Van Weeren and Secretary, Department of Family and Community Services

[2004] AATA 578

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 578

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No A2003/406

GENERAL ADMINISTRATIVE DIVISION		)
Re		WILLEM VAN WEEREN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr S. Webb, Member

Date7 June 2004

PlaceCanberra

Decision The decision under review is varied to the extent that 50 percent of Mr Van Weeren’s debt is waived.  The decision is otherwise affirmed. The matter is remitted to the Secretary to determine the amount of Mr Van Weeren’s debt that is outstanding and an appropriate recovery plan.

[Sgd] Mr S Webb, Member

CATCHWORDS

SOCIAL SECUIRTY - age pension - overpayment - Dutch pension – bilateral social security agreement between Australia and the Netherlands – Dutch pension income not declared - special circumstances - decision varied

Social Security Act 1991ss 1223, 1237, 1237A, 1237AAD, Schedule 8 (repealed)

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

Secretary of Social Security v Hales (1998) 82 FCR 154

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

Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435

Re Cymerman and Secretary, Department of Family and Community Services [2003] AATA 1354

Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553

Secretary, Department of Family and Community Services v Chamberlain (2002) 68 ALD 357

REASONS FOR DECISION

7 June 2004 Mr S. Webb, Member         

1.      This application concerns the recovery of an age pension overpayment debt for which Mr Van Weeren is liable.  It is not in dispute that Mr Van Weeren received Australian and Dutch age pensions from 1992.  Nor is it in dispute that he received biannual increases in the rate of his Dutch pension that were not taken into account for the purpose of calculating the rate of his Australian age pension and in consequence of which his Australian pension was overpaid.  The method of calculating Mr Van Weeren’s Australian age pension and the amount of the overpayment is not in dispute.  Mr Van Weeren does not dispute that the overpayment is correctly raised as a debt to the Commonwealth. 

2.      Before the Social Security Appeals Tribunal (“SSAT”) Mr Van Weeren asserted that the debt should be waived because it was caused by the administrative error of the Commonwealth, or in the alternative, in the special circumstances of his case.  The SSAT did not agree and affirmed the primary decision to recover the debt. 

3.      In his application to this Tribunal Mr Van Weeren asserts that there are special circumstances that make it desirable to waive his debt.

4.      The matter came on for hearing in Canberra on 18 May 2004.  Mr Van Weeren gave oral evidence at the hearing and was represented by Ms G. Boulton, Solicitor.  Dr G. Szmerler also gave oral evidence.  The Secretary of the Department of Family and Community Services (“the Respondent”) was represented by Ms K. Navarro, Solicitor.   Documentary evidence was tendered and labelled.

factual context

5.      The parties tendered an agreed statement of facts (Ex R2), accepting paragraphs 6 to 10 and paragraph 12 of the SSAT decision concerning Mr Van Weeren’s evidence before that Tribunal.  It is not necessary to reproduce those agreed facts here.  Essentially, Mr Van Weeren was in receipt of Dutch and Australian age pensions from 1992.  On 1 April 1992 the Social Security Agreement between Australia and the Kingdom of the Netherlands (“the Agreement”) came into effect.  In or about April 1992 Mr Van Weeren attended an information seminar and received a letter from the Dutch authorities concerning the Agreement (T26).  Mr Van Weeren’s Dutch pension was subject to biannual indexation adjustments.  Under the Agreement Dutch authorities informed Centrelink of the rate of the biannual Dutch age pension indexation increases in general terms.  Mr Van Weeren received monthly statements advising him of the rate of his Dutch pension.

6.      Mr Van Weeren was notified of adjustments in the rate of his Australian age pension from time to time.  Three such notices dated 10 March 1995, 15 September 1995 and 23 August 2000 are in evidence.   These notices specified his annual income and his obligation to inform Centrelink if his weekly income exceeded a specified amount.  The 10 March 1995 and 15 September 1995 letters (Ex R3 and R4) specify Mr Van Weeren’s overseas income details as follows:

“  Yearly Income           Weekly Income

Overseas income

(inc. overseas pension)  $7,513

Total income  $7,513  $144.48”

Those letters also stated:

“YOU MUST TELL US WITHIN 14 DAYS IF:

Income

.  your gross income (before tax) goes above $144.48 a week.

…”

7.      Mr Van Weeren’s income did in fact exceed those specified amounts but he did not inform Centrelink.

8.      Mr Van Weeren was informed by letter of changes in the exchange rate used by Centrelink in consideration of his Dutch age pension.  These letters did not inform him of the rate of his Dutch pension either in Guilders, Euros or Australian dollars.

9. On 31 May 2003 Mr Van Weeren was sent an information notice, informing him that that the rate of his Australian pension was being recalculated on the basis of the rate of his Dutch pension as advised by the Dutch authorities (T17 folio 133). On the same day Mr Van Weeren was informed that in the period from 1 April 1999 to 25 March 2003 his Australian pension had been overpaid in the amount of $4,484.97 and a debt would be raised under s1223(1) of the Social Security Act 1991 (“the Act”).  By request of Mr Van Weeren the matter was reconsidered and the amount of the debt was varied to $4,479.77 on 10 June 2003.  That decision was affirmed on review by an Authorised Review Officer (“ARO”) on 27 June 2003 and again affirmed by the SSAT on 30 September 2003.

10.     Mr Van Weeren is 77 years of age and frail.  Dr G. Szmerler, general practitioner, stated that he suffers from type II diabetes, ischaemic heart disease, hypertension, dyslipidemia, left ventricular heart failure, severe asthma, Paget’s disease of bone, adenocarcinoma of the prostate and chronic depression and anxiety (Ex A1 and T26).  He lives in rental accommodation.  He owns a 1980 Honda car that is fitted with a hoist for lifting groceries.  He uses a scooter because he has difficulty walking any distance.  His income is solely derived from his Australian and Dutch pensions.

issues

11. Mr Van Weeren is not pressing his earlier claim before the SSAT that the debt arose from the administrative error of the Commonwealth. It is common ground that Mr Van Weeren was overpaid age pension in the amount of $4,479.77 because increases in his Dutch pension were not taken into account when calculating the rate of his Australian age pension. The parties agree that Mr Van Weeren did not knowingly fail to comply with his obligations under the Act despite his open acknowledgement in oral evidence that he understood that he must inform Centrelink of any increases in his income. It is accepted that Mr Van Weeren did not knowingly make any false statement or representation in relation to these matters. The parties agree that the conditions applying to “write off” the debt pursuant to s1236 of the Act are not satisfied.

12.     The sole issue for determination is whether special circumstances exist that make it desirable to waive Mr Van Weeren’s debt in whole or in part.

legal principles

13. Mr Van Weeren’s application rises for consideration under s1237AAD of the Act. S1237AAD has three conjoined limbs. In this case it is common ground that ss1237AAD (a) and (c) are satisfied. The issue is whether special circumstances exist pursuant to ss1237AAD(b) that make it desirable to waive Mr Van Weeren’s debt in whole or in part.

14.     The meaning of the term “special circumstances” has been considered in the past by Courts and Tribunals.  Essentially, without limiting the meaning of the term, “special circumstances” are circumstances that are “unusual, uncommon or exceptional”, being possessed of “a particular quality of unusualness that permits them to be described as special” (Re Beadle and Director-General of Social Security (1984) 6 ALD 1). French J said in Secretary of Social Security v Hales (1998) 82 FCR 154 at 162:

“The evident purpose of s1237AAD 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 are 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.”

Kiefel J said in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545:

“The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle’s case (at ALR 229;  ALD 674), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case.  That was, I consider, the only enquiry to be undertaken in this case.  It 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.”

summary findings

15.     Mr Van Weeren was overpaid Australian age pension in the amount of $4,479.77 in the period from 1 April 1999 to 25 March 2003.

16.     That overpayment is a debt to the Commonwealth.

17. The overpayment arose, in part, because Centrelink did not take account of periodic indexation increases in Mr Van Weeren’s Dutch age pension as advised in general terms by the Dutch authorities. Mr Van Weeren failed or omitted to inform Centrelink of increases in his Dutch pension as required in compliance with his obligations under the Act and the notices he was sent on 10 March 1995, 15 September 1995 and 23 August 2000.

18.     Mr Van Weeren is not in financial hardship, even though his financial circumstances are somewhat straitened.

19.     There are special circumstances in Mr Van Weeren’s case:

(a)Mr Van Weeren attended a meeting about the Agreement and was led to believe that the Dutch authorities would inform Centrelink of increases in the rate of his Dutch pension. 

(b)Centrelink did not provide Mr Van Weeren with sufficient information about his obligations under the Act following implementation of the Agreement in 1992.

(c)Centrelink did not act on general information provided by the Dutch authorities under the Agreement concerning indexation increases in the rate of Dutch pensions until March 2003.

(d)Mr Van Weeren’s health is adversely affected by stress arising from the raising of the overpayment debt.

20.     These special circumstances make it desirable to waive 50 percent of Mr Van Weeren’s debt.

decision

21.     The decision under review is varied to the extent that 50 percent of Mr Van Weeren’s debt is waived.  The decision is otherwise affirmed.

reasons for the decision

22.     Making this decision I have carefully considered all of the evidence and the submissions of the parties, the relevant case law and legislation.

23. Considering all of the evidence I am satisfied that Mr Van Weeren was eligible to receive age pension during all relevant periods. The fact of his receipt of a Dutch age pension that was subject to biannual indexation increases that he failed or omitted to declare, means that he was not entitled to receive Australian age pension at the rate at which it was paid during the relevant period. That being the case he was paid amounts of age pension to which he was not entitled. It follows and is agreed that a debt to the Commonwealth in the amount of the overpayment arises pursuant to s1223 of the Act. It is agreed that the amount of the overpayment, and the debt, is $4,479.77 and I so find.

24. The Respondent may decide to waive the Commonwealth’s right to recover the debt, in whole or in part, in certain circumstances pursuant to s1237 of the Act. In this case it is agreed and I find that the debt did not arise solely by error of the Commonwealth and cannot, therefore be waived under s1237A of the Act. The issue is whether the debt can be waived under s1237AAD of the Act concerning “special circumstances”.

25. S1237AAD has three limbs each of which must be satisfied before the Respondent’s discretion to waive the debt is enlivened. It was common ground that Mr Van Weeren did not knowingly make a false statement or a false representation and did not knowingly fail or omit to comply with a section of the Act. It was also common ground that it is not appropriate to write off the debt pursuant to s1236 of the Act as not all of the essential preconditions are satisfied in Mr Van Weeren’s case. Neither of these matters was agitated in these proceedings. I note in passing that Mr Van Weeren stated that he understood his obligation to inform Centrelink if his income increased when receiving a disability support pension prior to 1992. Adopting an actual rather than a constructive interpretation of “knowingly” (see Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 at par 48), I accept his claim that he did not know that by not declaring increases in his Dutch pension he was in fact failing or omitting to comply with a provision of the Act.

26.     Considering the entirety of Mr Van Weeren’s circumstances I am satisfied that special circumstances exist in this case that set it apart from the run of cases.  It is accepted that Mr Van Weeren attended an information seminar and received a letter from the Dutch authorities concerning the Agreement.  That letter (T26, folio 163) is in the Dutch language and the English language and states:

“We are obliged to send the Australian DSS a copy of our decision which shows the [Dutch General Old Age Act] AOW pension rate you are entitled to as from the date the Agreement comes into effect.  If after the date on which the Agreement comes into effect, there are any changes in your circumstances which may affect the rate of your AOW pension, we will be obliged to apply the provisions of the Agreeement [sic].”

27.     Mr Van Weeren’s claim that the meeting was attended by Mr Fransen Van Zeeben from the Dutch Government and two officers from the Department of Social Security was not challenged.  Nor was his claim that the officials at the meeting explained that under the Agreement the Dutch authorities are required to inform the Australian Department of Social Security of any changes to the rate of the Dutch pension.  I accept Mr Van Weeren’s assertion that this information led him to believe that the Dutch authorities would inform the Department of Social Security of any change in the rate of his Dutch pension.

28. There is no evidence Mr Van Weeren received any further information from Centrelink concerning his obligations under the Act following commencement of the Agreement. The evidence before me indicates that Mr Van Weeren was sent notices setting out the annual rate of his Dutch pension income on 10 March 1995 and 15 September 1995 requiring him to inform Centrelink if his income increased above $144.48. He was sent a further notice on 31 August 2000 setting out the annual rate of his Dutch pension income at that time and requiring him to inform Centrelink if his income increased. Mr Van Weeren was also sent letters setting out the rate of exchange applied by Centrelink in relation to his Dutch pension during the period from 1999 to 2003.

29. I am satisfied that Centrelink’s failure to clearly communicate to Mr Van Weeren what his obligations were under the Act following commencement of the Agreement in a timely manner is an omission of significance. Mr Van Weeren was entitled to expect to be informed of his obligations under the Act following commencement of the Agreement even though, by his own account, he had previously been advised of the requirement to inform Centrelink of any increase in his income while in receipt of a disability support pension. Centrelink’s failure constitutes a special circumstance the significance of which was increased by the subsequent delay in communicating Mr Van Weeren’s obligations until 10 March 1995. I note in passing that the debt that has been raised is in consequence of overpayment of age pension from 1 April 1999 to 25 March 2003.

30.     The 10 March 1995 notice required Mr Van Weeren to inform Centrelink if his “gross income (before tax) goes above $144.48 a week” (Ex R3 p2).  The 15 September 1995 notice is in the same terms.  Mr Van Weeren claims he does not recall receiving those notices.  There is nothing to suggest that the notices were not dispatched and I am satisfied on the balance of probabilities that they were.  There is insufficient evidence before me to ascertain what the weekly rate of Mr Van Weeren’s Dutch pension was in 1995.  However, on the basis that his Dutch pension was subject to biannual indexation adjustments it is reasonable to conclude that the rate of his Dutch pension had increased in the three years following commencement of the Agreement in 1992.  It is possible, even likely, that his Dutch pension income may have surpassed the $144.48 threshold by the time those notices were dispatched.  However, there is insufficient evidence to support such a finding.

31.     In the Respondent’s submission, Mr Van Weeren failed to comply with the two 1995 notices.  There is no evidence before me concerning the rate of Mr Van Weeren’s Dutch pension prior to 11 November 1996, on which date his Dutch pension was paid at the rate of NLG864.18 per month, or A$644.81 per month applying the applicable exchange rate at that date (T24, folio151).   That amount equates to a rate of $148.80 per week.  Mr Van Weeren did not inform Centrelink that his income had risen above $144.48 per week.  It follows that Mr Van Weeren failed to comply with the notices and I so find. 

32. However, in Mr Van Weeren’s submission, it was not reasonable to expect him to apply fluctuating exchange rates to calculate the weekly rate of his Dutch pension for the purpose of informing Centrelink, when he understood that the Dutch authorities were informing Centrelink of the correct rate at which his pension was paid. I do not accept that submission. It was not necessary for Mr Van Weeren to perform complex calculations based on fluctuating rates of exchange. The advice he received from the Dutch authorities concerning the rate of his pension payments clearly indicated the amount of his pension in Netherlands Guilders, the applicable exchange rate and the amount of Australian dollars that was deposited into his bank account (T24). It is not unreasonable to expect Mr Van Weeren to either calculate the weekly rate from the monthly payment or to inform Centrelink of the monthly rate in compliance with his obligations under the Act. The simple fact is he did not. Mr Van Weeren claims he did not do so because he thought and had been led to believe that Centrelink already had that information from the Dutch authorities. Those assumptions do not excuse him from compliance with the notices he was sent in 1995.

33.     Mr Van Weeren was sent a third notice (T6, folio 31-32) on 31 August 2000, almost four years later.  That notice required him to inform Centrelink if his “income increases” and stated his annual income was $7,007.07.  At that time Mr Van Weeren’s Dutch pension income was $710.88 per month, or $8530.56 annually, and increased to $749.54 per month, or $8,994.48 annually, by 19 December 2000 (T24, folio 152).  Mr Van Weeren failed to comply with the notice and inform Centrelink of those or subsequent increases in his Dutch pension.

34.     In Mr Van Weeren’s submission he did not inform Centrelink of any increases in his pension because he was under the impression that the Dutch authorities were informing Centrelink of any such increases.  In Mr Van Weeren’s submission it can be inferred that the Dutch authorities were informing Centrelink of biannual indexation adjustments to the general rate of Dutch pensions.  That inference is pointed to by the letter from the Dutch authorities to Mr Van Weeren in February 1992 (T26) and Centrelink’s letter to Mr Van Weeren dated 31 May 2003 (T17).  While there is insufficient evidence to support a finding that the Dutch authorities regularly provided information to Centrelink on a biannual basis, it is clear that the Dutch authorities did provide information concerning the indexation rates for Dutch pensions to Centrelink.  However, it appears that Centrelink did not act on information provided by the Dutch authorities until March 2003.  On 31 March 2003 Centrelink sent a letter to Mr Van Weeren stating (T12):

“Centrelink regularly compares its payment information with the social security authorities in The Netherlands…

Information obtained from The Netherlands indicates that there could be a difference between information held on the pension records of The Netherlands and the details held by Centrelink.  The information obtained from The Netherlands suggests thatyour [sic] pension from The Netherlands is more than is shown on Centrelink records.

…”

35.     If Centrelink did indeed regularly compare social security payment records with the Dutch authorities it is surprising that Mr Van Weeren’s case was not identified as anomalous before March 2003.  Mr Van Weeren had been receiving increasing amounts of Dutch pension that he had not declared to Centrelink since April 1992.  On the evidence before me it appears that Centrelink either did not regularly compare records as claimed in the letter sent to Mr Van Weeren on 31 March 2003, or if such comparisons did take place then they were insufficient for the purpose of comprehensively identifying anomalies and discrepancies in the records.  Had such comparative assessments been undertaken thoroughly and on a regular basis after commencement of the Agreement it is reasonable to expect that Mr Van Weeren’s failure to declare increases in his Dutch pension income would have been exposed in a timely manner and the amount of overpayment, and consequent debt, would have been minimised.  I pause to note that DP Forgie concluded in Re Cymerman and Secretary, Department of Family and Community Services [2003] AATA 1354 that, while neither the Secretary nor Centrelink were obligated under the Agreement or the Act to keep abreast of changes in the rate of Dutch pension, Centrelink’s failure to carry out any audit or check for a period of years contributed to Mrs Cymerman’s perception that she was being paid on a proper basis. The fact is it took 11 years for Centrelink to identify a problem with Mr Van Weeren’s age pension payments during which period, like Mrs Cymerman, he was under the impression that his payments were in order and information about the rate of his Dutch pension was being provided to Centrelink by the Dutch authorities under the Agreement.

36.     That delay constitutes special circumstances in this case, despite Mr Van Weeren’s failure to comply with the notices he was sent.  It appears that Centrelink subsequently changed its procedures and now applies the pension indexation information provided by the Dutch authorities and adjusts the pension rate of recipients in Australia.

37.     In Mr Van Weeren’s submission his ill health constitutes a special circumstance that makes it desirable to waive his debt.  I do not agree.  It is not unusual, uncommon or exceptional for persons who are in receipt of the age pension to suffer ill health and frailty (see Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553 at 554). That is an unfortunate fact of the aging process. Dr Szmerler assessed Mr Van Weeren’s relative unwellness as “eight or nine out of ten”, noting that he was not so unwell that he required placement in a nursing home.  While Mr Van Weeren is clearly unwell I am satisfied that that factor alone does not render his circumstances special.  However, I note Dr Szmerler’s oral and written evidence (T26, folio 174) that Mr Van Weeren’s health is adversely affected by stress that is caused by his “problems with social security”.  On Dr Szmerler’s evidence the emotional intensity and agitation Mr Van Weeren experiences in relation to his dealings with Centrelink in relation to the issue of his debt increases his level of anxiety and stress, which in turn increases his blood pressure and asthma.  I note the clinical evidence that supports Dr Szmerler’s opinion.  Dr Szmerler’s evidence persuades me to conclude that the adverse effect on Mr Van Weeren’s health is a special circumstance that must be considered when deciding whether it is desirable to waive his debt.

38.     It is necessary to consider all of the circumstances in order to determine whether the result of recovering Mr Van Weeren’s debt would be one that is unfair, unintended or unjust (see Secretary, Department of Family and Community Services v Chamberlain (2002) 68 ALD 357 and Groth v Secretary, Department of Social Security (above)). The debt recovery provisions of the Act are clearly intended to impose on a person who has been paid amounts to which they are not entitled a liability to repay such amount to the Commonwealth. That intention was eloquently elucidated by French J in Secretary, Department of Social Security v Hales (above) at pp 695-696:

“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. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth. This case primarily concerns the proper construction of a section of the Social Security Act1991 (Cth) which provides for the waiver of debts where special circumstances are found to exist. There is a tension in the construction of such provisions between the needs for certainty of application and flexibility of response to the situations that may arise from time to time.”

39. Weighing the circumstances that gave rise to the debt and the circumstances of Mr Van Weeren with the legitimate expectation of taxpayers that monies will be recovered from those who have received them without entitlement, I am persuaded to conclude that the special circumstances of this case make it desirable to waive 50 percent of Mr Van Weeren’s debt. It cannot be said that it is the intention of the Act to materially contribute to the ill health of a frail age pension recipient who is liable for a debt to the Commonwealth, especially in circumstances where the magnitude of the debt was increased by delay and inadequate procedures on the part of the Commonwealth. However, those circumstances, which are special, must be considered in relation to Mr Van Weeren’s failure or omission to declare increases in his income to Centrelink in compliance with notices requiring him to do so.

40.     I pause to note that while Mr Van Weeren is not suffering financial hardship his financial circumstances are somewhat straitened.  Considering the fragile state of Mr Van Weeren’s health and his financial circumstances it is desirable that the outstanding amount of his debt should be recovered at a reduced rate.

conclusion

41. It follows that the decision of the SSAT is varied to the extent that 50 percent of Mr Van Weeren’s debt is to be waived in the special circumstances of his case pursuant to s1237AAD. The matter is remitted to the Secretary to determine the amount of Mr Van Weeren’s debt that is outstanding as well as an appropriate recovery plan.

I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S Webb

Signed:  A. Krilis                  Associate

Date/s of Hearing  18 May 2004
Date of Decision  7 June 2004
Solicitor for the Applicant          Ms G. Boulton
Solicitor for the Respondent     Ms K. Navarro