Tulachat and Secretary, Department of Education, Employment and Workplace Relations

[2009] AATA 277

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 277

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/4356

GENERAL ADMINISTRATIVE DIVISION		)
Re		JINTANA TULACHAT

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS  

Respondent

DECISION

Tribunal Mr S Karas, AO, Senior Member

Date24 April 2009

PlaceBrisbane

Decision The Tribunal affirms the decision under review.  

...............[Sgd]...............................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Newstart allowance debt – Foreign benefit paid as a lump sum by way of a payment of arrears – Benefit is a comparable foreign payment – Meaning of “severe financial hardship” – Meaning of “special circumstances” – No proportion of debt attributable solely to an administrative error made by the Commonwealth – No basis for write off of debt – No basis for waiver of debt – Decision under review affirmed.

Social Security Act 1991 (Cth), ss 23(1), 1236, 1228A, 1237A, 1237AAD

Social Security (International Agreements) Act 1999 (Cth), Schedule 3

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

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

Re L and Secretary, Department of Social Security [1995] AATA 159

Re Lumsden and Secretary, Department of Social Security (1986) 10 ALN N225

Re Stubbs and Secretary, Department of Families and Community Services (2003) AATA 729

REASONS FOR DECISION

24 April 2009 Mr S Karas, AO, Senior Member

1.      Ms Jintana Tulachat, the applicant, has been in receipt of newstart allowance since 9 March 2005.  In a letter dated 8 May 2007, the New Zealand Ministry of Social Development notified Centrelink that Ms Tulachat and her partner, Mr Tony Kirkland, “have been granted a married rate of portable Invalids Benefit”.  Arrears were payable to them for the period from 21 November 2006.  Centrelink subsequently adjusted the rate of Ms Tulachat’s newstart allowance and calculated she had been paid an amount of $2,036.76 in excess of her entitlement which amount was a debt due to the Commonwealth of Australia.

2.      Instead of repaying the debt, Ms Tulachat sought review.  On 21 December 2007, the original decision maker affirmed the decision and referred the matter to an Authorised Review Officer.  The Authorised Review Officer affirmed the original decision on 31 January 2008.  On 26 February 2008, Ms Tulachat appealed to the Social Security Appeals Tribunal (“the SSAT”).  On 11 September 2008, the SSAT remitted the matter to Centrelink to have the debt recalculated on the basis that the debt period runs from 21 November 2006 to 8 May 2007, rather than to 24 April 2007.  On 18 September 2008, Ms Tulachat applied to this Tribunal for review of that decision.

ISSUES AND LEGISLATION

3.      The issues for the Tribunal to determine are:

·   whether Ms Tulachat has a legally recoverable debt; and

·   whether all or part of the debt should be written off or waived.

4.      The legislation relevant to the appeal is contained in the Social Security Act 1991 (“the Act”) and in Schedule 3 to the Social Security (International Agreements) Act 1999. Schedule 3 contains the agreement between the governments of Australia and New Zealand on social security matters.

5. The invalid’s benefit granted to Ms Tulachat by the New Zealand Government is a comparable foreign payment for the purposes of Australian social security law. The term “comparable foreign payment” is defined at s 23(1) of the Act as a payment that is available from a foreign country and similar to an Australian social security pension, such as the disability support pension.

6. Section 1228A of the Act deals with circumstances, identical to those of Ms Tulachat, where the recipient of a social security payment (such as newstart allowance) has received a foreign pension lump sum paid in arrears. If (as in Ms Tulachat’s case) the lump sum is a “comparable foreign payment”, a debt is owed by the recipient to the Commonwealth. The debt owed is the total amount by which newstart allowance would have been reduced over the period for which arrears were paid.

7.      Centrelink calculated a debt due to the Commonwealth of $2,036.76 by using  the period 21 November 2006 to 24 April 2007.  However, the SSAT found that Centrelink had used an incorrect period in calculating the debt.  The SSAT found that the debt period existed from 21 November 2006 to 8 May 2007.  The respondent accepts that Ms Tulachat’s debt will need to be recalculated on that basis.  The revised amount is a revised debt due to the Commonwealth.

EVIDENCE

8.      The Tribunal had before it a letter from the respondent’s legal advisor to Ms Tulachat’s partner, Mr Kirkland, dated 15 October 2008.  A hearing of this matter was held on 8 April 2009.  Ms Tulachat was represented by Mr  Kirkland.  They both gave evidence to the Tribunal by telephone.  Mr Kirkland disagreed with paragraphs 5 and 7 of the respondent’s Statement of Facts and Contentions.  He also stated that he and Ms Tulachat had lived together for some 10 years and referred to her as his wife. 

9.      According to Mr Kirkland, he sold his house and has $440,000 in a bank account which earns some $1,100 interest a month.  Their other income is from his disability pension paid by New Zealand and Australia.  Ms Tulachat has no assets but receives money from the New Zealand government.  According to Mr Kirkland, Ms Tulachat received newstart allowance from March 2005 but has not received any payments from the Commonwealth since September 2007.  She had worked for the Salvation Army and for a shopkeeper.  However, she has not worked since 2007, except occasionally at a restaurant some nights.  Mr Kirkland and Ms Tulachat are in receipt of family tax benefits for their child, Noah. 

10.     Mr Kirkland stated that Ms Tulachat and their son Noah were in very good health.  The family does not socialise very much and largely stays at home. 

SUBMISSIONS

11.     Ms Tulachat (through Mr Kirkland) disputes the debt, although Mr Kirkland said he understands that money had been overpaid to them.  Mr Kirkland has repaid the debt he owed to the Commonwealth.  Mr Kirkland stated that Centrelink, by delaying its request for the debt to be repaid for some three months, had “made a big error” and left Ms Tulachat in a difficult position: she has spent all the money and cannot now repay the debt.  He added that she might have been in a better position to repay had the request been made earlier.  Mr Kirkland submitted that Ms Tulachat does not need to repay the debt because Centrelink made a mistake in that regard.

12.     However, they have also always contested the debt.  Indeed, Mr Kirkland disputed that on 8 October 2007 Ms Tulachat requested Centrelink to defer recovery of the debt until 8 November 2007.  This was a “misunderstanding”, he contended, as they intended to contest the debt.

13.     Ms Tulachat stated that she was “sorry” for what had happened and that although she would like to repay the debt, it would be hard as she has no money and everything has to be paid for by Mr Kirkland.

14.     Mr Guthrie, for the respondent, submitted there was no dispute about the existence of the debt and its quantum; the dispute was in relation to whether the debt should be written off or waived.  He contended that although there was a delay by Centrelink in notifying Ms Tulachat of the debt, this was not an “administrative error” and the debt could not be waived on this basis.

15. Mr Guthrie referred to s 1237AAD of the Act, which provides for a debt being waived on the grounds of “special circumstances”, and submitted that this did not include financial hardship. He referred to case law, noting that for “special circumstances” to exist Ms Tulachat’s circumstances would have to be shown to be out of the ordinary. He submitted that Ms Tulachat’s circumstances did not meet this criterion. Mr Guthrie submitted that although it may cause hardship for Ms Tulachat, she does have a capacity to repay the debt and that Centrelink can make arrangements with her for small amounts to be repaid over time. Also, she receives a part pension from New Zealand and may be entitled to Australian benefits as well. Mr Kirkland has $440,000 in the bank, from which he receives an income.

CONSIDERATION

16.     On the basis of the evidence and material before it, I make the following findings of fact:

·     Ms Tulachat was in receipt of newstart allowance for the period 21 November 2006 to 8 May 2007;

·     In a letter received on 9 May 2007, the New Zealand Ministry of Social Development advised Centrelink that Ms Tulachat’s partner, Mr Kirkland, had been granted a New Zealand invalid’s benefit at the married rate with effect from 21 November 2006.  It also advised that arrears backdated to 21 November 2006 were payable to Mr Kirkland;

·     On 9 May 2007, the New Zealand Ministry of Social Development also advised Centrelink that Ms Tulachat had been granted a New Zealand invalid’s benefit at the married rate with effect from 4 November 2006.  Arrears backdated to 21 November 2006 were also payable to Ms Tulachat; and

·     Ms Tulachat has a debt due to the Commonwealth, calculated in accordance with the decision of the SSAT.

17. Section 1237A of the Act provides for a debt to be waived if it is attributable solely to administrative error made by the Commonwealth. I find that although the debt was not notified to Ms Tulachat for some weeks, there has been no administrative error on the part of the Commonwealth (that is, Centrelink). The debt arose solely as a result of the application of s 1228A of the Act to Ms Tulachat’s circumstances and cannot be waived under s 1237A of the Act.

18. Section 1237AAD of the Act provides for the possibility of waiving all or part of the debt on the grounds of special circumstances. The term “special circumstances” is not defined in the Act but has been considered in a number of decided cases by the Tribunal and the courts.

19.     In Re Beadle and Director General of Social Security (1984) 6 ALD 1 at 3, the Tribunal noted that:

“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 upon 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 must have a particular quality of unusualness that permits them to be described as special”.

20.     After noting that the term “special circumstances” requires something to distinguish the particular case from others, taking it out of the run of usual or ordinary cases, the Federal Court in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 further noted that: “[i]t 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.”

21. I find that recovery of the debt from Ms Tulachat is not so unfair or unjust as to warrant the exercise of the discretion to waive all or part of the debt pursuant to s 1237AAD of the Act. In so finding, I have had regard to the circumstances of this case and have noted that something more than financial hardship is required.

22. Section 1236 of the Act allows for the debt to be written off, if recovery would result in the debtor being in “severe financial hardship”.

23. The term “severe financial hardship” is not defined in the Act. Re Lumsden and Secretary, Department of Social Security (1986) 10 ALN N225 stated that for this term to be satisfied, a person’s entire financial position would need to be materially less than the current rate of pension.  In Re Stubbs and Secretary, Department of Families and Community Services (2003) AATA 729 at [20] it was stated that:

“Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature”.

24.     I also note the decision of Re L and Secretary, Department of Social Security [1995] AATA 159 at [66] where the (then) President of the Tribunal stated 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 subsection 1236(1).  Retrospective consideration may occasionally be relevant.  The essential inquiry 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 personal hardship as to run contrary to the beneficial nature of the legislation? … ”

25. Having had regard to all of Ms Tulachat’s circumstances, I find that she has the capacity to repay the debt without suffering “severe financial hardship”. I note Ms Tulachat’s statement that she would like to repay the debt and have also considered the role of Mr Kirkland, her partner, who receives an income from the interest earned by a substantial bank account. Also, both Ms Tulachat and Mr Kirkland receive benefits in the form of welfare payments. Consequently, it is inappropriate to write off the debt pursuant to s 1236 of the Act.

DECISION

26.     The Tribunal affirms the decision under review.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S Karas, AO, Senior Member

Signed: ...............[Sgd]..............................................................
  Mátyás Kochárdy, Research Associate

Date of Hearing  8 April 2009
Date of Decision  24 April 2009
The Applicant represented by        Mr Tony Kirkland, Applicant’s partner
The Respondent represented by   Mr Joe Guthrie, Departmental Advocate