Ukalovic and Secretary, Department of Family and Community Services

[2004] AATA 1300

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1300

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/557

GENERAL ADMINISTRATIVE  DIVISION

Re:         VITOMIR UKALOVIC AND

NEDJELKA UKALOVIC

Applicants

And:SECRETARY,

DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             7 December 2004

Place:            Melbourne

Decision:      The Tribunal affirms the decision under review.

(sgd) Regina Perton
  Member

SOCIAL SECURITY ‑ disability support pension – wife pension – payment of weekly compensation arrears ‑ overpayment ‑ debt to Commonwealth ‑ waiver of debt ‑ write‑off of debt 

Social Security Act 1991 Part 3.14, ss 8(2) 17(1), 17(2), 17(4A), 1064, 1064E-3, 1233, 1236, 1237A, 1237AAD

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

REASONS FOR DECISION

7 December 2004  Regina Perton, Member

1.      This is an application by Vitomir Ukalovic and Nedjelka Ukalovic (the applicants) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 22 March 1999.  A delegate of the Secretary to the Department of Family and Community Services (the respondent) made a decision dated 31 July 1998, that the applicants had each been overpaid $4,971.50 in disability support pension (DSP) and wife pension (WP) respectively (a total of $9,943.00) from 16 October 1997 to 23 July 1998, a decision which was affirmed by an authorised review officer (ARO) on 31 August 1998.  Prior to making its decision, the SSAT asked the respondent to undertake a fresh calculation of the amounts overpaid.  Consequently, the SSAT affirmed the delegate’s decision that the applicants had been overpaid DSP and WP but varied the amount of the overpayment, deciding that each applicant owed $6,081.65 to the respondent  being overpayments made between 27 June 1996 and 17 October 1997.

2.      The application to the Tribunal was lodged on 7 May 2004, more than five years after the SSAT decision.  The Tribunal, differently constituted, determined that the applicants should be granted an extension of time for lodgement.

3.      At the hearing on 13 September 2004, Mr Ukalovic represented his wife and himself.  His wife did not attend the hearing.  Ms K. Navarro, a Centrelink advocate, represented the respondent.  An interpreter in the Croatian language facilitated communication.

4. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T59).   

BACKGROUND

5.      Mr Ukalovic and Mrs Ukalovic have received DSP and WP respectively since 29 March 1990.  Mr Ukalovic was injured in the workplace some years prior to 1990 and received compensation payments for that injury prior to being granted DSP.  On 2 December 1991, Mrs Ukalovic was injured in a workplace accident.  Mrs Ukalovic was paid weekly compensation payments from 19 June 1996 to 9 October 1997 of $268 per week.

6.      On 9 October 1997, the insurer, MMI Workers’ Compensation Victoria Ltd Insurance (MMI), stopped paying weekly compensation to Mrs Ukalovic.  Mrs Ukalovic successfully challenged this decision.  On 23 July 1998, the payments were reinstated and MMI agreed to pay arrears of compensation as follows:

19 June 1996 to 7 May 1997                  $77.00 per week

8 May 1997 to 9 October 1997               $79 per week

10 October 1997 to 7 May 1998             $358 per week

8 May 1998 and ongoing  $367 per week

7.      The back payment was to be $12,237.40 for the period from 27 June 1996 to 23 July 1998.  Having become aware of Centrelink’s interest in the matter, MMI advised Centrelink of its intention to pay these arrears.

8. On 31 July 1998, Centrelink informed MMI that the amount to be repaid to Centrelink under s 1233 of the Social Security Act1991 (the Act) was $9,943.00.  On 5 August 1998 a garnishee notice was sent to the insurer for $9,943.00.

9.      Centrelink wrote to Mrs Ukalovic a number of times during July and August 1998 advising her, amongst other things, that she owed $9,943.00 due to overpayment of WP during the cessation period.  Centrelink advised Mrs Ukalovic about its request to MMI to reimburse Centrelink that $9,943.00out of the $12,237.40 back payment. 

10.     The applicants disputed Centrelink’s determination and sought review by an ARO.   On 31 August 1998, an ARO determined that the debts were correctly raised. 

11.     Mr and Mrs Ukalovic lodged applications with the SSAT on 26 October 1998 and 12 November 1998 respectively.  On 26 November 1998, the SSAT adjourned its consideration of the matter and asked the respondent to clarify how it calculated the amount owing as $4,971.50 as it appeared there were some anomalies in the figures.  On 15 February 1999, a delegate of the respondent wrote to the applicants and to the SSAT advising that the amount overpaid to each of the applicants was $6,081.65 being for the period 27 June 1996 to 17 October 1997.

12.     On 22 March 1999, the SSAT determined that the applicants each had a debt of $6,081.65 for overpayment of DSP and WP respectively, between 27 June 1996 to 17 October 1997.

13.     Between 2001 and 2003, Mr Ukalovic had a number of discussions with Centrelink staff about matters relating to his and his wife’s income, including the possible impact on their pensions if his wife accepted a lump sum compensation payment from the insurer as full settlement in lieu of weekly compensation payments.  This resulted in the re‑examination by Centrelink of the issues around the debt raised as a result of the 1998 payment by the insurer.  Mr Ukalovic indicated to Centrelink that he still maintained the view that he and his wife should not have had to pay the debt. 

14.     On 7 May 2004, Mrs Ukalovic lodged an application for review with the Tribunal and Mr Ukalovic was subsequently joined as a party.  They applied for an extension of time to lodge the application and the extension was granted on 20 July 2004.

15.     The issues before the Tribunal are the effect of the payment of arrears of weekly compensation in July 1998 on the applicants’ pensions; and whether the applicants owe a debt to the Commonwealth, and if so, whether the debt should be waived or written off. 

EVIDENCE

16.     Mr Ukalovic told the Tribunal that he and his wife should not have to reimburse Centrelink as a result of the compensation payment of July 1998.  He said that they are not subject to the legislative provisions concerning compensation payments because their pensions commenced before 1 January 1994 and therefore were exempt from the provisions concerning reimbursement of compensation payments introduced at that time.  He said that Centrelink was not entitled to demand that the workers’ compensation insurer pay settlement moneys to it rather than to his wife.  He said that, furthermore, Centrelink should have advised his wife about their planned demand of the insurer before they issued the demand.

17.     Mr Ukalovic stated that he and his wife have always complied with Centrelink requirements.  He said that he had even reported a substantial quadrella win.  He also described other difficulties he had experienced with Centrelink, such as its officers failing to deliver on undertakings to send out copies of legislation or documents he had requested.

18.     Mr Ukalovic said that he was not suggesting that he and his wife met the criteria for waiver of debt on the basis of special circumstances. 

19.     Mr Ukalovic pointed out that he and his wife took on the risk and stress of court proceedings to have his wife’s workers’ compensation payments reinstated.  By doing so, he said, they saved the Government money, in that they did not receive the full pension as a consequence of his wife’s ongoing compensation payments from an insurance company.  He said it was unfair, and contrary to law, for Centrelink to require them to repay the amounts received as a result of their legal action.  

20.     Mr Ukalovic referred to a file note written by a Centrelink officer on 30 August 2001 (T32) as evidence for his stance:

The customer’s WFD PENSION claim was granted PRIOR to 01/01/1994. Therefore, it is NOT a Compensation Affected Payment pursuant to Part 3.14 of the Social Security Act. Accordingly, the continuing Weekly COMPENSATION payments are to be treated as OTHER INCOME…

CONSIDERATION OF THE ISSUES

21.     Section 17 of the Act sets out the impact of compensation payments on certain types of pensions.  Section 17(1) provides that DSP and WP are compensation affected payments.  Section 17(2) of the Act provides:

17.(2)  Subject to subsection (2B), for the purposes of this Act, compensation means:

(a)      a payment of damages; or

(b)a payment under a scheme of insurance or compensation under a Commonwealth, State or Territory law, including a payment under a contract entered into under such a scheme; or

(c)a payment (with or without admission of liability) in settlement of a claim for damages or a claim under such an insurance scheme; or

(d)      any other compensation or damages payment;

(whether the payment is in the form of a lump sum or in the form of a series of periodic payments and whether it is made within or outside Australia) that is made wholly or partly in respect of lost earnings or lost capacity to earn resulting from personal injury. 

22.     Section 17(4A) of the Act provides:

17.(4A)  For the purposes of this Act, a payment of arrears of periodic compensation payments is not a lump sum compensation payment.

23.     Mr Ukalovic submitted that his wife’s payment of arrears is not covered by s 17 and Part 3.14 of the Act as he and his wife were on DSP and WP respectively prior to 1 January 1994.  The respondent did not disagree with that submission.  The Tribunal accepts Mr Ukalovic’s submission and finds that Mrs Ukalovic is not subject to the provisions of the Act concerning repayment of lump sum compensation.

24.     The respondent submitted that the arrears of weekly compensation payments should be treated as income for the purposes of the pensions paid to the applicants.  Based on the documentary evidence, the Tribunal is satisfied that the payment by MMI in July 1998 constitutes arrears of weekly payments from 27 June 1996 to 23 July 1998.  The fact that the arrears were paid in one amount does not change their being weekly payments.  While the lump sum compensation provisions do not apply to the applicants because of the timing of Mr Ukalovic qualification for DSP, the payment of weekly compensation payments to Mrs Ukalovic are not excluded by the amendments made to the Act in 1994. 

25.     Section 8 of the Act sets out what constitutes income for the purposes of calculating entitlements for pensions.  Section 8(2) of the Act sets out what constitutes income:

8.(2)  A reference in this Act to an income amount earned, derived or received is a reference to:

(a)       an income amount earned, derived or received by any means; and

(b)an income amount earned, derived or received from any source (whether within or outside Australia).

26.     A number of sources of income are excluded from the income provisions pursuant to other subsections of s 8 and subsequent sections of the Act.  However, weekly compensation payments are not specifically excluded.  The Tribunal finds that the arrears of weekly compensation paid by MMI in July 1998 constitute income for the purposes of DSP and WP. 

27.     Section 1064 of 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.  Section 1064-E3 of the Act specifically relates to income arising out of the payment of arrears of weekly compensation:

1064-E3.  If:

(a)at the time of an event that gives rise to an entitlement of a person to compensation, the person is receiving age pension, disability support pension, wife pension, carer payment, mature age allowance under Part 2.12A or mature age partner allowance; and

(b)in relation to that entitlement, the person receives a payment of arrears of periodic compensation;

the person is taken to receive on each day in the periodic payments period an amount calculated by dividing the amount received by the number of days in the periodic payments period.

28.     The Tribunal is satisfied that each of the applicants was overpaid $6,081.65 in pension between 27 June 1996 and 17 October 1997 and that each applicant owes a debt to the Commonwealth in that amount.

29. Mr Ukalovic submitted that the respondent was not entitled to seek part of his wife’s compensation arrears directly from MMI. Section 1233 of the Act specifically authorises the issue of a garnishee notice in circumstances such as these, and the Tribunal is satisfied that it was appropriate for the respondent to do so.

30.     Section 1236 of the Act provides for a write‑off of a debt 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.

31.     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.

32.     There is no evidence that the debt is attributable solely to an administrative error by the respondent.  As a result, the Tribunal finds that the debt cannot be waived under s 1237A(1A) of the Act.

33.     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.

34.     The Tribunal is satisfied that the debt has not arisen through any dishonesty or omissions by the applicants.  Rather, the debt has arisen due to the legislative provisions relating to weekly compensation payments.  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.  Therefore, they meet the criteria in s 1237AAD(a) of the Act.

35.     Mr Ukalovic conceded that his and his wife’s situation did not meet the criteria of special circumstances as referred to in s 1237AAD(b) of the Act (Re Beadle and Director-General of Social Security (1984) 6 ALD 1). In Re Beadle, the Tribunal held that the special circumstances must be unusual, uncommon or exceptional.  There are no such circumstances here.  Therefore, the Tribunal finds that the waiver provisions of s 1237AAD of the Act do not apply.

36.     As a result, the applicants each owe a debt of $6,081.65 to the respondent. 

DECISION

37.     The Tribunal affirms the decision under review. 

I certify that the thirty-seven [37] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of hearing:  13 September 2004

Date of decision:  7 December 2004
Advocate for applicants:              self represented
Advocate for respondent:            Ms K. Navarro, Centrelink