Pirotta and Secretary, Department of Social Services (Social services second review)
[2015] AATA 874
•13 November 2015
Pirotta and Secretary, Department of Social Services (Social services second review) [2015] AATA 874 (13 November 2015)
Division
GENERAL DIVISION
File Number(s)
2014/4387
Re
Catherine Pirotta
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 13 November 2015 Place Sydney The decision under review is set aside and the matter is remitted to Centrelink to calculate the debt due by Ms Pirotta in accordance with this decision.
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Senior Member J F Toohey
CATCHWORDS – social security – disability support pension – overpayment – whether special circumstances – whether recovery fee should be imposed – whether applicant had reasonable excuse – decision under review set aside
Legislation
Administrative Appeals Tribunal Act 1975 s 37
Social Security Act 1991 ss 1237A, 1237AAD, 1228B
Social Security (Administration) Act 1999 s 68(2)
Cases
Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth and Secretary, Department of Social Security (1995) FCA 1708
Timothy Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 114
Secondary Materials
Guide to Social Security Law
REASONS FOR DECISION
Senior Member J F Toohey
Background
Catherine Pirotta was born with total deafness in one year and partial deafness in the other. From about three years of age, she received what was then known as Handicap Allowance. She has been paid disability support pension (DSP) since April 1990.
After obtaining her Higher School Certificate, Ms Pirotta completed a TAFE course in library studies. Since November 1998, she has been employed for 20 hours a week in the records library at the Mount Druitt Hospital.
Ms Pirotta’s mother is her nominee for the purposes of dealings with Centrelink. For reasons I will come to, neither Ms Pirotta nor her mother notified Centrelink of her employment. It appears it came to light in the course of a conversation between her mother and a Centrelink officer in late 2013. Centrelink subsequently obtained information from Ms Pirotta’s employer which led to an overpayment being raised for the period 12 November 1998 to 8 October 2013 in the amount of $113,588.18 with an additional 10 percent recovery fee of $11,358.80.
On 6 May 2014, Centrelink reviewed its decision at Ms Pirotta’s request and determined there was no legally recoverable debt before 3 May 2007 by reason of its failure to send statutory notices to her prior to that date.
For the remaining period, from 3 May 2007 to 8 October 2013, Centrelink determined that Ms Pirotta had been overpaid a total of $60,902.47, with an additional 10 per cent recovery fee of $6090.24. Centrelink further determined there were no special circumstances by reason of which any of the debt should be waived and no reason why the recovery fee should not be imposed.
On 30 July 2014, the Social Security Appeals Tribunal (SSAT) affirmed Centrelink’s decision.
On 1 July 2015, the SSAT amalgamated with the Administrative Appeals Tribunal (AAT) and became the Social Services and Child Support Division of the AAT. Under the transitional provisions in the Tribunals Amalgamation Act 2015, Ms Pirotta’s application to the SSAT is taken to be an application for “AAT first review” and her application for review of that decision one for “AAT second review”.
The issues
There is no dispute that, based on her earnings during the period from 3 May 2007 to 8 October 2013, Ms Pirotta was overpaid a total of $60,902.47 in DSP. There is no dispute that that amount is a debt to the Commonwealth. I have to decide:
(a)whether there are any special circumstances by reason of which all or any part of the debt should be waived;
(b)whether the additional recovery fee can lawfully be imposed.
Information before the Tribunal
Ms Pirotta and her mother gave evidence before the Tribunal. Also before the Tribunal are written submissions prepared by Legal Aid NSW for the purposes of Ms Pirotta’s application to the SSAT, and a large bundle of documents provided by Centrelink in accordance with s 37 of the Administrative Appeals Tribunal Act 1975.
Ms Pirotta’s employment
Ms Pirotta and her mother gave evidence that, after completing her TAFE course, she obtained work through a Job Network Provider (JNP) affiliated with Centrelink. There is no evidence available to the Tribunal about the precise relationship between JNPs and Centrelink at the time, but the role of the JNP was to assist Ms Pirotta to look for suitable work.
When no suitable positions were available in libraries, the JNP identified a position in the medical records department at Mt Druitt Hospital. The JNP assisted Ms Pirotta on site at the hospital for the first few weeks, at the end of which her manager at the hospital told the JNP and Ms Pirotta that she was able to work independently.
According to Ms Pirotta and her mother, the manager at the hospital told her and the JNP that she had been put on the payroll and they had notified Centrelink of her position and her hours of work.
Ms Pirotta has worked in the same position at the hospital since 1998. With occasional exceptions, she has worked 40 hours a fortnight on the same days each week since 1998. She has declared her income from the hospital and her DSP on her tax returns each year.
Centrelink notices
Ordinarily, Centrelink issues notices under subsection 68(2) of the Social Security Administration Act 1999 to pension recipients advising of such matters as changes in legislation, rates of payment and reporting requirements. Several such notices are usually sent each year.
For reasons which are not clear, but which Centrelink acknowledges was an administrative error, no notices were sent to Ms Pirotta from November 1998 when her DSP payment commenced up until 3 May 2007.
From May 2007, Centrelink sent notices to Ms Pirotta through her mother. The original formatting of the letter is not apparent from the computer-generated copies before the Tribunal but each included the following.
You must tell Centrelink within 14 days (28 days if residing outside Australia) if any of the things listed below happen or are likely to happen to you. If any of these changes happen, the amount of payment you get may change
.…
You must tell us if you: Employment start, stop, go back to or change work in any form of profession, trade, business or self-employment have any change to your income from employment (the amount you earn goes up or down)…”
Ms Pirotta and her mother say they had always understood that Centrelink was aware of the details of her employment from when she was first employed and from information provided to Centrelink for the purposes of review of her continuing qualification for DSP (see below). They say that she had been working for nine years while receiving DSP before she was sent any notices. When they did receive notices from May 2007, they required Ms Pirotta to notify Centrelink of any change in employment or income. In that time, and subsequently, nothing about her employment had changed since November 1998.
DSP review forms
Approximately every two years, Centrelink has sent Ms Pirotta DSP review forms to assess her continuing qualification for DSP. She says that, on each occasion, she would provide details of her employment and the hours she was working, and her doctor would complete a medical report to the effect that she was managing to work 20 hours a week. (Under the provisions that applied when Ms Pirotta qualified for DSP, she could work for up to 30 hours a week and still qualify for DSP).
Ms Pirotta says Centrelink never contacted her regarding her employment income even after receiving the completed forms which she handed in to her local Centrelink office.
Copies of the DSP review forms completed by Ms Pirotta and her doctor are not available. Centrelink has provided a copy of the review form currently in use. It asks for details of a recipient’s employment for the purposes of assessing whether he or she has completed a Program of Support. The requirement to complete a Program of Support was introduced by legislative amendment in September 2011 and does not apply to Ms Pirotta. Without seeing the review forms that Ms Pirotta and her doctor had to complete, I cannot know with any certainty what information was provided but I accept that information along the lines Ms Pirotta describes was included in the forms each time.
Relevant legislation: waiver of debts
The relevant legislation is in the Social Security Act 1991 (the Act). It provides that a debt must be waived where it is wholly attributable to administrative error and the debtor received the payment in good faith: s 1237A. There have been some amendments to the Act since November 1998 but they are not material. In effect, Centrelink waived recovery of the overpayment to Ms Pirotta in the period from 12 November 1998 to 3 May 2007 on the ground that it was wholly attributable to administrative error in failing to send her notices throughout that period, and she received the payment in good faith.
While I accept that Ms Pirotta received payments in the period from 3 May 2007 to 8 October 2013 in good faith, there is no suggestion that the overpayment in that period was attributable solely to administrative error. There is, therefore, no requirement that the debt be waived.
Section 1237AAD of the Act provides that 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.
I am satisfied, and I do not understand the Secretary to dispute, that Ms Pirotta’s debt did not result wholly or partly from her or anyone else making a false statement or representation, or failing to comply with any relevant legislative provision. If it is appropriate to waive any of the debt, I am satisfied that is more appropriate than writing off the debt. (The provisions concerning writing off the debt do not apply to Ms Pirotta).
Are there any special circumstances by reason of which all or any part of the debt should be waived?
It remains to consider whether there are special circumstances, other than financial hardship alone, that make it desirable to waive any of Ms Pirotta’s debt.
The meaning of the expression “special circumstances” for the purposes of the Act has been considered by the Tribunal and the courts on many occasions. It is “by its very nature incapable of precise or exhaustive definition” and contemplates circumstances that are “unusual, uncommon or exceptional”: Beadle and Director-General of Social Security (1984) 6 ALD 1. Other formulations are circumstances that distinguish an applicant’s case from others’ and take it “out of the usual or ordinary case”: Groth and Secretary, Department of Social Security (1995) FCA 1708.
In other cases, the Tribunal has looked to whether strict enforcement of liability would be “unjust, unreasonable or otherwise inappropriate”: Re Ivovic and Director-General of Social Services [1982] AATA 57; and whether any injustice or unfairness would be visited upon the applicant that is not visited upon all other recipients of social security payments: Timothy Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 114.
I am satisfied that there are aspects of Ms Pirotta’s circumstances that make them unusual and take them out of the ordinary. As a starting point, it was unusual that Centrelink did not send her any of the usual statutory notices for nine years. Once notices were sent, they required her to notify Centrelink of any changes in her employment. In the period from November 1998 to May 2007, nothing about her employment changed; she worked in the same position, for the same number of hours, on the same days, for nearly 20 years; her wages remained the same subject to ordinary annual increases.
This combination of circumstances was unusual and, I accept, led to the overpayment. I accept without hesitation that neither Ms Pirotta nor her mother intended at any time to conceal her income from employment. The fact that she disclosed her income and DSP in her annual tax returns, and her employment was referred to in the DSP review forms, confirms this. All that said, Ms Pirotta has had the benefit of the substantial overpayment that she was not entitled to.
In all the circumstances, in my view, a reduction of 20 percent of the debt is fair and reasonable.
Relevant legislation: imposition of a recovery fee
Subsection 1228B(1) of the Act provides for an additional 10 percent to be added to a DSP debt that arose wholly or partly because the person refused or failed to provide information in relation to his or her income, or knowingly or recklessly provided false or misleading information in relation to his or her income.
Subsection 1228B(2) does not apply if the Secretary is satisfied that the person had a reasonable excuse for refusing or failing to provide the information: s 1228B(4).
The expression “reasonable excuse” is an ordinary one and should be given its ordinary meaning. In the context of subsection 1228B(2), the Guide to Social Security Law (the Guide), which represents government policy, describes the meaning of reasonable excuse as “discretionary” but one that an ordinary member of the community would accept as reasonable in the circumstances. For example, it states, the refusal or failure to provide information must not simply be a deliberate act of non-compliance: cl 6.7.1.45
The Secretary submits that Ms Pirotta does not have a reasonable excuse for failing to comply with the notices issued to her requiring her to advise Centrelink of changes in her income. I do not agree. There is no suggestion that Ms Pirotta or her mother attempted to conceal her income. I accept that it was reasonable for them to understand Centrelink’s notices as requiring them to notify any changes in her employment. I accept it was reasonable for them to think that employment had not changed since 1998.
I am satisfied that Ms Pirotta had a reasonable excuse for failing to provide information in relation to her income. It follows that subsection 1228B(1) does not apply to the overpayment raised.
Conclusion
The decision under review is set aside and the matter is remitted to Centrelink to calculate the debt due by Ms Pirotta in accordance with this decision.
37. I certify that the preceding 36 (thirty-six) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey.
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AssociateDated 13 November 2015
Date(s) of hearing
2 November 2015
Representative for the Applicant
Terri Pirotta
Representatives for the Respondent
Ms Kate Martini, Government Lawyer
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