Bazley and Department of Family and Community Services - [2002] AATA 593

DECISION AND REASONS FOR DECISION [2002] AATA 593

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2002/32

GENERAL ADMINISTRATIVE DIVISION       )
           Re      JENNIFER BAZLEY
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date19 July 2002
PlaceBrisbane (heard in Bundaberg)

Decision      The Tribunal sets aside the decision under review and substitutes its decision to waive the debt of $1,957.03.
  ...................(Sgd)..................
  Ms J Cowdroy
  Member
CATCHWORDS
SOCIAL SECURITY - carers pension – overpayment – whether debt arose solely from administrative error – whether debt should be waived

Social Security Act 1991

Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212

REASONS FOR DECISION

19 July 2002 Ms J Cowdroy, Member

Hearing

This matter was heard in Bundaberg on 8 May 2002. The applicant's husband, Mr K Bazley, gave evidence and made submissions on behalf of his wife.
Mr T Ffrench, Departmental Advocate, appeared for the respondent.
The "T" Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were admitted into evidence as Exhibit 1 and other documents were admitted as Exhibits 2 and 3.

Background to the Application

The applicant claimed for Carer Pension on 19 November 1998 (T4) in respect of the care of Mrs Eileen Bazley, which was granted on 26 February 1999.
On 3 April 2001 a decision was made to raise and recover an overpayment of Carer Pension of $1,985.66 for the period 26 November 1998 to 27 February 2001. This was said to be a debt due to the Commonwealth and there were no circumstances that could warrant the waiver of part or the whole of the debt. Upon review, an Authorised Review Officer affirmed the original decision (T60). The debt had since been recalculated at $1,957.03. At issue is whether recovery of the debt, in whole or in part, should be waived.

Evidence before the Tribunal

Mr Bazley: Mr Bazley indicated he has authority to give evidence on his wife's behalf and to make submissions in support of her case. The amount of the debt was not disputed, although comment was made that calculations of the debt had been requested from Centrelink on various occasions.
In the Pension Claim (T4), the applicant indicated she was a primary producer and that she has also done "other work". This indicated to Centrelink, at the outset, that she was deriving income from employment. Also submitted with the claim were financial statements for the year ended 30 June 1998, which are date-stamped as having been received by a Centrelink Information Officer at Monto on 17 November 1998 (Exhibit 2). They include an Adjustment Sheet which shows an amount of $8,845 for salary/wages in respect of Mrs Bazley.
On 11 May 2000, Centrelink at Bundaberg was provided with financial statements for the year ended 30 June 1999 and a figure of $12,181 in respect of salary/wages for JM Bazley is disclosed (T25/82).
On 22 December 2000 in an Income and Assets Review document, the applicant indicated a gross amount from employment of $220 a week with a gross amount received for the past year of $16,000 (T34).
In a letter addressed to Centrelink, Bundaberg, dated 16 January 2001, Mr Bazley referred to his wife's part-time employment over the previous 2½ years (E3).
Consequently, he found it difficult to reconcile the Department's contention that the debt arose due to a failure to declare earnings, in particular, the statement "no earnings declared until 29/1/01" (T48/162).
In Mr Bazley's view, the debt arose solely from administrative error. On many occasions when he was asked to provide information to Centrelink, he had sought advice from Paul Webber or Paul Martin by telephone. The claim for Carer Pension was initially rejected on the basis that the assets exceeded the permissible level and he spoke to Paul Martin who suggested he obtain a recalculation and resubmit the claim, which he did. When he received the letter advising of the granting of Carer's Pension, there was nothing in it that suggested to him that the Department was recording incorrect information. He pointed out that the assets and income on that form did not reveal the basis of the calculations used in arriving at those figures.
In respect of the calculations used to determine the debt, he had requested information on this aspect so he was not in a position to determine whether they were correct. Although he had been advised of the figures used, he was still not sure how they were derived.
Mr Bazley said his wife received letters requesting her to advise Centrelink if her income changed. The income derived from the farm changed from week to week and upon making enquiries with a Centrelink officer, Mr Bazley was advised that all he needed to do was forward tax returns, which he did.
Mr Bazley referred to the tax returns for the year ended 30 June 1999 which show a taxable income of $1,122 and $13,756 for himself and his wife respectively.
The income shown on the letter granting pension mentioned a total income of $14,004.68 (T13). This was made up of $22.68 Deemed Investments and $13,982.00 for Real Estate/Business. This did not seem out of kilter with the facts. He felt he was complying with his obligations, not knowing that Centrelink was calculating income from a different perspective. The Adjustment Sheet for the year ended 30 June 1999 revealed a taxable income of $1,122 for him and $13,756 for Mrs Bazley, which included her earnings.
Upon cross-examination, Mr Bazley agreed that the reference at T13 to combined yearly income referred to an amount of $13,982 for real estate/business. After receiving a letter (T15) in respect to the need to advise of income changes, he had a discussion with Mr Martin. He acknowledged that that discussion resolved primarily around fluctuating farm income. Discussion did not cover specifically about his wife's income, although he had previously told Mr Martin that his wife worked. He was unsure whether he specifically indicated that Mrs Bazley had employment outside the farm. He agreed that his wife's income derived from employment at Ridge Haven Retirement Complex varied.
It was not until 24 May 2001 that the basis of the calculations on the income and asset statement was received, which was three months after the period of the overpayment. It was then explained to him that he needed to send in information about the applicant's earnings on a fortnightly basis. It was then he realised that income earned by Mrs Bazley as a salary earner was not being taken into account as it was earned and therefore it was treated differently from the income from that of a primary producer.
Submissions
The Respondent: When the initial claim was lodged, no specific information was sought from Mrs Bazley about her employment. The applicant's response by ticking the appropriate box indicating she was a wage/salary earner should have triggered further investigation by Centrelink. No doubt Centrelink focused primarily on the income from primary producing and in the initial stages, emphasis was on the asset level. It was acknowledged that that was an error on the part of Centrelink.
The adjustment sheet provided by the applicant clearly relates to partnership income. It is not usual accounting practice to include income from employment in a partnership tax return. The fact that no queries were made by Centrelink suggests that the income was regarded as partnership or business income. The financial statements were ambiguously structured, particularly so when salary and wages had nothing to do with the partnership, which was a primary producing concern. The reason for the debt occurring is that employment income was not recorded or declared. The letter of grant made it clear that the assessment for eligibility was based on income and assets.
It was contended that the debt was correctly calculated. Since the debt is one that is due to the Commonwealth, it can only be waived if it was caused solely by administrative error. This is not the case in the present circumstances, as the applicant had contributed to the overpayment by her failure to advise that her income was not being taken into account in the appropriate manner.
If, for example, the applicant had queried the assessment of income before the payment of carer allowance commenced, and had specifically advised that the assessment made no mention of salary or wages, most likely no debt might have been incurred.
Centrelink required specific information about current income, and by supplying tax returns, the information provided only related to the year prior to the application for carer payment being made. Even when details of Mrs Bazley's income were provided (T34), the information provided did not reflect the reality of the situation, as Mrs Bazley's income varied from week to week and there was no clear pattern of earnings.
The respondent contended that there were no special circumstances which would warrant a decision to waiver all or part of the debt and contended that the decision under review should be affirmed.
The Applicant: The applicant relied on the evidence of her husband and the documents before the Tribunal. It was disputed that the financial statements were obscure and pointed out that the information provided to him by Centrelink utilised terms such as "leased investments". He had no idea what this was referrable to, nor did he know what Centrelink had in mind when they referred to "real estate". He had never been made aware of how Centrelink calculated income for the purposes of assessing eligibility for carer pension, so he had no way of knowing that it was not aware of his wife's earnings. He acknowledged that if the form had stated: "salary/wages – nil" then he was likely to have been alerted to the fact that an error had been made.
The Legislation and its Application
Section 1223(1) of the Social Security Act 1991 (as it then was), states that if an amount has been paid to a person after 1 October 1997 and the amount was not payable to the recipient, then the amount so paid in a debt due to the Commonwealth.
The respondent had provided a calculation of the debt and whilst the applicant expressed some confusion about the basis of the calculation, I am satisfied that a debt has arisen on the basis that the earnings from Mrs Bazley's employment at Ridgehaven Retirement Complex and Queensland Health were not taken into account when assessing her entitlement to carers pension. The debt has been fully recovered.
In respect to waiver, section 1237A relevantly states:
"(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.
(1A) Subsection (1) only applies if:
(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks fromt eh end of the notification period;
whichever is the later."
I find that there was administrative error on the part of the respondent in not investigating the applicant's indication on the claim that she was doing "other work". The respondent contends that the applicant's failure to respond to a notice issued to her on 26 February 1999 contributed to the eventual overpayment. It was said, that applying the principles enunciated in Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212, that the applicant's inaction is "an error which is independent of the Commonwealth's administrative error" and consequently the error is not one caused solely by the respondent
However, the evidence before me is that there was no inactivity on the applicant's part. Mr Bazley received notification that the combined income being assessed was $14,004.68. That notification is dated 26 February 1999, some four months before the end of that financial year. He had no reason to believe that this figure was inaccurate and, indeed, his income returns for he and his wife for that financial year disclose a combined income of $14,878. It is therefore not surprising that he believed that his wife's income was being taken into account, despite the fact that he could not fathom how the amount was calculated.
At the time the amount of $14,004.68 was calculated, Centrelink had been in receipt of the 1998 tax returns since the prior November. How the amount described by Centrelink as "Real Estate/Business - $13,982.00" was arrived at was not disclosed during the course of the hearing, however it is not referable to the taxable income of Mr and Mrs Bazley for the 1998 financial year.
I accept Mr Bazley's evidence that he made enquiries when the assets level was too high and that when he sought information about how to advise about his wife's income he was told that if he sent in the financial returns, which would be acceptable. It has been suggested that the description of income as "real estate/business" should have alerted the applicant or Mr Bazley, however I am not persuaded that the advice was sufficiently precise to indicate that the Department had no knowledge that income was being derived from paid employment.
In my view, there was no error on the applicant's part. He had made enquiries and had satisfied himself that his obligations were being fulfilled. That was a reasonable belief on his part. The letter of 19 April 2000 addressed to the applicant (T23), referring again to $14,008.46, made no mention of its source.
On 11 May 2000 the respondent received the financial statements for the year ended 30 June 1999, in which $12,181 is disclosed as emanating from wages earned by Mrs Bazley. Following the receipt of those statements, a letter was sent advising of combined annual income of $13,236.46 as being used to assess entitlement to carer pension (T28). Again, considering the taxable income declared on the financial statements, the applicant had no reason to believe that income from employment was being treated as farm income. In that letter, no reference is made to real estate/business income. It simply appears as "combined income" with no reference to its source.
I find the Department was furnished with information which it had an obligation to examine and if necessary, clarify, in order for it to make a finding as the applicant's entitlement to carer pension, yet it failed to do so. Again, on 16 January 2001, the applicant conveyed advice that his wife had been working 18-20 hours for the past 2½ years. He even refers to that employment being "off farm" and still no action was taken by Centrelink.
Later the income and assets review form on 20 December 2000 declares earnings of $16,000 for the past 12 months and current earnings of $220 per week and this still does not produce any action on the part of Centrelink.
In fact, it was not until data matching in February 2001 that Centrelink finally recognised that Mrs Bazley was employed.
To summarise, I find that on numerous occasions Mrs Bazley indicated to Centrelink that she was in paid employment. I do not accept that the financial statements are so obscure that they were unable to be interpreted by a person who is competent in understanding financial statements. If there was any uncertainty, then Centrelink had a duty to clarify that uncertainty.
Leaving that aside, the clear unambiguous information conveyed by Mrs Bazley on: (i) her initial claim, (ii) the advice on 20 December 2000 and on (iii) 16 January 2001, was ignored by Centrelink. To say that the applicant had a part in the overpayment on the basis of his failing to recognise that Centrelink did not include any income earned from his wife is untenable. This is particularly so given that he had had various conversations with Centrelink officers, who, whenever he raised the issue of income, advised him to provide the Department with his tax returns.
The amount earned by Mrs Bazley in the period was $36,754.55. It is not the case that Mrs Bazley failed to disclose that sum. It is the case that the Department had the information at their disposal if they had elected to read it and act on it.
I find that the overpayment was caused solely by administrative error on the part of the respondent and that to hold Mrs Bazley responsible for the debt, or any part of it, on the basis of his failure to recognise that an isolated mention of real estate/business income meant that his wife's income was unnoticed, is unjustified.
In regard to the issue of good faith, there is no contention that Mrs Bazley did not receive carer pension during the relevant period in good faith and I therefore find that section 1237A is met. Consequently the debt is to be waived in its entirety.
I might add that even if I was not reasonably satisfied that section 1237A was met, I would find special circumstances exist on the basis that:

The applicant made continuous enquiries about the way the income and that of his wife was to be assessed.
He was told to provide taxation returns, which he did.
He provided information about his wife's earnings on four occasions, which the Department either misinterpreted or ignored.
Even the clearest advice that Mrs Bazley was in paid employment (see paragraph 7 above) was ignored and no action was taken.
The Department therefore caused the commencement of the debt and despite obvious opportunities to ensure that Mrs Bazley's entitlement was being correctly calculated, it failed to act. By its inactivity, it perpetuated the error.

The decision under review is set aside and in its place is substituted the decision of the Tribunal that the debt of $1,957.03 is to be waived.
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdory, Member
Signed:         Sarah Oliver
  Associate
Date of Hearing   8 May 2002 (at Bundaberg)
Date of Decision   19 July 2002
The Applicant Appeared in Person and was Represented by her Husband
Solicitor for the Respondent    Mr T Ffrench, Departmental Advocate