding balance of the debt at $73,168.47.

Whether the debt should be written off

It was submitted that the only applicable provision is that pertaining to "write off" in s1236(1C) of the 1991 Act.
Justice Matthews, as President of the Tribunal at the time, commented on the general meaning of the expression of "write off" in s1236 as the provision applied in 1995 Re L and Secretary, Department of Social Security (1995) 21 AAR 412:
In contrast with the waiver, the writing off of a debt does not extinguish it. The debt remains enforceable, but a decision is made not to pursue it, either indefinitely or for a set period. In either case, the decision can be reversed and enforcement proceedings commenced at any time in response to changes in the [debtor's] circumstances which led to the decision in the first place.
The write off provisions were inserted into the 1991 Act by the Social Security Amendment (Budget and Other Measures) Bill 1996 and applies to debts raised after 1 October 1997 or amounts of debts still outstanding as at 1 October 1997. The amendments codify the discretion to write off a debt. The Explanatory Memorandum discusses the purpose of the amendment:
Currently, section 1236 of the Social Security Act allows for a person's debt to be written off but does not specify the circumstances under which this may occur.
There have been a number of decisions of the Social Security Appeals Tribunal and the Administrative Appeals Tribunal which have resulted in the inappropriate use of write off. The Tribunals have tended, in some cases, to use write off as a pseudo waiver where waiver conditions are not satisfied and have purported to extinguish the Commonwealth's right of recovery of the whole of the debt or part of the debt. See for example, the decision of the Administrative Appeals Tribunal in Re Kratochvil (No. 2) 1995.
Accordingly, this amendment will codify the circumstances in which a debt can be written off. The amendment is intended to ensure consistency in decision making, permit write off in situations akin to its availability more generally under the Audit Act 1901, and prevent the undermining of the waiver provisions.
The new write off provisions were intended to codify the discretion and restrict the broader approach signified by the factors outlined by the Full Federal Court in Director-General of Social Services v Hales (1983) 47 ALR 281. That decision set out the following factors as a guide to the exercise of discretions under s140 of the 1947 Act, a forerunner of s251 of the 1947 Act:
(i) the fact that the applicant has received public moneys to which he or she was not entitled;
(ii) the way in which the overpayment arose, whether as a result of innocent mistake or fraud;
(iii) the financial circumstances of the prospective defendant;
(iv) the prospect of recovery;
(v) whether a compromise is offered;
(vi) whether recovery should be delayed if there is a prospect that the circumstances of the person who received the overpayment may improve ;
(vii) compassionate considerations and the fact that the Act is social welfare legislation and any financial hardship which may result from an action for recovery.
In Re Secretary, Department of Social Security and Wornes (AAT 12395, 14 November 1997) the Tribunal held that:
Subclause 105(4) is clear in its effect. If an application for review which relates or otherwise involves s1236 of the Act, (a provision of Part 5.4 of the Act) has not been finally determined before 1 October 1997, the amended s1236 of the Act must be applied to the determination of the application. S8 of the Acts Interpretation Act does not therefore apply.
The Department relied on the decision Re Wornes that s1236, as amended with effect from 1 October 1997, is the relevant provision to apply. That is, whether this debt should be written off on the grounds that Mr Perks has "no capacity to repay the debt" on the basis that recovery would cause "severe financial hardship".
Severe financial hardship
It was submitted for the Department that Mr Perks' circumstances have changed significantly since the SSAT decision, because he has been granted a pension from the DDB. The Department recognises that Mr Perks has severe health problems that cause him to incur additional costs. However, it was submitted that the debt involves a significant amount resulting from systematic fraud over a number of years. It was submitted that the debt must be recovered unless Mr Perks satisfies the test in s1236(1C), and no other considerations are relevant. Mr Perks has a capacity to repay and it is therefore inappropriate to write off the debt.
On 24 May 2000 the DDB advised Centrelink that Mr Perks' current gross fortnightly payment was $563.20 (exhibit A). This payment is assessed as "income" rather than "direct deduction" pursuant to s1168(4) of the 1991 Act. The DDB also noted that the cost of house cleaning by a paid housekeeper can be reimbursed, and medical costs related to a dust disease can be met by the DDB.
Mr Perks' income is $780.31 per fortnight, comprising $226.11 Disability Support Pension and $554.20 DDB compensation. It was submitted that if Mr Perks is arguing that his expenses leave no room for discretionary spending then the Department questioned how he was able to meet his expenses prior to receiving the DDB payment. It was submitted that a more appropriate response in Mr Perks' case was to arrange for a low level of repayment rather than writing off the debt.
The Department disagreed with the opinion expressed by the SSAT (paragraph 20) that the unlikelihood of the whole debt ever being recovered was a reason to write off the debt. It was submitted this would have the effect of a person with a very large debt being treated more leniently than one with a smaller debt.
It was submitted that the discretion contained in the phrase, 'severe financial hardship' should be viewed in the context of social security recipients generally, many of whom find it difficult "to make ends meet". Mr Perks' receipt of compensation from the DDB places him in a more favourable financial position than many other social security recipients.
It was submitted that Mr Perks receives a pharmaceutical allowance of $5.40, and he is also entitled to concessional prescription medicines through the Pharmaceutical Benefits Scheme ("the PBS"). It was submitted that he should not have to pay more than $3.20 for items listed on the PBS. In addition there is a safety net to assist people who require a lot of prescriptions by allowing free medicines after $166.40 has been spent in any one calender year.
It was submitted that recovery of the debt by means of deductions from Mr Perks' disability support pension would not place him in "severe financial hardship", and therefore the debt should be recovered by withholdings pursuant to s1231.
Rate of recovery
It was submitted that the Department's general policy is to withhold 14% of a person's basic pension rate. Where a person has income in addition to pension, a formula is employed to determine the withholding rate as follows:
The rate of withholdings is equal to the sum of:
14% of basic pension plus 55% of other income up to the free area (presently $102 per fortnight) and 27.5% of income over the income free area.

Applying this formula to Mr Perks:

14% of basic pension:   14% of $226.11         = $31.65
55% of income up to the free area:    55% of $102             = $56.10
27.5% of income over the free area: 27.5% of $452.20       = $124.55
Total:  = $212.30 per fortnight

However, the Department acknowledged that this formula had no force of law, nor did the Department urge the Tribunal to maximise the rate of recovery in order to attempt full recovery of the debt. However, the Department disagreed with Mr Perks' submission dated 31 May 1999, that the debt should be recovered at a rate of $5 per fortnight. Recovering the debt at such a low rate would be inappropriate and equivalent to writing off the debt. It was submitted that somewhere in the vicinity of $40 to $60 would be reasonable. The rate of recovery should also allow review by the Secretary from time to time.
Mr Perks
Mr Perks submitted that he was found guilty in the District Court in respect of fraud amounting to $935, and this therefore is the total amount of his debt to Centrelink. He said that because of previous withholdings of $8,084.06 the debt has already been repaid. In the alternative he submitted that he was found guilty of fraud amounting to $67,674.30. It was noted in his criminal trial that he would have been entitled to an amount of $17,000 had he claimed in his own name. When taking that amount into account as well as the money already repaid through withholdings, he submitted that his remaining debt is $42,590.24. However, it was also his case that there is no evidence that he received all or any of the money paid in the names already identified. Mr Perks repeatedly pointed to the transcript of the proceedings in the District Court that he considered should be taken as findings in these proceedings. He appeared unable to accept that these are separate proceedings and that the standard of proof in the criminal proceedings is not relevant here.

Entitlements from DDB

Mr Perks agreed that the DDB would meet medical and other costs if they relate to his asbestosis. However he is not entitled to be reimbursed for a housekeeper because at this stage his inability to clean his caravan is not due to his asbestosis, but to his other conditions of oesophagitis, osteoporosis, osteoarthritis, ischaemic heart disease, glaucoma, depression and a prostrate condition. He submitted that it may be three to four years until the doctors certify that his asbestosis has advanced to a stage where he is unable to clean his house.
Mr Perks informed the Tribunal that he visits his respiratory specialist once every six to eight weeks. He visits Dr Baker, his general practitioner, every week for his other conditions, but is not entitled to have these expenses met by the DDB. Mr Perks said that the DDB have now supplied him with an electric scooter, which increases the cost of travel for him.
Mr Perks submitted information regarding his weekly expenditure for medicine not on the PBS. In addition to the following prescription medicine, he said he needed to take other medications but he had difficulty in recalling them.

Medication not on PBS       Weekly Expenditure
Vitamin A $30.00 for 100 tablets       $2.50
Tenuate Dospan (Diet Pill) $35.90 for thirty tablets (he requires 15 per month)      $4.50
Modifast (Diet Pill) $52.00 per 21 sachets (takes for seven days every two months, 3 sachets a day)          $6.50
Rectinol $9.50 cost of one tube which lasts for 1 month      $2.40
Zinc and Caster oil Cream $8.00 per month $2.00
Senokot (laxative) $9.00 per month   $2.25
Gaviscon/Zoton (for oesophagitis) $8.50 per month $2.10
Nyal Decongestant (Nasal Spray) $6.50 per month $1.60
Vicks Nasal Inhalor $6.00 per month $1.50
Polydent (for teeth) $7.00 per month $1.75
Total – per week       $27.10

Mr Perks noted that whilst he gets a threshold of $171.60 or 52 scripts at $3.30 each, in reality he spends this money in the first four months of the year, by getting approximately 17 scripts of $56.10 in that period. He then has to wait 8 months to get the other 35 scripts at $115.50. He said that before he can obtain free medication, in the first four months he has to "go short" of the full medication list.

Mr Perks submitted that he receives a maximum of $6.60 a month from the DDB for medication. He noted that DDB consider that Centrelink should pay him mobility allowance, taxi cab allowance and housekeeper allowance, along with other allowances. Mr Perks said his oxygen machine burns up a lot of electricity and costs him $30 a fortnight.
Mr Perks submitted that prior to receiving compensation from the DDB he was unable to cope financially. Consequently he accumulated credit card debts of approximately $10,000, largely due to medical expenses.
Mr Perks submitted that the Department has had almost 16 years to take civil action, and it is inappropriate to take action now. He submitted that the debt should be written off due to his financial hardship and poor health. He submitted that recovery should not be akin to punishment, nor should it cause financial hardship. He submitted that the following decisions supported his case: Re L and Secretary, Department of Social Security (1995) 21 AAR 412; Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26; Re Darker and Secretary, Department of Social Security (1987) 14 ALD 545; Re McMahon and SDSS (1997) (AAT 12250, 30 September 1997).
Mr Perks submitted that the deductions from his social security pension since 1988 have amounted to a form of punishment or double jeopardy.
consideration of evidence and finding of fact
The Tribunal finds, based on the most recent calculations of Centrelink, that Mr Perks' debt to the Commonwealth now stands at $73,168.47, $8,084.06 having been recovered already by way of withholdings. That debt arose as the result of Mr Perks' fraudulent action in claiming unemployment benefit under twelve different names, none of which were his own name. An adjustment to the debt has been made to take account of his likely entitlement to receive unemployment benefit in his own name during the relevant period had he made such a claim.
The Tribunal does not accept the submissions of Mr Perks that his debt should be confined to the amounts involved in his previous criminal trials. There are various reasons why the Department may not choose to pursue criminal action in respect of the whole of the debt, which are of no concern to the Tribunal. Indeed, recovery of the debt can be justifiable even where no criminal action has been pursued. The Tribunal accepts the submissions on behalf of the Department demonstrating the legal basis for raising the debt as it has.
The Tribunal notes that Mr Perks was sentenced to imprisonment in relation to his fraudulent activity and that he served three years in jail. However, while that represents punishment for his crime, there is no indication in the records of the criminal proceedings that Mr Perks was required to make any reparation, and indeed apart from the withholdings of $8,084.06 the rest of the debt remains. Despite the fact that Mr Perks has been punished by imprisonment it is necessary for the debt to be recovered unless the debt is to be written off or waived. The 1991 Act and the relevant case law set out the circumstances in which a debt can be written off or waived.
The Tribunal finds that pursuant to s1236(1) of the 1991 Act there are no grounds for writing off Mr Perks' debt as he does not meet any of the criteria set out in s1236(1A).
The Tribunal finds that Mr Perks suffers from serious and very disabling medical conditions that may affect his life expectancy, the worst being the effects of asbestosis, for which he now requires oxygen on a regular basis. The Tribunal finds that Mr Perks has the need for extensive medication for his various conditions, and that it is only the medication in respect of his asbestosis that attracts a refund by the DDB. The Tribunal also finds that Mr Perks' respiratory problems, arising from his asbestosis, severely limit his mobility, and consequently necessitate the use of taxi transport on a regular basis. He will be entitled to housekeeping assistance refunded by the DDB if his asbestosis prevents him from undertaking his own housekeeping. It is not clear that Mr Perks has made any claim on DDB in regard to housekeeping.
The Tribunal does not consider that the debt should be written off, and accepts the quantum of the debt as calculated by the Department. In making this decision the Tribunal accepts the evidence that Mr Perks is in ill health and may have a limited life expectancy. However, his limited life expectancy is not a relevant consideration under s1236(1C). The Tribunal must consider whether deductions from Mr Perks' pension would cause him severe financial hardship, that being the only test. Mr Perks' health is only relevant insofar as he incurs costs for medicine and treatment as a result of his various conditions.
The Tribunal notes that Mr Perks has included in his estimate of expenses those items that are refundable by the DDB. Although it is possible that Mr Perks has not taken full advantage of his entitlement through the DDB, it is also possible that he has included those items in his list of expenses in order to inflate his expenses for the purpose of aiding these proceedings. The Tribunal found Mr Perks not to be credible, and noted that he used numerous opportunities during the hearing to manipulate and distort the evidence to his own advantage.
The Tribunal finds that Mr Perks' financial situation has substantially improved since the time of the SSAT decision, as a result of receiving ongoing payments of compensation from the DDB. The Tribunal finds that his present income is $780.31 per fortnight. Mr Perks' "conservative estimate" of his fortnightly expenses is $711.20, and the Tribunal has noted already that some of those costs would appear to be covered by the DDB. Some, too, may be costs that he now needs to reconsider, including the storage shed at Port Macquarie. The Tribunal finds that Mr Perks has some capacity to repay the debt. The Tribunal also notes that the Department does not urge recovery calculated at $212.30 per fortnight, based on its standard formula. Rather, it was submitted for the Department that the "ball park" figure of about $40 to $60 per fortnight would be a reasonable amount of withholdings in Mr Perks' case.

On the evidence the Tribunal finds that it is well within Mr Perks' ability to repay at the rate of $60 per fortnight as withholdings from his pension. From the first pay day after the date of this decision Centrelink shall deduct withholdings of $60 per fortnight.
Mr Perks submitted that the debt should not be recovered now because it related to money received by him 16 years ago. The Tribunal notes (T10) that the debt was raised and action commenced to recover the debt within 6 years and therefore that action complies with s1231(2A) of the Act.
Mr Perks relies on the case of Re L and Secretary, Department of Family and Community Services, which applied the Hales factors that in any event have since been codified and restricted by amending legislation. However, in that matter Justice Matthews noted that L could not be considered as a person who has fraudulently sought to use the social security system for her own gain, and there were thus no policy reasons which suggested that her financial hardship should not be taken into account. The Tribunal would therefore distinguish Ms Perks' case from that of L. Moreover, now that Mr Perks has been granted DDB payments his financial position is much better than most other pensioners, notwithstanding any extra costs he might have in respect of his poor health other than his asbestosis which is covered by the DDB payments.
The Tribunal notes the response from DDB to Centrelink dated 24 May 2000 indicating in effect that Mr Perks does not have any further claim to be determined by them (exhibit A). This is contrary to Mr Perks' evidence to the Tribunal that he was seeking a lump sum payment of about $120,000 from the DDB. If that payment materialises, it is possible that the remainder of the debt could be recovered. However, even if there is little chance of the whole debt being recovered in Mr Perks' lifetime, the Tribunal considers that while Mr Perks is in his present circumstances recovery should be pursued. The Tribunal understands that the Department can and does review the rate of recovery from time to time. Nothing in these reasons is intended to preclude a review of Mr Perks' circumstances in the event of any change in the future.
I certify that the 68 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs M T Lewis, Senior Member and Mr J Barber, Member.
Signed:         .....................................................................................
  Associate
Dates of Hearing  30 March 2000 and 28 June 2000
Date of Decision  8 August 2000
Mr Perks was unrepresented at the hearing.
The Department was represented by Mr B Slattery.