Vidovic and Secretary, Department of Employment and Workplace Relations
[2006] AATA 520
•14 June 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 520
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2005/429
GENERAL ADMINISTRATIVE DIVISION ) Re VLADO VIDOVIC Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date14 June 2006
PlacePerth
Decision The Tribunal varies the decision under review and remits the matter to the Chief Executive Officer of Centrelink for reconsideration in accordance with the Tribunal’s finding.
.......(Sgd A Sweidan)........................
Senior Member
CATCHWORDS: Social Security Act 1991 s 1237AAD – waiver of debt
Cases
Jazazievska v Secretary Department of Family and Community Services (2000) FCA 1484.
REASONS FOR DECISION
14 June 2006 Mr A Sweidan, Senior Member Background
1. This is an application by Mr Vlado Vidovic, the applicant, appealing against a decision of the Social Security Appeals Tribunal (“SSAT”) dated 1 December 2005.
2. The SSAT held that Mr Vidovic had been overpaid Disability Support Pension (DSP) during the period 12 September 2002 to 16 July 2003, but waived the portion of the debt for the period 24 October 2002 to 13 January 2003 under section 1237A of the Social Security Act (the Act).
3. To the extent that they are not in dispute, the relevant facts as well as the issues and the respondent’s contentions are set out in the respondent’s Statements of Facts and Contentions dated 24 April 2006 and it is helpful to repeat them here:
“Issues
4. Has Mr Vidovic been paid more DSP than he was entitled to receive during the period 12 September 2002 to 16 July 2003?
5. If so, is this overpayment a recoverable debt owed to the Commonwealth?
Facts
6. Mr Vidovic was a member of a couple with four dependent children and was in receipt of DSP when on 15 August 2002 he started work at Key Group Engineering Pty Ltd (Key Engineering).
7. On 26 August 2002 Mr Vidovic advised Centrelink that his gross earnings for the fortnight ending 5 August 2002 were $205.53.
8. On 9 September 2002 Centrelink wrote to Mr Vidovic notifying him that his rate of DSP was based on Combined Annual Income (CAI) of $5,344.28. The letter also advised Mr Vidovic of his notification obligations to inform Centrelink within 14 days if his ‘combined income, not including financial investments or maintenance increases’, or ‘you or your partner start work or recommence work’.
9. Mr Vidovic continued to receive the maximum amount of DSP based on the CAI of $5,344.28.
10. On 12 September 2002 Mr Vidovic advised Centrelink that his gross earnings for the fortnight ending 26 August 2002 were $633.92.
11. While Mr Vidovic did not work during the period 10 September 2002 to 4 November 2002, but recommenced work on 5 November 2002.
12. Mr Vidovic provided Centrelink with a copy of some payslips on 26 November 2002 and 24 December 2002, which were not recorded.
13. On 31 December 2002 Mr Vidovic was provided with an income statement for Housing Authorities showing that Mr Vidovic was receiving the maximum rate of DSP, based on casual earnings of $0.00 and earned income of $5,343.78.
14. On 3 February 2003 Mr Vidovic provided Centrelink with copies of some payslips.
15. On 25 February 2003, another Income statement for Housing Authorities was requested by Mr Vidovic showing that he was receiving the maximum rate of DSP, based on casual earnings of $0.00 and earned income of $5,343.78.
16. On 12 March 2003 Mr Vidovic provided Centrelink with a payslip for the fortnight ending 9 March 2003 as well as some of his previous payslips from 10 November 2002.
17. Centrelink also wrote to Key Engineering requesting verification of Mr Vidovic's earnings from 10 November 2002.
18. On 24 March 2003 the earnings information was received from Key Engineering and Mr Vidovic’s current income details was updated, but a debt was not raised at that point in time.
19. On 28 July 2003 Mr Vidovic provided Centrelink with some payslips showing that he had recommenced work with Key Engineering on 1 July 2003.
20. On 6 May 2005 a Centrelink officer decided that Mr Vidovic had been overpaid $1,260.31 for the period 24 October 2002 to 16 July 2003.
21. On 21 July 2005, the decision to raise a debt was reviewed and affirmed by the Original Decision Maker (ODM).
22. A Centrelink Authorised Review Officer (ARO) affirmed the ODM's decision that Mr Vidovic had a recoverable debt.
23. The matter was then reviewed by the SSAT on 1 December 2005 who affirmed that there was a debt, but that the debt for the period 12 September 2002 to 13 January 2003 must be waived.
24. On 29 December 2005 Mr Vidovic lodged an application at the AAT.
25. On 27 April 2006 the Secretary reviewed the decision under the provision of section 180 of the Social Security Administration Act and decided that only the part of the debt for the period 30 January 2003 to 12 February 2003 should be recovered.
Contentions
26. The relevant legislation in this matter is contained in the Social Security Act1991 (the Act) and the Social Security (Administration) Act 1999 (the Admin. Act).
27. Section 117 of the Act states that a person’s Disability Support Pension (DSP) rate is worked out according to instructions in s1064 of the Act.
28. Section 1064-A1 of the Act identifies the method used to calculate the rate of DSP, and s1064-B1 of the Act provides calculations to use when a person income effects the maximum rate of DSP.
29. Section 1223 of the Act provides that if a social security payment is made and a person obtains the benefit of the payment and was not entitled for any reason to obtain that benefit, the amount of the payment is a debt due to the Commonwealth.
30. The Secretary contends that the applicant has been overpaid DSP during the period 12 September 2002 to 16 July 2003, however the Secretary has waived the debt of $34.94 for the period 15 August 2002 to 28 August 2002, because the applicant did satisfy his notification obligations, the period of employment at this time was for a short period only and the amount of the debt was less than $50.
31. The Secretary contends that Mr Vidovic has been overpaid $1,260.31 for the period 24 October 2002 to 16 July 2003 and pursuant to s1223 of the Act, this overpayment is a debt due to the Commonwealth.
Write off of debts
32. Section 1236. (1A) of the Act states that ‘The Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.’ The Secretary contends that the recovery of the debt should not presently or for a future period be written off. The applicant has the capacity to repay the debt, as Mr Vidovic is currently in receipt of DSP and repaying the debt via $20 per fortnight withholdings.
Non Recovery of Debts
33. The Secretary contends that Mr Vidovic has the capacity to repay the debt and that there are no special circumstances that make it desirable to waive the debt.
34. Section 1237A(1) of the Act states that the Secretary must waive the right to recover a debt that ‘is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment’. The notes in this section also include the provision that ‘subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor)’.
Sole Administrative Error
35. The Secretary contends that the debt did not arise due to sole administrative error made by the Commonwealth, nor did Mr Vidovic receive the payments in good faith. Centrelink’s normal course of assessment of income is from information presented by the recipient of a Social Security payment.
36. The Secretary understands that it is Mr Vidovic's contention that it is Centrelink’s fault that he has a debt because over the last 8 years he has always provided his payslips to Centrelink on time.
37. The Secretary acknowledges that there was an element of administrative error involved relating to the occurrence of the debt, as there were times when Mr Vidovic provided payslips which were not correctly recorded by Centrelink such as 26 November 2002.
38. However, the Secretary contends that the debt was not caused by sole administrative error, ie, by the Department’s incorrect coding.
39. Section 68 of the Admin. Act states that:
Person receiving social security payment or holding concession card
68.(1) Subsection (2) applies to a person to whom a social security payment (other than utilities allowance or seniors concession allowance) is being paid.
68.(2) The Secretary may give a person to whom this subsection applies a notice that requires the person to do either or both of the following:
(a) inform the Department if:
(i)a specified event or change of circumstances occurs; or
(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment.
…
68.(5) An event or change of circumstances is not to be specified in a notice under this section unless the occurrence of the event or change of circumstances might affect the payment of the social security payment or the person’s qualification for the concession card, as the case requires.
40. Centrelink sent Mr Vidovic notices on 15 May 2002, 9 September 2002, 9 March 2003, 19 March 2003, 27 March 2003, 1 May 2003 and 10 July 2003.
41. Mr Vidovic was notified of his obligations to inform Centrelink when he started or recommenced work and if his income increased.
42. The Secretary contends that it was Mr Vidovic's failure to advise of his recommencement of work on 5 November 2002 or on 1 July 2003 within the required 14 days of the event and his failure to not adequately advise Centrelink of the increases of income within the required 14 days of the event, that contributed in him being overpaid for the period from 24 October 2002 to 16 July 2003.
43. The Secretary contends that these failures resulted in Mr Vidovic being overpaid DSP and as the debt was not due to sole administrative error by Centrelink, it cannot be waived under the provision of section 1237A of the Act.
Good Faith
44. The Secretary contends that Mr Vidovic did not accept the excess payment in good faith, as although the Secretary understands that Mr Vidovic has difficulty understanding English and reading the letters sent by Centrelink, it has been confirmed through conversations with Mr Vidovic, that Mr Vidovic understands that if his earnings increase then his rate of DSP reduces.
45. The question of "good faith" has been considered by the Federal Court in several matters. The Respondent refers the Tribunal to Secretary, Department of Family and Community Services and Reardon (2002) and Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484.
46. In Reardon v Secretary, Department of Family and Community Services and [2002] AATA 33 (19 January 2002) the Tribunal found (at 92) that:
“By omitting to fully read the letters, Mrs Reardon was exercising some persistent choice and causing herself to not be fully informed of all the information relating to her Family Allowance. The Tribunal does not think that it is good enough for Mrs Reardon to assert that given her wilful choice in not reading the reverse of letters, that she should then be able to avail herself of the benefit of section 1237A to have a debt waived because of departmental administrative error. Mrs Reardon bears some responsibility for informing herself about entitlements. That she did not do so is to her detriment.”
.
47. In the Federal Court decision of Jazazievska v Secretary, Department of Family and Community Services [2002] FCA 1484, Cooper J (at 41) concluded:
“A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists….”
48. The Secretary contends that Mr Vidovic failed to keep himself informed of his obligations, and as a result wilfully turned a blind eye to his responsibility to notify Centrelink. Mr Vidovic had the obligation to either read Centrelink correspondence or keep himself informed of the contents of the information presented in the letters, and could have sought clarification with Centrelink or with the Centrelink interpreter services that are available.
49. The Secretary contends that the applicant had past experience of his fortnightly DSP payments being reduced by his earnings from employment, therefore he would have understood that he was not entitled to be paid the maximum rate of DSP and that when his earnings income increased, he would have expected a reduction in his rate of DSP.
Waiver in special circumstances
50. Section 1237AAD states that
‘the right to recover a debt can be waived if
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.’
51. The term "special circumstances" has been examined by courts and tribunals in many decisions and in different contexts. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 Toohey J stated:
“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 on 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 have a particular quality of unusualness that permits them to be described as special.”
52. The Secretary contends that Mr Vidovic has the capacity to repay the debt and that there are no special circumstances that make it desirable to waive the debt
53. At the hearing of the matter before the Tribunal the respondent was represented by Mr Jones, one of the respondent’s officers, and the applicant appeared in person but was assisted by an interpreter. The Tribunal had before it the “T Documents”.
54. At the outset of the hearing the respondent’s representative, Mr Jones, stated that the respondent was prepared to vary the decision under review so that the only amount that would remain payable by the applicant would be the amount of $173.32 reflecting the amount of an overpayment in the period 4 January 2003 to 2 February 2003.
55. Mr Jones stated that the respondent accepted that Mr Vidovic did go into Centrelink and regularly provide updates of income which Centrelink did not correctly process and that the respondent was prepared to accept that it was only in relation to one 14-day period where there had been an overpayment resulting from Mr Vidovic being late in notifying Centrelink of an increase in his income.
56. Following this offer by the respondent negotiations took place between the parties while the hearing was adjourned.
57. Unfortunately, it was not possible for the parties to reach agreement and the hearing therefore proceeded.
Evidence
58. Mr Vidovic gave evidence through the interpreter in support of his application. He claimed that he had never failed to notify Centrelink of increases in his income and further that he had received the overpayment in good faith. He said that he had not checked his bank account and was therefore unaware that Centrelink had not changed his disability support payment, following an increase in his income.
59. However, it emerged from Mr Vidovic’s evidence under cross-examination that there was a period during which he was on leave, namely, 24 December 2002 to 7 January 2003 during which he acknowledged he may have failed to provide Centrelink with the relevant information concerning an increase in his income, although he did so later.
60. Following Mr Vidovic’s evidence respondent changed its position on the basis that it contended that Mr Vidovic had not received the payments in good faith. The respondent relied on the decision in Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484 in this regard.
Findings
61. In the matter of Jazazievska, the Centrelink recipient of benefits had failed to read correspondence from Centrelink and had also failed to check her bank account. His Honour, Justice Cooper said:
“A recipient of a payment to which he or she is not entitled, cannot avoid the requirement of good faith in s 1237 A(1) by the mere circumstance that the person arranges for direct payment of that person with a financial institution and in consequence is unaware of the fact of the payment at the time of its actual receipt.”
62. However, the facts in Jazazievska were somewhat different to the facts in the instant matter.
63. The Tribunal notes in this regard that the increase in Mr Vidovic’s wages was very minimal and that, except for the period referred to above, Mr Vidovic always provided Centrelink on time with details of his remuneration from work. This was acknowledged by the respondent at the outset of the hearing as referred to above.
64. Accordingly, the Tribunal finds in relation to the debt for the period 12 September 2002 to 13 January 2003 that this should be waived pursuant to section 1237 A of the Social Security Act 1991, as determined by the SSAT.
65. Further, in relation to the debt for the period 14 January 2003 to 16 July 2003 it appears, as set out above, that Mr Vidovic did in fact notify Centrelink of the small increase to his income, albeit that such notification was late.
66. In the Tribunal’s view s 1237 AAD of the Act which in essence allows for the waiver of a debt where three conditions are met, i.e.:
· That the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or a false representation or knowingly omitting to comply with the provision of the Social Security law;
· That there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt;
· That it would be more appropriate to waive than write-off the outstanding debt or part of the debt;
applies to the circumstances of this matter.
67. In the Tribunal’s view the special circumstances here are that Mr Vidovic, except for the one occasion referred to above and as acknowledged by the respondent’s representative was always prompt in complying with his obligations and also that the amount of the relevant increase in his wages was minimal and in the Tribunal’s view it is appropriate to waive the outstanding debt for the period 14 January 2003 to 16 July 2003.
Decision
68. The Tribunal accordingly varies the SSAT decision under review to the extent set out above and sends the matter back to the Chief Executive Officer of Centrelink for reconsideration in accordance with the Tribunal’s finding.
I certify that the 68 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member
Signed: .............(Sgd S da Motta)............................
Associate
Date of Hearing 28 April 2006
Date of Decision 14 June 2006
Representative for the Applicant UnrepresentedRepresentative for the Respondent Mr A Jones, Department of Employment and Workplace Relations
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