Steindl and Secretary, Department of Family and Community Service S
[2003] AATA 1034
•14 October 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 1034
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2002/1144
GENERAL ADMINISTRATIVE DIVISION ) Re THOMAS STEINDL Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr O Rinaudo, Member Date14 October 2003
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
(Sgd) O Rinaudo
Member
CATCHWORDS
SOCIAL SECURITY – benefits and entitlements – newstart – overpayment – whether debt properly raised – whether debt should be recovered – special circumstances
Social Security Act 1991 ss 1223(1), 1236, 1237A, 1237AAD
Re Ward and Secretary Department of Family and Community Services [2000] AATA 212
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Secretary, Department of Social Security v Hales (1998) 82 FCR 154Re Secretary, Department of Social Security and McEvoy (1996) 23 AAR 543
REASONS FOR DECISION
14 October 2003 Mr O Rinaudo, Member Decision Under Review
1. Mr Steindl makes application for review of a decision made by Centrelink on 23 September 2002 to raise and recover an overpayment of Newstart Allowance of $9,137.42 for the period 10 September 1998 to 29 November 2000. This decision was affirmed by an Authorised Review Officer on 14 October 2002. On the 29 November 2002, the Social Security Appeals Tribunal decided to set aside the decision under review and substitute a new decision that there is a debt of $9,137.42 but that two-thirds of the debt, namely $6,091 be waived due to special circumstances.
Evidence
2. Mr Steindl attended at the hearing. He was unrepresented. However, Mr Steindl had the assistance of a friend, Ms Burrows. The respondent was represented by Mr Ffrench (Advocate).
3. Mr Steindl would not appear in a court room nor would he give evidence on Oath. Mr Steindl said that he did not trust the court system as he had been convicted of an offence of grievous bodily harm and stealing water in March 2001 for which he was sentenced to three years imprisonment but declared he was innocent of the offence.
4. An informal hearing setting was arranged at which Mr Steindl made representations to the Tribunal. In addition to these representations a number of exhibits were tendered as follows:
§ Exhibit 1 T documents
§ Exhibit 2 Estimates
§ Exhibit 3 Bundle of Estimates
§ Exhibit 4 Bundle of letters re Wage Claims
§ Exhibit 5 Confirmation of Volunteer Placement
§ Exhibit 6 Affidavit of Steindl from QIRC dated 1 October 2001
§ Exhibit 7 File note by Centrelink dated 14 October 2002
§ Exhibit 8 Letter dated 23 December 2002 and attachments
§ Exhibit 9 First page of letter from Centrelink
§ Exhibit 10 Bundle of letters from SSAT
§ Exhibit 11 Bundle of documents
§Exhibit 12 Letter from respondent to applicant, dated 11 February 2003, with attachments
§Exhibit 13 Letter from applicant to respondent dated 12 February 2003
§Exhibit 14 Centrelink Customer Charter
§Exhibit 15 List of Expenses
§Exhibit 16 Amended PAYG Payment Summary
§Exhibit 17 Letter from Dr Nieuwenhuizen dated 26 February 2003
§Exhibit 18 Psychological Assessment Reports (2) of Spencer Carr dated 28 March 2003
§Exhibit 19 Letter to applicant from respondent dated 29 May 2003
§Exhibit 20 Documents regarding financial position
§Exhibit 21 Price list for stockings and Bank Statement
§Exhibit 22 Letter “To whom it may concern”, from B Brosnan, Meilene
§Exhibit 23 Computer print-outs and payment amounts
5. Mr Steindl’s evidence was set out in a typed statement which he read and a copy of which he provided to the Tribunal. Mr Steindl says that he was employed by a bus company known as Wayne’s World Tours and Charters owned by the Swan Family Trust Pty Ltd. Subsequent to his termination of employment it was established by the Industrial Commission that Mr Steindl was owed back income in the sum of $26,080.47. Mr Steindl began proceedings in the Queensland Industrial Relations Commission for recovery of this amount from his former employer. By Deed of Settlement dated 4 June 2002, Mr Steindl agreed to compromise his claim for a final payment of $18,000 payable $6,000 on 1 August 2002 and $12,000 on 30 September 2002. Mr Steindl subsequently received these monies.
6. As a result Centrelink made a decision to raise and recover a debt being overpaid Newstart Allowance in the sum of $9,127.42 incurred between the period 10 September 1998 to 29 November 2000. The amount of the debt was subsequently reduced by the Social Security Appeals Tribunal to a recoverable sum of $3,046.42.
7. Mr Steindl says that he sought advice from Centrelink on a number of occasions with respect to the amount that he would have to repay (if any) were he to compromise his claim against his former employer. Mr Steindl says that notwithstanding these requests he was never given any information and this has resulted in his having a debt to Centrelink.
8. Mr Steindl relies on the following:
“1.Bundaberg Centrelink staff did not at any time supply me with information requested which was readily available.
2.Bundaberg Centrelink staff did at no time suggest I speak to the management or advise me of whom to contact or phone.
3.Bundaberg Centrelink staff did at no time produce such rules which were being quoted [Centrelink’s rules].
4.Bundaberg Centrelink staff supplied incorrect information in reports.
5.The Manager lodged an SSAT appeal without written or verbal consent.
6.Bundaberg Centrelink staff only produced rulings after the fact and after receiving information about such.
7.Lost or destroyed important documents.”
9. Mr Steindl summarises his concerns in a letter dated 23 September 2002 as follows:
“As I am sure you can appreciate I had no intentions to fraud Centrelink as I notified them 7 days after an unfair dismissal case and conference with the Industrial Relations of my intention to make such a wage claim. Centrelink Bundaberg office had known of this information from 7th February 2001 which is 16 months prior to the claim and still could not supply me with the correct information. I suggest that had I received the correct information from Centrelink I would have taken different action in this case. As you may appreciate I have gone through stress and worry only to benefit Centrelink who I suggest are 100% at fault for my decision.”
10. Mr Steindl says in relation to his financial position that:
“I am now receiving an allowance of $459.10 per fortnight out of which I pay $220 rent, $45 Medibank, $15 electricity up to $40/45 mobile phone, $10/20 medication, $10/20 Bankcard, $10 rental bond loan [I produce copies] and I have to purchase Jobst therapeutic stockings for my venous problem. These range from $63-70 each for my left leg and $63.35 per pair for my right leg. Adding the first mentioned figures respectively they amount to $350 and $375 leaving $109.10 and $84.10 for me to purchase food and living essentials per fortnight. I am sure you will appreciate that because of hygienic reasons I need more than one of each of the stockings and also they loose their pressure effect with age and wear. Allowing for purchase quarterly this amounts to $813.40 per year or $16 per week reducing my living monies to $77.10 and $52.10 [I produce a copy of prices]. Also on this copy you will notice Atcicoat $349.35. This is the product I had to purchase to dress my ulcer. It is impregnated with nannacrystalised silver. As you may appreciate I have to use my Bankcard for living purposes [proof on copies produced].”
11. Mr Steindl urged the Tribunal:
“I am fully aware that this Tribunal is bound by laws governing how a decision is reached but lets forget the legislation, the rules and the laws for now and base a decision on the facts that you have just heard and I am quite sure that administrative error and special circumstances prevail. If a decision is made to the contrary the only result that will be achieved will be to place me in greater financial hardship than I was preceding this wage claim.”
I ask only one favour that is for this case to be decided on facts and merit. That is all I have been asking since this began 7 February 2001. All I ask is for a fair and just go.”
Issues
12. The issue for the Tribunal in this case is whether Mr Steindl should repay the debt as originally raised of $9,127.42 or whether the Tribunal is satisfied that the Social Security Appeals Tribunal has properly waived the amount of $6,091 or whether the whole of the debt should be waived.
Legislation
13. The relevant legislation in this case is contained in the Social Security Act 1991 and in particular sections 1223(1), 1236, 1237A and 1237AAD which state:
“1223 Debts arising from lack of qualification, overpayment etc.
(1)Subject to this section, if:
(a) a social security payment is made; and
(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
…
1236 Secretary may write off debt
(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.
(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 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.
(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable 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.
(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.
…
1237A Waiver of debt arising from error
(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
(1A) Subsection (1) only applies if:
(a) a debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
(2) If:
(a)a debt arose because the debtor or the debtor’s partner underestimated the value of particular property of the debtor or partner; and
(b) the estimate was made in good faith; and
(c) the value of the property was not able to be easily determined when the estimate was made;
the Secretary must waive the right to recover the proportion of the debt attributable to the underestimate.
(3) For the purposes of this section, a proportion of a debt may be 100% of the debt. …
1237AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or false representation; or
(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.”
Discussion
14. It is clear in this case and Mr Steindl does not deny that he had a debt to Centrelink. The only argument is whether Mr Steindl should have to repay the debt.
15. Accordingly the Tribunal is satisfied that the debt has been properly raised by Centrelink based on the amount received by Mr Steindl for back pay from his former employer which was not declared. This debt arises as a result of the provisions of section 1223(1).
16. It is appropriate to deal shortly with whether the debt can be waived pursuant to section 1237A or written off pursuant to section 1236 of the Act.
17. Dealing with section 1236 first, the Tribunal is satisfied that pursuant to section 1236(1C) as set out above, the debt cannot be written off if the debt is able to be recovered via deductions from the person’s social security payments as the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe hardship.
18. The Tribunal is satisfied in this case that it would not cause the applicant severe financial hardship if the debt was to be recovered by way of deductions from his social security payments. Accordingly the debt cannot be written off under this section.
19. For section 1237A to apply, the debt must be attributable solely to an administrative error made by the Commonwealth and the debtor must have received in good faith the payment or payments that gave rise to the debt.
20. It is acknowledged that there was some error on the part of Centrelink in this case. However, it cannot be said that the error of Centrelink was the sole contributing factor to the debt. In this regard the Tribunal was referred to the decision of Re Ward and Secretary Department of Family and Communtiy Services[2000] AATA 212 in which Deputy President Forgie made the following comments (at paragraph 47):
“This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth’s administrative error (ie they are incidental to the Commonwealth’s error), then it may be that the debt is attributable solely to the Commonwealth’s administrative error.”
This of course is not the case here. The issue of Centrelink’s error will be discussed again when considering the issue of waiver for special circumstances under section 1237AD.
21. When considering the application of section 1237AAD it is required that, as a first consideration, the Secretary be satisfied that the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or false representation or failing or omitting to comply with a provision of the Act.
22. In this case, the Tribunal is satisfied that Mr Steindl took appropriate steps to notify Centrelink that he was entitled to receive monies by way of underpayment of wages and accordingly the Tribunal finds that the debt did not arise wholly or partly from Mr Steindl making a false representation, or failing or omitting to comply with a provision of the Act. It is appropriate then to consider whether there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt. When considering the issue of special circumstances regard should be had to the decision in the decision in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 where Toohey J stated:
“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique, but they have a particular quality of unusualness that permits them to be described as special.”
23. It is also useful to bear in mind the comments of the Federal Court in the decision of Secretary, Department of Social Security v Hales (1998) 82 FCR 154 where it was stated:
“From time to time in the administration of Social Security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The Taxpayer is entitled to expect that in the ordinary course, money paid to people which they are not entitled to receive will be recovered albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned.”
24. In this case the Court further considered the meaning of the words “special circumstances” and said:
“The concept of special circumstances is broad. A constellation of factors, including financial circumstances may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary’s discretion.
On this point and as a matter of construing this section by reference to the ordinary meaning of its words, the Secretary’s submission that there cannot be special circumstances for the purpose of section 1237AAD(b) unless there is also financial hardship is not accepted. The explanatory memorandum does not undercut this conclusion. There it is said that the new special circumstances provision can only be used where the debt arose because of an innocent mistake by a Social Security recipient. Secondly, it is said that financial hardship of itself is not a sufficient reason to waive the debt. This is in substance a restatement of the ordinary meaning of the provision.
The evident purpose of section 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.”
25. The Social Security Appeals Tribunal considered a number of matters which it considered it to be special in the present case. In particular it made note of the comment contained in a Centrelink memorandum (at T26 page 120 of Exhibit 1) which said:
“We should never have advised him that he could declare his income as he received it and risk an overpayment. This is quite inappropriate. As soon as we became aware that he was being underpaid by his employer we should have told him to go immediately to the Industrial Inspector and to run the risk of losing the job. We would never have breached him under the activity test for such behaviour as it is entirely consistent with the intent of the Social Security law.”
26. The Tribunal considered this incorrect advice in the context of the decision in Re Secretary, Department of Social Security and McEvoy (1996) 23 AAR 543 and in particular the paragraph set out at T2 on page 12 of Exhibit 1 which noted that incorrect advice given to social security recipients by the Department has always been considered in the context of “special circumstances”.
27. The factors relied on then by the Social Security Appeals Tribunal in reaching its conclusion were set out in paragraph 31 of their decision as follows:
“The facts stated in the previous paragraph, [incorrect advice] together with the facts gathered in paragraph 25 of these Reasons for Decision led the Tribunal to conclude that the circumstances of this case are special in the sense of being unusual, uncommon or exceptional such that it was appropriate for the Tribunal to consider waiver of the debt. In particular, the Tribunal was persuaded by the individual and aggregate effect of facts concerning Mr Steindl: his current ill-health, his adverse personal circumstances (separation from his spouse), and the fact that he has private debts to pay (legal expenses associated with an attempt to preserve his personal liberty).”
28. The factors set out in paragraph 25 were related to Mr Steindl’s age (54 years), that he had been convicted of a criminal offence which could prevent or hinder him gaining re-employment in the future, that he was on anti-depressant medication, that he had separated from his spouse, that he had debts to lawyers arising from his criminal defence, that he had received incorrect advice from Centrelink and that he had not obtained information from Centrelink concerning the amount of debt before entering into the deed of settlement with the Swan Family Pty Ltd.
29. Based on these circumstances the Tribunal held that it was appropriate that two-thirds of the debt be waived for special circumstances.
30. In the respondent’s Statement of Facts and Contentions and in submissions the respondent argued that the decision of the Social Security Appeals Tribunal should be set aside and that the full amount of the debt should be recovered. However, the respondent argued that:
“…in the alternative, if it is found that there are special circumstances present in this matter a balanced approach should be adopted in recognition of the competing policy interests at stake, and the fact that the applicant was always going to have a debt of some size, and, indeed, was aware of this. If such an approach is undertaken the respondent contends that it would be appropriate to affirm the decision of the SSAT.”
31. In speaking of the “competing policy interest” the respondent is speaking of the general principle that taxpayers are entitled to expect that, in the ordinary course, monies paid to people to which they are not entitled will be recovered. And of course the consideration of special circumstances under the relevant section of the legislation.
32. In all the circumstances the Tribunal is satisfied that the Social Security Appeals Tribunal properly exercised its discretion under section 1237AD and correctly decided that two-thirds of the debt should be waived for special circumstances. The Tribunal respectfully adopts the comments of the Social Security Appeals Tribunal when it says that:
“The principal justification that the Tribunal relied on in making such an apportionment of responsibility was that Mr Steindl knew that there would be a Newstart Allowance debt to repay to Centrelink, and he made efforts to ascertain the amount of that debt from Centrelink when negotiating and structuring his settlement. Centrelink should bear the brunt of the responsibility for the debt associated with the overpayment of Newstart Allowance to Mr Steindl, and this is why the Tribunal decided that two-thirds of the responsibility should be sheeted at home to Centrelink.”
33. Accordingly, the Tribunal affirms the decision under review.
I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Mr O Rinaudo, Member
Signed: Sarah Oliver
AssociateDate of Hearing 17 June 2003
Date of Decision 14 October 2003The Applicant appeared in person and was assisted by Ms Burrows
For the Respondent Mr Ffrench, Departmental Advocate
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