Smillie and Secretary, Department of Family and Community Services

[2003] AATA 464

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION  [2003] AATA 464

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2002/620

GENERAL ADMINISTRATIVE DIVISION		)
Re		SHANE JON SMILLIE

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr O Rinaudo, Member

Date23 May 2003

PlaceBrisbane

Decision The Tribunal sets aside the decision under review. 

(Sgd) O Rinaudo
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – disability support pension – overpayment – applicant in gaol – whether applicant entitled to receive benefits – whether debt properly raised – whether debt should be waived – special circumstances – whether applicant knowingly failed to comply with his obligations under the Social Security Act 1991

Social Security Act 1991

Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Re Beadle and Director-General of Social Security (1986) 6 ALD 1
Beadle v Director-General of Social Security (1985) 60 ALR 225
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Neivandt and Secretary, Department of Family and Community Services [2000] AATA 1115

Re Condren and Secretary, Department of Family and Community Services [1999] AATA 575
Condren v Secretary, Department of Family and Community Services (2000) 60 ALD 471
Re Junor and Secretary, Department of Social Security (AAT No 11802, 24 April 1997)

REASONS FOR DECISION

23 May 2003 Mr O Rinaudo, Member    

1.      This is an application for review of a decision of the Social Security Appeals Tribunal (SSAT), dated 17 June 2002, which affirmed the decision of a delegate of the respondent to cancel the applicant’s disability support pension and to raise and recover an overpayment of benefits made to the applicant during the period 19 February 2002 to 12 March 2002. Centrelink calculated that the applicant was overpaid the sum of $792.99.  Mr Smillie had been in receipt of a disability support pension for some time before being convicted of criminal offences and being imprisoned in February 2002.

2.      This matter was heard by the Tribunal on 26 November 2002.  The applicant  appeared in person.  The respondent was represented by Ms H Wallis-Dunn, a Departmental Advocate.  The following exhibits were tendered at the hearing:

§Exhibit 1:  “T” Documents

§Exhibit 2:  Statutory Declarations

§Exhibit 3:  Facsimile from the Department of Corrective Services

§Exhibit 4:  Update with regard to the applicant’s debt position from the Department of Family and Community Services (DFCS)

§Exhibit 5:  Financial Records

Factual Background

3.      The applicant had been in receipt of a disability support pension from 1993 until the decision to cancel his pension was made on 15 March 2002.  This decision was taken after the respondent became aware that the applicant had been sentenced to a term of imprisonment.  The applicant was convicted of the offences of arson and fraud with circumstances of aggravation on 12 February 2002.  The applicant was subsequently acquitted on appeal.

4.      The respondent contends that the overpayment of disability support pension arose as a result of the applicant failing to comply with his notification obligations under the social security legislation, in that he failed to advise the department of his imprisonment.

Evidence Before the Tribunal

5.      The applicant provided the Tribunal with a number of statutory declarations from other inmates at the Arthur Gorrie Correctional Centre.  David Daley, Victor McFarlane and Christopher Bennett all declared that, at their induction at the gaol, they were advised that Centrelink had been or would be notified of their imprisonment and that they were not required to notify Centrelink personally.  The applicant provided a statutory declaration in similar terms.  He stated.

“I was informed at induction at R&R also know as Arthur Gorrie Correctional Center (sic) + asked the induction officer if I had to notify Centerlink (sic) + was told that Centerlink (sic) was informed the day I arrived in the center (sic) so there was no need.  So it was my beleave (sic) that my pension had been surspened (sic) untill (sic) my releace (sic).”

6.      The applicant gave evidence at the hearing.  He stated he was wrongly convicted and should never have been put in gaol.  If he had not been put in gaol the debt would never have occurred.  Mr Smillie was later acquitted of the offences and released from prison.

7.      Mr Smillie said that, in any event, he was advised that the authorities in the gaol would notify Centrelink.  He assumed this had been done as he was told they would do it and he did not have to do anything.

8.      Mr Smillie spent seven months in prison and during that time he did not have access to his bank accounts.  He was not made aware of the debt until he left prison.

9.      Mr Smillie was sued.  He lost his house and everything else.  He has had to rely on the Salvation Army for assistance.  He still has a debt to his solicitors.  He is considering going bankrupt.

10.     He has many health issues including suffering a heart attach in 1982, angina and diabetes.  Mr Smillie said that he had been in receipt of a pension since 1995 and had received notices over the years.  He said that he did not recollect receiving the specific notice at folio 21 of the T documents, but conceded that he may have received it.  He said that he would not have read it as he does not read.  He said that he can talk to people.

11.     Mr Smillie said that if it was not for his friends he would be dead.

12.     Mr Smillie believed that the debt should be waived as he would never have had the debt if he had not been wrongly convicted in the first place.  Mr Smillie was also aggrieved because he was told the prison authorities would notify Centrelink of his imprisonment.

Legislative Framework and Consideration

13. Pursuant to s 1158 of the Social Security Act 1991 (the Act), a social security pension is not payable to a person in respect of a day on which the person is in goal.  The Tribunal is satisfied that, during the period of overpayment, the respondent was imprisoned and therefore was not entitle to receive the payments made to him.  Therefore, the Tribunal is satisfied that the overpayment of disability support pension is a debt due to the Commonwealth under s 1223(1) the Act.  This means that, unless there is some basis for the waiver of the debt under the Act, the monies paid to Mr Smillie must be repaid.

14.     The Act sets out the circumstances where the right to recover a debt due to the Commonwealth may be waived.  These include situations where there has been an administrative error, or where there are special circumstances (other than financial hardship alone) that make it desirable for the debt to be waived.  The Tribunal is satisfied in this case that the debt did not arise as a result of an administrative error.  Therefore, the only relevant waiver provision for the Tribunal to consider is the section regarding special circumstances.

15.     Section 1237AAD of the Act provides the Secretary with the discretion to waive all or part of the debt owed by the applicant where there are special circumstances.  This section provides:

“The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

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

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

(ii)  failing or omitting to comply with a provision of this Act 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”.

16.     The first issue for consideration is whether the debt arose wholly or partly from the applicant “knowingly failing” to comply with his obligations under the Act to notify of the changes in his circumstances. The principles in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 at 445 are relevant with respect to the meaning of “knowingly” in s127AAD:

“There is nothing in s1237AAD which suggests that the word ‘knowingly’ should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act.  That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual knowledge at the tome and to events surrounding the false statement or the act or omission”.

17.     In this case, the respondent sent letters to the applicant notifying him of his obligations under the Act, and the applicant does not dispute that he knew he was required to notify Centrelink of any changes in his circumstances. The applicant contends that he did comply with his obligations under the Act, in that he relied on his custodians to notify Centrelink of his imprisonment on his behalf.  The Tribunal accepts the applicant’s evidence in this regard, and therefore finds that the debt did not wholly or partly arise from the applicant “knowingly failing” to comply with his obligations.  Such a finding allows the Tribunal to consider the question of whether there are any special circumstances in this case that would warrant the exercise of the discretion to waive the right to recover the debt owed by the applicant.

18.     In order for the circumstances of this case to be considered “special” there must be circumstances which are “unusual”, “uncommon” or “exceptional” (see Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3) to warrant a debt being waived. In Beadle v Director-General of Social Security (1985) 60 ALR 225, the Full Federal Court observed (at 228) that the phrase “special circumstances” would usually include events that rendered the operation of the statute in a particular case “unfair or inappropriate”.

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

“would require something to distinguish [the] 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”.

20.     In the present case, the applicant contends that the circumstances in this case which are unusual, uncommon or exceptional are:

§That he would be exposed to financial hardship if the Department sought to recover the debt; and

§That upon his during his induction at the Arthur Gorrie Correctional Centre, he was informed that Corrective Services would notify Centrelink in his behalf.

21.     In relation to the question of financial hardship, the Tribunal is not satisfied that the applicant’s circumstances are sufficiently unusual to amount to special circumstances.  It is not unusual for people in receipt of social security benefits to have financial difficulties.

22.     That leaves the question of whether the applicant’s reliance on Corrective Services officers to inform Centrelink of his imprisonment and their failure to do so would constitute special circumstances in this case.  There have been a number of cases where consideration has been given to similar circumstances and the question of whether these would amount to special circumstances.

23.     In Re Neivandt and Secretary, Department of Family and Community Services [2000] AATA 1115, the Tribunal found that a small part of the applicant’s debt, which arose in very similar circumstances to this applicant’s, should be waived under s 1237AAD. However, that Tribunal had evidence before it of the procedures followed at the correctional centre in relation to inmates who were in receipt of social security benefits at the time of their imprisonment. No such evidence was provided to the Tribunal in this case. The only evidence before the Tribunal in relation to the gaol’s procedures is contained in the statutory declarations of the applicant and the other three inmates.

24.     In Re Condren and Secretary, Department of Family and Community Services [1999] AATA 575, the Tribunal found that there were no special circumstances to warrant the waiver of a debt owed by the applicant which arose as a result of his failure to notify the department that he was in prison. However, the Tribunal, in its reasons, did not specifically address the issue of whether the applicant’s reliance on the corrections officer to notify Centrelink of his imprisonment could amount to special circumstances under the Act. In addition, the applicant in that case had been in gaol previously, and the period of the overpayment extended over a much longer period than the overpayment in the present case.

25.     That decision was appealed to the Federal Court.  Whilst Lehane J did not find fault in the approach of the Tribunal, his Honour stated that the question of whether particular circumstances are “special” involves questions of fact and degree, which are matters for the Tribunal to determine: Condren v Secretary, Department of Family and Community Services (2000) 60 ALD 471.

26.     In this case, the Tribunal is satisfied that there are circumstances in this case which distinguishes it from the circumstances in the above cases:

§The applicant was aware of his obligations to notify Centrelink of changes in his circumstances and thought that his obligations would be discharged based on advice he received from correctional officers at the Arthur Gorrie Correctional Centre.

§The period of imprisonment in question in this case was the applicant’s first period of imprisonment, so he would not have been aware of procedures within the gaol and would have had no reason to question the prison officers when they stated that Centrelink would be notified of his imprisonment.

§The respondent did not provide any evidence to the Tribunal to dispute the claims made by the applicant in his statutory declaration and in the three statutory declarations from other inmates at the gaol.

§The period of the overpayment in this case was relatively short, and during the period of the overpayment the applicant did not receive any letters from Centrelink advising him of the amount of benefits he was receiving.

§The Tribunal also accepts that the applicant’s access to his bank accounts and other financial information was limited due to imprisonment.

§The Tribunal notes that the practice of the prison authorities has now been changed so that this situation cannot occur again.  The prison now updates Centrelink regularly.

27.     Whilst the Tribunal notes that the applicant’s notification obligations are personal obligations (Re Junor and Secretary, Department of Social Security (AAT No 11802, 24 April 1997) and that generally he would not be entitled to rely on a third party to notify Centrelink of the changes in his circumstances, the Tribunal is satisfied in this case that the applicant’s reliance on the prison officers to advise Centrelink of his detention was not unreasonable. The applicant, whilst in prison, would not have had the same freedoms enjoyed by other members of society, and would, in many instances, have had to rely on his custodians in his communications and dealings with people outside the gaol.

28.     Accordingly, the Tribunal is satisfied that the circumstances in this case are sufficiently unusual, uncommon or exceptional to amount to special circumstances under the Act, and that the right to recover the overpayment of disability support pension made to the applicant in the period 19 February 2002 to 12 March 2002 should be waived.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Mr O Rinaudo, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  26 November 2002
Date of Decision  23 May 2003

The Applicant Appeared in Person
Solicitor for the Respondent     Ms Wallis-Dunn, Departmental Advocate