Atkinson and Secretary, Department of Social Services (Social services second review)
[2017] AATA 1963
•26 October 2017
Atkinson and Secretary, Department of Social Services (Social services second review) [2017] AATA 1963 (26 October 2017)
Division:GENERAL DIVISION
File Number: 2016/7010
Re:Michele Atkinson
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member J Sosso
Date:26 October 2017
Place:Brisbane
The Tribunal:
(a) sets aside the matter under review
(b) waives 80% of the debt of $57,804.13
(c) remits the matter to the Respondent to recalculate the debt payable by the Applicant in accordance with this decision.
...................[Sgd].....................................................
Senior Member J Sosso
CATCHWORDS
SOCIAL SECURITY – Widow’s Allowance - Overpayment and Debt Recovery – asset limits – whether attributable solely to administrative error – special circumstances (other than financial hardship alone).
LEGISLATION
Social Security (Parenting Allowance and Other Measures) Legislation Amendment Act 1994
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Secretary, Department of Family and Community Services and Gray & Witchard (1999) 58 ALD 209
Pepi and Director-General of Social Security (1984) 7 ALD 155
Re L and Secretary, Department of Social Security (1995) 21 AAR 412
Sekhon v Department of Family and Community Services (2003) 132 FCR 126
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; 100 ALD 9
Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693
Department of Social Security v Hales (1998) 82 FCR 154
Haggerty v Department of Education, Training and Youth Affairs [2000] FCA; 31 AAR 529
Brown and Secretary, Department of Family and Community Services [1999] AATA 113
Castle and Secretary, Department of Employment, Training and Youth Affairs [1999] AATA 176
Reardon and Secretary, Department of Family and Community Services [2002] AATA 33
Cone and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 245
Smart and Secretary, Department of Family and Community Services (2003) 79 ALD 586
Lucey and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 485
Archer and Secretary, Department of Social Services [2016] AATA 948
Woodward and Secretary, Department of Family and Community Services [2001] AATA 818
De Neumann and Secretary, Department of Social Security [1996] AATA 351
Secretary, Department of Social Security and Winters [1997] AATA 594
Dean and Secretary of Education, Employment and Youth Affairs [2005] AATA 586
DeLuca and Secretary, Department of Education, Science and Training [2007] AATA 1925
REASONS FOR DECISION
Senior Member J Sosso
26 October 2017
INTRODUCTION
Mrs Michele Atkinson (the Applicant) seeks review of a decision of the Social Services and Child Support Division of this Tribunal (AAT1) dated 22 December 2016 that affirmed a decision of the Secretary, Department of Social Services (the Respondent) to raise and recover a widow allowance debt of $57,804.13.
The Applicant’s partner, Mr John Atkinson, passed away on 21 May 2011 – Exhibit 1 T5 p.28.
The Applicant made claim for the widow’s allowance on 30 November 2011 – Exhibit 1 T5 pp.25-60.
In response to Question 94, which asked if the Applicant received regular payments from an income stream product (which included a superannuation fund), the “No” box was ticked – Exhibit 1 T 5 p.40.
The Applicant provided details of her assets in the body of the application form as well as in detailed attachments. The assets listed in the application form included:
(a)Heritage Building Society Account 1 - $300 (p.28);
(b)Heritage Building Society Account 2 - $50,000 (p.36);
(c)Household contents - $2000 (p.35);
(d)Motor vehicles (2) - $2000 (p.35);
(e)NIB Holdings Limited shares - $3796 (p.55);
(f)Family Superannuation Fund- $417,576 (p.39).
The attachments to the application form included details of the Applicant’s Superannuation Account, the total value of which was estimated to be $436,875. It was also specifically stated that the nominated annual pension amount from the Fund was $20,000 – Exhibit 1 T5 pp.49 – 54.
Consequently, the application form and attachments contained conflicting information. A negative answer to the question whether the applicant was receiving an income stream from a superannuation fund, but specific and very detailed information about such a fund in both the body of the application and in six pages of attachments.
As the Applicant was under 65 years of age when she made application for the widow allowance, the amount of the superannuation fund in the accumulation “phase” is considered an “exempt asset”. In the attachments to the application, the Family Superannuation Fund was apportioned into a pension account component of $188,959 and an accumulation (i.e. exempt) component of $247, 916 – Exhibit 1 T5 p.50.
Consequently, the value of the Applicant’s assets for the purpose of determining eligibility for the widow allowance was $237,945, comprising the pension component of the Family Superannuation Fund and other disclosed assets of approximately $57,300.
At the time the Applicant made the claim for widow allowance the upper limit of assets for eligibility was $186,750. Consequently, the Applicant exceeded the upper limit by more than $50,000 and was not entitled to receive the widow allowance,
On 16 December 2011 the Department of Human Services (the Department) sent a letter to the Applicant advising that she would be paid the widow allowance from 9 December 2011. The letter stated that in calculating the amount of the allowance the Department proceeded on the basis that her fortnightly income was $8.56 – Exhibit 1 T6 p.61.
In the period 2012 until 2015 the Department wrote to the Applicant on three occasions outlining the amount of the widow allowance she was receiving and detailing the asset basis upon which that allowance was based – 6 March 2012 (Exhibit 1 T7 p.65), 16 March 2012 (Exhibit 1 T7 p. 67) and 21 June 2013 (Exhibit 1 T8 p.69) .
In the 21 June 2013 correspondence the Department informed the Applicant that the regular payment of the widow allowance was $553.10, and stated under the heading “Information used for calculating your regular payment”, a total fortnightly income of $6.53 – Exhibit 1 T8 p.69.
In the second page of the letter in extremely small print was a series of headings containing information about taxation, compensation, information that the Department required and rights of the recipient of social security, including the right to privacy. Under the heading “WHAT YOU SHOULD TELL US” were 20 dot points. One of those stated – Exhibit1 T8 p.70:
“the value of your assets goes over $196,750.00”.
When the Applicant reached 65 years of age she completed the relevant Transfer to Age Pension form – Exhibit 1 T11 pp.79 – 82.
On 29 January 2016, the Applicant’s widow allowance was cancelled as from 9 December 2011 as the value of her assets were above the allowable limit- Exhibit 1 T15 pp.128 – 129.
Subsequently, the Department raised a debt of $57,804.13 for the period 9 December 2011 to 21 December 2015 – Exhibit 1 T17 pp.132-133.
The amount being withheld from the Applicant’s age pension to repay the debt is currently $105.15 per fortnight, having increased from $93.90 on 7 July 2017 to $97.92 and then to the current amount on 21 July 2017. As at 6 September 2017 the amount of the debt had reduced to $51,606.78 – Exhibit 2.
Following an internal review, the Applicant applied for review to AAT1. Member McKelvey affirmed the decision of the Department. He also determined that the debt could not be waived on the basis of sole administrative error or special circumstances – Exhibit 1 T3 pp.5 -11.
The review application was heard in Brisbane on 8 September 2017. The Applicant appeared in person and gave evidence. She was assisted at the hearing by Mr Lindsay Walker, financial planner. The Respondent was represented by Mr Jake Kyranis of Sparke Helmore Lawyers.
STATUTORY OVERVIEW
The widow allowance was introduced by the Social Security (Parenting Allowance and Other Measures) Legislation Amendment Act 1994, and commenced from 1 January 1995. No woman can be granted the widow allowance on or after 1 July 2005 unless she was born on or before 1 July 1955 – s 408AA Social Security Act 1991 (the Act).
The widow allowance provisions are to be found in Part 2.8A of the Act.
Section 408BA(2) provides that a woman is qualified for the widow allowance if, inter alia, she has turned 50, she was a member of a couple, since turning 40 her partner has died and she satisfies the Respondent that she has no recent workforce experience.
An assets test is prescribed by s 408CE. The widow allowance is not payable to a woman if the value of her assets exceeds the assets value limit. The assets value limit formula is set out in s 408CE(2). The assets value limit is indexed annually – ss 1190 – 1194. If a woman is a homeowner, the current assets value limit is $250,000 – s 408CE(2). At the time the Applicant claimed the widow allowance the assets value limit was $186,750.
Subsection 80(1) of the Social Security (Administration) Act 1999 provides that if the Respondent is satisfied that a social security payment is being paid to a person who is not qualified for the payment, the payment is either cancelled or suspended.
In this matter a decision was made to cancel the widow allowance.
Where a person obtains the benefit of a social security payment they are not entitled to, the amount of payment is a debt due to the Commonwealth, and such debt arises when the person obtained the benefit of a payment – s 1223(1) of the Act.
Subsection 1236(1) of the Act provides that the Respondent may, on behalf of the Commonwealth, write off a debt for a stated period or otherwise.
The discretion to write off a debt is not open-ended. Subsection 1236(1A) limits its exercise to four specified circumstances. Apart from the grounds of recoverability and discoverability, the remaining two grounds are:
·the debtor has no capacity to repay the debt (para b));
·it is not cost efficient to recover the debt (para d)).
Section 1237A of the Act provides that the Respondent must waive the right to recover so much of the debt that is “attributable solely to administrative error made by the Commonwealth” if the debtor received in good faith the payment(s) that gave rise to the debt.
Finally, s 1237AAD of the Act allows for the waiver of all or part of the debt where “special circumstances” exist.
This discretion cannot be exercised:
·if the debt arose from the debtor or another person knowingly making a false statement or representation, or failing to comply with the Act – s. 1237AAD(a);
·unless there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt- s 1237AAD(b); and
·unless it is more appropriate to waive than to write off the debt – s1237AAD(c).
ISSUES
The Respondent contended (SSIFC para 2.1), and the Tribunal agrees, there are three issues to be determined:
(a)whether the Applicant was paid in excess of her correct entitlement of widow allowance during the period 9 December 2011 and 21 December 2015;
(b)if the Applicant was overpaid, whether the overpayment is a debt owing to the Commonwealth; and
(c)whether all or part of the debt should be waived or written off.
CONISDERATION
Introduction
The foundation on which social security administration rests is the provision of accurate information from persons who seek to obtain any form of benefit from the Commonwealth. It is not the duty of the Commonwealth, through the Department, or any other agency or person, to seek out such information or to make independent searches and inquiries. The person who has made a claim is responsible for complying with whatever reasonable and prescribed requirements are in place. Certainly, the Department needs to take account of personal circumstances of claimants, particularly in cases of intellectual impairment, physical incapacity or other disabling circumstances – Secretary, Department of Family and Community Services and Gray & Witchard (1999) 58 ALD 209. However, the obvious requirement to insert fairness and flexibility into the administration of social security, does not derogate from the fundamental overarching duty placed on a claimant to honestly and diligently arm the Commonwealth with the requisite information so an informed decision on the grant or continuance of social security benefits can be made.
Importantly in this matter, the obligation to provide accurate information is neither lessened nor dispensed with, when the relevant form(s) is completed by a third person on behalf of the applicant – Pepi and Director-General of Social Security (1984) 7 ALD 155.
Was the Applicant paid in excess of her entitlement?
The Applicant did not contest at the hearing that she was paid in excess of her entitlement.
Is the overpayment a debt owed to the Commonwealth?
The Applicant did not contest at the hearing that the overpayment was a debt owed to the Commonwealth.
Should the debt be written off - section 1236?
As previously pointed out, s1236 allows for writing off, or delaying recovery of a debt for a period, in specified circumstances.
The meaning of “write off” was explained by Matthews J in Re L and Secretary, Department of Social Security (1995) 21 AAR 412 at 424 as follows:
“In contrast with waiver, the writing off of a debt does not extinguish it. The debt remains enforceable, but a decision is made not to pursue it, either indefinitely or for a set period. In either case, the decision can be reversed and enforcement proceedings commenced at any time in response to any changes in the circumstances which led to the decision in the first place.”
The only relevant grounds for considering a “write off” are whether the Applicant has no capacity to repay or it is not cost effective for the Commonwealth to take action to recover the debt.
The Respondent contends (SSIFC para 5.12) that the debt is being recovered by fortnightly withholdings from the Applicant’s current age pension payments and, as such, there is no evidence that the Applicant does not have capacity to repay the debt.
Having regard to the significant balance in the Applicant’s superannuation account, questions of financial hardship, which otherwise are relevant when considering write off, are moot.
Clearly the Applicant has the capacity to repay the debt, and, insofar as fortnightly repayments are being deducted from her age pension, it is cost effective for the Commonwealth to take steps to recover the debt.
The Tribunal concludes that there is no basis for writing off the debt pursuant to s 1236.
Should the debt be waived: sole administrative error – section 1237A?
Subsection 1237(1) requires the Respondent to waive the right to recover that proportion of a debt that is attributable solely to an administrative error by the Commonwealth, if the debtor received in good faith the payment.
The subsection, therefore, has two limbs. The first is that the debt was solely attributable to an administrative error by the Commonwealth, and second the payment was received in good faith.
The Respondent contends (SSIFC paras 5.14 – 5.15) that the Applicant was sent notices under s 68(2) of the Social Security (Administration) Act 1999 in relation to her widow allowance, including a notice granting the claim. Notices were issued on 16 December 2011, 6 and 16 March 2012 and 21 June 2013. Those notices advised the Applicant of the information used for calculating her widow allowance payment and required her to advise of any events or circumstances that may affect her payment.
There is, however, another matter that must be addressed.
The claim form contained an answer, which though in a temporal sense was correct, laid the basis for the ensuing error. The negative answer to Question 94 concerning the existence of an income stream product was, as Mr Walker admitted during the hearing, open to error. This response is the root cause of the subsequent problems that befell the Applicant.
There is a useful discussion about this matter by Member McKelvey at AAT1 – Exhibit 1 T3 p.9 para 19:
“There is no evidence before the Tribunal as to how it was the incorrect “no” answer was provided. Mr Walker suggested the answer might have been technically correct in that although the pension was a reversionary pension to Mrs Atkinson on her husband’s death, she might not have physically received any payment at the time of her claim. The submission is not attractive given the claim form was completed for Mrs Atkinson by an adviser and in such case might then be thought of as deliberately deceptive. The unexplained error from the unidentified accountant might well be because he/she was not fully informed or correctly understood Mrs Atkinson’s actual superannuation position.”
Mr Walker again raised during the hearing the proposition that Question 94 was answered in a technically correct manner at that point of time.
Whether the answer was technically correct or not, the undisputable truth is that during the currency of the payment of the widow allowance the Applicant did receive regular payments from her superannuation fund.
The preferable and benign interpretation of what occurred is that the person who completed the form for the Applicant was faced with a conundrum. At the point of time when the form was completed the Applicant may not have been receiving money from her superannuation account. The professional who completed the form would have known that state of affairs would not persist. In order to arm Centrelink with all available information the application contained voluminous attachments dealing with all aspects of the Applicant’s financial affairs, including full disclosure of her superannuation position.
Even accepting this benign interpretation, when subsequently a superannuation income stream was activated Centrelink was not informed of this changed state of affairs.
In the Full Federal Court decision of Sekhon v Department of Family and Community Services (2003) 132 FCR 126, Selway J made the following observation (135):
“The words ‘a debt attributable solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is administrative error.”
Member McKelvey highlighted at AAT1 the manifest error that Centrelink made in this instance. It is instructive to quote in full his observations – Exhibit 1 T3 p.9 para 18:
“There is a substantial and significant Centrelink error in this case. There has been a complete failure by the Centrelink officer processing Mrs Atkinson’s claim to have any regard to the documentation as to her superannuation entitlements provided with the claim. A proper understanding of the documents would have revealed the existence of an assessable asset in the form of the pension account. The valuations provided at the time by Mr Walker show specific values attributed to both an accumulation account, noted as exempt in parentheses, and a pension account. Mr Walker’s submission is that the claim process and its requirements are matters for Centrelink and if payments result from its errors, Centrelink should take ownership of and responsibility for its mistakes and should not be able to recover from a payee years later. There is force in the submission, it is in fact in the legislation, but it is limited by the Act to where the debt is solely due to those Centrelink errors.”
The Tribunal adopts Member McKelvey’s observations about the initial failure of Centrelink to adequately examine the material presented. A perusal of the application form and attachments would leave no reasonable person in any doubt as to the Applicant’s financial position. There was full disclosure of her superannuation position. It was presented in a straightforward fashion and Centrelink should have been immediately cognisant of the Applicant’s superannuation position.
While there was an initial failure by Centrelink to peruse with due care the material presented in the application form and attachments, there remained an ongoing obligation on the Applicant to keep Centrelink informed of any change in her financial position.
While there is some dispute about what steps the Applicant took to keep Centrelink informed of her financial situation in the 2011 – 2015 period, there is no evidence before the Tribunal of any written notification by the Applicant to Centrelink of her superannuation income stream. During the hearing Mr Walker contended that there was documentation that supported the Applicant’s contention that she had been in contact with Centrelink during the 2012-2015 period alerting officers to her financial position. The Tribunal was referred to a Centrelink document Exhibit 1 T 25 p.163 which outlines the various contacts made between Centrelink and the Applicant in the period 2011 – 2016. However, a perusal of the contemporaneous telephone and other records fails to disclose any record of the Applicant providing or seeking information with respect to her superannuation payments – Exhibit 1 T25 pp.164 – 171.
Consequently, there is no sound basis for the Applicant to contend that her overpayment was solely due to administrative error.
The Tribunal concludes that there was error both by the Applicant and Centrelink and the initial failure of the latter, and ongoing failure of the former, in combination, resulted in the overpayment of social security.
Should the debt be waived: special circumstances – section 1237AAD?
Introduction
The term “special circumstances” is not defined in the Act, but it has been generally accepted that “special circumstances” are “unusual, uncommon or exceptional” or “markedly different from the usual run of cases” per Toohey J, Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3.
However, Branson J cautioned against overstating the test by emphasising “exceptional”. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 her Honour said (at [26]):
“The statutory requirement for ‘special circumstances’ discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness…must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.”
This approach was subsequently endorsed by Besanko J in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; 100 ALD 9 at [33]:
“…the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.”
It is important to recognise that the consideration of an individual’s circumstances is in the context of the overall administration of Australia’s social security system – Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693.
As French J highlighted in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at 155, there is a tension between the need for certainty in the application of the special circumstances provision and the desirability of a flexible response to the many situations that can arise. French J concluded (at 162):
“…to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.”
His Honour specifically dealt with the question whether financial hardship was a precondition of a finding of special circumstances. French J specifically rejected that proposition, and said (at 162):
“But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary’s discretion.
On this point and as a matter of construing this section by reference to the ordinary meaning of its words, the Secretary’s submission that there cannot be special circumstances for the purposes of s 1237AAD(b) unless there is also financial hardship is not accepted.”
Factual Background
The Applicant was born in 1950 and is currently 66 years of age. For most of her life the Applicant lived in New South Wales. She did not move to Queensland with her husband until 1991.
The Applicant was partnered with her second husband for 37 years, and for the last 29 years they were a married couple. The deceased husband was fifteen years older than the Applicant and in the last years of their marriage was in very bad health.
In 2000 when the Applicant’s husband turned 65 years of age he began receiving the age pension. As the husband’s health declined, the Applicant progressively had to spend more time attending to him. In approximately 2006/2007 the Applicant began receiving the carer allowance.
The Tribunal was provided a copy of a letter from Dr Robert Labrom, Associate Professor, Spinal Surgeon dated 2 May 2017 – Exhibit 3.
Dr Labrom provided this background to the Applicant’s current medical condition:
“…her husband John, sadly passed away on the 2nd May 2011. He had cancer and he was managed here at the Wesley Hospital as well as nursed by herself for 7 years and his passing has been a very significant emotional tragedy for Mrs Atkinson. The nursing took a physical toll on Michele as well as an emotional one with her experiencing several nasty falls whilst aiding John in his mobility. She was his primary carer and responsible for his care as well as the continued care and upkeep of the family home including all maintenance and household tasks and lifting.
Moreover, I note that Mrs Atkinson has also suffered amounts of depression during this time and she has also taken anti-depression medication as well as sleeping tablets. She felt with regards her mental health, in combination with the pain suffered from her back condition that her life was really in a very difficult place and thankfully, this recent surgery has improved her physical condition immensely. She is still recovering emotionally and psychologically from her husband’s passing.”
Dr Labrom referred to recent surgery performed on the Applicant. He discusses this surgery below:
“This lady suffered severe amounts of back pain secondary to a very large scoliosis that measured over 30o convex to the left between T11 and L3. There was a curvature above this in her thoracic spine and ultimately, despite non-surgical management she has undergone recent surgery at the Wesley Hospital in Brisbane on the 20th March 2017 to include a posterior scoliosis correction between T4 and L4 using a posterior pedicle screw and rod construct. This major surgery has proceeded well or be it Michele still recovers and the pain and rehabilitation process remains significant.”
The Tribunal was also provided a photograph of the Applicant’s back following her operation. The photograph discloses a long post-operation scar which proceeds from her upper back down her spine to the bottom of her lower back. The photograph suggests, as Dr Labrom states, that the Applicant underwent major surgery.
The Applicant, when giving evidence, described having “panic attacks” when she had to fill out Centrelink forms and needing the service of professional advisors in completing Centrelink documentation. The Tribunal observed the Applicant to be an extremely nervous witness who found it very difficult, at times, to process information and understand questions. She would give impulsive answers that sometimes were unhelpful to her case and was somewhat contradictory. Throughout the Tribunal formed the view that she was a truthful witness, but seemed overcome by the proceedings and generally appeared on edge and emotional.
This then leads to the critical issue of the completion of the Applicant’s widow allowance claim form.
Both Mr Walker and the Applicant gave oral evidence at the hearing of 8 September 2017. Both testified that the claim form was not completed by the Applicant. The Applicant utilised the services of RSM Financial Services Australia Pty Ltd (RSM), which firm has offices in New South Wales and the ACT.
As previously noted, the Applicant and her late husband only came to Brisbane in 1991. Prior to that time they lived in New South Wales, and Goulburn, in particular, until 1986.
The widow allowance application form was completed by a RSM employee in Goulburn, a Ms Jan Hall. The Applicant testified that Ms Hall is an accountant who telephoned the Applicant and asked her a combination of specific and general questions. It was as a result of the information given during these telephone discussions that Ms Hall completed the form on behalf of the Applicant. The only independent action of the Applicant was the final signing of the document.
During cross-examination the Applicant testified that the completed form was returned to her prior to lodgement, she looked at it but did not read every page. The Applicant testified that she paid for this service and relied on the professionalism and knowledge of her financial advisors to complete the form correctly. She also testified that she honestly believed that the form was correct and after signing it, posted it to Centrelink.
Having closely observed the Applicant give evidence, particularly during cross-examination by Mr Kyranis, the Tribunal formed a positive view of the truthfulness of the Applicant’s testimony. As with Member McKelvey at AAT1 (Exhibit 1 T3 p.11 para 27), the Tribunal does not doubt that the Applicant was a truthful witness.
It is also the case that the wording of Question 94 is very precise:
“Do you receive income from any income stream products?”
The question is not, do you now, or will you, receive income from any income stream products. It is a specific time-based question, and the negative response in the Applicant’s claim form was technically correct.
Looked at from this perspective, a readily explicable but extremely unfortunate scenario becomes clear.
The widow allowance is a relatively rare form of social security payment. It was inserted into the Act in 1994 as a stop-gap measure. The policy underpinning social security administration for some decades now has been to eliminate payments based on dependence on another person and to give sole primacy to an individual’s personal need. Nonetheless due recognition was given to women who had lived in an era when it was not expected that they would work after getting married and who, on the death of their partner, had no recent workforce experience. In keeping with the transitional nature of the widow allowance, no woman has been granted the allowance on or after 1 July 2005 unless she was born before 1 July 1955.
When Ms Hall completed the widow allowance claim form she attached all of the relevant financial information. Included in that information was detailed and readily understandable information about the Applicant’s superannuation portfolio. No doubt, from the viewpoint of Ms Hall, Centrelink had been put on notice about the Applicant’s financial state of affairs. Further, it is not clear if Ms Hall, or indeed RSM, were experts in this area of social security administration. All that is clear is that the Applicant was then in a state of emotional and physical turmoil and was totally reliant on RSM and its employees to give her the appropriate and correct advice. Which advice she followed without question.
There have been suggestions that there was ongoing fault on the part of staff of the Inala Centrelink Office. The evidence before the Tribunal discloses, with the exception of the perusal of the original claim form, no such fault. Any suggestion that Centrelink staff, whether at Inala or elsewhere when contacted by telephone, were anything other than professional and helpful is not borne out by the evidence.
Knowingly making a false statement or representation
The first issue is whether the Applicant is precluded from the operation of the special circumstances provision because she knowingly made a false statement or representation. Guidance is helpfully provided by French J in Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287; 31 AAR 529 (at 534):
“…want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses described simply because there are in existence objective facts which would raise a belief or a doubt or suspicion of non-entitlement in the mind of some imaginary recipient.”
It has not been contended that the Applicant knowingly made a false statement or representation and there is no evidence that she did so.
The answer to Question 94 was technically correct, and even if it were incorrect, there is absolutely no evidence that the Applicant had knowledge of its inaccuracy or should have known that it was inaccurate. The Applicant relied on the advice of her professional advisors, and those advisors were diligent in providing Centrelink with all available financial information.
Nor is there any suggestion that the Applicant deliberately made any false statements to Centrelink in the 2011 – 2015 period. The evidence indicates that the Applicant received on three occasions in the 2012 – 2013 period correspondence from Centrelink which perhaps should have alerted her that there was an issue with her widow allowance. However, the Applicant was in a state of physical and mental decline and the evidence strongly suggests that any omission to take action during this period was the product of her severe malaise.
Are there special circumstances?
The Tribunal has concluded that there are special circumstances in this case. The special circumstances can be grouped under three broad headings:
(a)administrative error by Centrelink;
(b)reliance on the advice and actions of professional advisors; and
(c)the ill-health of the Applicant.
Administrative error
As described above, Centrelink was informed of the Applicant’s superannuation situation from the outset. This was not a matter where Centrelink had to make its own inquiries, or was provided with either partial information or potentially misleading information. On the contrary, there was full disclosure. Centrelink was put on notice that even if the Applicant was not receiving an income stream at the time the claim was made, she would be receiving one in due course and was given the exact amount of money that would comprise that income stream.
Despite being provided with this information, Centrelink either ignored it or determined to take no further action. It was only when the Applicant transitioned from the widow allowance to the age pension that Centrelink acted. In short there was a gap between 2011 and 2015 when Centrelink, though apprised of the Applicant’s superannuation situation, remained inert.
There are numerous Tribunal determinations where special circumstances have been found to exist because, inter alia, there has been administrative error by Commonwealth officers: Brown and Secretary, Department of Family and Community Services [1999] AATA 113, Castle and Secretary, Department of Employment, Training and Youth Affairs [1999] AATA 176 and Reardon and Secretary, Department of Family and Community Services [2002] AATA 33. In each of these determinations administrative error was one of a number of factors that were taken into account. Administrative error alone can constitute special circumstances, but in such an instance there must be something in the administrative error which will involve unfairness or hardship to the recipient if repayment is required: Tubic and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 13.
In this matter the administrative error described above and blamelessness of the Applicant although not sufficient by itself to establish the existence of special circumstances, nonetheless is a matter that should be taken into account – Cone and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 245.
Reliance on professional advisors
The undisputed evidence is that the Applicant has relied throughout on the advice of her accountants and financial advisors. The extent of that reliance became clear when the Applicant testified at the hearing. The Applicant presented as a mature lady who, following the death of her husband, was overwhelmed by the circumstances that confronted her. She sought, and acted on, the advice given by RSM.
The extent of her reliance was near to total. She testified that she suffered panic attacks in dealing with Centrelink and filling out forms. The application form for the widow allowance was physically completed on her behalf. All of the financial information attached to the form was prepared by RSM. Apart from receiving a telephone call from an RSM employee in Goulburn and providing her with answers to questions about the application form, the only independent action undertaken by the Applicant was signing the completed form.
There are numerous Tribunal determinations where special circumstances have been found to exist where an applicant has acted on the advice of professional advisors to their ultimate detriment: Smart and Secretary, Department of Family and Community Services (2003) 79 ALD 586 and Lucey and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 485.
In this instance it could not be said that the financial advisor failed as in Lucey where Centrelink was given incorrect income details. Rather, the professional advice was less than optimal in that the Applicant was not apprised that although technically she was able to apply and receive the widow allowance, this was a temporary state of affairs. The Tribunal has found in the past that where a person (or persons) has relied absolutely on professional advice about their eligibility for social security payments, which advice leads them into a situation of overpayment, this is an appropriate matter to weigh in determining whether special circumstances exist: Archer and Secretary, Department of Social Services [2016] AATA 948.
One important qualification must, however, be made. It is usually the case that when reliance on professional advisors is factored in, the particular circumstances of the applicant are critical. In short, it is usually the case that the recipient of the advice is in a position of disadvantage which leads them to uncritically accept the advice.
In Lucey the applicant and her husband lived on a remote location and had difficulties communicating. In Smart there was an age pensioner couple who had no secondary education and relied totally on their professional advisers in both business and personal dealings. In Archer the couple were aged and in bad health.
Here, the Applicant was emotionally and physically ill and incapable of managing her financial affairs without professional advice.
Ill health of the Applicant
The evidence before the Tribunal is that the Applicant was suffering from both physical and psychological ailments before and after the death of her husband. At the time she made application for the widow allowance in 2011 she was at a particularly low ebb. She was in a depressed state and suffering from panic attacks and was incapable of proactively managing her financial affairs.
The evidence suggests that in 2011 and for a long period of time thereafter she was incapable of attending to her own affairs with any degree of competence. This has been found to be a matter that should be factored in when determining whether special circumstances exist: Woodward and Secretary, Department of Family and Community Services [2001] AATA 818.
There are numerous Tribunal determinations where an applicant’s physical or mental illness has, with other matters, led to a finding of special circumstances: De Neumann and Secretary, Department of Social Security [1996] AATA 351; Secretary, Department of Social Security and Winters [1997] AATA 594; Dean and Secretary of Education, Employment and Youth Affairs [2005] AATA 586 and DeLuca and Secretary, Department of Education, Science and Training [2007] AATA 1925. In particular, where a person is in emotional distress and suffering from depression which negatively impacts on their capacity to manage their affairs, successive Tribunal determinations have found that this can be a critical factor in weighing the existence of special circumstances.
Waiver or write off
The final issue to be determined is whether it is more appropriate to waive rather than to write off the debt.
This issue was not addressed in either written or oral submissions. The proper interpretation of s 1237AAD(c) was given by French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 at 163-164.
There are potentially two issues in determining how to exercise this residual discretion.
The first is whether the public interest in recovering debts properly raised is greater than the special circumstances disclosed. The second is whether the Applicant is, or will be, in a sufficiently sound financial position such that the debts owed can be repaid.
While the second issue is made out, the first and fundamental issue has not. The particular special circumstances raised in this matter render it appropriate to exercise waiver. The Applicant is a sick and vulnerable person whose conduct has been blameless and whose medical circumstances require resolution rather than the continuation of uncertainty which write-off necessarily entails.
CONCLUSION
The Tribunal having found special circumstances exist, has to determine the proper exercise of the discretion granted by s 1237AAD. In so doing, the Tribunal is required to balance two competing matters. First, there is the overriding principle that persons who have been overpaid social security should not, as a general principle, be allowed to retain moneys they are not entitled to. On the other hand, as French J highlighted in Hales (at 155), s 1237AAD (and other related provisions) were inserted into the Act to ensure a rigid application of the debt recovery regime does not result in unfair or harsh outcomes.
There is, as French J observed, an inherent tension in balancing these competing policy objectives.
In this matter it is not disputed that the Applicant was overpaid and that the overpayment is a debt owed to the Commonwealth. The question now, having determined that special circumstances exist, is to determine whether all or part of the debt should be waived.
In this matter there is a degree of fault by both the Respondent and the Applicant’s financial advisers. In these circumstances waiving all of the debt would not be appropriate. Further, as the Applicant is not in financial distress, issues of financial hardship are not relevant.
In the circumstances it would be fair and appropriate to waive 80% of the $57,804.13 owed to the Commonwealth by the Applicant. This would equate to a debt of approximately $11,560. The requirement to repay 20% of the overall debt is chosen as it equates, in the determination of the Tribunal, the extent to which the Applicant, through her advisors, caused the overpayment to occur and then continue.
DECISION
The Tribunal:
(a)sets aside the matter under review;
(b)waives 80% of the debt of $57,804.13; and
(c)remits the matter to the Respondent to recalculate the debt payable by the Applicant in accordance with this decision.
I certify that the preceding 117 (one hundred and seventeen) paragraphs are a true copy of the reasons for the decision herein of Senior Member J Sosso
.....................[Sgd]...................................................
Associate
Dated: 26 October 2017
Date of hearing: 8 September 2017 Advocate for the Applicant: Mr Lindsay Walker
RSM Financial Services AustraliaAdvocate for the Respondent: Ms Jacky Vetter Solicitors for the Respondent: Sparke Helmore Lawyers
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