Boyd; Secretary, Department of Family and Community Services

[2003] AATA 541

CATCHWORDS – SOCIAL SECURITY

– disability support pension – overpayment - whether debt owed to Commonwealth – whether failed or omitted to comply with a provision of Act – whether amounts not payable to her – whether debt should be waived – decision set aside.

Social Security 1991 ss. 23, 94, 98, 132, 1222, 1223, 1224, 1237, 1237AA, 1237AAA, 1237AAB, 1237AAC and 1237AAD

Acts Interpretation Act 1901 s. 29

Evidence Act 1995 s. 160

Social Security Legislation Amendment (Budget and Other Measures) Act 1986 ss. 2 and 3 and Schedule 18

Beadle v Director-General of Social Security (1985) 60 ALR 225
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67

DECISION AND REASONS FOR DECISION [2003] AATA 541

ADMINISTRATIVE APPEALS TRIBUNAL     )          
  )          S2001/291
GENERAL ADMINISTRATIVE DIVISION     )          

Re             SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And          ANN BOYD

Respondent

DECISION

Tribunal:                   Miss S A Forgie (Deputy President)
Date:  11 June, 2003
Place:  Adelaide

Decision:The Tribunal:

1.set aside the decision of the Social Security Appeals Tribunal dated 2 July, 2001; and

2.substitute a decision that the decision of the delegate of the applicant dated 7 February, 2001 and affirmed by a decision of an Authorised Review Officer dated 5 April, 2001 to raise and recover from the respondent an overpayment of Disability Support Pension in the sum of $12,250.26 for the period 10 July, 1997 to 30 January, 2001 is affirmed.

S A FORGIE
  Deputy President

REASONS FOR DECISION

On 8 August, 2001, the applicant, the Secretary of the Department of Family and Community Services (“the Secretary”), applied for review of a decision of the Social Security Appeals Tribunal (“SSAT”) dated 2 July, 2001.  The SSAT set aside a decision of a delegate of the Secretary made on 7 February, 2001, and affirmed by an Authorised Review Officer on 5 April, 2001, to raise and recover from the respondent, Mrs Ann Boyd, an amount of $12,250.26 paid to her as disability support pension (“DSP”) from 10 July, 1997 to 30 January, 2001.  In its place, the SSAT substituted a new decision that the amount of DSP paid to her in that period was not an overpayment.

1. At the hearing, the Secretary was represented by Ms Pugsley, an advocate with Centrelink, and Mrs Boyd represented herself with the assistance of her daughter, Mrs Trish Dawson. Regard was had to the documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 (“T documents”) and to documents relating to the postage of letters on behalf of the Department of Family and Community Services (“the Department”). Mrs Boyd gave oral evidence in support of her case.

THE ISSUES

1. There were two issues in this case.  The first was whether Mrs Boyd owed a debt to the Commonwealth of the amount of disability support pension that she has been overpaid.  Resolution of that issue depends upon whether Mrs Boyd has failed or omitted to comply with a provision of the Social Security Act 1991 (“the Act”) or whether she has been paid amounts that were not payable to her.  If she does owe a debt, the second issue is whether that debt should be waived.

BACKGROUND

1. Mrs Boyd was, pursuant to s. 94 of the Act, qualified to receive the payment of DSP throughout the period from 10 July, 1997 to 30 January, 2001. Although a person may be qualified for DSP, it will not be payable to him or her if he or she comes within the circumstances specified in s. 98(1) of the Act. The only circumstance that is applicable in this case is that set out in s. 98(2) which provides that a DSP is not payable if the rate would be nil. The rate at which DSP was payable to Mrs Boyd was calculated by using Pension Rate Calculator A at the end of s. 1064 in Part 3.2 of the Act (s. 117). 

1. Although in question at the SSAT hearing, there was no dispute between the parties at the hearing in the Tribunal that the Department had correctly calculated Mrs Boyd’s payments of DSP over the period in question (T documents, pages 94-100).  Having regard to the payments over the entire period, I find that Mrs Boyd was paid an amount of DSP in every fortnight.  On recalculation having regard to her combined income, her rate of payment in some fortnights was calculated to be nil.  In other fortnights DSP was calculated to be payable to her but at a reduced amount.

1. Section 132(1) provides that the Secretary may give a person to whom DSP is being paid a notice that requires the person to inform the Department if a specified event or change of circumstances has occurred or the person becomes aware that a specified event or change of circumstances is likely to occur. An event or change of circumstances is not to be specified under s. 132(1) unless the occurrence or change of circumstances may affect the payment of the pension (s. 132(2)).  Section 132(3) specifies that:

“Subject to subsection (3A), a notice under subsection (1):

(a)must be in writing; and

(b)may be given personally or by post; and

(c)must specify how the person is to give the information to the Department; and

(d)must specify the period within which the person is to give the information to the Department; and

(e)must specify that the notice is a recipient notification notice given under this Act.”

If the notice does not specify how the person is to give the information or does not specify that it is a notice under the Act, it is not an invalid notice by reason of those omissions (s. 132(3)). Subject to qualifications that are not relevant in this case, s. 132(4) provides that the period specified in the notice must end at least 14 days after the day on which the event or change of circumstances occurs or the day on which  the person becomes aware that it is likely to occur.

1. On 26 March, 1997, the Department wrote a letter to Mrs Boyd. It complied with the provisions of s. 132..  The letter set out the payments that Mrs Boyd would receive and showed that the Department had assessed Mrs Boyd’s combined yearly income to be $21,710.16.  It went on to require Mrs Boyd to tell the Department if, among other matters, her combined income, not including maintenance, was more than $82.00 per week or she or her partner started or recommenced work.  The word “income” was said to mean her gross income before payment of any tax or, if self employed, her net profits after allowable deductions.

1. Mrs Boyd said that she had not seen this letter prior to its being included in the T documents. I am satisfied that Mrs Boyd telephoned the Department on 26 March, 1997 to advise that her husband had commenced work two weeks before (T documents, page 36). His earnings for the fortnight ending 27 March, 1997 would be $835, she advised and this was noted on the Department’s computer system. I am satisfied that Mrs Boyd’s telephone call could not have been made in response to the Department’s letter for the letter could not have been sent from the Department’s regional office to an address in country South Australia and received through the postal system all on the one day. On the balance of probabilities, a letter posted on the 26 March, 1997 would have been received after that date at Mrs Boyd’s address.

1. I accept Mrs Boyd’s evidence that she has not seen the letter but is she deemed to have received the letter? The effect of s. 29 of the Acts Interpretation Act 1901 is that, the notice is deemed to have been given by properly addressing, prepaying and posting it as a letter. Unless the contrary is proved, it is deemed to have been given to Mrs Boyd at the time at which it would have been delivered to her in the ordinary course of post. The effect of s. 160 of the Evidence Act 1995 is that, unless evidence to raise doubt about the presumption is adduced, a postal article sent by prepaid post to a person at a specified address in Australia was received on the fourth working day after it was posted. 

1. It is clear that these provisions only have effect if the notice was sent to Mrs Boyd by post. On the evidence that I have, I am satisfied that it was generated on the computer. As to whether or not it was posted, the only evidence that I have is that the Department, then known as the Department of the Social Security, lodged 19,717 letters with Australia Post on 27 March, 1997 for delivery. Most were for delivery in South Australia but 151 letters were for delivery in other States. On the same day, a further 157 articles were recorded as posted on a bulk postage listing. Further documents from Australia Post shows that the Department posted 47,491 letters and 5,438 and 1,841 articles on 1 April, 1997. There is no evidence to indicate that the letter dated 26 March, 1997 was one of the letters posted or even that it was in a batch of letters that were posted. Therefore, the deeming provisions of s. 29 of the Acts Interpretation Act does not apply to the notice. It follows that I am not satisfied that Mrs Boyd was given the notice of 26 March, 1997.

1. There is evidence of a similar notice having been generated on 30 January, 1996 requiring Mrs Boyd to advise the Department of the same information (T documents, pages 33-35).  Mrs Boyd did not question whether she had received this notice.  Whether or not she did, she complied with its requirements when she telephoned the Department on 26 March, 1997. 

DOES MRS BOYD OWE A DEBT?

1. There is no question that Mrs Boyd did not contact the Department again after 26 March, 1997 and nor did the Department contact her until it communicated its decision of 7 February, 2001 that she had been overpaid DSP.  In that period, it had continued to calculate her entitlement on the basis of her combined income of $21,710.16.  There is no disagreement between the parties that Mr Boyd’s income from his employment had increased above that amount from July, 1997.  As a result, a delegate of the Secretary recalculated Mrs Boyd’s entitlement to DSP and decided to raise and recover a debt of $12,250.26 for the period 10 July, 1997 to 30 January, 2001.  The fortnights in relation to which no amount of DSP was payable to her covered the period from 10 July, 1997 to 24 June, 1998 and from 22 July 1999 to 15 March, 2000.  In all other periods from 10 July, 1997 to 30 January, 2001, it was payable to her but at a reduced amount.

1. An amount paid to her as DSP is a “social security payment” within the meaning of the Act (s. 23).  As a social security payment and in the circumstances of this case, the amount paid only becomes a debt that she owes to the Commonwealth and so must repay to the Commonwealth if:

“(a)   a provision of this Act, the 1947 Act or the Data-matching Program (Assistance and Tax) Act 1990 expressly provided that it was or expressly provides that it is, as the case may be; or;

(b)…

Note 1: for the provisions of this Act that create debts due to the Commonwealth see sections 1135, 1223, 1223AA, 1223AB, 1223A, 1223B, 1224, 1224AA, 1224B, 1224C, 1224D, 1224E, 1225, 1226, 1226A, 1229 and 1229A.

Note 2: paragraph 1222A (b) covers some debts under the 1947 Act which arose from amounts that stopped being paid to a person before 1 January 1991.” (s. 1222)

1. Two sections of the Act are relevant in this case: ss. 1223 and 1224(1). Taking first s. 1224(1), it provides that:

“If:

(a)an amount has been paid to a recipient by way of social security payment; and

(b)the amount was paid because the recipient or another person:

(i)made a false statement or a false representation; or

(ii)failed or omitted to comply with a provision of this Act or the 1947 Act;

the amount so paid is a debt due by the recipient to the Commonwealth.”

1. I am satisfied that Mrs Boyd has not made any false statement or false representation in relation to her husband’s employment or earnings. In view of the finding I have already made regarding the letter 26 March, 1997, I am satisfied that she has not failed or omitted to comply with s. 132 of the Act as she was not given the notice. She had complied with her earlier obligations contained in the Department’s earlier letter of 30 January, 1996. It follows that Mrs Boyd has not failed or omitted to comply with a provision of the Act. Consequently, a debt does not arise under s. 1224 of the Act.

1. Section 1223 is the other relevant section of the Act. It has been amended during the period with which I am concerned. As at 10 July, 1997, s. 1223(1) provided, in so far as it is relevant, that:

“… if:

(a)an amount has been paid to a person by way of social security payment; and

(b)the recipient was not qualified for the social security payment and the amount was not payable to the recipient;

the amount so paid is a debt due to the Commonwealth.”

1. Mrs Boyd’s circumstances come within s. 1223(1)(a).  That is to say, an amount has been paid to her as DSP.  Whether they come within s. 1223(1)(b) is a different matter.  There was no dispute at the hearing that DSP was not payable to her because of the amount of combined income that she received in the relevant period.  Mrs Boyd was, however, qualified to receive the DSP during the period.  As the form in which s. 1223(1)(b) was then in force required that Mrs Boyd not be qualified for the social security payment as well as its not being payable to her, she did not come within its terms. Therefore, she does not come within the terms of both ss. 1223(1)(a) and (b) and so the amount paid to her cannot be a debt pursuant to s. 1223(1).

1. Section 1223(1) has been amended at various times over the years.  Of relevance in this case is the amendment effected by the Social Security Legislation Amendment (Budget and Other Measures) Act 1986 (“Amendment Act”).  It repealed the section and, in so far as it is relevant in this case, replaced it with the following:

“… if:

(a)an amount has been paid to a person by way of social security payment on or after 1 October 1997; and

(b)the recipient was not qualified for the social security payment when it was granted; or

(c)the amount was not payable to the recipient;

the amount so paid is a debt due to the Commonwealth.” (Amendment Act, s. 3 and Schedule 18)

The amendment came into effect on 1 October, 1997 (Amendment Act, s. 2(6))

1. The consequence of the newly drafted provision in a case such as this is that the amount of DSP paid to Mrs Boyd can become a debt owed by her if either she was not qualified for it when it was granted or it was not payable to her. As I have already found, DSP was not payable to her over a number of fortnights and these are detailed in T5 of the T documents (pages 94-100). In relation to those periods occurring from 1 October, 1997 and in which the rate of DSP was nil, the amounts paid to her are a debt under s. 1223(1) of the Act. In relation to payments made before that date where Mrs Boyd’s rate of DSP was nil, s. 1223(1) does not, for the reasons that I have already given, apply to make them a debt. Therefore, the amounts overpaid to her from 10 July, 1997 to 30 September, 1997 are not a debt under this section but the amounts overpaid to her in the period from 1 October, 1997 to 30 January, 2001 are a debt to the Commonwealth.

1. Are the amounts paid in any of the period from 10 July, 1997 to 30 January, 2001 a debt under any other provision?  In that regard, I have looked to s. 1223 (5) of the Act. Until 1 October, 1997 when it was amended by the Amendment Act (Amendment Act, s. 2(6) and Schedule 18), it provided that:

“If:

(a)an amount (the received amount) has been paid to a person by way of social security payment; and

(b)the received amount was calculated by using a maximum payment rate that was not the maximum payment rate (the correct maximum payment rate) that should have been used in working out the rate of the person's social security payment; and

(c)the received amount should not have been paid because the rate of the person's social security payment under this Act (that is, the rate worked out by using the correct maximum payment rate) was nil;

the received amount is a debt due to the Commonwealth.

Note: A person's maximum payment rate (except for family payment) is worked out by following the steps set out in the Method statement in Module A of each relevant Rate Calculator.”

1. In this form, the payments made from 10 July, 1997 to 30 September, 1998 are debts to the Commonwealth. The amount of DSP received by Mrs Boyd was calculated using a maximum payment rate that should not have been used because the incorrect combined income was used. On the basis of the fortnightly calculations appearing in the T documents, I find that Mrs Boyd’s payment rate of DSP for each fortnight in the period 10 July, 1997 to 30 September, 1997 was nil. Therefore, the amount of DSP that she received in the period prior to 1 October, 1997 was a debt to the Commonwealth.

1. From 1 October, 1997, s. 1223(5) provided that:

   “If:

   (a)an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997; and

   (b)because the received amount had not been correctly calculated using the relevant rate calculator, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment that should have been paid to the person under this Act;

   the difference between the received amount and the correct amount is a debt due to the Commonwealth.”

1. I have considered the remaining period from 1 October, 1997 to 30 January, 2001 under this provision even though I have already found that the amounts overpaid in this period are a debt pursuant to s. 1223(1)..  That period covers payments made to Mrs Boyd when her rate of payment was nil and also payments made to her when she was entitled to lesser amounts.  Both situations come within the terms of s. 1223(5) in that she received an amount greater than the amount that should have been paid to her whether the amount that should have been paid was nil or some greater amount.  It follows that I have concluded that the amounts that she received but to which she was not entitled are a debt to the Commonwealth.

SHOULD THE DEBT BE WAIVED?

1. The Secretary may waive the Commonwealth’s right to recover the whole or part of a debt from a person only in the circumstances set out in ss. 1237A 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD of the Act (s. 1237(1)). Only one section is relevant in this case. It is s. 1237AAD, which provides:

“The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a)the debt did not result wholly or partly from the debtor or another person knowingly:

(i)making a false statement or a false representation; or

(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b)there are special circumstances (other than financial hardship alone) that makes it desirable to waive; and

(c)it is more appropriate to waive than to write off the debt or part of the debt.”

1. On the findings that I have already made, I am satisfied that Mrs Boyd satisfies the requirements of s. 1237AAD in that the debt did not result wholly or partly from Mrs Boyd’s knowingly (or unknowingly) making a false statement or representation or failing or omitting to comply with a provision of the Act. She made no statement or representation and was not required to comply with, in this case, a notice issued under an provision of the Act.

1. The debt may only be waived if the second aspect of s. 1237AAD is also satisfied.  That is that there are special circumstances that make it desirable to waive.  The expression, “special circumstances”, has been considered in the past.  I have had regard first to the words of the Full Court of the Federal Court when it said that it is not “... possible to lay down precise limits or precise rules.” (Beadle v Director-General of Social Security (1985) 60 ALR 225 (Bowen CJ, Fisher and Lockhart JJ)). Of the expression “special circumstances”, it has been said by Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 that:

“… although imprecise [it is] sufficiently understood not to require judicial gloss: Beadle’s case [(1985) 60 ALR 225, 7 ALD 670] (at ALR 229; ALD 674), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case.  It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.” (page 545)

More recently, the expression was considered again by Kiefel J in a different context in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67, (2002) 71 ALD 423. Her Honour adopted similar principles and considered their application in the context of determining the length of a preclusion period when a person has received a compensation payment. In doing so, she clearly referred not only to the circumstances of the individual affected by the preclusion provisions of the Act but to the effect that those preclusion provisions were intended to achieve and the consequences for every person who was affected by them. Having regard to all of the circumstances, would the result be one that is unfair, unintended or unjust so that the circumstances may be described as special?

1. In this case, the provisions of the Act are clearly intended to characterise as debts owed to the Commonwealth amounts of Commonwealth money paid to a person who was not entitled to receive them regardless of whether that person received them in good faith or not. The objective is to recover those debts but latitude is allowed if there are special circumstances. In this case, I have already found that Mrs Boyd did not receive the letter of 26 March, 1997. Ms Pugsley advised that the Department did not send her another letter until it wrote to her on 30 January, 2001. In other words, the Department continued to pay Commonwealth money to Mrs Boyd without checking her circumstances or requiring her to account in any way. This was apparently as a result of the Department’s, or later Centrelink’s, being required to implement a system of “self-assessment” similar to that adopted in relation to income tax provisions for individuals. There is no requirement in the Act that it send notices to a recipient of his or her obligations to advise of changes in circumstances but its decision not to do so had most unfortunate consequences for Mrs Boyd. It can be expected that it also had most unfortunate consequences for a number of other people who were in receipt of money paid under the Act and to whom notices were not sent. It is difficult to expect that recipients will know their entitlements under the Act and know when they are receiving money to which they are not entitled. The provisions of the Act and the calculation of the payments are complicated. Once a person has complied with the provisions of a notice in the terms in which that dated 26 March, 1997 was written, it is understandable that he or she thinks that he or she has complied with her obligations unless he or she receives another letter. A letter such as that dated 30 January, 1996 and sent to Mrs Boyd did not state that her obligations were ongoing and went beyond her contacting the Department on 26 March, 1997. Unlike a taxation return that must be lodged each year under the self-assessment scheme and that makes a person look at his or her income and taxation obligations at least once each year, there was nothing that trigger Mrs Boyd or any other recipient to look at his or her ongoing entitlement to a payment.

1. The system of administration adopted by the Department, and later Centrelink, had dire consequences for Mrs Boyd in that she was permitted to receive money and to continue to receive it for a very lengthy period.  I am satisfied that she thought that the Department would be told of her combined income when she and her husband lodged their taxation returns.  That is understandable when it is generally known that data-matching is available at some level between government departments.  The problem is that data-matching is not used to gather information for the purpose of updating the Department’s, or Centrelink’s, knowledge on a day by day, week by week or even month by month basis so that it can pay the correct amount in the first place.  Instead, data is gathered to check the information it already holds and used to re-assess what it has paid in the past.  That is what happened in Mrs Boyd’s case.

1. Mrs Boyd’s circumstances are most unfortunate. She did not enjoy good health as is evidenced by her being qualified to receive the DSP. Her health does not make it any easier for her to deal with the thought of owing such a large sum of money when she had no idea that she was not entitled to receive it in the first placed. She thought that she had done the right thing by advising of her husband’s commencing employment and complied with her obligations when she and her husband declared all of their income in their taxation returns each year. At the hearing, she was deeply distressed by the whole matter and understandably so. The difficulty that I have is that the manner in which the Department and Centrelink monitored payments has led to her situation but it has potentially led to the same situation for countless other people whose income took them over the limits and were not sent notices. The system of administration potentially led to injustice for many if not all social security recipients but it did not lead to any injustice or unfairness to Mrs Boyd that was not visited, or potentially visited, upon all other recipients of payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s. 1237AAD of the Act.

1. For the reasons I have given, I:

1.set aside the decision of the Social Security Appeals Tribunal dated 2 July, 2001; and

2.substitute a decision that the decision of the delegate of the applicant dated 7 February, 2001 and affirmed by a decision of an Authorised Review Officer dated 5 April, 2001 to raise and recover from the respondent an overpayment of Disability Support Pension in the sum of $12,250.26 for the period 10 July, 1997 to 30 January, 2001 is affirmed.

I certify that the thirty preceding paragraphs are a true copy of the reasons for the decision herein of
Miss S A Forgie (Deputy President)

Signed:           ................................................................
  P. Paczkowski  Associate

Date/s of Hearing  2 May, 2003
Date of Decision  11 June, 2003
For the Applicant  Ms A. Pugsley, advocate
Solicitor for the Applicant            The Service Recovery Team Centrelink

For the Respondent  self represented with the assistance of

Ms T. Dawson, daughter.