Editors --- "Age pension debt: waiver and special circumstances" [2006] SocSecRpr 28; (2006) 8(3) Social Security Reporter, Article 5

• FOSCHI and SECRETARY TO THE DFaCSIA
• Background
• The issue
• Evidence
• Discussion
• Formal decision

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Age pension debt: waiver and special circumstances

FOSCHI and SECRETARY TO THE DFaCSIA

Decided: 26th June 2006 by M.J. Carstairs

Background

Foschi was overpaid age pension between 1996 and 2001 because her assets combined with those of her husband were not correctly assessed by Centrelink. The main assets that led to the overpayment were loans made by Foschi’s husband to his company, Foschi Enterprises. On appeal, the SSAT had decided to waive part of Foschi’s debt taking into account a Centrelink administrative error in 2001.

The issue

The AAT identified the key issue in this matter as being whether Foschi’s debt should be waived on the grounds of special circumstances.

Evidence

Foschi told the AAT that her husband refused to discuss company business with her insisting that it was his company. Her involvement in the company was limited to signing where and when she was told to, when her husband brought documents home. Foschi was adamant that her husband never explained to her what she was signing and she felt that she had no option other than to sign. She could not read or write in English.

Foschi detailed the problems in her marriage. She gave evidence that her husband had dominated her in the home, refusing to give her money and insisting that she take cleaning and ironing work in order to contribute to the household. Her requests for money were met with angry outbursts and threats that she must leave the home. She told the AAT that she had been locked out on one occasion and had been forced to obtain assistance from charitable sources. Foschi had made several applications for payment of pension at the single rate but Centrelink had rejected them.

Foschi told the AAT that the incursion of the debt at this stage of her life had been stressful. Foschi provided a medical report from her general practitioner stating that she suffered from possible ischemic heart disease, hypertension, and severe depression, generalized osteoarthritis with degenerative disease to both knees and the right shoulder. She told the AAT that she believed that the debt was affecting her blood pressure and because of her ill health she was unable to work now.

Discussion

The AAT considered that the examination of Foschi’s case had been clouded by the complexities of the legal issues in her husband’s case. The AAT noted that the solicitors who had represented her husband at the SSAT had not represented her. The AAT was critical of Centrelink’s approach to the matter, noting that some specific focus on Foschi’s issues might have been possible if decision makers at Centrelink had spoken directly with Foschi rather than relying on the limited file materials in existence, particularly once she had requested the review of the decision.

The AAT considered the discretion for the exercise of special circumstances referring to the decisions of Beadle and Director-General of Social Security (1984) 6 ALD 1, Ryde and Secretary, Department of Family and Community Services (2005) FCA 866, Groth and Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 and Secretary, Department of Social Security and Hales(1998) 153 ALR 259. The AAT essentially concluded that the discretion was designed to address any circumstances that distinguish a particular case from the usual, in order to justify a departure from the rule by which money overpaid should be repaid by the person who received it.

In this case, the AAT was satisfied that special circumstances did exist. The special circumstances in this case were taken to be the combination of several matters including elements of administrative error and absence of documents, Foschi’s lack of knowledge of the company’s operations, her disadvantage when communicating in English; as well as her advanced age, poor health and limited financial resources.

In noting the significant errors on Centrelink’s part in dealing with the Foschis’ information, the AAT referred to a submission written by the respondent’s delegate recommending debt waiver on the grounds of administrative error that had not been accepted by her superiors. The submission had noted that Centrelink had been aware of the company as at 1995 and that there had been several occasions when Centrelink had received information about the company. The AAT found that Centrelink should have carried out further checks on receiving information about the company.

The AAT also considered the absence of pension records, particularly the original forms as worrying and less than satisfactory given that the debt was raised a very long time after the Foschis’ had first provided information about the company to Centrelink. The AAT found that, apart from 1997, there were no claim forms, or review forms on Foschis’ file and the paucity of information had meant that the opportunity for her to point to any supportive material on either her or her husband’s claims had been lost. The AAT noted that there had been a number of Tribunal cases that had pointed to the difficulty that delay can present for those who must then defend a debt. The Tribunal specifically referred to McLean and Secretary, Department of Family and Community Services [2003] AATA 321; (2003) 37 AAR 328 where it was held that delay in raising a debt had a significant effect on the applicant’s ability to meet the contentions made against her. The Tribunal considered that this was accentuated here because Foschi was a person who was disadvantaged when communicating with Centrelink, and indeed, with tribunals, in a second language.

Whilst the AAT decided that it was not required to consider whether Centrelink was correct or not in refusing to treat Foschi and her husband as separated, it did consider as relevant the evidence that years before any debt was raised, Foschi had approached Centrelink about problems in her marriage. The AAT considered that the evidence Foschi gave about her marriage was true and found that it also supported Foschi’s claims that she had limited knowledge of the company and her husband’s refusal to share business discussions with her.

The Tribunal concluded that the recovery of the debt amount after an excessively lengthy period, taking into account all these matters, would be unreasonable, unfair and unjust. The AAT was satisfied that these factors, when combined, took Foschi’s case out of the ordinary run of cases, and justified departure from the rule that overpaid moneys should be recovered by the Commonwealth.

Formal decision

The decision under review was set aside and substituted with a decision that the debt be waived on the grounds of special circumstances, from the date that the debt was raised.

[G.B.]