Burford and Secretary, Department of Family and Community Services

[2005] AATA 271

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 271

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2004/937

GENERAL ADMINISTRATIVE DIVISION		)
Re		HAYDON BURFORD

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date31 March 2005  

PlaceBrisbane

Decision The Tribunal sets aside the decision under review and in substitution therefor decides to write-off the overpayments of $12,696.74 of parenting payments received by Mr Burford until 31 May 2005.  The Tribunal remits the matter to the respondent with a Direction that fortnightly instalments for recovery of the debt be based on an assessment of Mr Burford’s capacity to repay the debt due to the Commonwealth i.e. with full details of both income and expenditure being available.  

.................[Sgd]........................

EK Christie
  Member

CATCHWORDS

SOCIAL SECURITY – parenting payment – overpayment - administrative error – special circumstances – write off - whole or part of the debt 

Social Security Act 1991 s 1236, 1237A, 1237AAD

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60

Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316

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

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277

Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435

Pledger v Department of Family and Community Services [2002] FCA 1576

Prince v Secretary, Department of Education, Employment and Youth Affairs [1997-98] 50 ALD 186

Re Riches and Secretary, Department of Social Security AAT Decision 10590, 8 December 1995

Re Hughes and Secretary, Department of Social Security (1992) 25 ALD 754

Re Wright and Secretary, Department of Social Security (1994) AAT 9736, 82 SSR 1196

Menkens and Department of Family and Community Services [2000] AATA 22

Re L and Secretary, Department of Social Security (1995) 21 AAR 412

Director-General of Social Services v Hales (1983) 47 ALR 281

Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26

Strang and Secretary, Department of Family and Community Services [2005] AATA 193

Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543

REASONS FOR DECISION

31 March 2005  Dr EK Christie, Member

1.      This is an application by Haydon Burford for a review of the decision made by the Social Security Appeals Tribunal (the “SSAT”) made on 26 November 2004 to recover a parenting payment debt in the sum of $12,696.74 for the period 19 August 1999 to 30 June 2001.

2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” documents) [Exhibit 1] and the various exhibits lodged by the parties.

3.        The applicant represented himself at the hearing. The respondent was represented by Ms J Dwyer, a Departmental Advocate.

Issues before the Tribunal

4.      The only issues for the Tribunal to decide were:

(a)whether the debt could be waived, in part or in full, for either “administrative error” or “special circumstances”; and

(b)whether the debt could be written off.

5.        At the end of the hearing the Tribunal exerted its inquisitorial powers and required the applicant to prepare a Statement of Financial Circumstances i.e. in order to effectively address the write-off provisions of the Social Security Act 1991 (“the Act”).  The applicant filed this Statement with the Tribunal on 10 March 2005.  Supplementary submissions by the respondent were filed with the Tribunal on 17 March 2005.

Factual Evidence

6.        Mr Burford commenced a “marriage like relationship” with Ms Strang in March 1999 and ended this relationship in March 2002.

7.        Mr Burford gave the following summary of his company business:

(a)that his company Island Surf and Sail commenced in Adelaide in 1980 and ceased business in 1998;

(b)that his personal company H Burford Pty Ltd was established in early 1999;

(c)that personal loans he had taken out with the Commonwealth Bank sometime around 1997 had been applied to his company Island Surf and Sail;

(d)that when this company was sold in 1998, proceeds from this sale, together with the proceeds from the sale of his home, were applied to repay outstanding debts – including the Director’s loan; and

(e)that his personal company H Burford Pty Ltd was established sometime in March 1999 with private funds arising from a family inheritance.  The company was dormant as it had not commenced trading.

8.        On the basis of the evidence before it, the SSAT made the following findings of fact:

“(i)Mr Burford provided a loan to his company H Burford Pty Ltd and the balance outstanding to him from time to time are as follows:

§  Year ended 30 June 1999  $178,789

§  Year ended 30 June 2000  $166,091

§  Year ended 30 June 2001  $152,931

(ii)The value of Mr Burford’s other assets were $12,030 (financial investments) and $2,500 (other assets).

(iii)The value of Mr Burford’s then partner’s assets was $135,106.

(iv)The total value of Mr Burford’s assets was therefore $328,425 as of 30 June 1999, $315,727 as of 30 June 2000 and $302,567 as of 30 June 2001.

(v)The allowable assets value limits applicable from time to time for members of couples who are not homeowners were $273,000 from 1 July 1999, $285,000 from 1 July 2000 and $301,500 from 1 July 2001.” (T2, Folio 10)

9.      Mr Burford gave the following responses to each of the above findings of fact made by the SSAT.

(i)That he disagreed with this finding.  From the outset he believed that the issues in dispute were the losses of the company;   he thought that his correspondence with Centrelink was bringing up company losses.  He said that some time later he received advice from his accountant that consideration of the Director’s Loan Account as an asset was in issue.  Mr Burford stated that from the time he moved from Adelaide [in 1999], the Director’s Loan Account was “about nil” and was made up of primarily two loans (from his business and his private home).  The loans had been repaid to the CSB following the sale of his business [Island Surf and Sail] and his private home.  It was his impression that the status of his Director’s Loan Account was “nil”;

(ii)Mr Burford agreed with this finding.  This period coincided with an inheritance from a deceased estate enabling him to commence a business;

(iii)That he disagreed with this finding as he was unaware of the value of Ms Strang’s assets – other than he knew she had a house in Adelaide;

(iv)For the reasons given in finding (i), he disagreed with this statement; and

(v)This finding was not in dispute.

10.     Mr Burford challenged any inference that he had deliberately misled Centrelink.  He acknowledged a mistake on his part to not read the “small print” on the Centrelink notification notice setting out his obligations as a social security recipient – and that he may not have read the notification notices as carefully as he should.

11.     He stated that he had clearly disclosed his company and bank details on his claim form and that he had believed Centrelink would follow up this issue if they believed there were a problem in the information he had provided.  However, Centrelink had never advised him that a problem existed and so the issue remained unresolved.

12.     He said that his answer to Question 3 on the Claim Form where he had answered “‘No’ to [having] loaned money to anyone” was because, technically, the loan did not exist;  there was no money to loan as neither company had any assets.  Island Surf and Sail had been sold and all sale proceeds used to pay creditors.

13.     Mr Burford acknowledged that when both loans had been repaid he, personally, had not been repaid the moneys that he had loaned to the company.

14.     It was his understanding that the Director’s Loan Account was a personal asset of his and had he remained in Adelaide for one more year after moving to New South Wales in 1999, that his then accountant would have completed his income tax and assigned a monetary value to the Director’s Loan Account.

15.     Mr Burford further acknowledged that he now understood the Director’s Loan Account to be a taxable asset – a fact that he was unaware of at the time he completed his claim form.  Moreover, he recognised this to be a “paper asset” on his balance sheet – rather than an asset in real terms.

16.     He said that he had answered Question 14 on the claim form “No” as to whether he “was involved in a business or company” as his personal company H Burford Pty Ltd was dormant i.e. not operating or receiving any income.  In retrospect, he conceded that this was incorrect but that his past responses to questions on the claim form relating to this issue had not been done dishonestly.  Furthermore, he said that he had responded to this question, and completed the claim form, without being provided by the accompanying Centrelink publication that gave explanatory assistance for completing the claim form [Information You Need to Know – Parenting Payment (Document C1 008)].

17.     Mr Burford stated that although Centrelink became aware of the loan in April 2001, Centrelink had failed to act until December 2001.  The time taken for Centrelink to respond to this information meant that his accrued overpayment almost doubled.

Contentions and Submissions of the Parties

17.      Mr Burdon prepared written submissions and substantially relied upon those submissions, only briefly addressing the Tribunal.  From those written submissions and his oral evidence, the Tribunal draws the following statements:

(a)That the problem arose from the time he moved from Adelaide to New South Wales in 1999.  His accountant in Adelaide had acted for him for six years and had subsequently confirmed to him that the amount of $138,767 was the major part of the Director’s Loan Account that had been the number one problem with Centrelink.  This loan comprised personal bank loans to Mr Burford and loaned to his business.  These were repaid by him back to the bank at the time of the sale of his business, Island Surf and Sail, in South Australia [in 1998].

(b)That the problem had come from the fact that he had commenced with a new accountant in New South Wales and as the new accountant was not aware of how this Director’s Loan Account came about.  His new accountant was not informed of the nature of this Loan (which, other than on the balance sheet, did not exist).

(c)He submitted that the problem of overpayments of parenting payments being made to him had been contributed to by Centrelink.  Centrelink was putting the blame solely on H Burford Pty Ltd.  However, Centrelink had ample opportunity to question the bank account of H Burford Pty Ltd.  For example, by April 2001 Centrelink should have had the fax stating he no longer required assistance and had advised Centrelink to the fact.  The date at this point could not be substantiated, notwithstanding that Mr Burford had gone to Centrelink requesting this information and could not get it.

(d)That Mr Burford did not in any way knowingly make a false statement.  The question which asked about involvement in an operating company was not read clearly.  He believed it referred to a company that was active and operational – whereas his company was dormant and non-functioning.

(e)That no statements made on the form were knowingly answered to mislead or defraud Centrelink.  To the statement “was any dividend, loans made to the company, which includes salaries and wages yet to be repaid to any shareholder or director” he answered “No” because all loans had been repaid to the bank.

18.     Ms Dwyer submitted that Mr Burford did not fulfil his notification obligations as set out in notices sent to him when he began self-employment in his company and that this failure contributed to the overpayment.

19.     Accordingly, Ms Dwyer submitted that the overpayment could not be waived for administrative error because Mr Burford had contributed to the error that led to the overpayments.  Ms Dwyer contended that for the debt to have solely arisen by Centrelink, there must be no other factors that caused the debt to arise or which contributed to the debt arising.  The main reason for the debt, Ms Dwyer submitted, was Mr Burford’s failure to correctly answer the question on his claim form about his involvement in his company.  Ms Dwyer conceded that although Centrelink should have followed up the information in Mr Burford’s claim form, indicating that he had a business in a company name, Mr Burford had contributed to this problem by answering “Yes” to a question about whether he was involved in a company.  In addition, Mr Burford had failed to inform Centrelink that he had become self-employed.

20.     In relation to waiver for “special circumstances”, Ms Dwyer submitted that Mr Burford had knowingly made a false statement.  Mr Burford had known that he was the major shareholder of his company.  His answer to the question on his claim for that he did not own shares in a private company was therefore false in his actual knowledge.  In addition, on a form returned to Centrelink on 11 April 2001, question 18 asked “Does the company owe money to any associates?” with the following clarification for the meaning of moneys: “Money owed to by the company includes salaries and wages owed, loans made to the company, and dividends allocated to a shareholder that have not yet been paid to the shareholder”.  Mr Burford answered “No” which Ms Dwyer submitted was clearly a false statement which he knew to be incorrect.

21.     Ms Dwyer contended that an analysis of the factual circumstances in Mr Burford’s case did not satisfy the legal meaning of “special circumstances” as defined and applied in Beadle’s case.

Supplementary Submissions

22.     Mr Burford prepared a Statement of Financial Circumstances and based on his current income and expenditure states that “he is prepared to repay the overpayment at $100 per month, commencing from May 2005”.  However, whilst the financial statement provided sets out “General Expenses” of $505 per week, “Household Expenses” at $154 per week and “Regular Payments of Money Owed” of $437 per week [for three credit card debts of $56,300], the “Income” details have not been completed.  His statement (at p.2) has the notation under “Self Employed”, “commencing self-employment in Indonesia from April 2005”.

23.     Ms Dwyer’s response to this Statement of Financial Circumstances in relation to the question of “write-off” can be summarised as follows:

§  Mr Burford has not made any repayments since October 2004;

§  Mr Burford has the capacity to repay the debt, even at a nominal rate of $10 per fortnight until May 2005, when he has offered to repay $100 per month;

§  Centrelink’s debt recovery team have been unable to contact Mr Burford to make an assessment of his capacity to repay the debt as his income has not been reported.

The Tribunal’s Decision-Making Powers

24.     “The question for the determination of the Tribunal is whether the decision [under review] was the correct one [that is, when there is only one decision] or preferable one [that is, when a range of decisions is available] on the material before the Tribunal.”: see Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60, [per Bowen CJ and Deane J, at 68]. There are a range of decisions possible in this application for review.

25.      Administrative decision-makers are generally required to address the evidence before them and not confine themselves to evidence before a prior decision-maker whose decision is being reviewed unless the relevant legislation requires a decision to be based upon the circumstances at a particular point of time: see Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316 at 324-326. In this application for review, the Tribunal considers all the evidence and information before the Tribunal at the date of the hearing, including the supplementary submissions in relation to “write-off”.

Statutory Requirements And Case Law

26. Section 1237 of the Social Security Act 1991 provides for circumstances where a debt due by a recipient of social security to the Commonwealth may be waived, either in part or in full.  These circumstances arise” where there were “special circumstances” that led to the overpayment – or if the overpayment arose from “administrative error”.

27. Section 1237AAD provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “special circumstances”:

“1237AAD – WAIVER IN 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.   [Tribunal emphasis].

28. For this section of the Act to apply to Mr Burford’s factual situation, there must be “special circumstances” that led to the overpayment of social security entitlements.  In addition, Mr Burford must not have “knowingly” made a false statement or false representation or failed to have complied with a provision of the Act. Both these requirements must be satisfied for Mr Burford to succeed under the “special circumstances” provisions of the Act.

29.      The Tribunal has had to consider the meaning and application of the expression “special circumstances” on many occasions.  The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 has been an oft-quoted benchmark as to the interpretation of “special circumstances”.  In that case the Tribunal said (at 3):

“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 upon 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 must have a particular quality of unusualness that permits them to be described as special.”

30.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (a case on “special circumstances” and section 1184 of the Act) at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:

“…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.”

31.     In Boscolo v Secretary, Department of Social Security(1999) 53 ALD 277, French J, a case that also referred to the Federal Court’s decision in Beadle, held that “special circumstances” is where there is “something unusual or different to take the matter the subject of the discretion out of the ordinary … [But] that does not require the case be extremely unusual, uncommon or exceptional.”

32.     The principles in Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435 are relevant with respect to the meaning of “knowingly” at paragraph 48:

“There is nothing in s 1237AAD which suggests that the word 'knowingly' should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation of that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission debt”; and

Later at paragraph 50:

“Knowingly omitting them is something different from fraudulently omitting them and I draw the distinction in this case.” [Tribunal emphasis].   

33. Section 1237A provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “administrative error”:

“SECTION 1237A – WAIVER OF DEBT ARISING FROM ERROR

1237A(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.

Note: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.”   [Tribunal emphasis].

34. For this section of the Act to apply to Mr Burford’s factual situation, Mr Burford must not have contributed, in any way, to the administrative error that led to the overpayment. In addition, Mr Burford must have received his overpayments of social security entitlements in “good faith”.  Both these requirements must be satisfied for Mr Burford to succeed under the “administrative error” provisions of the Social Security Act.

35.      The legal meaning of “good faith” was considered by the Federal Court in Prince v Secretary, Department of Education, Employment and Youth Affairs [1997-98] 50 ALD 186. In this case, Finn J stated:

“if that person knows or has reason to know that he or she is not entitled to a payment received - i.e. is not entitled to use the moneys received as his or her own - that person does not receive the payment in good faith.  Absent such knowledge or reason to know, the receipt would be in good faith…the [legislation] does seem in all probability to be directed to a payee who receives the money (to put the matter positively) in the good faith belief that he or she is entitled to receive it.  In other words the frame of the section is to exclude from the right to a waiver, a person who knows or has reason to know that he or she is not entitled to receive the payment.  It would be surprising to find that the Parliament intended otherwise”.

36. Section 1122 of the Social Security Act is relevant in this case at it prescribes for the value of a loan to be used in asset test calculations, in prescribed circumstances:  

“If a person lends an amount after 27 October 1986, the value of the assets of the person for the purposes of this Act includes so much of that amount as remains unpaid but does not include any amount payable by way of interest under the loan.” [Tribunal emphasis]

37.      It seems established unequivocally that the value of any loan arising after 27 October 1986 is its face value (Re Riches and Secretary, Department of Social Security AAT Decision 10590, 8 December 1995;  Re Hughes and Secretary, Department of Social Security (1992) 25 ALD 754; Re Wright and Secretary, Department of Social Security (1994) AAT 9736, 82 SSR 1196).  And, on the same authorities, the amount of the loan asset as at 27 October 1986, for the asset test calculation is determined by its realisable value having regard to the ability of the debtor to repay at the time of the valuation: see Menkens and Department of Family and Community Services [2000] AATA 22.

38. Section 1236(1) of the Social Security Act sets out the requirements for a debt due to the Commonwealth to be written off:

“1236 Secretary may write off debt

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)the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt.”

39.     A former President of the Tribunal, Mathews J, has commented on the write-off provisions of the Social Security Act in Re L and Secretary, Department of Social Security (1995) 21 AAR 412, and observed that the financial circumstances of the debtor and the prospect of the recovery of the debt will necessarily be the primary considerations in deciding whether to write off a debt. Mathews J summarised the position as follows (at 428):

“In summary, I consider that matters relating to the personal financial hardship of the individual are always relevant in any decision as to write off under s 1236(1).  Retrospective considerations may occasionally be relevant.  The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned.  Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation?  If an affirmative answer is reached to this question, then it would be appropriate to defer recovery in the manner contemplated by s 1236(1).”

40. In considering its discretion for write-off under the Act, the Tribunal has also had regard to a number of factors referred to by the Federal Court in Director-General of Social Services v Hales (1983) 47 ALR 281. These factors were summarised by Senior Member Dwyer in Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26 at 42 as follows:

(a)the fact that the applicant has received public moneys to which he was not entitled;

(b)the way in which the overpayment arose, whether as a result of innocent mistake or fraud;

(c)the financial circumstances of the applicant;

(d)the prospect of recovery;

(e)whether a compromise is offered;

(f)whether recovery should be delayed if there is a prospect that the circumstances of the person who received the overpayment may improve; and

(g) compassionate considerations and the fact that the Act is social welfare legislation and any financial hardship which may result from any action for recovery.

Consideration of the Issues

41.     The first issue for the Tribunal to consider is the factual evidence relating to whether the debt could be waived under the “special circumstances provisions” of the Social Security Act.

42.     The Tribunal has considered the “knowingly” issue in relation to Mr Burford’s state of knowledge at the time and to events surrounding the false statement or the act or omission: see Strang and Secretary, Department of Family and Community Services [2005] AATA 193:  

“Mr Burford’s evidence was that he did not, in any way, knowingly make a false statement or answer statements on his claim form that were intended to mislead or to defraud Centrelink, for the following reasons:

(a)He had completed his claim form for parenting payment in August 1999 by answering “No” to Question 14.  At this time his company “Island Surf and Sail” had ceased [in 1998].  He had then set up a new company, H Burford Pty Ltd in 1999.  However, this company was not operating at this time i.e. the company was dormant and non-functional – and not active and operational;

(b)He had responded to the question in this manner because he believed the wording of the question about “operating” a business referred to a business which was actively operating which his company H Burford Pty Ltd was not;

(c)To clarify the situation he had completed a further question on his claim form dealing with “details of money held in bank, building society or credit union accounts”, by stating full details of all his bank accounts, including full details for his personal company H Burford Pty Ltd;

(d)No query was raised by Centrelink in relation to this information he had provided.  His parenting payments followed and continued to be paid to him over time; and

(e)In relation to the question whether any dividend, loans made to the company which includes salaries and wages yet to be repaid to any shareholder or direction, Mr Burford had answered “No”  because all loans had been repaid to the bank.”

43.     The Tribunal noted in Strang’s case that Mr Burford had faxed information to a Ballina Centrelink staff member (“Pia”), some time in 2000-2001, notifying a change in financial circumstances.  Approaches to that office by him had not provided access to the date the fax was received.

44.     The Tribunal concluded in Strang’s case that it “accepted Mr Burford’s account of the factual basis for completing his claim form and his reliance on Centrelink to pursue with him any inconsistency in the way he had completed his claim form with respect to his company involvement – given that he had fully disclosed the existence of his personal company, H Burford Pty Ltd, on his claim form”.

45.     The Tribunal further notes that an “essential feature” which contributed to the problems of overpayment (see paragraph 46) was associated with the fact that Mr Burford completed his claim form without being provided with the accompanying information booklet;  also, based on the materials before the Tribunal, a Complex Assessment Officer was not assigned to the problem until after the end of the overpayment period.

46.     The Tribunal agrees with the following observations of Senior Member Handley in Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543, with respect to reliance by social security recipients on advice by Departmental officers:

“Citizens are entitled to act upon the advice given to them by representatives of government through its departments and agencies.  Citizens also are entitled to have confidence in the advice that they are given by persons in authority and who represent government departments and agencies.  Citizens should be entitled to expect nothing less.”

and

“The responsibility for efficient and effective administration of departmental practice and policy must carry with it a responsibility for any error or mistake which is made by the departmental officers alone.”

47.     Applying the “test” in Callaghan, the Tribunal concludes, for the above reasons, that Mr Burford’s state of knowledge at the time he completed the claim form – as well as the events surrounding the statement or the act or omission, do not represent a situation whereby he had "knowingly" made a false statement or an act or omission.  Mr Burford could only have “constructive” – not “actual” knowledge and so could not have “knowingly” made a false statement or representation – or failed, or omitted to comply with a provision of the Act.

48.     The Tribunal agrees with the SSAT summary of the essential features of Mr Burford’s factual situation:

“19.….this case stems from Mr Burford’s two loans from the Commonwealth Bank.  He then ‘on-lent’ those funds to his company.  If it hadn’t been for these loans to the company, the value of his assets would have fallen well below the asset value limit.

20.While it can be accepted that Mr Burford personally repaid the two loans to the Commonwealth Bank, the loans to his company remain.  The loans to his company are separate and discrete transactions from the loans he had personally taken out with the Commonwealth Bank.  The company’s taxation returns were lodged on that basis.  In saying this, the Tribunal appreciates that for practical purposes, Mr Burford was the one and the same as his company and that there was no other separate pool of money when he ‘on-loaned’ the amounts he personally borrowed from the Commonwealth Bank to his company.”  (T2, Folio 9)

49. In such a situation, the provisions of section 1122 of the Act applied at the time Mr Burford lodged his claim. As a result the Tribunal concludes that the circumstances that led to the overpayment in this factual situation cannot be described as “special” when clearly this is a complex question of law that warranted careful consideration by both Centrelink and Mr Burford.

50.     When the legal principles that have been defined by the Federal Court are applied (see paragraphs 29, 30, 31), the Tribunal cannot conclude that there is something unusual or different to take the matter out of the ordinary.

51.     Consequently, special circumstances do not apply and the debt due to the Commonwealth cannot be waived under the “special circumstances” provisions of the Act.

52.     Next, the Tribunal considers the factual evidence relating to whether the debt could be waived under “administrative error” provisions of the Act.

53.     The Tribunal concludes that both Centrelink and Mr Burford have contributed to the administrative error that led to the overpayments of parenting payment being made to Mr Burford.  The Tribunal notes that the first filenote that the issue of Mr Burford’s company and its operation were considered by a Complex Assessment Officer of Centrelink was 13 February 2003 (T24, Folio 107).  Given the divergent answers given by Mr Burford when he completed his claim form as to his company, it would have been a reasonable expectation for this matter to have been referred to a Complex Assessment Officer much earlier.

54.     However, the Tribunal finds that Mr Burford contributed to the administrative error in failing to make a query in response to the status of his divergent answers in his claim form – given that he received notification notices over time from 10 August 1999.

55.     Given the above findings, the debt due to the Commonwealth cannot be waived under the “administrative error” provisions of the Act.

56.      Next, the Tribunal considers the factual evidence relating to whether the debt could be waived under “write off” provisions of the Act.

57.     The Tribunal has considered the “Hales factors” and concludes:

(a)      Mr Burford received public moneys to which he was not entitled;

(b)      The overpayment arose as a result of “innocent mistake”;

(c)The current income details of Mr Burford are unknown, although his evidence is that he is commencing a new business in Indonesia;

(d)There are positive prospects of recovery as he has offered to repay the debt at $100 per month from May 2005; and

(e)The question of compromise has not been raised.

58.     For all of the above reasons, the Tribunal sets aside the decision under review and in substitution therefor decides to write-off the overpayments of $12,696.74 of parenting payments received by Mr Burford for the period 19 August 1999 to 30 June 2001 until 31 May 2005.  The Tribunal remits the matter to the respondent with a Direction that the fortnightly instalments for recovery of the debt be based on an assessment of Mr Burford’s capacity to repay the debt due to the Commonwealth i.e. with full details of both income and expenditure being available. 

I certify that the 58 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed:         Camille Banks

Associate

Date/s of Hearing  2 March 2005   [at Ballina]

Date of Decision  31 March 2005  [at Brisbane]

The Applicant appeared in person

For the Respondent                  Ms J Dwyer, Departmental Advocate