Simpson and Secretary, Department of Family and Community Services

[2000] AATA 1078

DECISION AND REASONS FOR DECISION [2000] AATA 1078

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2000/657

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      LESTER ROBERT SIMPSON     
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Dr E K Christie, Member   

Date7 December 2000

PlaceBrisbane

Decision      The decision under review is varied to the extent that the recovery of the debt of $3016.13 in respect of the period 22 May 1998 to 23 November 1999 should be written off.     
  ............(Signed)..................................
  DR E K CHRISTIE
  MEMBER
CATCHWORDS
SOCIAL SECURITY - Rental allowance – overpayment – whether appropriate to waive overpayment because of administrative error or special circumstances – whether appropriate to write off overpayment
Social Security Act 1991: s 1236, 1237A, 1237AAD
Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3
Director-General of Social Services v Hales (1983) 47 ALR 281
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re L and Secretary, Department of Social Security (1995) 21 AAR 412

REASONS FOR DECISION

7 December 2000   Dr E K Christie, Member               

1. This is an application by Lester Robert Simpson to review a decision of the Social Security Appeals Tribunal ("the SSAT") made on 28 May 2000 which set aside a decision made by Centrelink on 16 December 1999.  The SSAT decided that the recovery of the debt of $3,016.13 in respect of the period 22 May 1998 to 23 November 1999, should be written off for a period of two years.

2. At the hearing, Mr. Simpson represented himself.  The           Department of Family and Community Services ("the Department") was represented by Mr. R. McQuinlan, a Departmental Advocate.

3. At the hearing, the Tribunal had in evidence before it documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act1975, the "T" documents (Exhibit 1) and the following document:

• Exhibit 2:  Letter of Mr. L.R. Simpson, 20 November 2000.

ISSUES BEFORE THE TRIBUNAL

1. The only issues for the Tribunal to decide was whether the debt should be waived under the "administrative error" or "special circumstances" provisions of the Social Security Act 1991 ("the Act");  alternatively, whether the debt should be written off.
   FACTS

2. The SSAT made the following findings of facts:

   "(I)Mr Simpson was in receipt of newstart allowance and rent assistance for the period 28 August 1997 to 23 November 1999.

   (ii)Mr Simpson was residing in a property owned by a company of which he was both a director and shareholder.

   (iii)Rent assistance was paid to Mr Simpson by Centrelink as the result of administrative error for the above period.

   (iv)On 22 May 1998 Mr Simpson was sent a notice advising that he was recorded as paying $370 per fortnight rent by Centrelink.

   (v)Mr Simpson upon receipt of this notice failed to clarify his position.

   (vi)Mr Simpson is in severe financial hardship and is being treated for depression."

1. Mr. Simpson and his partner were the sole shareholders of Vamapu Pty Ltd trading as Bushranger Country Hideaway.

2. Mr. Simpson is being treated for the medical conditions of depression and anxiety, blood pressure, bronchial asthma, left eye damage and eczema.  He is currently on sickness benefit.
   CONTENTIONS AND SUBMISSIONS OF THE PARTIES

3. Mr. Simpson submitted that the 1997 introduction of gun laws and restrictions on firearms ruined his business.  Severe financial difficulties "closed in very quickly" from these restrictions, at a time when he had made major capital investment in his business.

4. Mr. Simpson provided the following estimates of his current debts:

• Accountant:                   $  18,000

• Family/Friends loans:    $117,000

• Group Tax Debit:           $  80,000

• Company Debts:           $  30,000

• Credit Cards:                  $  24,000     $269,000

1. Mr. Simpson stated that he had been led to believe from responses he received from politicians that compensation would be paid where it could be established that the introduction of gun laws "seriously affected the outcome of a business".  Mr. Simpson said that he had spent the last four years fighting the Commonwealth and New South Wales governments for the compensation he believed he was entitled, arising from the adverse impacts of the gun laws on his business.  However, all attempts, to date, to obtain compensation had failed as he has been "shuffled around without an answer".  The end effect of his ever-increasing debt load was stress, resulting in anxiety and depression.

2. A further stressor in Mr. Simpson's life, since 1997, was that he had to deal with the terminal illness of his step-father and the responsibility for the care of his aged mother on the death of her husband - at a time when she was suffering dementia.

3. An additional source of major stress for Mr. Simpson arose, with his neighbours.  Mr. Simpson had reported their marihuana cultivation and production to the Ombudsman, local police and the New South Wales Inspector of Police.  The end effect of the harassment that followed was that his partner of 20 years had a nervous breakdown and had left him.  She had then moved to the Gold Coast.

4. Mr. Simpson said that the result of all these stressors in his life was that he had been treated for depression and blood pressure since 1997.  He had also been on the verge of suicide.  Furthermore, as a result of his medication regime, he had short-term memory loss problems "basically for the past few years".  He no longer had his normally sharp memory – and retained very little of what he read.  Simple tasks like writing a letter now took him a few days to complete.

5. In response to the Centrelink Notification Notice (T6 Folio 59), Mr. Simpson acknowledged that he had been remiss in not reading the notification notice, dated 22 May 1998;  he had assumed it was the same as previous letters and so had not read the notice.

6. Mr. Simpson stated that his partner had moved to rental property on the Gold Coast  in July 1997 and had applied for rent assistance.  Mr. Simpson submitted that it appeared Centrelink had applied the amount of rent his partner had stated in her application ($370 per fortnight) against his name, as he had not applied for rent assistance.

7. Mr. Simpson concluded by stating that he wished to avoid bankruptcy in order to be able to re-establish his business in Queensland – or elsewhere, possibly as a joint venture.  In addition, Mr. Simpson said that if he received the compensation he believed he was entitled to, that there would be no problem in repaying his debt to the Department.

8. Mr. McQuinlan referred the Tribunal to some confusion in answers given by Mr. Simpson in the following completed forms:

• Newstart Allowance (T5 Folio 52, 5 June 1997):  See Question 21

• Rent Assistance Questionnaire (T16 Folio 95, 1 December 1999):  See Question 6

1. Mr. McQuinlan then referred to the Centrelink File Note (T20 Folios 106, 107) which confirmed that Centrelink could not locate a copy of his application for rent assistance in 1997.  Furthermore, any claim for rental assistance made by Mr. Simpson beyond this date "would have been placed in to batch storage and shredded after 18 to 24 months".

2. Mr. McQuinlan submitted that the overpayment of rental assistance could not be waived under the "administrative error" provisions of the Act because Mr. Simpson had contributed to the error by failing to read the notification notice (T6, 22 May 1998) and so becoming aware that he was receiving rental assistance. A failure to read the notice was not a basis for not complying with the notice. In addition, further notification notices were sent to Mr. Simpson over time (T7 – T14) making him aware of his rental assistance entitlement.

3. Applying the reasoning of Finn J in Department of Education, Employment, Training and Youth Affairs v Prince (1998) 50 ALD 186, Mr. McQuinlan contended that an additional effect of the notification notice (T6, 22 May 1998) was such that Mr. Simpson "had reason to know" he was receiving rental assistance in his social security benefit to which he was not entitled. As a result, it could not be said that Mr. Simpson received this payment in "good faith".

4. Mr. McQuinlan acknowledged the financial and emotional difficulties encountered by Mr. Simpson, over a long period of time, but contended that the circumstances in which he received the overpayments of rental assistance were not "unusual", "uncommon" or "exceptional" to justify waiver of the debt because of "special circumstances".

5. Mr. McQuinlan concluded with the submission that the approach taken by the SSAT to write off the debt for a two year period was the correct one.  Whilst, acknowledging that Mr. Simpson was confronted with a bleak future, there was the possibility that his position may improve in time.  Mr. Simpson could receive compensation, or could commence another venture elsewhere, and so forestall bankruptcy.  The SSAT decision to write off the debt for a two year period effectively deferred any recovery of this amount for that time.  After this time, the Department would only look at recovery of the debt that had been written off if Mr. Simpson's financial circumstances had improved.
   CONSIDERATION OF THE ISSUES

6. The objective of the Tribunal is to review administrative decisions, not only on their merits, but in accordance with the law at all times.  The relevant legislation is the Social Security Act 1991.

7. The first question to be considered relates to the credibility of Mr. Simpson and the veracity of his account as to his dealings with Centrelink.  I accept Mr. Simpson acted honestly in all his dealings with Centrelink and his account to be consistent over time.

8. Section 1237A(1) of the Act provides for a waiver of a debt due by a recipient of social security where debt arose from "administrative error".

   "SECTION 1237A – WAIVER OF DEBT ARISING FROM ERROR
   1237A(1) Administrative error.  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)."

1. With respect to waiver on the basis of "administrative error", the Tribunal finds that there is no basis to waive the debt because the error has been solely caused by the Commonwealth.  Mr. Simpson's failure to read the notification notice and so become aware of his obligations to inform Centrelink, has contributed to the error.

2. Section 1237AAD of the Act provides for a debt due by a recipient of social security to the Commonwealth to be waived because of "special circumstances".

   "SECTION 1237AAD – WAIVER IN SPECIAL CIRCUMSTANCES
   1237AAD  The Secretary may waiver the right to recover all or part of a debt if the Secretary is satisfied that:

   (a)the debt did not result wholly or partly from the debtor or another person knowingly:

   (i)making a false statement or a false representation;  or

   (ii)failing or omitting to comply with a provision of this Act or the 1947 Act;  and

   (b)there are special circumstances (other than financial hardship alone) that make it desirable to waive;  and

   (c)it is more appropriate to waive than to write off the debt or part of the debt."

1. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the court acknowledged that the phrase "special circumstances" was "incapable of precise or exhaustive definition", nevertheless stated that the circumstances "must have a particular quality of unusualness that permits them to be described as special".

2. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to the Federal Court's decision in Beadle (supra, 1985), observed that "special circumstances":

   "would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case… It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary."

1. The Tribunal concludes that the circumstances in which the overpayment of rental assistance were paid to Mr. Simpson were not sufficiently unusual to justify the description "special circumstances".  In addition, Mr. Simpson has endured the same consequences as any other social security recipient who has failed to respond to obligations contained in a notification notice.  Whilst, this conclusion may seem harsh, it would be fairer to say the outcome is unfortunate.  The outcome is dependent on the legislation, but the legislation provides the Tribunal with no discretion from which to depart.

2. Section 1236 of the Act provides for a debt due to the Commonwealth to be "written off".

   "SECTION 1236  SECRETARY MAY WRITE OFF DEBT
   1236(1)  [Write off of debt]  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)  [Class of debts]  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)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."

1. In terms of "write off" the comments of Mathews J in relation to the provisions of the Act in Re:  L and Secretary, Department of Social Security (1995) 21 AAR 412 are particularly relevant. Mathews J summarised the position at page 428 as follows:

   "In summary, I consider that matters relating to the personal financial hardship of the individual are always relevant in any decision as to write-off under section 1236(1).  Retrospective considerations may occasionally be relevant.  The essential enquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned.  Will recovery cause such financial hardship as to run contrary to the beneficial nature of the legislation?  If an affirmative answer is reached to this question, then it would be appropriate to defer recovery in the manner contemplated by section 1236(1)."

1. On consideration of all the evidence before the Tribunal, in relation to issues such as:

• The feasibility of recovery and the financial means and obligations of Mr. Simpson;  and

• Compassionate considerations and the fact that the Act is social welfare legislation in relation to any financial hardship to Mr. Simpson that may result from any action for recovery (see Director-General of Social Services v Hales (1983) 47 ALR 281),

the Tribunal concludes that write off of the debt is appropriate, as Mr. Simpson has no capacity to repay the debt.

1. Moreover, given the evidence on these issues (particularly paragraphs 9, 10, 13), and the fact that there appears to be no certainty, whatsoever, of compensation payment being received by Mr. Simpson, the Tribunal concludes that the two year limit on the write off period, imposed by the SSAT decision, is quite arbitrary and should be omitted.

2. For all of the above reasons, the decision under review is varied to the extent that the recovery of the debt of $3,016.13, in respect of the period 22 May 1998 to 23 November 1999, should be written off.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Dr E K Christie, Member

Signed:         .....................................................................................
           R. Hayes, Associate

Date/s of Hearing  21 November 2000
Date of Decision  7 December 2000
Applicant  Mr. Simpson, himself
Respondent  Mr. R. McQuinlan, Departmental Advocate