Ricciuti and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 929 (25 May 2011)

Last Updated: 22 December 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 929

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/3097

GENERAL ADMINISTRATIVE DIVISION		)
	Re		ALFRED RICCIUTI AND MARIA RICCIUTI

Applicants

And

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

Respondent

DECISION

Tribunal

Ms Regina Perton, Member

Date 25 May 2011

Place Melbourne

Decision

For reasons given orally at the hearing on 25 May 2011, the Tribunal varies the decisions under review made by the Social Security Appeals Tribunal on 28 June 2010 to provide as follows: Mr Ricciuti has a legally recoverable debt in the sum of $21,622.67 for the periods 7 August 1997 to 13 January 2004, 14 January 2004 to 29 February 2004 and 1 March 2004 to 17 March 2009. Mrs Ricciuti has legally recoverable debts in the sum of $10,169.13 in wife pension for the period 7 August 1997 to 13 January 2004 and $11,352.38 in age pension for the period 15 January 2004 to 17 March 2009.

..............................................
Member

SOCIAL SECURITY – age pension – overpayment – recipients of Swiss and Italian pensions – failure to declare income and increments from overseas pensions - variation of debt by Secretary after SSAT decision - waiver of debt – write off of debt - whether special circumstances exist – decision under review affirmed

Social Security Act 1991 ss 8, 1064, 1072, 1100, 1223(1), 1237A(1), 1237AAA, 1237AAD

Social Security (Administration) Act 1999 ss 126, 179, 180

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

25 May 2011

Ms Regina Perton, Member

1. The Tribunal provided oral reasons for its decision at a hearing of this application on 25 May 2011. The applicants requested written reasons for the decision.
2. Alfred Ricciuti and Maria Ricciuti are a married couple in their seventies who migrated to Australia more than 30 years ago. They were both born in Italy and lived for a time in Switzerland. They receive pension payments from the Australian, Italian and Swiss governments. Australian residents who were born and/or worked in certain countries are sometimes eligible for pensions paid by the relevant overseas government. The rate of Australian age pension to which they are entitled is adjusted to take account of the payments they receive from the overseas pensions.
3. Mr Ricciuti was paid disability support pension (DSP) and Mrs Ricciuti, wife pension, from 13 January 1994. On 16 July 1997 Mr Ricciuti was transferred to age pension. In early August 1997 the Swiss Government granted Mr Riciutti a pension. On 1 December 1999 Mr Ricciuti was granted an Italian pension, with payment backdated to 1 August 1992.
4. Mr Ricciuti’s Swiss pension payments were indexed annually until March 2004 when the amount decreased following the grant to Mrs Ricciuti of a Swiss pension. Their Swiss pension payments were subsequently were indexed.
5. From time to time, Centrelink wrote to Mr Ricciuti and Mrs Ricciuti advising them of the amount of income it had on its records of the amount over and above the Australian pension that they were receiving. Centrelink reminded the couple individually of the amount of income, including the amount of the Italian pension, that was in their records and the requirement to inform Centrelink if its record was incorrect. They were advised to tell Centrelink if they received additional income from any other source within 14 days of its commencement.
6. It was not until 17 March 2009 that Mr Ricciuti wrote to Centrelink to advise that he and his wife were recipients of a Swiss pension. The letter followed the establishment of an international social security agreement between Switzerland and Australia in 2008. The Italian-Australian international social security agreement had been in place from before Mr Ricciuti’s eligibility was established.
7. On 25 January 2010 Centrelink, which administers pension payments for the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (the Secretary), determined that Mr Ricciuti had been paid a higher Australian pension than he was entitled to between 1 March 2004 and 17 March 2009. Mr Ricciuti was advised that he had a debt of $11,351.91 to the Commonwealth. On the same day, Centrelink decided that Mrs Ricciuti had also been overpaid. Her debt to the Commonwealth for the same period was calculated as $11,175.49.
8. Mr and Mrs Ricciuti sought review of Centrelink’s decision. On 23 April 2010 an authorised review officer affirmed the decisions to raise and recover the debts. On 28 June 2010 the Social Security Appeals Tribunal (SSAT) also affirmed the decisions. Mr and Mrs Ricciuti applied to this Tribunal on 26 July 2010.
9. After the lodgement of the application to this Tribunal, Centrelink scrutinised the amounts owed. The Secretary, as he in entitled to do under social security legislation, determined that there were further overpayments and recalculated the debt amounts and the periods of overpayment. On 16 November 2010 Centrelink raised a further age pension debt was raised for Mr Ricciuti of $21,622.67 for the periods 7 August 1997 to 13 January 2004, 14 January 2004 to 29 February 2004 and 1 March 2004 to 17 March 2009.
10. In relation to Mrs Ricciuti, the Secretary determined that she had an additional debt of $10,169.13 for wife pension she had been paid in the period 7 August 1997 to 13 January 2004 and that the age pension debt for the period 15 January 2004 to 17 March 2009 should have been $11,274.85 rather than $11,175.49. A further recalculation of her age pension debt in May 2011 resulted in a slight adjustment to the age pension part of her debt.
11. Mr and Mrs Ricciuti believed that they should not have a debt in relation to the Swiss pension because they had not used the money but left it in a Swiss account for their daughter and/or to donate to charity. Centrelink does not agree stating that the payments constituted income, regardless of what Mr and Mrs Ricciuti decided to do with the money.
12. The specific issues to be considered by the Tribunal are:
    • Are there debts to the Commonwealth?
    • Did the debts arise solely because of a Commonwealth administrative error?
    • Should the debts be waived on other grounds?

IS THERE A DEBT TO THE COMMONWEALTH?

13. As indicated earlier, Mr Ricciuti was a DSP recipient from 13 January 1994 until 16 July 1997 when he attained 65 years of age and was transferred to age pension. Mrs Ricciuti received wife pension from 13 January 2004 until transferred to an age pension in January 2004. Centrelink only became aware of the receipt of Swiss pension, which had commenced in August 1997, many years later on 17 March 2009.
14. After becoming aware of the receipt of Swiss pension, Centrelink wrote to Swiss authorities seeking details of the actual amounts paid. On receiving the relevant information, a recalculation of entitlements to age pension was undertaken.
15. Section 1064(1) of the Social Security Act 1991 (the Act) sets out the method of calculation of a person’s rate of age pension, DSP and wife and/or DSP. Section 1064-A2 of the Act states that where two people are members of a couple, they are treated as pooling their resources and sharing them on a 50/50 basis.
16. Section 1064-E1 of the Act sets out the way for calculating the impact of ordinary income on the rates of payment.
17. The terms ordinary income and income are defined in subsection 8(1) of the Act:

"income" , in relation to a person, means:
(a) an income amount earned, derived or received by the person for the person's own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
...
"ordinary income" means income that is not maintenance income or an exempt lump sum.

18. Subsection 8(2) of the Act further defines the term income amount earned, derived or received:

(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).

19. Section 1072 of the Act states:

A reference in this Act to a person's ordinary income for a period is a reference to the person's gross ordinary income from all sources for the period calculated without any reduction...

20. Section 1100 of the Act sets out the way that foreign currency payments are to be converted to Australian currency on a particular day.
21. Mr and Mrs Ricciuti submitted that the payments made to them of Swiss pension should not be considered as income as they had not used the money in Australia but left it in Switzerland for their daughter and for charity. Hence, they had not declared the income as they did not believe it to be such. The Tribunal accepts that Mr and Mrs Ricciuti genuinely held that view but they were mistaken. It is clear that the Swiss pension payments are income for the purposes of the Act. Therefore the payments are to be factored into the calculations of their entitlements to Australian pension.
22. Section 1223(1) of the Act allows the Commonwealth to raise a debt if a person is paid a social security payment to which he or she is not entitled. On reconciling the payments made and the amended income due to the Swiss pension, Centrelink determined that they had each been overpaid age pension for the period from 1 March 2004 to 17 March 2009. On 25 January 2010 Centrelink raised a debt of $11,351.91 for Mr Ricciuti and $11,175.49 for Mrs Ricciuti.
23. Some months after lodgement of the application for review with the Tribunal, Centrelink, on the respondent’s directions, re-examined the period prior to 1 March 2004, the date on which Mrs Ricciuti commenced receipt of the Swiss pension. Mr Ricciuti had been receiving Swiss pension since early August 1997 but that income had not been attributed to his or his wife’s Australian pension. As a result, the debts of both Mr and Mrs Ricciuti for which they sought review have now almost doubled.
24. Section 126 of the Social Security (Administration) Act 1999 (the Administration Act) allows the respondent to review and alter previous decisions that are already in the review process:

(1) The Secretary may review:
(a) subject to subsection (2), a decision of an officer under the social security law; ..
...
if the Secretary is satisfied that there is sufficient reason to review the decision.
(2) The Secretary may review a decision:
(a) whether or not any person has applied for review of the decision; and
(b) even though an application has been made to the Social Security Appeals Tribunal or the Administrative Appeals Tribunal for review of the decision.
(3) The Secretary may:
(a) affirm a decision; or
(b) vary a decision; or
(c) set a decision aside and substitute a new decision.
...

25. Section 179 of the Administration Act sets out that this Tribunal is reviewing a decision of the SSAT. If the respondent invokes the provisions of s 180 of the Administration Act to alter the SSAT’s decision, this Tribunal reviews the altered decision.

179(1) If:
(a) a decision has been reviewed by the SSAT; and
(b) the decision has been affirmed, varied or set aside by the SSAT;
application may be made to the AAT for review of the decision of the SSAT.
(2) For the purposes of subsection (1), the decision made by the SSAT is taken to be:
(a) where the SSAT affirms a decision--that decision as affirmed; and
(b) where the SSAT varies a decision--that decision as varied; and
(c) where the SSAT sets a decision aside and substitutes a new decision--the new decision; and
(d) where the SSAT sets a decision aside and sends the matter back to the Secretary for reconsideration in accordance with any directions or recommendations of the SSAT--the directions or recommendations of the SSAT.
180(1) If an officer varies a decision after an application has been made to the AAT for review of that decision but before the determination of the application, the application is to be treated as if:
(a) the decision as varied had been affirmed by the SSAT; and
(b) the application were an application for review of the decision as varied.
...

26. The respondent made fresh decisions on 16 November 2010, some four months after the application to this Tribunal, pursuant to s 179 of the Administration Act. Mr Ricciuti was determined as being liable for age pension debts of $10,169.13 for the period 7 August 1997 to 13 January 2004 and $101.63 for the period 14 January 2004 to 29 February 2004. In relation to Mrs Ricciuti, the decisions were that she had a wife pension debt of $10,169.13 for the period 7 August 1997 to 13 January 2004 and an age pension debt of $99.36 for the period 15 January 2004 to 29 February 2004.
27. Mr Ricciuti queried the calculations of the debt, both as to dates and whether the foreign currency conversion reflected the relevant rate at the time of the payments. He also indicated that his wife had been in Switzerland from late August 2008 to late January 2009 which would have impacted on her entitlements and hence calculation of the debts.
28. At the initial hearing of the matter, the Tribunal determined that the payments of Swiss pension were income for the purposes of the Act. However, in light of Mr Ricciuti’s concerns about the calculations, the Tribunal referred the matter to the respondent for fresh calculations and for discussions between the applicants and an appropriate Centrelink officer. If there were agreed figures, the Tribunal would make its final determination taking those into account. If not, Mr and Mrs Ricciuti were entitled to further hearing of the matter.
29. On rechecking the calculations and dates, there was a minor adjustment for Mrs Ricciuti’s debt for the period 1 March 2004 to 17 March 2009. The overpayment for that period was found to be $11,253.02 with the debt for the period from 15 January 2004 to 29 February 2004 being $99.36. Hence the debt raised for the period from 15 January 2004 to 17 March 2009 was $11,352.38.
30. Mr and Mrs Ricciuti were not happy with the further consultations with Centrelink so the hearing of the matter resumed on 25 May 2011. Mr Ricciuti was still not convinced that the recalculations were correct. Centrelink presented another detailed printout of its fresh calculations. Mr Ricciuti was not in a position to provide his own calculations given their complexity despite his conviction that the figures are wrong. Centrelink has now checked the calculations a number of times. In the absence of any evidence indicating the calculations are incorrect, the Tribunal finds that Centrelink overpaid Mr and Mrs Ricciuti and that they each have debts to the Commonwealth of the amount cited above.

DID THE OVERPAYMENT ARISE SOLELY BECAUSE OF A COMMONWEALTH ADMINISTRATIVE ERROR?

31. Centrelink provided the Tribunal and Mr and Mrs Ricciuti with the text of letters sent to them over the years concerning their obligations in relation to the pensions they were receiving.
32. Both Mr and Mrs Ricciuti received letters between January 1994 and September 2008 in which they were informed of the requirement to notify Centrelink of any increases in income beyond the amount specified in the letter. Mr Ricciuti, who handles the couple’s finances, told the Tribunal that he had believed the Swiss pension was not income so he had not informed Centrelink of those payments.
33. Section 1237A(1) of the Social Security Act 1991 provides for waiver of a debt arising from solely from administrative error:

1237A.(1).... 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.

34. The Tribunal is satisfied that Mr and Mrs Ricciuti acted in good faith and did not deliberately fail to inform Centrelink of increases in their income. However, it is not the fault of Centrelink that they misunderstood their obligations. The Tribunal is not satisfied that the debt has arisen due to sole administrative error by Centrelink. Therefore, the debt cannot be waived pursuant to s 1237A(1) of the Act.

SHOULD THE DEBT BE WAIVED ON OTHER GROUNDS?

35. Unless a debt arises solely out of an administrative error by the respondent resulting in an overpayment (1237A(1) above), or a debt is less than $200 and is not recoverable from social security benefits and the cost of retrieval outweighs the debt (1237AAA), or in certain other limited circumstances (also not applicable to Mr and Mrs Ricciuti), there is no discretion to waive a debt, unless s 1237AAD applies
36. 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.

37. The term special circumstances is not defined in the legislation. For the Tribunal to exercise its discretion to determine that Mr and Mrs Ricciuti’s situation constitutes special circumstances, it must be satisfied that there is something to make the case stand out from the usual or the ordinary (Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25). In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases (at [26]). Branson J stated that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case (at [26]).
38. The Tribunal is satisfied that Mr and Mrs Ricciuti did not inform Centrelink about the increases in their income due to their Swiss pensions because they did not think the payments were income because the money stayed in Switzerland. Mr Ricciuti said the money was partly used for charitable purposes and also to reimburse their daughter, living in Switzerland, who had helped them with mortgage repayments when they faced difficulties after Mr Ricciuti’s injury. There is no evidence to suggest that Mr and Mrs Ricciuti deliberately withheld information from Centrelink. The Tribunal finds that Mr and Mrs Ricciuti did not knowingly make false statements or representations to Centrelink; nor did they deliberately fail to comply with a provision of the Act. Mr and Mrs Ricciuti therefore meet the criteria in s 1237AAD(a) of the Act.
39. Mr Ricciuti pointed out that he and his wife worked hard in Australia and paid their taxes. In 1990 Mr Ricciuti suffered a heart attack and in 1991 Mrs Ricciuti suffered a stroke. In 1992 Mr Ricciuti injured his back in a workplace injury. Mrs Ricciuti has hearing difficulties and a range of other health problems. They do not have the funds to repay the debts in full.
40. Mr and Mrs Ricciuti currently receive income from their Australian and overseas pensions. The Tribunal accepts that because of the long time it has taken to discover the overpayments, it is much more difficult to deal with the situation than if the error had been discovered earlier. This is particularly so when they believed they had provided all the necessary information to Centrelink.
41. However, the Tribunal is not satisfied that the situation that they find themselves is vastly different from the situation of other social security recipients who have incurred debts due to overpayments. In the Tribunal’s experience, it is, unfortunately, not unusual for debts to arise in circumstances such as these. Mr and Mrs Ricciuti remain on social security benefits and are repaying their debts in instalments taken out of their fortnightly payments. The amount Centrelink is to withhold per fortnight is negotiable.
42. The Tribunal is not satisfied that the circumstances in these cases constitute special circumstances (other than financial hardship alone). Hence, the Tribunal decides that the waiver provisions of s 1237AAD of the Act should not be invoked.

DECISION

43. For reasons given orally at the hearing on 25 May 2011, the Tribunal varies the decisions under review made by the Social Security Appeals Tribunal on 28 June 2010 to provide as follows:
1. Mr Ricciuti has a legally recoverable debt in the sum of $21,622.67 for the periods 7 August 1997 to 13 January 2004, 14 January 2004 to 29 February 2004 and 1 March 2004 to 17 March 2009.

2. Mrs Ricciuti has legally recoverable debts in the sum of $10,169.13 in wife pension for the period 7 August 1997 to 13 January 2004 and $11,352.38 in age pension for the period 15 January 2004 to 17 March 2009.

I certify that the forty-three [43] preceding paragraphs are a true copy of the reasons for the decision herein of

Ms Regina Perton, Member

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

Clerk

Dates of Hearing 17 January 2011, 25 May 2011

Date of Decision 25 May 2011

Advocate for the applicants self - represented

Advocate for the respondent Mr T Noonan

Advocacy Branch Centrelink