Stevens and Secretary Department of Family and Community Services [2002] AATA 101 (22 January 2002)

Last Updated: 8 May 2002

DECISION AND REASONS FOR DECISION [2002] AATA 101

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/641, 642

GENERAL ADMINISTRATIVE DIVISION )

Re OLIVE AND GEORGE STEVENS

Applicant

And SECRETARY DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date 22 January 2002

Place Hervey Bay

Decision The Tribunal sets aside the decision under review and in substitution thereto decides: (a) to waive the debt for Olive Stevens accrued over the period 25 December 1997 to 12 November 1998; (b) to waive the debt for George Stevens accrued over the period 25 December 1997 to 8 August 1998; (c) To write off the debt for Olive Stevens accrued over the period 13 November 1998 to 30 May 2000; (d) To write off the debt for George Stevens accrued over the period 9 August 1998 to 30 May 2000; and (e) In accordance with sub-section 1237(2)(a) of the Social Security Act, the waiver for Mrs Stevens is to take effect from 13 November 1998 and for Mr Stevens from 9 August 1998.

(Sgd) Dr EK Christie

(Member)

Decision No: 101/2002

CATCHWORDS

SOCIAL SECURITY - disability support pension - carer pension - overpayment - whether overpayment should be waived - whether overpayment should be written off

Social Security Act 1991 S 1236, 1237A, 1237AAD

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

Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435

Department of Social Security and McAvoy (1996) 23 AAR 543

Re L and Secretary, Department of Social Security (1995) 21 AAR 421

Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26

ORAL REASONS FOR DECISION

22 January 2002 Dr EK Christie, Member

1. This is an application for a review of the Social Security Appeals Tribunal ("the SSAT") made on 9 May 2001 to recover overpayments of disability support pension paid to Olive Stevens and carer payment and disability support pension paid to George Stevens for the period 25 December 1997 to 30 May 2000.

2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T documents"), (Exhibit 1) and the following exhibits:

Exhibit 2 Letter QBE Insurance to Olive Stevens, date stamped by Centrelink 4 June 2001

Exhibit 3 Centrelink statement, 12 August 2001

Exhibit 4 Bundle of documents provided by Mr Stevens to the Administrative Appeals Tribunal

Exhibit 5 Centrelink Statement: Account payable for overpayment, 30 August 2000

3. Mr Stevens represented the Applicant and gave evidence on behalf of his wife (Olive) and himself. The Department of Family and Community Services was represented by Mr R McQuinlan, a Departmental Advocate.

Issues before the Tribunal

4. The only issues for the Tribunal to decide were:

(a) whether the debt could be waived in part, or in full, for either "special circumstances" or "administrative error"; and

(b) whether the debt could be written off

Facts

5. On the basis of the evidence before it, the SSAT made the following findings of fact:

"28. Mrs Stevens was in receipt of disability support pension and Mr Stevens in receipt of carers payment and disability support pension during the period in question.

29. Mrs Stevens receives a weekly compensation payment from QBE Workers Compensation (Victoria) Limited.

30. Mrs Stevens was sent a letter on 25 June 1997 advising her to notify Centrelink if her combined income of $4,368.08 was incorrect. She was also sent letters on 13 January 1998, 12 November 1998 and 12 April 1999 advising her to notify if her combined income of $8,736.06 was incorrect.

31. Mr Stevens was sent a letter on 21 July 1997 advising him to notify Centrelink if his combined income of $4,368.08 was incorrect. He was also sent letters on 13 January 1998, 8 August 1998, 12 November 1998 and 12 April 1999 asking him to notify if his combined income of $8,736.06 was incorrect.

32. Mrs Stevens was paid compensation at the following rates:

$221.00 from 18 December 1997

$230.00 from 16 June 1998

$231.00 from 16 June 1999

$235.00 from 16 June 2000

33. Mrs Stevens advised Centrelink on 30 May 2000 that her income was $231.00 gross per week" (T2 folios 7,8)

Evidence of George Stevens

6. Mr Stevens said that, in December 1997, he had provided the Centrelink Office with the QBE Insurance Statement which set out the compensation settlement details [a change in psychiatric impairment from 75-85%] for Olive Stevens. The Centrelink staffer photocopied the document and returned the original to Mr Stevens. Mr Stevens then sent a copy of this document to his wife's treating psychiatrist (Dr Fried) and GP (Dr Ironside). Apparently, Centrelink cannot locate this document.

7. Mr Stevens said that he next went to the same Centrelink office in January 1998 around the time of his birthday (14 January). He saw the same Centrelink staffer as he had seen in mid December 1997. She followed the same procedure. That is, she copied the original QBE Insurance statement he had provided, retained the photocopy and then returned the original to Mr Stevens.

8. To illustrate what Mr Stevens believed to be flaws in this Centrelink office's internal procedures, Mr Stevens produced a copy of a personal (QBE Insurance) document that he had dated stamped (4 June 2001) at the Centrelink office as well as a photocopy of this document that had been retained by Centrelink (Exhibit 2). Mr Stevens then referred the Tribunal to the Centrelink Statement (Exhibit 3), dated 12 August 2001. It was significant, Mr Stevens said that the latter document made no reference to the QBE Insurance Statement (Exhibit 2), date-stamped 4 June 2001, notwithstanding the information that it contained was a relevant consideration for (Exhibit 3).

9. Mr Stevens said that another example of a Centrelink error was that the amount of overpayment stated on the Centrelink notice (Exhibit 5) was out by one half.

10. Mr Stevens gave the following responses to a Tribunal question relating to their financial circumstances:

* The only money in their bank account was the insurance/social security payments they received each month ($215 per week from QBE Insurance and $162 per week from Centrelink). The bank deposit varied, depending on their expenses

* The only weekly expenses provided at the Tribunal hearing were for food ($150), rent ($126) and fuel ($30). Mr Stevens could give no estimates for other necessaries of life.

* Mr Stevens had no cash reserves for unforeseen problems or maintenance needs (car insurance and registration, an existing need for four new tyres and a new windscreen). To meet some these financial outlays would necessitate a further reduction in other necessaries of life for them both.

11. Mr Stevens described the following characteristics of his wife's medical condition stating that her condition had commenced in late 1994:-

* an anxiety state;

* suicidal characteristics;

* memory loss; and

* lack of understanding

12. Mr Stevens said that he was his wife's full-time carer. As they had moved interstate he had no family to assist him. Nor could he afford to pay for assistance to provide him some casual relief for his wife's care. He described his wife's condition as "like a child" and the toll on him, as her carer, had significantly affected his own health. However, as Olive's husband he had no desire other than to care for his wife permanently.

13. Under cross-examination, Mr Stevens stated that he found the information Centrelink required to calculate their entitlements as "very confusing". He said that he always had believed that Centrelink knew what they were doing and so he had relied on Centrelink to pay the correct Social Security entitlements to them, based on the information that he had provided to Centrelink.

Contentions and Submissions of the parties

14. Mr McQuinlan, for the Department, stated that there was no dispute that overpayments of Social Security entitlements had been paid to Olive and George Stevens.

15. With respect to waiver of the debt for "special circumstances", Mr McQuinlan submitted that when the overall facts were considered, there were no special circumstances which met the "Beadle test" as being either "unusual", "uncommon" or "exceptional".

16. Whilst acknowledging the medical condition of Mrs Stevens, Mr McQuinlan contended that medical problems of Social Security recipients were "quite common" and a severe medical condition alone did not represent "special circumstances". In this situation, a waiver was not justified.

17. Mr McQuinlan contended that there was nothing "exceptional" about the financial circumstances of Mr and Mrs Stevens. He submitted that they had a small cash surplus each week to meet day to day living expenses and could get by with modest needs.

18. Mr McQuinlan contended that there were "quite a few situations where [Centrelink] advice [to Mr and Mrs Stevens] was less than satisfactory", but most related to the period after the overpayment period in issue. Consequently, there was no basis for waiver.

19. With respect to waiver of the debt for "administrative error", Mr McQuinlan referred to the Centrelink notices sent to Mr and Mrs Stevens on 13 January 1998, and the letter from QBE Insurance that Mr Stevens had given to Centrelink in December 1997. Further notification notices had been sent to Mr and Mrs Stevens over time [see para 5].

20. It was Mr McQuinlan's contention that Mr and Mrs Stevens had contributed to the administrative error as Mr Stevens had failed to respond to the notification notices. As a Social Security recipient Mr Stevens had an obligation to respond to the notification notices. Furthermore, as Mrs Stevens' carer, Mr Stevens would need to manage his wife's financial affairs and to read and to respond to notification notices sent to her.

21. Mr McQuinlan submitted that Mr and Mrs Stevens would not have received the social security payments made to them in "good faith". He contended that this was the case because Mr Stevens was aware that the Social Security payments that he received would decrease as a result of the Workers' Compensation settlement paid to Mrs Stevens.

22. Mr Stevens submitted that he had not knowingly misinformed Centrelink. The overpayment arose due to unfortunate circumstances for which he was not wholly to blame.

23. Mr Stevens contended that Centrelink had made consistent mistakes over time and the overpayment was not solely caused by him. He contended that Centrelink must accept responsibility for the error which led to the overpayment in their circumstances.

24. Mr Stevens submitted that his wife should not be held responsible for any overpayment as Centrelink had failed in their duty of care with respect to his wife. He referred to a recent threatening letter sent by Centrelink to his wife to recover the overpayments paid to her. This Centrelink letter had caused a further deterioration in her condition ["leading to a partial stroke"].

25. In response to a Tribunal question, Mr Stevens stated that he had no Power of Attorney for his wife. As her carer he was only concerned with her health and well-being. He was not her financial adviser.

26. Mr Stevens concluded that the whole overpayment situation had been very frustrating and tiring for them and said that if Centrelink made things easier to understand, their predicament would never have arisen.

Consideration of the Issues

27. The objective of the Tribunal is to review administrative decisions not only on their merits, but in accordance with the law at all times. The relevant legislation is the Social Security Act 1991 ("the Act").

28. The Tribunal finds Mr Stevens to be a credible witness who had acted honestly and consistently in his dealings with Centrelink over time.

29. The next question is for the Tribunal to consider is whether the debt should be waived, in part or in full, under the "special circumstances" or "administrative error" provisions of the Act. The Tribunal considers firstly the "special circumstances" provisions.

30. Section 1237AAD provides for "special circumstances" where a debt due to a social security recipient may be waived in part or in full:

"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 a false representation; or

(ii) failing or omitting to comply with a provision of this Act or the 1947; 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."

31. The leading case as to the meaning of "special circumstances" is Re Beadle and Director-General of Social Security (1984) 6 ALD 1 where the Tribunal said at page 3:

"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."

32. The Tribunal has carefully considered all the evidence and information before the Tribunal as well as the submissions made by Mr Stevens and Mr McQuinlan and concluded that part of the debt should be waived under the "special circumstances" provision of the Act, because:

(a) it accepts the evidence of Mr Stevens that he provided evidence to Centrelink on his wife's Workers' Compensation details in December 1997 as well as mid-January 1998 (see paragraph 6,7)

(b) the information so provided to Centrelink was sufficient for Centrelink to correctly estimate their entitlements

(c) in these circumstances, it was reasonable for Mr and Mrs Stevens to rely on Centrelink to correctly estimate their social security entitlements as at the time the notification notice was issued to them on 13 January 1998 (T11, T12).

(d) applying the test in Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435 as to the meaning of "knowingly" to this fact situation, the Tribunal concludes that Mr and Mrs Stevens did not "knowingly" make a false statement or representation. Nor had they failed or omitted to "knowingly" comply with a provision of the Act.

33. The Tribunal further considers that the observations made in Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543, with respect to advice given to Social Security recipients by departmental officers is also relevant in Mr and Mrs Stevens fact situation:

"Any failure to regard the seriousness of the consequences of the giving of wrong advice as not being a circumstance special to the person or persons who have suffered as a result of that advice would be cruel. Citizens are entitled to act upon the advice given to them by representatives of government through its departments and agencies. Citizens also are entitled to have confidence in the advice that they are given by persons in authority and who represent government departments and agencies. Citizens should be entitled to expect nothing less."

and

"the responsibility for efficient and effective administration of departmental practice and policy must carry with it a responsibility for any error or mistake which is made by the departmental officers alone. The presence of the debt in the circumstances of this case is a circumstance undoubtedly special. That the department would seek to enforce it and recover it only reinforces the circumstances being special."

34. The Tribunal concludes that the circumstances in which the overpayment of social security entitlements were paid to Mr and Mrs Stevens were sufficiently "unusual' or "uncommon" to justify the description "special circumstances" - but for only part of the period 25 December 1997 to 30 May 2000.

35. The Tribunal concludes that the overpayment to Mrs Stevens should be waived for "special circumstances" for the period 25 December 1997 to 12 November 1998. No query was raised on Mrs Stevens behalf, for the next notification notice received 12 November 1998 (T14) ie in relation to the correct entitlement based on the information held by Centrelink. Accordingly, "special circumstances" cannot be said to apply after this date.

36. The Tribunal concludes that the overpayments to Mr Stevens should be waived for "special circumstances" for the period 25 December to 8 August 1998. Mr Stevens made no query whether his entitlement was based on the correct information held by Centrelink at the time the next notification notice was received - 8 August 1998 (T13). Accordingly "special circumstances" cannot be said to apply after this date.

37. Given this finding for waiver, there is no need for the Tribunal to consider the "administrative error" waiver provisions of the Act'

38. The next issue for the Tribunal to consider is whether the residual debt existing after waiver, should be written off.

39. Section 1236(1) of the Act sets out the requirements for a debt due to the Commonwealth to be written off:

"1236 Secretary may write off debt

1236(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

1236(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:

(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) the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt."

40. A former President of the Tribunal, Mathews J, has commented on the write-off provisions of the Social Security Act in Re L and Secretary, Department of Social Security (1995) 21 AAR 412, and observed that the financial circumstances of the debtor and the prospect of the recovery of the debt will necessarily be the primary considerations in deciding whether to write off a debt. Mathews J summarised the position as follows (at 428):

"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 s 1236(1). Retrospective considerations 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? If an affirmative answer is reached to this question, then it would be appropriate to defer recovery in the manner contemplated by s 1236(1)."

41. In considering its discretion for write-off under the Act, the Tribunal has also had regard to a number of factors referred to by the Federal Court in Director-General of Social Services v Hales (1983) 47 ALR 281. These factors were summarised by Senior Member Dwyer in Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26 at 42 as follows:

(a) the fact that the applicant has received public moneys to which he was not entitled;

(b) the way in which the overpayment arose, whether as a result of innocent mistake or fraud;

(c) the financial circumstances of the applicant;

(d) the prospect of recovery;

(e) whether a compromise is offered;

(f) whether recovery should be delayed if there is a prospect that the circumstances of the person who received the overpayment may improve; and

(g) compassionate considerations and the fact that the Act is social welfare legislation and any financial hardship which may result from any action for recovery.

42. The Tribunal has applied the reasoning in Re Waller and makes the following findings:

(a) Mr and Mrs Stevens received overpayment of public moneys for which they were not entitled;

(b) the overpayment to Mr and Mrs Stevens arose by an innocent mistake;

(c) In the present case, Mr and Mrs Stevens' financial circumstances are not desperate but nor can they be described as comfortable. Mr Stevens described their life as a financial struggle where their weekly cash balance fluctuated from some residual balance to none - depending on their outgoing expenses each week. Their weekly income and expenditure had little latitude and financial hardship could arise should unforeseen future/ongoing expenditure arise - including moneys outlaid on what could be regarded as necessaries of life, medical/health needs for them both and vehicle maintenance (see paragraph 9). The "unannounced" Centrelink decision to recover $111 per fortnight from Mr Stevens' Social Security entitlements had led to significant problems for them.

(d) The prospects of recovery of the overpayment are extremely limited. Moreover, there was little prospect of recovery as Mrs Stevens' medical condition will not improve and nor will Mr Stevens' circumstances improve. Mr Stevens is aged 57, on a Disability Support Pension and Carers Pension and cares full-time for his wife (see para 11). In this fact situation he would have little employment prospects.

(e) The Tribunal notes the following medical statements on Mrs Stevens' condition (Exhibit 4):

"Mrs Stevens is mentally incompetent with regard to managing her life affairs and cannot understand or respond to any correspondence from Centrelink (or any other person, business or institution)."

(Dr P Ironside, 27 August 2001)

and

"Mrs Stevens' current presentation is consistent with the other reports provided. She is profoundly disabled and does not seem to have made any improvement in the last 5 years. Her prognosis for significant improvement is poor. She is totally unfit for employment currently. It is likely that this level of disability will continue very long term and probably permanently."

(Dr E Jensen, 20 February 200)"

43. Based on the above considerations the Tribunal concludes that, applying the reasoning in Re L's case to Mr and Mrs Stevens' fact situation (para 40) recovery of the residual balance of overpayments will "cause such personal hardship as to run contrary to the beneficial nature of the legislation"

44. Accordingly the Tribunal concludes that the debt accrued for Olive Stevens over the period 13 November 1998 to 30 May 2000 should be written off. Similarly, the debt accrued to George Stevens accrued over the period 9 August 2000 to 30 May 2000 should be written off.

45. The Tribunal makes the following observations on concerns raised by Mr Stevens as to internal procedures used by Centrelink to recover overpayments. At no stage had Centrelink involved them in arriving at a mutually agreed amount for recovery or to request a statement of financial circumstances. Rather Centrelink had sent them a letter advising them an amount of $111 would be deducted each fortnight from Mr Stevens' Social Security entitlements. Nor had Centrelink considered the impact of this letter on their overall health and well-being, in additional to their financial well-being. The Tribunal concludes that Mr and Mrs Stevens, as Social Security recipients, are entitled to be treated with dignity and respect when Centrelink pursues administrative matters. It may well be that some review of this Centrelink office is warranted to ensure that their internal administrative procedures for debt recovery are consistent with the best practice management procedures that Centrelink adheres to.

46. For all of the above reasons, the Tribunal decides to set aside the decision under review and in substitution thereto:

(a) to waive the debt for Olive Stevens accrued over the period 25 December 1997 to 12 November 1998;

(b) to waive the debt to George Stevens accrued over the period 25 December 1997 to 8 August 1998;

(c) to write off the debt for Olive Stevens accrued over the period 13 November 1998 to 30 May 2000;

(d) to write off the debt of George Stevens accrued over the period 9 August 1998 to 30 May 2000;

(e) in accordance with sub-section 1237(2)(a) of the Social Security Act and recovery of moneys made by Centrelink, the waiver for Mrs Stevens is to take effect from 13 November 1998 and for Mr Stevens from 9 August 1998; and

(f) a direction that Centrelink recalculate the actual amount of overpayment accrued for Mr and Mrs Stevens.

I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of

Signed: .....................................................................................

Associate

Date/s of Hearing 22 January 2002

Date of Decision 22 January 2002

Date of Written Reasons 19 February 2002

Applicant Mr Stevens

Respondent Mr McQuinlan