Adams and Department of Family and Community Services
[2001] AATA 479
•1 June 2001
DECISION AND REASONS FOR DECISION [2001] AATA 479
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2000/932
GENERAL ADMINISTRATIVE DIVISION )
Re NICOLE DEBORAH ADAMS
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Ms J A Shead, Member
Date1 June 2001
PlaceSydney
Decision The Social Security Appeals Tribunal decision of 8 June 2000 under review is set aside and in substitution therefore the Tribunal finds that the sum of disability support pension overpaid to the applicant for the period 9 July 1998 to 27 May 1999 was $6,145.70, however, this amount is waived in full in accordance with section 1237A(1) of the Act.
..............................................
Ms J A Shead
Member
CATCHWORDS
SOCIAL SECURITY – disability support pension – overpayment – whether false statement with respect to partner's earnings – whether special circumstances –
Social Security Act 1991 – ss 1224(1), 1237A(1), 1237AAD
Student and Youth Assistance Act 1973
Re Gerhardt and Department of Employment, Education and Training (AAT 10941, 17 May 1996)
Gerhardt v Department of Employment, Education and Training [1997] FCA 815
Re Vitalone and Department of Social Security (1995) 38 ALD 169
Department of Employment, Education and Youth Affairs v Prince (1997) 50 ALD 186; 152 ALR 127
Re McKnight and Secretary, Department of Social Security (AAT 9814, 2 November 1994)
Re De Neumann and Secretary, Department of Social Security (1996) 45 ALD 787
Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212
Re Carruthers and Secretary, Department of Social Security (1993) 31 ALD 567
Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287
Bruneau and Secretary, Department of Family and Community Services [1999] AATA 48
Re Christensen and Secretary, Department of Social Security (AAT 10277, 4 June 1995)
Re Lohner and Secretary, Department of Social Security (1995) 85 SSR 1241
REASONS FOR DECISION
Ms J A Shead, Member
The Applicant, Nicole Deborah Adams, ("Ms Adams") has applied for review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 8 June 2000.
A decision was made by a delegate of the Secretary of the Department of Family and Community Services ("the Department") on 3 June 1999 to raise and recover a debt of $6,367.77 ("the debt") from Ms Adams, in respect of overpayment of disability support pension ("DSP") from 28 May 1998 to 27 May 1999 (T29). On 14 January 2000 the Department's Authorised Review Officer ("ARO") affirmed the decision to raise and recover the overpayment but varied the amount by a reduction of $594.90 relevant to three paydays, namely 28 May 1998, 11 June 1998 and 25 June 1998 (T39).
On 8 June 2000 the SSAT decided to:
"set aside the decision and send the matter back to the Chief Executive Officer of Centrelink with directions that the overpayment must be re-calculated to take into account the earnings during the relevant period of the applicant's partner Austin James Atkinson, in accordance with module E under section 1064 of the Social Security Act 1991(the Act)." (T2)
Ms Adams did not attend the hearing but gave evidence by conference telephone. Ms S Koller, Solicitor of the Welfare Rights Centre, represented Ms Adams. Ms H Schuster, an Advocate with Centrelink, represented the Respondent.
The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T documents"). The following documents were also tendered to the Tribunal:
Exhibit No Description Date
A1 Gwydir Glass Pty Ltd pay slip for Austin Atkinson 25 June 1998
A2 Budget Planner
R1 Respondent's Statement and attachments 20 November 2000
The Tribunal also had before it the Applicant's Statement of Issues, Facts and Contentions dated 21 August 2000. Ms Schuster provided the Tribunal with the Respondent's Statement of Facts and Contentions dated 19 September 2000.
BACKGROUND
By way of background, the Tribunal extracts the history of the matter from SSAT decision, dated 8 June 2000:
"1. Ms Nicole Deborah Adams (the applicant) has been in receipt of disability support pension from 9 July 1998, having been notified by Centrelink of the grant of disability support pension to her by a letter dated 2 July 1998 (the grant letter). The disability support pension was backdated to 5 February 1998.
2. Prior to the grant of the disability pension and until 23 June 1998 the applicant was in receipt of newstart allowance. The applicant's partner, Austin James Atkinson was also in receipt of newstart allowance as of the date of the grant letter and until 8 June 1998.
3. On or about 3 June 1999 Centrelink notified the applicant of an overpayment to her of disability support pension in the sum of $6,367.77 during the period 28 May 1998 to 27 May 1999 and that the overpayment had occurred because her husband's income from Gwydir Glass was not taken into account when the applicant was granted the disability support pension in July 1998. Accordingly the applicant had received the incorrect rate for disability support pension."
The SSAT decision did not alter the ARO's waived amounts for the paydays, having found that the DSP was granted on 2 July 1998, the first payday being 9 July 1998.
In the Application for Review to the Tribunal, for review of the SSAT decision, the reasons for the Application were:
"The decision is wrong." (T1)
The application was determined having regard to the evidence, the written material, and the case law.
ISSUES BEFORE THE TRIBUNAL
At the commencement of the hearing a preliminary question had arisen as to the calculation of the debt. It was agreed that the Respondent would recalculate the debt, forward the new calculation to the Applicant's solicitor and once agreed, advise the Tribunal as to the amount of the debt. Subsequently, the Respondent's letter to the Tribunal dated 21 December 2000 advised the debt under review was in the amount of $6,145.70.
The issue is whether the debt owed by Ms Adams must be waived pursuant to sections 1237A or 1237AAD of the Social Security Act 1991 ("the Act"). Section 1237A raises two ancillary issues: whether the debt was solely due to an administrative error made by the Commonwealth and whether Ms Adams received the payments in good faith. Section 1237AAD requires a consideration of whether special circumstances make it desirable to waive the debt.
LEGISLATION
In so far as is relevant, the Social Security Act 1991 ("the Act") states as follows:
"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.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
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 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."
EVIDENCE BEFORE THE TRIBUNAL
In response to questions from Ms Koller, Ms Adams told the Tribunal she was born in 1974 and left school in about 1991. She had worked at Big W stores, in child care and in a real estate agency. On 7 October 1995 she had been injured while working with the Volunteer Bush Fire Brigade. On 31 October 1996 she applied for newstart allowance (T3). She was living in Coffs Harbour and Austin Atkinson ("Mr Atkinson") was Ms Adams' partner. Ms Adams was required to lodge newstart allowance continuation forms fortnightly.
On 12 January 1998 Ms Adams claimed DSP (T4) at Centrelink Coffs Harbour. Mr Atkinson had accompanied Ms Adams when she made the application at the Coffs Harbour. At that time Mr Atkinson had his cleaning and lawn mowing business which Ms Adams told the Tribunal made $47.50 per week. Centrelink Coffs Harbour requested she complete documents, including modules about Mr Atkinson's business.
Ms Adams told the Tribunal that about April 1998 they moved to Moree. Mr Atkinson was initially unemployed, and on 24 April 1998 applied for newstart allowance (T51). As requested he had lodged a module B (T56) and a module F (T57) as well as a profit and loss statement.
On 21 May 1998 Ms Adams had attended Centrelink Moree to enquire about the progress of her claim for DSP. There was a note that she advised that the modules had been supplied but she would do so again (T8). She told the Tribunal that she told Centrelink Moree that Mr Atkinson had lodged the modules with his claim. On 25 May 1998 in the course of inquiries about her DSP claim, Ms Adams told Centrelink Moree that Mr Atkinson's business had ceased (T9).
During the course of her evidence, Ms Adams identified "Business and self employment" form B (T56) and "Business – Income and Assets Detail" form F, also signed and dated by her 24 April 1998 (T57). A copy of a profit and loss statement dated 1 July 1997 to 31 March 1998 was also annexed (T57), and a stamp on it indicated that the original had been sighted by Centrelink Moree on 11 June 1998. Ms Adams said those documents were supplied when Mr Atkinson had applied for newstart allowance.
She also identified a "Business/Self Employment" form B (T61) dated 21 May 1998 and stamped 1 June 1998 Centrelink Moree. Mr Atkinson had stated there that he was looking for full-time work (page 286, question 14). She also identified a "Business – Income and Assets Detail" form F also dated 21 May 1998 (T62). Ms Adams told the Tribunal that although Centrelink had been told that the forms had already been filled out, they had been asked to complete the second set of documents. She also confirmed that the business had stopped operating. During the course of her evidence Ms Adams also confirmed the module documents at T61 and T62, were labelled at the top "Nicole Adams" and had her Social Security reference number.
Mr Atkinson obtained a position with Gwydir Glass Pty Ltd. He notified Centrelink that from 18 May 1998 he was working at Gwydir Glass Pty Ltd. Centrelink Moree, in a letter dated 26 May 1998 to Mr Atkinson, noted his fortnightly income was $393.25 and reduced his newstart allowance for the period 12 May to 26 May to $28.13 (Exhibit A3). On 11 June 1998 Mr Atkinson lodged a newstart allowance continuation form for the period 26 May to 8 June 1998 where he stated he was working on a three-month trial and he earned $1,110.00 from 28 May 1998 to 8 June 1998 (T63).
Ms Adams confirmed that she received a letter from Centrelink Moree dated 12 June 1998, advising a debt of $324.57 and stating in part:
"Your declared income of $1110.00 from employment with Gwydir Glass for the period 26/05/98 to 08/06/98 for you partner. This income was not assessed for you payment for same period."
Ms Adams confirmed that while living at the Gwydir Caravan Park she received a letter from Centrelink Coffs Harbour dated 2 July 1998 (T20), which stated that she had been granted DSP from 9 July 1998. That letter also stated:
"How we have assessed your combined yearly income
Financial Investments $0.02
Earnings $2,447.00
Total income $2,447.02
…
WHAT YOU MUST TELL US
…
Income …
If your combined income, not including financial investments or maintenance increases;
If your combined income as shown above is incorrect; …"She told the Tribunal that she had checked that against Mr Atkinson's pay slip and identified the weekly payslip dated 25 June 1998 (Exhibit A1). She told the Tribunal:
"I looked at his net and his gross and I sort of looked at that and I thought oh, yes, right, no problem. That is like less than his gross but then that is for the tax or whatever it is more than what his net was."
She said that she had looked at the net figure of $2,278.30.
Ms Adams also told the Tribunal that while she had been still receiving newstart allowance she had received a letter from Centrelink Moree dated 15 June 1998, which stated amongst other things:
"You were sent an 'Application for Payment' on 13 April 1998. This letter is to remind you that it is due to be lodged with us on 6 July 1998. …" (T15)
Ms Adams completed that Application and at question 6 "Are you married and living with your partner, …" and also "If Yes, did your partner work in the above period?" she ticked both boxes "Yes". To the question "If Yes, is this full-time work?" she ticked the box "No". She told the Tribunal that she did not think it was full-time work because it was a three-month trial period. She completed details of the employer and telephone number, and after the space for dates worked, Ms Adams wrote, "Austin has already declared." Ms Adams told the Tribunal that she took that same document to Centrelink. It was stamped 7 July 1998 Centrelink, Moree.
Ms Adams later said she received a letter from Centrelink Moree dated 26 April 1999, advising that her pension had decreased because of a change in her circumstances, and which noted her and her partner's combined yearly income as totalling $2,447.02. (T22). Later she received a letter from Centrelink Moree dated 27 April 1999 concerning the DSP (T23). As requested in that letter she completed the questions as to her partner's employment and returned it to Centrelink Moree on 29 April 1999. Ms Adams told the Tribunal that the next thing she received was a letter advising her of overpayment of the DSP and that she would have to pay back $6,367.77. That letter was dated 3 June 1999 (T29).
Ms Adams gave evidence as to her circumstances. In regard to her financial situation, she had prepared a budget planner (Exhibit A2). In summary, she had no discretionary income left after payment of household accounts and repayment to Centrelink of $20 a week. Ms Adams had obtained employment with Woolworths and that had recently become fulltime work. She described herself as going to work "doped up to the eyeballs on Panadeine Forte" most days because of her neck injury. She said her employer knew she was not allowed to do heavy lifting and that she took small five or ten minute breaks to rest, or take Panadol or Aspirin. She anticipated further the regular treatment for the migraine like headaches. The regular treatment involved a needle being inserted into her neck and a laser application blocking the nerve. Ms Adams also told the Tribunal that to make ends met and save for a wedding, she had started a cleaning business.
During the cross examination of Ms Adams by Ms Schuster, Ms Adams confirmed that she had been on and off newstart allowance from about 1993. She said she did not know much about the DSP when she had made the application for it, and did not know it was about the same amount as newstart allowance. Asked whether she thought it was income tested, she said that she was not working and that Mr Atkinson's income would affect the amount she would receive. Ms Adams reiterated that she had received the Centrelink letters dated 11 June (T12), 18 June (T18) and 25 June 1998 (T19), and that she had read them. Briefly, those letters advised changes in newstart allowance payments to her because of Mr Atkinson's income. In relation to the Centrelink letter dated 2 July 1998, Ms Adams said that when she received it she remembered searching for Mr Atkinson's payslips in the caravan, and that she " .. looked and thought right, okay, it is around these figures, …" and " … because I thought oh well, you have got his details. You will be contacting Gwydir Glass to find out".
It was put to Ms Adams:
Ms Schuster: When you claimed the pension – what did you know about the pension when you claimed it ?
Ms Adams: I didn't know much about it at all. …
….
Ms Schuster: Did you know it was going to be more or less the same money?
Ms Adams: I didn't
…
Ms Schuster: Did you think it was going to be income tested. Like did you think that your income, what you earned would matter to how much you could get?
Ms Adams: Well, I wasn't working.
Ms Schuster: Did you think that Austin's income might matter to how much you could get?
Ms Adams: Yes.
….
Ms Schuster: Even after having read the letter that said you had to tell Centrelink of income changes you still thought that Centrelink would ring the employer?
Ms Adams: Yes, because like he had been told that he was working so I thought that, well, yes, they will check up to make sure how much he has got so the figure on here, yes, sure, it seems similar to his pay slip. So yes, they must have contacted.
Ms Schuster: How often did you expect Centrelink to check with the employer?
Ms Adams: Weekly
Ms Schuster: So you expect Centrelink to check with the employer every week to find out the income figures?
Ms Adams: That is what I thought you did, yes. I since know better.
…
Ms Schuster: Okay. So the first time he got more money was on 20 August 98?
Ms Adams: Yes
Ms Schuster: So he went from $467 to $560?
Ms Adams: Yes
Ms Schuster: Did you come into Centrelink and tell them about that?
Ms Adams: No. Because I thought they would find out off the employer. See because that is in August, the end of August would have been when he actually finished his three month trial period.
Ms Schuster: Right and then he got some extra money?
Ms Adams: Yes. Because on the three month trial period I think he was only put on like casual or a junior wage or something until they know what qualifications and that he has got.
Ms Schuster: So he got – and then he got $492 and so on, …
Ms Adams: YesMs Adams maintained that she understood Centrelink rang the employer every week to check Mr Atkinson's income figures, "That is what I thought you did, yes. I since know better." Ms Adams also stated that she understood that the figure of $2447.02 was year to date and that the year referred to earnings from January to December.
SUBMISSIONS
The Tribunal requested the Respondent address its submission first, although in the normal course, the Applicant would have made submissions before the Respondent.
RESPONDENT'S SUBMISSIONS
28.On behalf of the Respondent, Ms Schuster submitted that the Respondent's case relied substantially on the notice provisions in the Act and it was contended that Ms Adams had failed to comply with the notices sent to her. In particular, while on newstart allowance, Ms Adams had been sent a letter from Centrelink Coffs Harbour dated 19 May 1998, which stated:
"If there are no further changes to your circumstances, your next payment for the period 12 May 1998 to 25 May 1998 will be $292.80. … YOU MUST TELL US IF … you or your partner start paid work …" (T7)
It was contended that this was a notice pursuant to section 657 of the Act.
29.It was also contended that in the letter dated 2 July 1998 (T20) the notice was pursuant to section 132 of the Act and it imposed two obligations on Ms Adams. The first had regard to combined yearly income of Ms Adams and her partner. Ms Schuster noted those earnings were assessed at $2,447.00 and it was contended that the notice went on to state that Ms Adams must tell the Department if their combined income as shown was incorrect. It was asserted that $2,447 was not the correct income and that Ms Adams had failed to advise that income was incorrect. Secondly, the letter stated that Ms Adams had to tell the Department:
"If your combined income, not including financial investment or maintenance, increases."
It was pointed out that when Mr Atkinson's wages increased from about 20 August 1998, Ms Adams had failed to notify the Department.
30.In response to the Applicant's written submissions that the debt arose wholly through administrative error, due to Centrelink not acting on information received from the Applicant, it was submitted that there was no sole administrative error in the case. Ms Schuster submitted that Ms Adams' failure to comply with the notification obligations substantially contributed to the payment being made in error. In regard to the Applicant's case that she put Centrelink on notice of income when she lodged the newstart allowance continuation form on 7 July 1998 (T65), it was noted that the information related to a closed period 14 April 1998 to 6 July 1998 and did not indicate Mr Atkinson's earnings or that he was working full time. Further, the form did not relate to DSP, which was the benefit Ms Adams was receiving.
31.In regard to Ms Adams' evidence as to what Ms Adams believed at the time, Ms Schuster asserted the notice provisions were not unreasonable and were simply not complied with. Also it was asserted that Ms Adams' mistaken belief of what the letter said was said to be "neither here nor there" because once the notification obligations were not complied with, that contributed to the error.
Ms Schuster reiterated that in terms of section 1237A, there were several elements that had to be made out: that there was an administrative error; that the debt was attributable to that error; that the administrative error was the sole reason that the debt occurred and the money paid due to the error was received in good faith.
32.It was conceded that administrative error did occur. It seemed to Ms Schuster that the most likely explanation was that the payments were processed in Coffs Harbour. The grant letter dated 2 July 1998 was posted from Coffs Harbour. It seemingly was processed in reliance of forms that had been provided in April 1998 and there was no attempt to reconcile with the income figures that had been provided in Moree. It caused Ms Adams to be overpaid at the wrong rate of payment and did contribute to the occurrence of the debt, however it was not the sole reason for the debt. Rather it was contended that Ms Adams' failure to comply with the notification obligations substantially contributed to the payment being made in error. The error was in granting at the wrong rate of payment and that arose as no regard was had to more recent information that was provided about Mr Atkinson's income.
33.It was further agreed that the error did contribute to the debt.
34.It was submitted however that the third element posed considerable difficulties for the Applicant's case to have the debt waived. It was reiterated that the question is whether that error was the sole error that caused the debt. The notes to the section make it clear that the debt cannot be waived if there was any other contributing reason for the debt, even if, as Ms Schuster noted, it was minor. Ms Schuster noted that the meaning of "solely" was examined in Re Gerhardt and Department of Employment, Education and Training (AAT 10941, 17 May 1996).
35.In summary, Ms Schuster noted that it was clear that the administrative error set the debt in motion. However, the receipt of the notice, which spelt out the notification obligations and Ms Adams' failure to comply with the duties under the notice was, it was submitted, unreasonable failure which continued the excess payment for some time. Ms Adams' case, it was submitted was distinguished from Re Vitalone and Secretary Department of Social Security (1995) 38 ALD 169, in that Ms Adams had not approached the Department asking any questions about her payments.
36.In particular Ms Schuster asserted that Ms Adams was in the best position to know her and her partner's income, and that requirement to notify whether that yearly income was different to their actual income "was plain English". Ms Schuster continued saying that there was not anything unequivocal about it. Also, it was asserted that Ms Adams' explanation that she thought it was year to date income was unrealistic. Ms Schuster pointed to the back of the grant letter that stated "How we have assessed your combined yearly income" (T20) of $2447, and noted there was nothing about year to date income. Ms Schuster also asserted Ms Adams' expectation that Centrelink would continuously ring Mr Atkinson's employer was not reasonable. It was asserted that Ms Adams herself had never provided any figures about her partner's income to the Department nor had she notified the Department about increases in her partner's income. Ms Schuster relied upon the decision in Department of Employment, Education, Training and Youth Affairs v Prince (1997) 50 ALD 186, where His Honour Finn J held that good faith is lacking if a person knows or has reason to know that he or she is not entitled to the payment received. Ms Schuster asked the Tribunal to consider whether on the balance of probabilities it was more probable than not that the Applicant honestly believed that she was entitled to full pension payments, when her partner was receiving five times her previous fortnightly Newstart entitlements.
APPLICANTS SUBMISSIONS
37.On behalf of Ms Adams, Ms Koller submitted that the overpayment of the disability support pension was "attributable" solely to administrative error. It was pointed out that Departmental file notes "Customer at Moree office says spouse has supplied all mod" (T8) showed that on 21 May 1998 Ms Adams went to the Moree office. On 25 May 1998, there is a file note stating "a/n would like call. I said within 24 hours re progress DSP NCL" (T9, page 85), which Ms Koller interpreted as new claim, and continued to interpret "She says she has lodged p & l statements", profit and loss statements, "Re partner's business … Although she says these have now all ceased. No evidence of that yet supplied." There was an annotation that attempts were made to telephone Ms Adams, that the Moree office was also called, and "they have no papers for a/n and no papers have reached this office," so that the file note appears to have originated in the Coffs Harbour office. And also Ms Koller interpreted "Ms Adams has advised that she and her spouse have completed the documents but there is no evidence of them being received." On 1 June 1998 Ms Adams put in more modules (T61 and T62). Ms Koller noted that it was clear that these were for the purposes of processing the DSP as they had "Nicole Adams" and her social security reference number. Ms Koller pointed that the "F Business – Income and Assets Details" module indicated that self-employment had been discontinued, "Is the business still operating: No" (T62, page 287).
38.Ms Koller speculated that when the Departmental assessor considered the DSP claim, the assessor looked at the wrong modules, that is the old business income module instead of the new module, and coded in the former business income. If the correct module had been used, then the "New Claim Checklist" (T64) would have triggered an enquiry as to Mr Atkinson's income. As it was, that checklist ticked business and not earnings.
39.Ms Koller contended that Ms Adams' evidence that she did read the letter dated 2 July 1998 granting DSP was credible. While she was not able to pin point a date, she had a clear recollection of looking up the pay slip for Mr Atkinson when she was in the caravan park. There were only two letters about DSP; one dated 26 April 1999 and a second dated 2 July 1998. She was only in the caravan for the 2 July 1998 letter. She checked it, and it was the incorrect income written that Ms Koller said deprived Ms Adams of the opportunity to realise the Department's error. The figure of $2,447 on the grant letter was similar to that on Mr Atkinson's pay slip, that is $2,278.30 (Exhibit A1).
40.It was noted that on Mr Atkinson's newstart allowance continuation form dated 8 June 1998 (T63), received by Centrelink 11 June 1998, he had written that he was doing a 3 month trial with Gwydir Glass and during 26 May to 8 June 1998 he had earned $1,110.00. By reference to Exhibit A3, which stated in part "Your rate of newstart allowance has changed from 18 May 1998 because of a change in your and your partner's income", Ms Koller asserted that Mr Atkinson had earlier notified Centrelink of his income. On the reverse of that letter it was noted that his fortnightly-earned income was $393.25.
41.About this time Ms Adams got the letter dated 12 June 1998 advising the over-payment of $324.00 (T14). That letter concerned newstart allowance overpayment and the reason Ms Adams had to repay it was because the Department was aware of Mr Atkinson's income.
42.It was asserted that the letter dated 2 July 1998 (T20) was not clear. On the reverse it stated "combined yearly income" and "earnings $2447.00". Ms Koller disagreed with the Respondent's submission that no reasonable person could have thought that yearly income was anything other than a financial year. Ms Koller contended that it might be fine for someone familiar with the Department's practices to think yearly meant financial year. For a person who had never received the DSP before and who was previously used to newstart allowance continuation forms, and in the absence of more, there was no reason it would not have meant calendar year. It was submitted that the letter was misleading and open to the interpretation that Ms Adams gave it, particularly because of the error it contained. The error was with regard to the income figure, which turned out to be the approximate figure of Mr Atkinson's earnings. Since the income figure coincidentally did represent something that was Mr Atkinson's earnings, that alleviated Ms Adams.
43.In respect of the changes of Mr Atkinson's income, Ms Koller noted it was true that Ms Adams did not notify the changes. There was no record of her giving further advices until she got the letter dated 27 April 1999 (T23) querying her partner's employment and income. It was contended that Ms Adams' belief that Centrelink checked her partner's income, was a genuine belief. Her reason for that belief was because of what she had observed on the back of the letter of 2 July 1998; it looked like the Department had checked Mr Atkinson's income. During her evidence she had stated that she wrote down the name and telephone number of the employer as requested. It was contended that it was not unreasonable to expect that if the Department asked for information, it might use it.
CONSIDERATION
44.The issue in this case turns upon whether the debt incurred by Ms Adams may be waived under the Act. In that regard, sections 1237A(1) and 1237AAD are relevant. Taking first section 1237A(1), it provides, insofar as it is relevant, that:
"... 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."
45.The Applicant's written submissions were that the mandatory waiver provisions apply if a debt is attributable solely to an administrative error. Ms Koller relied on the decision in Re Gerhardt (supra).
46.Ms Koller had submitted that the Department's administrative error was to take into account the incorrect figure for Mr Atkinson's income, by virtue of its failure to consider the second modules B and F which indicated that the business was no longer operating, and by virtue of the Department's failure to respond to information provided on the newstart allowance continuation forms. These forms clearly showed Mr Atkinson was not working in his own business. It was those matters, it was contended, to which the debt was attributable.
47.The Tribunal noted in the Respondent's Statement and attachments dated 20 November 2000 (Exhibit R1), the Respondent's advocate had brought the following to the attention of the Applicant and the Tribunal:
"2. In their Statement of Facts & Contentions at paragraph 36, the applicants refer to the figure of $2,447.00 which was used to calculate the applicant's Disability Support Pension form 2 July 1998. After further examination of the computer records, it has come to my attention that her partner's business income of $2,447 was indeed recorded on the applicant's record (see print outs attached) as commencing on 27 April 1998.
3. Furthermore, a form signed by the applicant on 24 April 1998 stated that Ms Adams' partner was 'now self-employed' in a business called 'AJ & RG Atkinson Cleaning & Maintenance' (p. 268-271, T57).
4. The profit and loss statement of that business for the 9 months from June 1997 to March 1998 showed income of $1,835.93 (p.293, T57). When one converts this into a 12-month figure (by dividing by 9 and multiplying by 12) the result is annual income of $2,447 (rounded down).
5. I also note that a mark note made on the 'new claim checklist' by the assessor on 2 July 1998 indicates that business income was assessed (p.293, T64).
6. It is our contention that information provided by the applicant in April 1998 for the purpose of assessing her Disability Support Pension was used by the respondent to assess her eligibility for that payment in July 1998."
48.The Tribunal observed that there were difficulties relating to that contention. Firstly, the printout attachment is not dated although it does indeed refer to an "event date" as being 27 April 1998. In relation to the statement 'now self-employed' (T57, page 268) it is quoted out of context. It is an answer to a question:
"1 f. If the estimate is considerably different from what is shown on your tax return for the previous year, please give reasons for the difference and/or provide documents which support your estimate."
It is also observed that the answer to question 1 f, refers to "profit & loss form attached" and across that form there is a notation of what appears to be Mr Atkinson's social security number, followed by "Ptr of", which the Tribunal takes to mean partner of, then the social security number of Ms Adams appears together with the notation "claiming DSP Nicole Adams".
49.Secondly, it is difficult to explain why Centrelink Moree did not refer to that record when Ms Adams attended that office on 21 May 1998 (T8) and 25 May 1998 (T9) to enquire about her DSP claim.
50.With regard to that (April 1998) module sets B & F (T56, T57), it was lodged in support of Mr Atkinson's Newstart claim; in module B (T56), at question 15 "Are you looking for full time work?" Mr Atkinson has ticked "Yes".
51.As regards the New Claim Checklist dated 2 July 1998 (T64) that appears to have originated in Coffs Harbour at about the time of the issue of the Centrelink Coffs Harbour grant letter dated 2 July 1998. It does also seem to the Tribunal that the assessor did have regard that (April 1998) module sets (T56, T57) and the profit and loss statement. The difficulty is however that, as Ms Koller pointed out, Ms Adams had, as requested, lodged further modules dated 21 May 1998. In module B (T61), at question 12 "Do you intend to resume self employment?", Mr Atkinson ticked "No" and in module F stated that the business was no longer operating.
52.There are previous decisions of the Tribunal that have concluded that failure by the Department or Centrelink to act on information is an administrative error (Re Lohner and Department of Social Security (1995) 85 SSR 1241, Re Christensen and Secretary, Department of Social Security (AAT 10277, 4 June 1995), and Bruneau and Secretary, Department of Family and Community Services [1999] AATA 48. The issue however is whether the debt is attributable to that administrative error and, if it is, whether it is solely attributable. The Tribunal is satisfied that the Department used the incorrect amount for Mr Atkinson's earnings by virtue of its failure to consider the second module sets B & F, which indicated the business was no longer operating. There was also the Department's failure to act upon the information provided by Ms Adams on the newstart continuation form (T65) lodged 7 July 1998, which stated that Mr Atkinson was not working in his business but working for an employer, Gwydir Glass.
53.When Deputy President Forgie considered the meaning of the word "solely" in Re Gerhardt (supra), as it is used in s 289(1) of the Student Assistance (Youth Training Allowance) Amendment Act 1994, a provision which is substantially the same as s 1237A(1) of the Act, she concluded at paragraph 40 that:
"There is nothing in sub-section 289(1) which indicates that any meaning should be given to 'solely' other than its ordinary meaning. Applying those ordinary meanings to the sub-section mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth's administrative error. The Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth's administrative error (i.e. they are incidental to the Commonwealth's error), then it may be that the debt is attributable solely to the Commonwealth's administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact."
54.That interpretation was not said to be in error by the Federal Court in Gerhardt v Department of Employment, Education and Training [1997] FCA 815. It has been adopted by the Tribunal in Re McKnight and Secretary, Department of Social Security (AAT 9814, 2 November 1994), in Re De Neumann and Secretary, Department of Social Security (1996) 45 ALD 787, and also applied by Deputy President Forgie in Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212.
55.In regard to the DSP grant letter dated 2 July 1998 (T20), the Tribunal accepts Ms Adams evidence that she did read it. Overall, the Tribunal considered Ms Adams a credible witness. She gave a clear recollection of looking up Mr Atkinson's payslip in the caravan park. During cross examination she denied that evidence was given with the benefit of hindsight. She said she read the figure of $2,447.00 on the letter dated 2 July 1998 and her evidence was that she thought, albeit erroneously, that it "looked right". Her evidence was straightforward on this point and it was supported by the payslip which showed her partner's earnings were of similar amount. Also she thought, albeit erroneously, it was a year to date income figure.
56.The Tribunal noted there were a number of occasions where disclosure was made that Mr Atkinson was working. There was the newstart continuation form for the period 26 May 1998 to 8 June 1998 (T63), lodged with Centrelink Moree on 11 June 1998. On that form Mr Atkinson wrote he was undertaking a three month trial with Gwydir Glass and indicated how much he was earning. In addition, it also seems that Mr Atkinson made an earlier disclosure. The Centrelink letter dated 26 May 1998 (Exhibit A3) to Mr Atkinson referred to the period 12 May 1998 to 26 May 1998, a change in the rate of his newstart allowance from 18 May 1998 and also noted his fortnightly earnings income of $393.25. A number of Centrelink letters were sent to Ms Adams concerning her newstart allowance. Those letters dated 13 May 1998 (T6), 19 May 1998 (T7), 26 May 1998 (T10), 2 June 1998 (T11), 11 June 1998 (T12), referred to a change in Ms Adams circumstances and also advised the rate of newstart allowance as $292.80, $292.80, $313.98, $328.10 and $292.80 respectively. Those letters however concerned newstart allowance and they did not specify the basis, (for example Mr Atkinson's income), of the changes. There is also the Centrelink Moree Advice of Debt dated 12 June 1998 concerning newstart allowance overpayment to Ms Adams because of Mr Atkinson's employment with Gwydir Glass during the period 26 May 1998 to 8 June 1998 (T14). So the Department knew Mr Atkinson was working, as also referred in the attachment Exhibit R1.
57.Then Ms Adams received the grant letter of 2 July 1998, which also had the wrong income figure. She checked it and it looked right. Ms Adams' error was incidental to the administrative error of the wrong income figure, which arose from the wrong module being used.
58.Ms Koller had contended that the fact that Ms Adams did not understand the income assessment on the grant letter made no difference to the causative effect of the above failures by the Department. Had Ms Adams understood the letter and advised the Department, this would not have changed the fact that the overpayment was "attributable" to the Department's error.
59.The Tribunal considered whether the wording of the letter is ambiguous to the extent that "yearly income" might be read as a reference to "year to date" income as was Ms Adams evidence. Certainly it is not stated that it is a "financial year" 1 July to 30 June. It simply says "yearly". The Tribunal had regard to Re Carruthers and Secretary, Department of Social Security (1993) 31 ALD 567, where O'Connor J referred to "the long standing common law principle that statutes are to be construed strictly where penalties apply". In that case the Tribunal found that the Department had failed to comply with a notice requirement under section 163 of the Social Security Act 1947 ("the 1947 Act") because the notice failed to specify the manner of notification as required by that section. Also in Re Vitalone (supra) Mathews J noted in relation to section 163, a provision relating to notices under the 1947 Act, at paragraph 31, that:
"…Non compliance with it is potentially punishable by imprisonment. Accordingly, it needs to be interpreted in a manner which is favourable to the individual concerned. "
On balance, the Tribunal considered that strict interpretation of that part of the letter "yearly income" would allow Ms Adams' interpretation.
60.The Tribunal then turned to consider the Respondent's argument that Mr Atkinson's income changed, initially about August 1998, and that Ms Adams did not advise of those changes. Ms Adams' evidence, which did not waiver under cross examination, was that she believed, albeit erroneously, that Centrelink checked weekly with Mr Atkinson's employer. From Ms Adams' stand point, Ms Koller argued that this was not an unreasonable belief because of what she observed about Mr Atkinson's income on the reverse of the letter dated 2 July 1998. As well she had given evidence that she believed the reason Centrelink asked questions about employment and income on newstart allowance continuation forms was that Centrelink would check by telephoning the employer. On balance, having regard to Ms Adams' life experiences, her apparently consistent attempts to comply with other Department requirements, and her evidence demonstrating lack of knowledge of DSP, the Tribunal agreed with the proposition that what Ms Adams believed was not unreasonable.
61.The Tribunal found that Ms Adams received the payments in good faith as that expression was interpreted by the Federal Court in Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186; 152 ALR 127, where Finn J considering "good faith" in relation to section 289 of the Student and Youth Assistance Act 1973 AT ALR 130:
"For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith."
62.Ms Adams did not have any reason to think, and her evidence was that she did not think, that she was being paid more than what she was entitled. She was a new DSP recipient.
63.The Tribunal then considered the respective arguments on behalf of the Applicant vis-à-vis the original administrative error and the subsequent erroneous events in terms of Deputy President Forgie's consideration of "solely" and "attributable" in Re Gerhardt (supra), at paragraph 40:
" … The Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth's administrative error (i.e. they are incidental to the Commonwealth's error), then it may be that the debt is attributable solely to the Commonwealth's administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact."
64.The Applicant's argument was that if the other errors were attributable to a factor independent of the Commonwealth's error, then it is not "solely" an administrative error. If however, it is attributable to an error that is dependent on the Commonwealth's error, then it is incidental. The Tribunal was also referred to the Federal Court decision in Gerhardt v Department of Employment, Education and Training [1997] FCA 815 where Ryan J said:
"In reaching this conclusion I have not been unmindful of the findings by the Social Security Appeals Tribunal at para 7.6 which is quoted above. However, that was concerned with what a reasonably prudent assessor should have done. The Tribunal did not go so far as to find that particular assessor had actual knowledge of Mrs Gerhardt's mistake, so as to deprive that mistake of any operative effect in bringing about the overpayment."
65.Having regard to the whole of the evidence, the Tribunal was satisfied that the debt was attributable solely to an administrative error made by the Department (and so by the Commonwealth). In Ms Adams' case, the Department's error is in the way it calculated her partners income. Information provided by Ms Adams in April 1998 for the purpose of assessing her DSP was used by the Respondent to assess her eligibility for that payment in July 1998 (Exhibit R1). Ms Adams had supplied a second set of documents a "Business/Self Employment" form B (T61) dated 21 May 1998 and stamped 1 June 1998 Centrelink Moree. During the course of her evidence Ms Adams also confirmed the second set of module documents at T61 and T62, were labelled at the top "Nicole Adams" and had her Social Security reference number. For the purpose of assessing her DSP, the second module set was the relevant documents. In order to deprive the Department's error of using the wrong module from its continuing sole effect, there needs to be an error of Ms Adams' which is not incidental to the Department's error. Ms Adams received the grant letter of 2 July 1998 which also had the wrong income figure. She checked it and it looked right. Ms Adams' error was incidental to the administrative error of the wrong income figure. With regard to the notice on the reverse side of that grant letter, and applying what Matthews J said in Re Vitalone (supra) about strictly construing documents with penal provisions in them, the Tribunal has already found (at paragraph 59) that Ms Adams did not fail to comply with that letter. There was nothing in that letter that would have alerted her to the Departmental error. Nevertheless, Ms Adams had lodged the Newstart Continuation form and gave it to Centrelink on 7 July 1998, and by reason of that lodgement Ms Adams did alert the Department that the figure was incorrect. Earlier, the Tribunal accepted that Ms Adams believed the Department would check her partner's income and that was because of the original error in the grant letter that made it look to her that the Department already knew what Mr Atkinson's income was. The Tribunal considers that in her circumstances, her continuing error was an incidental error and did not impact on the causative nature of the Department's original error. In conclusion, Ms Adams did not contribute to the misunderstandings that led to the overpayment.
66.Accordingly it follows from the foregoing reasons, that the Social Security Appeals Tribunal decision of 8 June 2000 under review is set aside and in substitution therefore the Tribunal finds that the sum of disability support pension was overpaid to the applicant for the period 9 July 1998 to 27 May 1999 was $6,145.70, however, this amount is waived in full in accordance with section 1237A(1) of the Act.
I certify that the 66 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J A Shead, Member.
Signed: .....................................................................................
AssociateDate/s of Hearing 22 November 2000
Date of Decision 1 June 2001
Solicitor for the Applicant Sandra Koller
Solicitor for the Respondent Hannelore Schuster
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