Abdallah and Secretary, Department of Family and Community Services

[2004] AATA 532

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 532

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/180

GENERAL  ADMINISTRATIVE DIVISION

Re:         NORMA MARY ABDALLAH

Applicant

And:SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             26 May 2004

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) G.D. Friedman
  Member

SOCIAL SECURITY ‑ parenting allowance and parenting payment ‑ failure to disclose trust ‑ overpayment ‑ debt to Commonwealth ‑ waiver of debt ‑ write‑off of debt 

Social Security Act 1991 s8(1), 1223(5), 1236, 1237A, 1237AAD

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

REASONS FOR DECISION

26 May 2004  G.D. Friedman, Member

1.      This is an application by Norma Abdallah (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 5 January 2004.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 10 July 2003 to raise and recover a debt of $12,628.90, arising from an overpayment of parenting allowance between 3 July 1997 and 12 March 1998, and parenting payment between 26 March 1998 and 1 May 2001. 

2.      At the hearing on 18 May 2004 the applicant represented herself and Ms E. King, a Centrelink advocate, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T25).

BACKGROUND

4.      On 8 May 1997 the applicant lodged a claim for parenting allowance.  Her claim was granted with effect from 3 July 1997, when she received parenting allowance and later parenting payment partnered.  On 19 June 1997 Centrelink sent the applicant a letter requiring her to advise Centrelink within 14 days if her income exceeded $60 per fortnight or her husband’s income exceeded $498 per fortnight.  Centrelink sent similar letters to her on 22 March 1998, 1 July 1998 and 11 June 1999.

5.      The applicant has been a beneficiary of the B & D Abdallah Family Trust (the trust) which had been settled on 4 July 1996.  In her claim for parenting allowance in May 1997 and in a review form in May 2001 the applicant denied that she was a beneficiary of a trust.

6.      In 2002 taxation returns for the trust, for the years 1996/1997 to 2000/2001, were provided to Centrelink.  They showed that the applicant was a beneficiary of the trust and that distributions had been made to her and her husband as follows:

YEAR  APPLICANT                  APPLICANT’S HUSBAND

1996/1997  $6100  $6400

1997/1998  $700  $11,162

1998/1999  NIL  $18,000

1999/2000  NIL  $20,549

2000/2001  $750  $5729

7.      Centrelink carried out a re‑assessment of the applicant’s entitlement and concluded that the applicant had been overpaid.  Centrelink raised a recoverable debt for $12,628.90, comprising an overpayment of $2273.46 in parenting allowance between 3 July 1997 and 12 March 1998, and $10,355.44 in parenting payment between 26 March 1998 and 1 May 2001.

8.      On 10 July 2003 an authorised review officer affirmed the decision to raise a recoverable debt of $12,628.90.  On 18 August 2003 the applicant applied to the SSAT for review of the decision of 10 July 2003.  On 5 January 2004 the SSAT affirmed the decision.  The applicant lodged an application with the Tribunal on 16 February 2004 for review of the SSAT decision.

9.      The issue before the Tribunal is whether the applicant owes a debt to the Commonwealth, and if so, whether the debt should be waived or written off. 

EVIDENCE

10.     In oral evidence by telephone the applicant said that she had been unaware, until at least 2001, that she was a beneficiary of a trust, and had provided taxation returns to Centrelink based on information provided by her accountant.  She conceded that she had not read the taxation returns carefully and had not noticed the distribution from the trust when she provided the returns to Centrelink.  The applicant told the Tribunal that she worked in her husband’s milk bar and that she had estimated her husband’s earnings for Centrelink purposes.

11.     The applicant said that she was aware of the notices Centrelink sent her, but stated that in 1997 and 1998 the business was not making much money, and she estimated that her earnings and her husband’s earnings would not exceed the amounts specified by Centrelink in the notices.  She said that she had passed on to Centrelink all the information supplied by her accountant, and could not understand why Centrelink did not have the documents.  The applicant stated that she did not believe that Centrelink would continue her social security payments year after year based only on her original estimates of her income and her husband’s income.

12.     In respect of information provided to Centrelink in its Parenting Payment (partnered) review in May 2001 (T11), the applicant acknowledged that she and her husband had signed the form in which she provided incorrect information by declaring that they had no investments, when in fact they had received distributions from the trust.  However, she stated that Centrelink should have recognised from her husband’s personal taxation returns that there was a trust and that because she was in business with her husband she would have been a beneficiary under the trust.   The applicant accepted that she should take responsibility for failing to scrutinise her financial affairs, but she claimed that Centrelink should also bear some responsibility for failing to make proper enquiries and for taking several years to discover the overpayment.  

CONSIDERATION OF THE ISSUES

13.     Ms King agreed that for several years Centrelink had not detected the existence of a trust from the husband’s taxation returns, and had not matched the applicant’s distribution from the trust to the amounts of her social security payments.  However, Ms King submitted that the applicant had made false statements regarding her beneficial interest in the trust, although Ms King acknowledged that these were not made intentionally.  She submitted that as a result the applicant had received an overpayment of parenting allowance and parenting payment, based on the income received from the trust.  Ms King also said that the applicant had failed to comply with the requirement of the notices issued under s 506 and s 950 of the Social Security Act 1991 (the Act) to notify Centrelink of changes in her income and her husband’s income.

14.     In reaching its decision the Tribunal takes into account the oral and written evidence and submissions made at the hearing. 

15. The Tribunal finds that the distributions to the applicant and her husband from the trust constituted income as defined in s 8(1) of the Act. The Tribunal finds that as a consequence, during the relevant periods the applicant received an amount of $12,628.90 in parenting allowance and parenting payment to which she was not entitled, and that this amount is a debt owed to the Commonwealth under s 1223(5) of the Act.

16. Section 1236 of the Act provides for a write off of the debt under certain circumstances. The Tribunal finds that the applicant is receiving social security payments, she has the capacity to repay the debt, and the debt is not irrecoverable at law. Therefore, there are no grounds to write‑off the debt.

17. Section 1237A of the Act provides for waiver of a debt arising from administrative error:

1237A.(1)   Subject to subsection (1A), 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

1237A.(1A)     Subsection (1) only applies if:

(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.

The Tribunal agrees with the applicant’s submission, and Ms King’s admission, that the information contained in the taxation returns lodged by the applicant’s husband should have alerted Centrelink earlier that there was a trust, and that the applicant was a beneficiary, which would have had an impact on the amount of her parenting allowance and parenting payment. However, the Tribunal accepts Ms King’s submission, that the applicant had a responsibility to provide correct information to Centrelink, and her lack of knowledge of the trust until 2001 did not absolve her from this responsibility. The Tribunal finds that on several occasions the applicant provided incorrect information to Centrelink. Therefore, the debt was not attributable solely to an administrative error made by the Commonwealth. As a result, the debt cannot be waived under s 1237A(1A) of the Act.

18. Section 1237AAD of the Act provides for waiver of the debt in certain 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.

19.     In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held that the special circumstances, referred to in s 1237AAD(b), must be unusual, uncommon or exceptional. The Tribunal accepts Ms King’s submission that Centrelink has no evidence of the receipt of a number of taxation returns and taxation notices from the applicant, despite the applicant’s evidence that she provided all relevant information to Centrelink. In any case, the Tribunal notes that the applicant was not aware until at least 2001 that she was a beneficiary under the trust, so that any information she did provide before this time would probably have been incorrect.

20.     For these reasons, and despite Ms King’s acknowledgment that Centrelink could have followed up the information about the trust sooner, the Tribunal is satisfied, on balance, that the circumstances in this case are not unusual, uncommon or exceptional, and do not constitute special circumstances (other than financial hardship alone). Therefore, the waiver provisions of s 1237AAD of the Act cannot apply.

21.     Therefore, the applicant owes a debt to the respondent of $12,628.90, which cannot be written off or waived.

DECISION

22.     The Tribunal affirms the decision under review.

I certify that the twenty‑two [22] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of hearing:  18 May 2004

Date of decision:  26 May 2004
Advocate for applicant:                Self‑represented
Advocate for respondent:            Ms E. King, Centrelink