Stewart and Secretary, Department of Family and Community Service S

[2004] AATA 169

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 169

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/332

GENERAL ADMINISTRATIVE DIVISION		)
Re		ERIC STEWART

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date20 February 2004

PlaceBrisbane

Decision The Tribunal sets aside the decision under review and substitutes its decision that the portion of the debt remaining unpaid is to be waived.   

...….(Sgd) J Cowdroy……
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – disability support pension – overpayment of arrears – overpayment caused solely by administrative error – debt raised within 6 wks – no discretion to waive recovery for administrative error – no special circumstances

Social Security Act 1991

Beadle v Director General of Social Security (1985) 7 ALD 670
Secretary, Department of Social Security v Hales [1998] FCA 219

REASONS FOR DECISION

20 February 2004 Ms J Cowdroy, Member     

BACKGROUND TO APPLICATION

1.      By decision dated 6 March 2003, the Social Security Appeals Tribunal (“the SSAT”) affirmed a decision made by Centrelink on 22 November 2002 to raise and recover a debt in the amount of $2,168.11.

HEARING:

2. The matter was heard in Rockhampton on 5 November 2003. The applicant gave evidence. The respondent was represented by Mr T Ffrench. The T documents, pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, were admitted into evidence as E1 and other material was admitted into evidence as exhibits E2 and E3.  The matter was decided on the basis of the material in the exhibits and the oral evidence.

FACTUAL BACKGROUND:

3.      The following matters are not disputed and I find accordingly.  Mr Stewart was in receipt of disability support pension (DSP) on 22 November 2002 when an arrears payment of $2,168.11 was credited to his account in error.  He had telephoned Centrelink on 21 November 2002 to query his payments. At that time he was advised of the arrears payment to be paid 22 November 2002 for the period 8 January 1998 to 18 March 1998. 

4.      Mr Stewart was offered an appointment to attend the office and have the payment explained, but he was unable to attend such an appointment. 

5.      He had been paid his correct entitlement in respect of the period 8 January 1998 to 18 March 1998. 

6.      Mr Stewart was advised of the debt for overpayment of DSP on 6 December 2002 for the amount of $2,168.11. 

EVIDENCE:

7.      Mr Stewart pointed out that his domestic circumstances were difficult at the time he received the telephone advice of the payment to be received on 22 November 2002.  He had had a previous experience where payments were backdated and he received approximately $3000 in arrears of carers allowance.   Consequently, he was not surprised to learn of the arrears payment of disability support pension and he assumed that the payment was correct. 

8.      Shortly after its receipt, but in any event within a week of its receipt, the money was spent on repaying personal loans and credit cards, groceries, car repairs a deposit on a computer and Christmas presents.  He was particularly aggrieved that he had been told that the overpayment had been detected within a few days, and yet he was not advised until 6 December 2002.  

9.      Mr Stewart stated that if he had been given more timely notice of the error, at least some of the money could have been returned.

10.     The debt is currently being repaid at $10 per fortnight from Mr Stewart’s disability support pension.  The family’s financial situation is poor, with resort to food parcels from Lifeline frequently.  He had sought assistance from the Salvation Army in relation to his financial situation, but he had already explored all the sources of assistance that were recommended.     He has three daughters, aged 10, 8 and 3 years.  The middle child had been diagnosed with attention deficit disorder (ADD) and Asperger's syndrome.  She has been the cause of considerable worry, having disappeared from school on one occasion.   His youngest daughter is exhibiting signs of ADD.  His employment as a labourer/offsider has been spasmodic, although at the time of the hearing, he had obtained some removal work driving a truck.  He made the comment that he found the work hard, as his body is “shot” and he would not be able to carry out furniture removals indefinitely as the work is physically demanding. 

11.     His wife has suffered from depression for the last three to four years, for which she had been taking medication.   He considered the state of their financial affairs contributed considerably to her depression.  He described their relationship as fragile. 

LEGISLATIVE FRAMEWORK:

12.     The legislation relevant to this matter is the Social Security Act 1991 (the Act) and is found at sections 1223, 1236 and 1237 of the Act.  Section 1223(1) provides for debts arising from overpayments in the following terms:

“1223(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.”

13.     Sections 1236(1) and 1236(1A) of the Act set out the requirements to write off the debt.

“1236(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.

1236(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)it is not cost effective for the Commonwealth to take action to recover the debt.”

14.     Sections 1237A(1) and 1237A(1A) of the Act provide for the waiver of debts arising from error as follows:

“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.”

15.     Section 1237AAD provides for waiver in special circumstances as follows:

“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 a false representation; or

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

FINDINGS AND CONSIDERATION:

16.     The Tribunal is satisfied that pursuant to section 1223(1) of the Act the applicant received monies to which he was not entitled and it finds that there is a debt to the Commonwealth.   I am satisfied that the debt has been correctly calculated at $2,168.11.

17.     In respect to non-recovery of the debt, there are a number of legislative provisions that must be considered.  The first relates to whether there were grounds established to write off the debt.  Section 1236 of the Act sets out the requirements that must be met in order for this to occur.  It provides, in part, that if a debt is able to be repaid by way of deductions from a person’s social security payments, then the debtor is taken to have the capacity to repay the debt unless the deductions would result in severe financial hardship.

18.     The Tribunal understands that the applicant’s financial situation is difficult. The debt is currently being repaid by way of fortnightly deductions of $10 from the applicant’s Centrelink payments.  As such, it could not argued that recovery at that rate is causing severe financial hardship.  Therefore, the Tribunal is satisfied that there is no basis for writing off the debt under section 1236.

19.     Section 1237A(1) of the Act provides for waiver of a debt in certain circumstances.  It provides that waiver must occur where the debt arose solely because of administrative error on the part of the Commonwealth, and the payments, which constitute the debt, were received by the recipient in good faith.

20.     The Tribunal is satisfied that the debt arose solely due to administrative error caused by Centrelink. The applicant had a genuine belief that he was entitled to keep and spend the monies.  Consequently, I find that the applicant received the money in good faith.  

21.     However, Section 1237A(1A) states that Section 1237(A) can only have application if a debt is not raised within a period of six weeks from the date of the first payment that causes the debt.  As the payment was made on 22 November 2002 and the debt was raised on 6 December 2002, it was raised within the six week period.  Accordingly, section 1237A(1) does not apply.

22.     The Tribunal has also considered section 1237AAD of the Act.  The only relevant parts to consider are (b) and (c).  

23.     In deciding whether special circumstances exist, the Tribunal has had regard to the principles outlined in Beadle v Director General of Social Security (1985) 7 ALD 670, which described “special circumstances” as “extremely unusual, uncommon or exceptional”. In Secretary, Department of Social Security v Hales [1998] FCA 219, French J discussed Beadle’s case and the application of section 1237AAD in the following terms:

“The evident purpose of s 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.”

24.     The Tribunal notes that Mr Stewart’s wife suffers from depression and that one of his children has been diagnosed with Asberger’s Syndrome and ADD.   The receipt of food parcels from welfare organisations on a regular basis indicates that the family are in dire financial straits.  The Tribunal finds that having to repay this debt over an extended period will add considerable pressures to an already fragile family unit.    The fact that Mr Stewart has three children, the youngest aged 3 years, and he is aged 57 years, means he will be required to provide for his family’s needs for many years.  In that regard, his level of responsibility far exceeds that of other men in the community of the same age.  

25.     Whilst a repayment of $10 per fortnight is a modest amount, the requirement to repay will effectively mean that he is repaying that debt for about eight years.   That calculation is made on the basis of repayments at the current level, and there is no evidence to suggest that the applicant’s earning capacity will change.  In reality, it is likely to diminish as he ages, whereas he still has the financial responsibilities associated with three young children, the youngest of whom will be entering high school at about the time the applicant reaches the age of 65 years.  Such a requirement, in the Tribunal’s mind, is onerous and could be construed as oppressive.  Because of the applicant’s age, his precarious financial situation, his fragile marital situation including the ongoing ill health of his wife, the special needs of some of his children, his need to support three young children for many years until they reach their independence, the unlikelihood that he will be able to obtain and retain work in a physically demanding position for more than a few years, the fact that the repayments of the debt will be in place until he reaches 65 years, leads the Tribunal to find that the applicant’s circumstances are sufficiently special to set him apart from other recipients of social security benefits who are required to repay such a debt. 

26.     For that reason, the Tribunal determined to set aside the decision under review and substitute its decision that the balance of the debt outstanding is to be waived.  

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member

Sgd:       K J Donnelly

Associate

Date of Hearing  5 November 2003
Date of Decision  20 February 2004

The Applicant appeared in person
For the Respondent                  Mr T Ffrench, Departmental Advocate