Blake and Secretary Department of Employment and Workplace Relations

[2007] AATA 1329

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1329

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W200600169

GENERAL ADMINISTRATION  DIVISION		)
Re		TRACY BLAKE

Applicant

And SECRETARY DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr A Sweidan, Senior Member

Date16 May 2007

PlacePerth

Decision The Tribunal affirms the decision under review.

........(Sgd. Mr A Sweidan)...................

Senior Member

CATCHWORDS

Social Security – Parenting Payment – administrative error – whether overpayment received in good faith

LEGISLATION

Social Security Act (1991) s 8, 503, 1068B-A2, 1068B-D1, 23(4A), 1237A(1), 1237AAD, 500, 500D and 5

Social Security (Administration) Act 1999 s 80

Cases

Re Falconer and Secretary Department of Social Security (1996) 41 ALD 187

Secretary, Department of Education, Employment, Training & Youth Affairs v Prince [1997] 1565 FCA

Re Secretary, Department of Family and Community Services and Jonauskas (2001) AATA 72

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

REASONS FOR DECISION

16 May 2007 Mr A Sweidan, Senior Member    

1.      The background, issues and relevant facts as well as the respondent’s contentions are all to be found in the respondent Secretary’s Statement of Facts and Contentions which reads, relevantly as follows:

2.      The decision under review is the Social Security Appeals Tribunal (SSAT) decision of 29 May 2006, which affirmed the decision made by a Centrelink officer on 10 January 2006 to raise and recover a Parenting Payment debt of $2,025.64, from the applicant for the period 1 July 2005 to 31 October 2005.

Issues

3.      Was Mrs Blake overpaid Parenting Payment during the period 1 July 2005 to 31 October 2005?

4.      And if so, is the overpayment a debt to the Commonwealth which should be recovered?

Facts

5.      Mr and Mrs Blake have three dependent children.

6.      Mrs Blake was receiving Parenting Payment (PPP) at the partnered rate.  Her rate was reduced by the income she earned from the Department of Education and Training.

7.      Mr Blake was in receipt of Austudy payments.

8.      Centrelink initiated a review of their income from employment on 28 June 2005.

9.      On 30 June 2005 Mrs Blake advised Centrelink that Mr Blake was earning $42,000 per annum and that she would provide a payslip within 14 days. Mr Blake’s Austudy payments were cancelled from 1 July 2005 because he had ceased full time study.

10.     Mrs Blake telephoned Centrelink on 1 July 05 to update her Family Tax Benefit (FTB) estimate for the 2005/2006 financial year.  Her telephone call was transferred so that she could advise of Mr Blake’s employment income for PPP purposes.  She was advised that her payments of PPP would continue for six fortnights at a nil rate, during which time her payments of FTB would remain the same.  A comment was written on her Centrelink record that the customer service officer ‘had to convince cust [customer] that this is correct, as she insisted that her PPP would CAN [cancel] immediately.’

11.      On 11 July 2005 Mrs Blake advised Centrelink that she had earned $200 in the previous fortnight and that Mr Blake had earned $120 in the fortnight ending 30 June 2005. 

12.     Centrelink sent Mrs Blake a letter on 11 July 2005, which included an Account Statement which:

(a)confirmed the amount of income she had declared between 19 April 2005 and 11 July 2005;

(b)showed that she had been paid Parenting Payment of $290.94 for the period 28 June 2005 to 13 July 2005; and

(c)said that she would be paid $360.30 on 27 July 2005, based on her current income and asset levels.

13.     Mrs Blake advised Centrelink of her and her husband’s income from employment on 25 July 2005, 8 August 2005, 22 August 2005, 5 September 2005, 19 September 2005, 17 October 2005 and 14 November 2005.

14.     Centrelink did not record these wages correctly and so Mrs Blake was paid more than the nil amount she was entitled.

15.     Centrelink sent a letter to Mrs Blake on 4 October 2005 which included an Account Statement for the period 12 July 2005 to 3 October 2005 listing the amounts of Parenting Payment paid to her and the amounts of income she had declared.

16.     On 14 October 2005 and 25 October 2005 Centrelink sent letters to Mrs Blake, informing her of her rate of payment and the amount of income used in calculating it.  The letters required her to tell Centrelink within 14 days if the incomes shown on the letters were incorrect.

17.     Mrs Blake did not query the incomes stated on the letters or the amounts of PPP paid to her.

18.     Mrs Blake was paid various amounts of Parenting Payment each fortnight during the period 1 July 2005 to 31 October 2005.

19.      On 15 November 2005 Centrelink found that Mrs Blake had been overpaid Parenting Payment.

20.     An overpayment of $2,025.64 for the period 1 July 2005 to 31 October 2005 was raised on 10 January 2006.

21.     On 21 March 2006 an Authorised Review Officer (ARO) affirmed the decision that Mrs Blake had been overpaid and that the debt should be recovered.

22.     Mrs Blake applied for a review by the SSAT which affirmed the decision that there was a debt of $2,025.64 to be recovered.  The Tribunal found that the debt had not been caused by sole administrative error, because the amounts of income reported by Mrs Blake did not match the reported income from Mr and Mrs Blake’s payslips.  The Tribunal considered that there were no special circumstances in her case.

23.     Mrs Blake made an application for a review by this Tribunal on 22 June 2006.

Respondent’s Contentions

24.     The legislation relevant to Mrs Blake’s case is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).

25. Provisions relevant to when a person is qualified to receive parenting payment are set out in sections 500, 500D, and 5 of the Act and section 80 of the Administration Act.

26.     It is agreed that Mrs Blake satisfied the qualification criteria to be paid Parenting Payment.

27. Section 8 of the Act contains the following definitions in regard to the income test:

"income", in relation to a person, means:

a.an income amount earned, derived or received by the person for the person's own use or benefit; or

b.a periodical payment by way of gift or allowance; or

c.a periodi cal benefit by way of gift or allowance;

but does not include an amount that is excluded under subsection (4), (5) or (8);

Note 1: See also sections 1074 and 1075 (business income), sections 1076-1084 (deemed income from financial assets), sections 1095 to 1099D (income from income streams), section 1099F (exempt bond amount does not count as income) and section 1099K (refunded amount does not count as income).

Note 2: where a person or a person's partner has disposed of income, the person's income may be taken to include the amount which has been disposed of–see sections 1106-1112.

Note 3: income is equivalent to ordinary income plus maintenance income.

"income amount" means:

a.valuable consideration; or

b.personal earnings; or

c.moneys; or

d.profits;

(whether of a capital nature or not);

"income from personal exertion" means an income amount that is earned, derived or received by a person by way of payment for personal exertion by the person but does not include an income amount received as compensation for the person's inability to earn, derive or receive income through personal exertion;

"ordinary income" means income that is not maintenance income or an exempt lump sum.

28. Section 503 of the Act states that parenting payment for a partnered person is to be calculated according to the rate calculator set out at the end of s1068B of the Act

Calculation of rate of Parenting Payment

29. Section 1068B-A2 provides the steps to determine the rate. Section 1068B-D1 explains that a person or the person’s partner’s income is to be taken into account in working out the effective of income on the maximum payment rate of PP.

30.     If the combined income amount exceeds the ordinary income area amount for the period, the rate of PP will reduce accordingly.

31. Section 500I (1) of the Act states that ‘a parenting payment is not payable to a person if the person’s parenting payment rate would be nil’.

32. Section 23(4A) of the Act provides that a person in receipt of Parenting Payment qualifies for an employment income nil rate period. The duration of this period can be for a maximum of 6 fortnights. The period can be shorter than this if the person’s circumstances change. Chapter 3.1.12 of the Guide to the Social Security Law, the policy manual that accompanies the Social Security Legislation, provides the background and clarification of the application of section 23(4A) of the Act .

33. The effect of section 23(4A) is postpone the reduction in the rate of the person’s FTB Part A, until the end of the employment income nil rate period. Clause 17 of Schedule 1 of the Family Assistance Act 1999, provides that if either partner of a couple are in receipt of a social security pension or benefit, such as Austudy, that partner’s income excess is nil.

Debt

34. The Secretary contends that due to the correct amount of Mr and Mrs Blake’s income not being taken into account during the period 1 July 2005 to 31 October 2005, Mrs Blake was paid $2,025.64 more PPP than she was entitled to receive and therefore has a debt due to the Commonwealth, as per section 1223 of the Social Security Act 1991 (T3: pg. 14].

Non Recovery of Debts

Sole Administrative Error

35. Section 1237A (1) of the Act states that the Secretary must waive the right to recover a debt that ‘is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment’.  The notes in this section also include the provision that ‘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)’.

36.     The Secretary contends that the debt did not arise due to sole administrative error made by the Commonwealth.  Centrelink’s normal course of assessment of income is from information presented by the recipient of a Social Security payment. Mrs Blake did not correctly advise of her and her husband’s employment income.

37.     The debt was initially caused by Mrs Blake advising Centrelink on 11 July 2005 that Mr Blake had employment income of $120 for the fortnight ending 11 July 2005, instead of the $2,571.80 that he actually earned.

38.     The Secretary concedes that in the fortnights following 11 July 2005, until 15 November 2005, Centrelink incorrectly coded Mr Blake’s earnings so that Mrs Blake’s rate of Parenting Payment was not reduced to nil.

39.     However Mrs Blake continued to incorrectly advise of her and her husband’s income, therefore the Secretary contends that neither the whole nor any part of the debt was caused by sole administrative error.

40.     The Secretary understands that Mrs Blake is contending that the inconsistency between her declared income and that denoted on her payslips, is due to Mrs Blake calculating her income from the dates she actually worked during the fortnightly PPP pay period and not by apportioning her wages.

41.     The table over the page denotes Mr and Mrs Blake’s income from employment during the period 1 July 2005 to 31 October 2005 and the amount of income Mrs Blake declared to Centrelink. 

42.     It should be noted that neither Mr nor Mrs Blake’s pay periods correspond to Mrs Blake’s PPP fortnightly pay periods.  Mrs Blake’s payslips contain the dates she actually worked and the amounts she earned.  The dates she actually worked have been used to calculate her earnings for the PPP fortnightly period in the table.

43.     In Mr Blake’s case, his earnings were constant at $1,646.92 per fortnight after his pay period 1 July 2005 to 14 July 2005, so it is only his earnings for the PPP pay period of 28 June 2005 to 11 July 2005 that need to be adjusted  ($3,273.20 div 14 x11 = $2,571.80).

PPP fortnightly period	Mrs Blake’s payslip period	Amount Mrs Blake earned in PPP period	Amount Mrs Blake declared	Amount Mr Blake earned	Amount Mrs Blake declared
28/06/05 - 11/07/05	01/07/05 - 14/01/05	Not provided	.$200	.$2,571.80	.$120
12/07/05- 25/07/05	15/07/05 - 28/07/05	$358.02 + $198.9 = $556.92	.$399.54	.$1,646.92	.$1,200
26/07/05 -8/08/05	29/07/05- 11/08/05	$397.8	.$400	.$1,646.92	.$1,200
9/08/05 - 22/08/05	12/08/05 - $25/08/05	$119.34	.$100	.$1,646.92	.$1,200
23/08/05 -5/0905	26/08/05 - 8/09/05	$386.26 + $119.34 = $505.6	.$400	.$1,646.92	.$1,200
6/09/05 - 19/0905	9/09/05 - 22/09/05	$238.68 + $358.02 = $596.7	.$400	.$1,646.92	.$1,200
20/09/05 -3/10/05	23/09/05 - 6/10/05	$477.36	.$300	.$1,646.92	.$1,200
4/10/05 - 17/10/05	7/10/05 - 20/10/05	$119.34	.$110	.$1,646.92	.$1,200
18/10/05- 31/10/05	4/11/05 - 17/11/05	Not provided	.$290	.$1,646.92	.$1,200

44.     The table demonstrates that from 1 July 2005, Mrs Blake did not correctly advise of either her or her husband’s income from employment. 

45. Consequently the Secretary submits that the debt cannot be waived as per section 1237A (1) of the Act, as the debt was not caused by sole administrative error.

Good Faith

46.     The question of "good faith" has been considered by the Federal Court in several matters.

47.     In the case of Re Falconerand Secretary Department of Social Security (1996) 41 ALD 187 it was found that if a person knows he is not entitled to the payment, then it cannot be said he received the payment in good faith. Indeed, a person can even be unaware that payments have been made to them and can still be said, under the Act, not to have received payments in good faith.

48.     In the case of Secretary, Department of Education, Employment, Training & Youth Affairs v Prince [1997] 1565 FCA a student had been unaware that payments had continued after he had cancelled his entitlement. When the student eventually found out he was still receiving payments into his bank account he had to request payments to cease on repeated occasions before the payments stopped.

49. The Federal Court in that case held that the money was not received in good faith in those circumstances, even for the period before the student became aware he was receiving them, because he knew he had no entitlement to them. Therefore the term “good faith” in the Act does not denote any dishonesty of the recipient.

50.     In the case of Re Secretary, Department of Family and Community Services and Jonauskas (2001) AATA 72 Mr. Jonauskas did not know that there could be an error in the amount of Age Pension that he was paid because he did not read the back of the letter requiring him to notify the Department if there was an error in his combined income.Not knowing was not sufficient for the Tribunal to find that Mr. Jonauskas received the payment in good faith, as he had reason to know that there might be an error and that reason was in the letter

51.     When Mrs Blake initially spoke with Centrelink Callcentre Illawarra on 1 July 2005, she was advised that her PPP payments would not immediately cancel, but would continue for a further six fortnights paid at a nil rate.

52.     Centrelink sent letters to Mrs Blake on 11 July 2005, 4 October 2005, 14 October 2005 and 25 October 2005.  All of these letters informed Mrs Blake that she was being paid PPP at more than the nil rate.

53.     The letters dated 11 July 2005 and 4 October 2005 listed the amounts of PPP Mrs Blake had been paid between 19 April 2005 - 11 July 2005 and 12 July 2005 - 3 October 2005, respectively.  The letters also listed the amount of earnings she had reported during those same periods.

54. The Secretary contends that Mrs Blake did not receive the money in good faith, and that this provision of the Act cannot be applied in her case.

Waiver in special circumstances

55.     Section 1237AAD notes that the right to recover a debt can be waived if:

(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.

56.     The term "special circumstances" has been examined by courts and tribunals in many decisions and in different contexts.  In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 Toohey J stated:

“An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend on the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they have a particular quality of unusualness that permits them to be described as special.”

57.     Mrs Blake continues to work for the Department of Education and Mr Blake continues to work for the Department of Environment, but has reduced his hours to part time as he has returned to study.  All the family are in good health.

58.     The Secretary contends that Mrs Blake has the capacity to repay the debt and that there are no special circumstances that make it desirable to waive the debt.

Write off debts

59. Section 1236(1) of the Act states that ‘The Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.’ The Secretary contends that the recovery of this debt should not presently or for a future period be written off, as Mrs Blake is able to repay the debt at $50 per fortnight.  Should her financial circumstances worsen, she can negotiate a lower amount of repayments.

Applicant’s Evidence and Contentions

The applicant, who was assisted by her husband, gave evidence. She did not dispute the essential facts as contended by the respondent and set out above. However, she contended that the relevant payments were received in good faith and that recovery should therefore be waived under section 1237 (A) (i) of the Act.

TRIBUNAL’S FINDINGS

60.     The Tribunal finds that, for the reasons contended by the respondent, the relevant payments were not received in good faith.

DECISION

61.     The Tribunal affirms the decision under review.

I certify that the 61 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member

Signed:         .................(Ms R Riberi)............................
  Associate

Date of Hearing  25 January 2007
Date of Decision  16 May 2007
Representative for the Applicant               Mr David Blake

Representative for the Respondent          Ms Margaret Conlon
  Centrelink