Bilgin; Secretary, Department of Employment and Workplace Relations and
[2007] AATA 1167
•23 March 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1167
ADMINISTRATIVE APPEALS TRIBUNAL )
) N°V 200600714
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY,
DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONSApplicant
And
DENIZ BILGIN
Respondent
DECISION
Tribunal Dr Gordon Hughes, Member Date23 March 2007
PlaceMelbourne
Decision The Tribunal sets aside the decision of the Social Security Appeals Tribunal made on 12 July 2006 and reinstates the Centrelink decision dated 13 February 2006.
(sgd) Gordon Hughes
Member
SOCIAL SECURITY - Overpayment of parenting payment – recipient contributed to error by providing inaccurate information – Centrelink nevertheless provided with correct documentary information – whether recipient entitled to waiver on the grounds of administrative error – whether recipient entitled to relief on the grounds of special circumstances – whether recipient suffering severe financial hardship
Social Security Act 1991 (Cth) section 1068A, 1223(1), 1237A, 1237AAD
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Beadle v Director-General of Social Security (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 60 ALR 225
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Lumsden v Secretary Department of Social Security (1986) 10 ALN N225
Re Head and Department of Family and Community Services [2000] AATA 530
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Secretary, Department of Employment, Education, Training and Youth Affairs v Prince (1997) 152 ALR 127
REASONS FOR DECISION
23 March 2007 Dr Gordon Hughes, Member 1. This application was heard on 1 March 2007. Mr Andrew Carson, a Centrelink advocate, appeared for the Applicant. Centrelink is the service delivery agency for the Secretary to the Department of Employment and Workplace Relations (the Applicant). The Respondent, assisted by her husband, appeared on her own behalf. The Respondent now uses her married surname, Yilmaz.
2. On 13 February 2006 a Centrelink officer made a decision to raise and recover a debt of $6,880.75 in respect of parenting payments made to the Respondent between 27 April 2001 and 25 August 2005, to which the Respondent was not entitled. The Respondent sought an internal review of the decision. On 25 May 2006 a Centrelink Authorised Review Officer (ARO) affirmed the decision. The Respondent sought review of the decision by the Social Security Appeals Tribunal (SSAT). On 12 July 2006 the SSAT set aside the decision by the ARO and remitted the matter to the Chief Executive Officer of Centrelink for reconsideration in accordance with the following directions:
·the debt amount for the period 19 September 2001 to 7 September 2003 is to be waived pursuant to section 1237AAD of the Social Security Act 1991 (the Act); and
·the remaining debt amount is recoverable.
3. The Applicant contends that, in making the above decision, the SSAT erred in finding that the circumstances of the case warranted the exercise of discretion to waive part of the debt under section 1237AAD of the Act.
4. The following facts, as set out in the Applicant's Statement of Facts and Contentions, were not in dispute:
3.1 Ms Bilgin commenced receiving parenting payment as from 17 December 1998.
3.2 Ms Bilgin was sent by Centrelink a letter dated 20 February 2001, requiring her to advise Centrelink within 14 days if she started work or recommenced work or her income increased.
3.3 On 20 February 2001 Ms Bilgin notified Centrelink by telephone that she had ceased employment with Kanelia Aged Care on 17 February 2001 but had commenced in a new position.
3.4 On 3 May 2001 Ms Bilgin commenced work with Dalton Village Medical Centre.
3.5 On 8 June 2001, Ms Bilgin advised Centrelink by telephone that she had commenced employment "around a month ago". She was invited to update her income but she asked that the update wait until the 3-monthly review is completed.
3.6 Ms Bilgin advised Centrelink by telephone on 30 July 2001 of her earnings but declared her net income.
3.7 Ms Bilgin submitted various 12-weekly review forms thereafter, but declaring her net income rather than her gross income as required in the form. She is recorded as also submitting pay slips with the form on 3 occasions, the dates of receipt being 19 September 2001, 5 March 2002 and 8 May 2003.
3.8 On 21 November 2003 Ms Bilgin informed Centrelink that her employment with Dalton Village Medial Centre had ceased and that she last worked on 13 November 2003 and that she had regular earnings of $824.00 per fortnight gross until that date. The Employer Report records show two gross fortnightly payments through to the 14 November 2003 of $504 (a total of $1,008) and two net payments of $412 (a total of $824 net). A further amount is shown paid to Ms Bilgin for the fortnight ending 21 November 2003.
3.9 Ms Bilgin was sent a letter dated 21 November 2003 requiring her to advise Centrelink within 14 days if she started work or commenced work or her income increased.
3.10 On 25 March 2004 Ms Bilgin advised Centrelink that she had commenced work with Settlement Road Medial Clinic. The Employer's Report indicated that she commenced this employment on 11 December 2004 and continued until August 2005.
3.11 Centrelink received employment and income details from the Settlement Road Clinic in respect to Ms Bilgin's employment from 11 December 2004 to 14 June 2005.
3.12 On 18 November 2005 Centrelink received employment and income details from Dalton Village Medical Centre (Anatolia Medical Enterprises).
3.13 Further documentation from Dalton Village Medical Centre set out wages paid to Ms Bilgin from 1 July 2002 to 30 June 2003 and from 11 July 2003 to 21 November 2003.
3.14 Ms Bilgin's verified earnings have then been proportioned by Centrelink according to the Centrelink pay periods, showing that the total declared income as $73,388.95 during the overall period from April 2001 to August 2005 whereas the actual income was $89,159.73.
3.15 As a consequence of the data matching process a Centrelink officer determined that Ms Bilgin had been overpaid $6880.75 during the period 27 April 2001 to 25 August 2005 and a debt for this amount was raised on 14 February 2006 under subsection 1223(1) of the Social Security (Administration) Act 1991.
3.16 On 25 May 2006, an authorised review officer affirmed the decision to raise and recover a debt of $6880.75 in parenting payment paid to Ms Bilgin in respect to the period 27 April 2001 to 25 August 2005. The authorised review officer concluded that the debt had arisen because Ms Bilgin had failed to accurately declare her income from employment to Centrelink during the period of the debt, and that there were no grounds on which the debt could be waived.
3.17 On 2 June 2006 Ms Bilgin applied to the Social Security Appeals Tribunal for a review of the authorised review officer's decision, stating that she had "provided payslips and have notified Centrelink with all changes I have made".
5. The essence of the Respondent's submission to the SSAT was that she did not realise she was incorrectly declaring her income. She always attached her payslips to her three-monthly review forms and therefore, if she was declaring her income incorrectly, she was nevertheless providing payslips with the correct information and Centrelink should have detected this. She was under the impression that she had been doing everything correctly and did not understand how Centrelink calculated her parenting payment entitlement.
6. The SSAT concluded that there were no grounds for a waiver of the debt under section 1237A(1) of the Act. Although the overpayment of the Applicant between 17 September 2001 and 8 May 2003 was partly due to an administrative error by the Applicant in failing to verify the Respondent's declared (net) income against the accompanying payslips which would have revealed the correct (gross) income, the Respondent had also contributed to the error by completing the review forms incorrectly in the first place. The SSAT did, however, consider that there were special circumstances for the purposes of s 1237AAD of the Act on the basis that the Applicant's failure to check the payslips and correct the Respondent's error in the early years of the debt period contributed to her ongoing confusion about the amounts she was required to declare. The SSAT considered that it would be unfair or inappropriate to recover from the Respondent any part of the debt which arose during the period when she was supplying payslips, that is, between 19 September 2001 and 7 September 2003. The Applicant contends that the SSAT was in error in relation to the finding of special circumstances for that limited period.
7. Pursuant to section 1223(1) of the Act, the payment of a benefit to a person not entitled to obtain that benefit is a debt to the Commonwealth. The rate of parenting payment (single) is based on a Rate Calculator set out in section 1068A of the Act, and a person's entitlement reduces after taking account of gross income from wages. Before this Tribunal, the Respondent did not dispute that the overpayment was correctly calculated at $6,880.75.
8. The Applicant referred the Tribunal to section 1237A(1) of the Act, which addresses the consequences of payments made as a result of an administrative error:
… 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.
9. Section 1237A(1) is accompanied by the following note:
Note: Subsection (1) does not allow a 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).
10. The Applicant contended that the overpayment was not due solely to an administrative error made by the Commonwealth. The forms the Respondent was required to complete specifically asked for the gross amount of income, yet the Respondent stated her net income. The Tribunal agrees with the Applicant’s contention on this point. Although it is clear that the Applicant made an administrative error in not checking the payslips which accompanied the Respondent's review forms, it is equally clear that the error arose directly from the Applicant's reliance, rightly or wrongly, upon information provided by the Respondent which did not comply with the instructions appearing on the form.
11. The Applicant also disputed that the overpayment had been received by the Respondent in good faith for the purposes of section 1237A(1) of the Act. Good faith requires the recipient to hold an honest belief as to his or her entitlement and to be absent of any knowledge or reason to know of a lack of entitlement: Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424; Secretary, Department of Employment, Education, Training and Youth Affairs v Prince (1997) 152 ALR 127. According to the Applicant, in this case the Respondent knew or had reason to know that the annual income amount stated in her correspondence was less than her actual gross income. Given the Tribunal's finding that the overpayment was not attributable solely to an administrative error made by the Commonwealth, it is unnecessary to decide this point but it is appropriate for the Tribunal to record that it considers the Respondent did, at all times, act in good faith. The Tribunal accepts that she did not understand that she was providing incorrect information to the Applicant and that she did not appreciate that she was being overpaid as a result.
12. The Applicant referred the Tribunal to section 1237AAD of the Act, which provides for the possibility of waiving all or part of the debt on the grounds of special circumstances:
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or false representation; or
(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
13. The Applicant submitted that, in order to be entitled to a waiver under section 1237AAD, the Respondent's individual circumstances would need to be unusual, uncommon or exceptional. Furthermore, there would have to be factors, apart from financial hardship alone, which distinguished the case and set it apart from other similar cases. The Applicant submitted that in order to qualify as special circumstances under section 1237AAD, the Respondent would have to demonstrate that there were unusual, uncommon or exceptional circumstances which were different from the usual run of cases: Re Beadle and Director-General of Social Security (1984) 6 ALD 1. Mr Carson emphasised that for the purposes of paragraph (b) of section 1237AAD, financial hardship alone was expressly excluded from being regarded as special circumstances, while it was implicit that the effects of administrative error should also be disregarded as those consequences were addressed by section 1237A(1). In the Applicant's contention, therefore, the Respondent's circumstances were not sufficiently special to warrant the exercise of discretion under section 1237AAD.
14. The SSAT, in finding that special circumstances existed for the purposes of s 1237AAD, observed as follows:
22. The Tribunal noted that, although no part of the debt was solely due to Centrelink error, such error represented a significant causal factor on those occasions in which payslips were provided. In a sense, Centrelink's failure to check payslips and correct Ms Bilgin's error in the early years of the debt period also contributed to her ongoing confusion about the amount she was required to declare when she commenced notifying her wages fortnightly over the telephone. Taking this into account, the Tribunal concluded that Ms Bilgin's circumstances could be described a special in the sense intended by section 1237AAD, in that it would be unfair on inappropriate to recover from her any part of the debt which arose in that period where she was supplying payslips with her 12 weekly review forms, that is from 19 September 2001 to 7 September 2003. In that period Centrelink had all the information necessary to correctly determine her entitlement, despite Ms Bilgin's error, but did not act with sufficient care and diligence.
23. The Tribunal is mindful that its approach in this case is consistent with that of the Administrative Appeals Tribunal in the decision of Head and Department of Family and Community Services [2000] AATA 530, where an analogous situation arose. In that case, the Administrative Appeals Tribunal also concluded that the debt could not be waived on the basis of administrative error under section 1237A(1) but noted that the Department had properly conceded that its error, in not having regard to payslips, constituted special circumstances such that part of the debt should be waived.
15. In the opinion of this Tribunal, it is difficult to place any reliance upon Re Head and Department of Family and Community Services [2000] AATA 530 in the context of the current matter. In Re Head, the Tribunal was told that in respect of a period of one month (which was a minor part of the period in dispute in that case), the Department had agreed to waive recovery of the debt for that period in acknowledgment of the fact that the Department had made a contributory error. While the Tribunal observed in that case that it agreed with the waiver under those circumstances, it was not necessary for the Tribunal to decide the point.
16. The Tribunal is mindful of the recent decision by Besanko J in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 in which the Federal Court of Australia considered section 1237AAD of the Act and reviewed the relevant authorities, particularly the analyses of the expression unusual, uncommon or exceptional in Re Beadle. His Honour observed:
… the authorities had 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. These words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
17. It is also pertinent to observe that the Full Court of the Federal Court in Beadle v Director-General of Social Security (1985) 60 ALR 225 did not endorse the view expressed by the Tribunal in Re Beadle that circumstances are special only if they are unusual, uncommon or exceptional. In Secretary, Department of Social Security v Hales (1998) 82 FCR 154, French J preferred the view (at 162) that:
…the evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt.
In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J emphasised that the requirement for special circumstances disclosed an intention to proscribe waiver in ordinary cases, being hardship or unfairness sufficient to justify departure from the general rule in the particular case.
18. One cannot help but sympathise with the Respondent in these proceedings. She has, in the Tribunal's view, made an innocent mistake which has been compounded by the Applicant's clerical oversight. Undoubtedly, the requirement to refund the overpaid sum will cause some financial discomfort over a protracted period. The Tribunal is nevertheless of the view that these factors do not constitute special circumstances for the purposes of section 1237AAD of the Act. The Respondent has received benefits to which she is not legally entitled. The SSAT found that special circumstances existed solely on the basis that the Applicant was partly to blame. In the opinion of this Tribunal, this does not amount, in the words of Besanko J in Angelakos, to something that distinguishes the case from the ordinary or usual case. Section 1237A(1) addresses the consequences of benefits which are paid solely as a result of administrative error on the part of the Department. It cannot have been Parliament's intention to nevertheless allow the retention of such benefits, under a different section, in circumstances where the recipient was partly to blame. Viewed in its statutory context, something more must be required.
19. Finally, the Applicant directed the Tribunal's attention to section 1236 of the Act, which provides for the possibility of writing off a debt in certain circumstances, including circumstances involving severe financial hardship to the individual:
1236.(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
1236.(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
1236.(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa)the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt.
1236.(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a)deductions from the debtor's social security payment; or
(b)deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c)setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
20. The Applicant contended that in order to meet the requirement of severe financial hardship under section 1236, the Respondent's entire financial position would need to be materially less than the current rate of pension: Lumsden v Secretary Department of Social Security (1986) 10 ALN N225. In this case, however, the Respondent had already demonstrated her capacity to repay the balance of the parenting payment debt via ongoing withholdings from her fortnightly Centrelink payments and this was not causing her severe financial hardship.
21. The Tribunal agrees with the Applicant that the Respondent is not confronted with severe financial hardship and this contention was not vigorously pursued by the Respondent at the hearing. The Respondent and her husband have a combined net fortnightly income of $1,800. They own a house (albeit with a significant mortgage) and two vehicles and can afford the relative luxuries of mobile telephones and satellite television. The Respondent and her husband are not financially well-off but they are also not confronting severe financial hardship in the context of section 1236.
22. For the above reasons, the Tribunal sets aside the decision of the Social Security Appeals Tribunal made 12 July 2006 and reinstates the Centrelink decision dated 13 February 2006.
I certify that the twenty‑two [22] preceding paragraphs are a true copy of the reasons for the decision herein of
Dr Gordon Hughes, Member
(sgd) Ursula Noyé
Clerk
Date of Hearing 1 March 2007
Date of Decision 23 March 2007
Advocate for the Applicant Self‑represented
Advocate for the Respondent Mr A. Carson, Centrelink Legal Services Branch
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