Vourlas and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2009] AATA 763

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 763

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/0529

GENERAL ADMINISTRATIVE DIVISION		)
Re		SESIEL VOURLAS

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr S E Frost, Member

Date6 October 2009  

PlaceSydney

Decision The decision under review is affirmed.    

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

Mr S E Frost
  Member

CATCHWORDS

SOCIAL SECURITY – lump sum award – compensation preclusion period – disability support pension – overpayment – debt owing to the Commonwealth – waiver or write off – special circumstances not established – decision under review affirmed.

Social Security Act 1991 (Cth) ss 17(1), 1169, 1170, 1184K, 1223(1), 1236(1), 1236(1A), 1236(1C), 1237A(1), 1237AAD

Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9

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

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

REASONS FOR DECISION

6 October 2009	Mr S E Frost, Member
introduction

1.      The applicant, Sesiel Vourlas, sustained injuries in a workplace accident in January 2001.  Five years later, in February 2006, she was awarded a significant lump sum compensation payment for her injuries.

2.      As a result of the lump sum award, Ms Vourlas became subject to a “compensation preclusion period”, which meant she would not be entitled to receive certain social security benefits for a calculated period.  Ms Vourlas nevertheless received the disability support pension (‘DSP’) during some of the preclusion period, apparently to avoid financial hardship as some of the compensation money was temporarily withheld from her.  Eventually, after all the compensation amounts had been paid out to her, Centrelink calculated that the amount of DSP Ms Vourlas had been paid during the preclusion period, and to which she was not entitled, was in excess of $20,000.00. 

3.      The Secretary seeks to recover that overpayment.  Ms Vourlas’ position is that she should not have to pay the money back.

issues

4.      The issues before the Tribunal are:

(i)Whether Ms Vourlas has a recoverable debt of $21,074.33 owing to the Commonwealth, being an overpayment of DSP during the period 19 February 2006 to 14 December 2007; and, if so,

(ii)Whether there is any reason the debt should not be recovered.

the debt

5. On 14 December 2007, Centrelink calculated that a preclusion period applied to Ms Vourlas from 10 February 2006 to 5 March 2009 and that she had been overpaid $21,074.33 in DSP payments during the period 19 February 2006 to 14 December 2007. On 21 May 2008, the Social Security Appeals Tribunal (‘SSAT’) reduced the preclusion period on the grounds of “special circumstances” pursuant to section 1184K of the Social Security Act 1991 (‘the Act’), such that the preclusion period expired on 30 April 2008. In later, separate proceedings, which led to the current review, a differently constituted SSAT panel again accepted Centrelink’s debt calculation and found that a debt was due and payable to the Commonwealth.

6. Section 1169 of the Act provides that a “compensation affected payment” is not payable to a person during a lump sum preclusion period. DSP is defined as a “compensation affected payment” pursuant to subsection 17(1) of the Act. As Ms Vourlas received compensation affected payments to which she was not entitled during the preclusion period, this amounts to a debt owing to the Commonwealth under subsection 1223(1) of the Act.

7. Ms Vourlas does not dispute that she has a debt, or the amount she owes. Her contention is that she should not have to repay the debt because she cannot afford to and that it has increased her “anxiety and stress badly”. This leads me to consider whether the debt can be written off or waived. The Secretary contends, and I agree, that given Ms Vourlas is no longer subject to a compensation preclusion period and is in receipt of disability pension and currently making repayments towards her debt, it is preferable to assess any “special circumstances” under section 1237AAD of the Act, rather than section 1184K.

write off of the debt

8. A debt may be written off under subsection 1236(1) of the Act for a stated period or otherwise if, and only if, pursuant to subsection 1236(1A):

(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.

9. None of these circumstances apply in Ms Vourlas’ case. I have carefully considered her circumstances, and have paid particular attention to subsection 1236(1C) of the Act, which provides, for the purposes of paragraph 1236(1A)(b) above, that 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 repay the debt unless recovery by those means would result in the debtor being in severe financial hardship. I note that Ms Vourlas has been repaying her DSP debt via withholdings of $20.00 per fortnight. I do not consider her circumstances, dealt with in more detail below, amount to a case of “severe financial hardship”. Therefore, the debt cannot be written off under section 1236 of the Act.

waiver of the debt

10. A debt may be waived if it arose through error. Under subsection 1237A(1) of the Act, the Secretary must waive, subject to certain conditions, the right to recover any part of the debt that is attributable solely to an administrative error made by the Commonwealth if the payments were received by the debtor in good faith.

11. There is a slight complication in Ms Vourlas’ case in that, as mentioned above at [2], part of her compensation lump sum award was withheld from her for a period of time. This was because she was disputing the amount of legal costs payable to her then solicitor. The temporary withholding of the payment created a period of financial hardship for Ms Vourlas, and it was during this period that she received DSP payments. Once the costs issue was resolved, Centrelink stopped paying the DSP. At this time Centrelink also calculated the compensation preclusion period applicable to Ms Vourlas, and the amount of overpayment owed. The preclusion period is the outcome of the straightforward mathematical formula of dividing the “compensation part” of the lump sum by the relevant income cut-out amount pursuant to section 1170 of the Act.

12. None of the circumstances demonstrate an administrative error on the part of the Commonwealth. For this reason, it is not possible to waive the debt under subsection 1237A(1) of the Act.

Special Circumstances

13. Section 1237AAD of the Act enables a flexible response to a wide range of situations which could give rise to hardship or unfairness due to rigid application of a requirement for recovery of debt. This is a discretionary provision, pursuant to which the Secretary may waive the right to recover all or part of the debt if, among other things, there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt.

14.     During the hearing of this matter, I asked Ms Vourlas to tell me about her circumstances.  She said she lives in a one-bedroom, public housing unit in Sydney.  She has a number of health problems, including insulin-dependent diabetes and high blood pressure, and that she suffers from stress, and panic and anxiety attacks. She told the SSAT that she requires extensive medication for her conditions, which costs her about $100.00 per month. She also undertakes regular hydrotherapy sessions for lower back pain.

15.     She also gave evidence that she has a 12-year-old hatchback car, on which she spends about $50.00 per week for petrol, and about $55.00 per month on car insurance.

16.     She also said she has two sons, but she is estranged from one of them. The son with whom she does have contact helps her with some of her expenses.  She said she now owes him about $10,000.00 and would like to start repaying him.

17.     Ms Vourlas also told me of her past gambling problems, and that at one stage she had incurred a debt to the NSW Department of Housing, but has since repaid the debt through fortnightly instalments. She said she underwent treatment for her gambling and that the treatment proved successful. She is currently making modest fortnightly payments towards her Centrelink DSP debt.

18. The phrase “special circumstances” is not defined in the Act; however, it has been judicially considered on numerous occasions in connection with the above provision or similar provisions, including:

·     Re Beadle and Director-General of Social Security (1984) 6 ALD 1, where the Tribunal said, at 3:

The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. … 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.

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

… it is sufficient to observe that it would require something to distinguish [the] case from others, to take it out of the usual or ordinary case.

·     Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9, where Besanko J in the Federal Court stated, at 18:

There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ [as referred to in Beadle] are emphasised.  Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.

19.     I must decide, on balance, whether Ms Vourlas’ circumstances differ from the ordinary or usual case of a social security recipient, such that her circumstances are “special” and warrant waiver of the debt in question.

20.     In my view, Ms Vourlas has not demonstrated that her case should be regarded as one of “special circumstances”. She received DSP payments to which she was not entitled, and the general expectation is that overpayments made to social security recipients should be recovered.  Ms Vourlas has given evidence that she has a number of health problems, but this is a familiar set of circumstances, particularly for a person who is receiving DSP.  There is nothing particularly unusual or out of the ordinary in her personal, living or family circumstances.

21.     Further, Ms Vourlas’ financial position is neither straitened nor exceptional, such as to constitute “special circumstances”. She is currently repaying the debt by modest fortnightly withholdings from her DSP entitlement. This repayment arrangement does not impose upon her a level of hardship or unfairness that would warrant her case being treated as anything other than the routine example of a social security overpayment that the Commonwealth should recover.

decision

22.     The decision under review is affirmed.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S E Frost, Member

Signed: .........................[Sgd]..........................
  Associate: Jennifer Wong

Date of Hearing  5 August 2009
Date of Decision  6 October 2009
Appearance for the Applicant        Self-represented
Advocate for the Respondent        Mr D Buchanan, Centrelink Legal Services