Stepic and Secretary, Department of Family and Community Services

[2004] AATA 1053

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1053

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/349

GENERAL ADMINISTRATIVE  DIVISION

Re:         PETER STEPIC AND

LJILJANA STEPIC

Applicants

And:SECRETARY,

DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             11 October 2004

Place:            Melbourne

Decision:      The Tribunal affirms the decision under review.

(sgd) Regina Perton
  Member

SOCIAL SECURITY ‑ disability support pension ‑ failure to notify variation of wife’s income ‑ overpayment ‑ debt to Commonwealth ‑ waiver of debt ‑ write‑off of debt 

Social Security Act 1991 ss 8(1), 1064, 1223(5), 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 ss68 (2), 98, 99, 100,

Data-matching Program (Assistance and Tax) Act 1990 s11

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

11 October 2004  Regina Perton, Member

1.      This is an application by Petar Stepic and Ljiljana Stepic (the applicants) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 18 February 2004.  The SSAT set aside the decisions of a delegate of the Secretary to the Department of Family and Community Services (the respondent) dated 30 July 2003 as varied by an authorised review officer (ARO) on 2 December 2003.  The SSAT decided that the applicants had been overpaid disability support pension (DSP) and wife pension (WP) respectively between 13 June 1996 and 17 December 2002 and that each owed $14,903.72 to the respondent.

2.      At the hearing on 1 September 2004, the applicants represented themselves.  Ms Kayren Paul, a Centrelink advocate, represented the respondent.  A Serbian interpreter facilitated communication.

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T101) and two documents from the applicant.

BACKGROUND

4.      Mr Stepic and Mrs Stepic have received DSP and WP respectively since 24 November 1977.  In December 1993, Mrs Stepic began working as a part-time office cleaner for Crusader Property Services (the employer).  The applicants notified Centrelink of Mrs Stepic’s employment in early 1994, providing a letter from the employer dated 25 March 1994 which stated that her gross fortnightly income was approximately $450.00.  On 11 April 1994, Centrelink wrote to each of the applicants advising them that their pensions had been reduced to reflect their changed circumstances.  The letter also stated that the applicants were required to advise Centrelink within 14 days if their combined income was more than $225.00 per week.

5.      In August 1996, Mr Stepic sought and was granted an advance on his DSP with Centrelink advising him of the repayment schedule by letter dated 23 August 1996.  Centrelink also advised Mr Stepic in that letter that he was required to notify Centrelink if his and his wife’s combined income, not including investment income, was above $11,700 per annum.  On 20 February 1997, Centrelink wrote to Mr Stepic advising him of an increase in DSP as the advance had now been repaid.  He was again informed of the need to notify Centrelink if the combined income increased to more than $11,700 per annum.  On 20 February 1997, Centrelink wrote to Mrs Stepic approving an advance on her WP that she had recently applied for.  She was also advised of the requirement to notify Centrelink if she and her husband had a combined income higher than $11,700 per annum.

6.      Between 1997 and 2001, Centrelink sent letters to Mr Stepic, Mrs Stepic or to both of them on the following dates: 8 October 1997, 20 April 1998, 15 September 1998, 13 October 1998, 12 April 1999, 14 December 1999, 11 May 2000, 15 May 2000, 7 June 2000, 26 October 2000, 7 May 2001 and 18 June 2001.  Each of these letters notified the applicants of their obligation to advise Centrelink if their income increased beyond the amount upon which their then benefits were calculated.

7.      Following a data matching review with the Australian Taxation Office in November 2002, Centrelink sought and obtained Mrs Stepic’s taxation returns for 1997/1998 and 1998/1999, the latter return showing a gross income of $26,464 and a taxable income of $23,242.  Centrelink also obtained detailed wage records from the employer.

8.      On 30 July 2003, the Centrelink delegate decided that Mr and Mrs Stepic had each been overpaid $11,485.55 for the period 10 July 1997 to 17 December 2002 and raised a recoverable debt in that amount.  On 11 November 2003, that decision was reviewed on the basis of additional payment details provided by the employer.  Consequently, the debt was re‑calculated using 13 June 1996 as the start date and the amount of the debt increased to $14,903.72 for each applicant.

9.      The applicants sought review of that decision on 2 September 2003.  On 2 December 2003, an ARO varied the delegate’s decision, finding that there was an overpayment of $14,094.03 for each of the applicants for the period 5 September 1996 to 17 December 2002.  On 12 December 2003, Mr and Mrs Stepic applied to the SSAT for review of the decision.  On 18 February 2004, the SSAT set aside the original decision dated 30 July 2003 as varied by the ARO’s decision on 2 December 2003 and decided that each of the applicants has a recoverable debt of $14,903.72 for the period 13 June 1996 to 17 December 2002.  An application for review with this Tribunal was lodged on 16 March 2004.

10.     The issue before the Tribunal is whether the applicants owe a debt to the Commonwealth, and if so, whether the debt should be waived or written off. 

EVIDENCE

11.     The applicants presented their evidence concurrently.  The applicants migrated to Australia from Yugoslavia separately.  They raised two children; a son now aged 31 and a daughter, aged 38.  Their 15 year old grandson lives with them as does his mother, their daughter.  Their daughter is on DSP.  Mr Stepic gave oral evidence that he had been injured in 1976 while working at the Ford factory and that he has been on DSP since 1977.  His wife has been on WP since that date.

12.     Mr Stepic stated that he believed that they should not have to repay the moneys because it was not their fault that the overpayment occurred.  He said that he and his wife do not read English and the instruction to notify Centrelink about changes in income was printed in small print on the back of the letter.  He said that had they been aware of the need to regularly update information about their income, they would have done so.  He said that Centrelink should have telephoned them to tell them about their obligations.  Mr Stepic stated that Centrelink now rings them to confirm appointments and had they done so earlier, they would not be in their current difficult circumstances.  He also queried why Centrelink could not have sent letters in Serbian. 

13.     Mr Stepic said that he did not ask his son to read the letters from Centrelink for him, despite his education having been in Australia.  He said that his son is only occasionally at home, often being on the road working in Brisbane and other places.   Mr Stepic said that their taxation returns were completed by a taxation agent they had been referred to by the St Albans Migration Resource Centre (MRC).  He did not recall filling in forms for Centrelink about their income and assets, but Mrs Stepic stated that she could recall doing so.  Mrs Stepic said that she had received help in doing so from a lady she knows but suspects that she may have given the net amount of her wages rather than the gross amount.  Despite the wrong information being provided in the form, Mrs Stepic stated that she nonetheless did not believe that she contributed to the error by Centrelink in overpaying them for so long.  She stated that it was Centrelink’s mistake because Centrelink was not pro‑active in seeking updated information from them.  She stated that it is much easier dealing with Centrelink now.  Mr Stepic also indicated that had Centrelink provided the current level of service at an earlier date, they would not have accumulated such a large debt. 

14.     In terms of the hardship he and his wife are suffering, Mr Stepic said that as a result of his workplace accident, he lost his home and now rents public housing.  Their daughter is not well, suffering from epilepsy, brain damage and other illnesses.  Mrs Stepic explained the difficulties they had with their daughter whose problems were not diagnosed until late primary school.  Their daughter eventually went to a special school at the late age of 12.  They would like to take her to Serbia as they believe that the medical treatment there is more accessible and appropriate but have been told that they cannot permanently transfer their pensions there.  Both applicants described the stressors in their life and their poor state of health.  A report from Dr Lillian Rezk, dated 23 July 2004, described Mr Stepic’s medical history and medication.

15.     Mr Stepic acknowledged that he should have declared the income from the cleaning work he did on his wife’s behalf for the three months she was overseas but was adamant that the accumulation of the rest of the debt was not his fault.

16.     On cross examination, Mr Stepic stated that he knew he had to advise Centrelink when his wife started working but he could not recall how he came to know that.  He said that he could not remember if his pension went down after he informed Centrelink of his wife’s employment as it was so long ago.  Mrs Stepic said that she was never aware of the exact rate of pension she was receiving but she could recall her husband going in to ask Centrelink why the rate had gone down.  Mr Stepic indicated that he is aware Centrelink has interpreters but he could not recall when he first became aware of the availability of interpreters.  In relation to obtaining assistance from the MRC, Mr Stepic initially said that he had only been to see them once for assistance and could not recall when he first became aware of the MRC’s existence but later recalled that he had also sought their assistance in relation to motor vehicle registration and taxation.  Neither of the applicants could recall what they had said in relation to their income when they were interviewed in October 2000 and December 2001. 

17.     Mr and Mrs Stepic both recalled receiving letters from Centrelink over the years which looked similar to those they are receiving now with larger writing on the front and smaller writing on the back.  Both applicants said that they did not concern themselves with, nor were they curious about, the small print.  They did not ask their daughter for assistance due to her disabilities nor did they believe it appropriate to ask their young grandson. 

CONSIDERATION OF THE ISSUES

18. Section 1064 of the Social Security Act 1991 (the Act) sets out the rate calculator for DSP and WP, and provides that a person’s income, and that of their partner, will affect the rate of pension. Under s 8(1) of the Act, income includes wages and funds generated from investments.

19. Section 68(2) of the Social Security (Administration) Act 1999 (the Administration Act) provides that Centrelink may give a person a notice requiring the person to inform Centrelink of any changes in circumstances. Section 123(3) of the Administration Act provides that a determination of a rate of payment continues until the payment becomes payable at a lower rate under s 98, s 99 or s 100 of the Administration Act.

20. The applicants did not dispute that their combined income exceeded the regulatory threshold. However, their oral submissions and a written submission, by the Victoria Legal Aid solicitor previously acting on their behalf, was that the debt should be waived under s 1237A(1) of the Act as the applicant’s failure to advise Centrelink of changes of income was not their fault, but rather it arose due to administrative error by Centrelink. They submitted that their inability to read English should have been recognised and acknowledged and alternative means of informing them of their obligations should have been utilised. They also suggested that had Centrelink acted more promptly, such a large debt would not have accrued.

21. Ms Paul, in her submissions, noted that Centrelink sent several letters to the applicants between 1994 and 2001 in which their then recorded income level for pension purposes was set out and they were informed that it was their obligation to notify Centrelink if the income was higher than that specified in the letter. She submitted that the applicants’ combined annual income was higher than that advised to Centrelink and upon which it based its payments. She submitted that it was only after taxation records were matched with Centrelink records in November 2002 that the discrepancy was discovered. On this basis, Ms Paul stated that Mr Stepic and his wife were paid more than their entitlement from 13 June 1996 to 17 December 2002, which was a debt owed to the Commonwealth. Ms Paul submitted that the debts cannot be waived under s 1237A(1) of the Act as they did not arise through sole administrative error on the part of Centrelink. She also submitted that there were no special circumstances that would justify waiving the debt (Re Beadle and Director-General of Social Security (1984) 6 ALD 1).

22. The applicants were sent several letters before and during the period in which the debt accumulated reminding them of the requirement to notify Centrelink if their income was above the amount specified in the letters. The Tribunal notes that the applicants acknowledged receipt of the letters and told the Tribunal that they could not read English and that they did not ask anyone else to read it to them. Their decisions not to check the content of those letters, and the length of time it took Centrelink to recognise the overpayment, do not negate the debt nor change the amount owing. The Tribunal is satisfied that the taxation returns and employer records made available to Centrelink show that Mrs Stepic earned significantly more than the amount documented in Centrelink records from 13 June 1996 to 17 December 2002. The Tribunal accepts that the calculations presented to it are correct. The Tribunal finds that, during the relevant period, Mr Stepic received an amount of $14,903.72 in DSP to which he was not entitled and that Mrs Stepic received an amount of $14,903.72 in WP to which she was not entitled. The Tribunal finds that those amounts are debts owed to the Commonwealth under s 1223(5) of the Act (s 1223(1) from 1 July 2001).

23. Section 1236 of the Act provides for a write‑off of the debt in certain limited circumstances, namely if it is irrecoverable at law, the debtor has no capacity to repay the debt, the debtor’s whereabouts are unknown or it is not cost effective for the Commonwealth to take action to recover the debt. If a debt is recoverable by means of deductions from the debtor’s social security payment, the debtor is taken to have a capacity to pay. In this matter, both applicants are recipients of social security payments. The Tribunal therefore finds that the applicants have the capacity to repay the debt, and the debt is not irrecoverable at law. Therefore, there are no grounds to write‑off the debt.

24. Section 1237A of the Act provides for waiver of a debt arising from administrative error:

1237A.(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

1237A.(1A)  Subsection (1) only applies if:

(a)the 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.

25. The applicants were advised by Centrelink on several occasions of their obligation to notify it if their combined income increased from the level specified in the letter. The applicants failed to do so. Regardless of the reason for their failure to follow the instructions in the letters, the evidence indicates that Centrelink did notify them of their obligations. The Tribunal finds that the debt is not attributable solely to an administrative error by the Commonwealth. As a result, the debt cannot be waived under s 1237A(1A) of the Act.

26. Section 1237AAD of the Act provides for waiver of the debt in certain other circumstances:

1237AAD.  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.

27. Both Mr and Mrs Stepic gave evidence that they would have informed Centrelink with regular updates on their combined income had they been aware of the need to do so. They informed Centrelink when Mrs Stepic commenced work and when she proposed to travel overseas. Mrs Stepic submitted taxation returns in relation to her income. There is no evidence to suggest that they deliberately withheld information from Centrelink. The Tribunal finds that the applicants did not knowingly make false statements or representations to Centrelink nor did they deliberately fail to comply with a provision of the Act. They therefore meet the criteria in s 1237AAD(a) of the Act.

28.     In Re Beadle, the Tribunal held that the special circumstances, referred to in s 1237AAD(b) of the Act, must be unusual, uncommon or exceptional.  The Tribunal accepts that the applicants do not have strong English language skills and that they have multiple medical problems.  It acknowledges that their family circumstances are difficult, with their daughter and teenage grandson relying heavily on them both physically and emotionally.  While their daughter receives DSP and family allowances for her son, the family’s finances are tight.  However, the Tribunal is not satisfied that the situation that the Stepic family find themselves is vastly different from other social security recipients who have received overpayments.  The Tribunal is not satisfied that the circumstances in this case are unusual, uncommon or exceptional.  Therefore, they do not constitute special circumstances (other than financial hardship alone). Hence, the waiver provisions of s 1237AAD of the Act do not apply.

29.     Therefore, the applicants each owe a debt of $14,903.72 to the respondent. 

30.     The applicants are currently repaying the debt at the rate of $50.00 per fortnight from each pension.  Ms Paul indicated that Centrelink may well be prepared to renegotiate the repayment rate with the applicants should they seek to do so.

DECISION

31.     The Tribunal affirms the decision under review. 

I certify that the thirty-one [31] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of hearing:  1 September 2004

Date of decision:  11 October 2004
Applicants:  Self represented
Advocate for respondent:            Ms K. Paul, Centrelink