CAMERON and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS - [2010] AATA 755

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 755

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/4491

GENERAL ADMINISTRATIVE DIVISION			)
Re	DONALD AND KATHLEEN CAMERON

Applicants

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

M J Carstairs, Senior Member

Date 1 October 2010
Place Brisbane

Decision

The Tribunal affirms the decision under review.

....................[Sgd]........................
Senior Member

CATCHWORDS

SOCIAL SECURITY – Age pension – Overpayment – Error by financial adviser – No sole administrative error by Centrelink – No special circumstances – Other remedies – Decision under review affirmed.

Social Security Act 1991 (Cth), ss 9A, 9B, 1223, 1224, 1237A, 1237AAD

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

1 October 2010 M J Carstairs, Senior Member

Kathleen and Donald Cameron are age pensioners. Now in their eighties, they have incurred substantial debts of $58,406.90 each through no direct fault on their part. The debts arose as a result of their financial adviser incorrectly certifying to Centrelink, some eight years previously, that their respective pensions being paid out of the Cameron Superannuation Fund complied with s 9B of the Social Security Act 1991 (“the Act”). Centrelink calculated the rate of age pension payable accordingly.
Mr and Mrs Cameron readily admit that they had no understanding of the financial arrangements recommended to them by their adviser, and simply accepted that he had correctly provided all relevant information to Centrelink. It was because they did not have knowledge of financial matters themselves that they used an adviser. Their backgrounds were in teaching and in farming. After taking retirement they worked on the land well past age pension age, in order to secure certainty in their retirement years.
Mr and Mrs Cameron have repaid a small portion of the debts. Usually, retired people have finite resources. The Camerons fall into that category. They are far from destitute, but it can readily be appreciated that suddenly finding they must together repay over $116,000 has been a shock. Centrelink is recovering the debts by deducting $222 per fortnight from their ongoing age pension payments.

BACKGROUND

How Mr and Mrs Cameron came to incur these debts warrants some explanation, although I would point out that they have not challenged the calculation of the debts in these proceedings.
Briefly put, Mr and Mrs Cameron applied for age pension. They had a range of investments, all dutifully declared when they made their pension applications. They had a self-managed superannuation fund and were obtaining financial advice. Their then financial adviser, Mr Don Gibbs, completed some of the paperwork related to their pension claims (as would be expected where people have financial advisers and somewhat complex products). Specifically, he completed paperwork about two income stream financial products that Mr and Mrs Cameron had purchased.
Centrelink requested, as is usual practice, details of any such products in order to gather data upon which to assess the rate of age pension payable. On 5 October 2000, Mr Gibbs provided information to Centrelink (at T24 and T26) about the type of income stream here in question, a superannuation pension named “DIY Lifetime Pension”. He indicated—incorrectly—on the relevant forms for both Mr and Mrs Cameron that that type of superannuation pension met the requirements of s 9A or s 9B of the Act to qualify as an assets test exempt income stream.
When calculating the rate of age pension payable, Centrelink relied on the information provided by Mr Gibbs from the date the Camerons qualified for age pension until the time their new financial adviser, Ms Colleen Thomas, provided an update to Centrelink in early 2008. As a result, Centrelink paid the Camerons age pension from 15 September 2000 until 17 April 2008 at a rate higher than their entitlement.

ISSUES

The issues are whether Mr and Mrs Cameron have debts to the Commonwealth and, if so, whether these debts should be waived in whole or in part.

DO MR AND MRS CAMERON HAVE DEBTS TO THE COMMONWEALTH?

Section 1223 of the Act in its current form provides that (emphasis added):
Subject to this section, if:
(a) a social security payment is made; and
(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
According to the respondent’s Statement of Facts and Contentions, the debts were raised under s 1224 of the Act as in force at the time of the first debt period (it has since been repealed). Section 1224 of the Act then required that a debt be raised against a person who received an amount of social security payment because of a false statement or a failure or omission to comply with a provision of the Act.
It is noteworthy that s 1224 of the Act was not relied upon by the authorised review officer or by the Social Security Appeals Tribunal in their decisions. Both appear to rely, rather, upon s 1223 of the Act—seemingly with reference to its wording after 1 July 2001, when it was significantly amended.
In the circumstances of this matter, the overpayments are debts due to the Commonwealth under s 1223 of the Act. This is evident from the width of the wording of that section, both pre- and post-amendment, as this wording provides the basis for raising debts, however innocent the circumstances in which they occur.
At the hearing, Mr and Mrs Cameron acknowledged that their debts had been incurred in the amount calculated by Centrelink. They accepted that Mr Gibbs had incorrectly marked the Centrelink forms and that his error was (at least in part) the cause of the overpayments. I am satisfied that Mr and Mrs Cameron received moneys to which they were not entitled partly due to their financial adviser providing incorrect information to Centrelink that their respective superannuation pensions complied with s 9A or 9B of the Act. I accept the evidence represented by the Centrelink overpayment calculations, and find that Mr and Mrs Cameron have debts to the Commonwealth in the amount of $58,406.90 each.

SHOULD THE DEBTS BE WAIVED?

Section 1237A of the Act provides for waiver of a debt to the Commonwealth arising from sole administrative error by the Commonwealth, if the payment was received by the debtor in good faith.
Mrs Cameron referred to the operation of s 1237A(1A) of the Act as if its effect is somehow to prevent debts being raised after six weeks. I would simply observe that the way in which s 1237A operates is to make the discretion to waive on grounds of administrative error unavailable where Centrelink has raised the debt within six weeks.
The debts of Mr and Mrs Cameron can only be waived under s 1237A(1) of the Act if the debts were attributable solely to an administrative error made by the Commonwealth. I had evidence from Mr M Richards, a Centrelink complex assessment officer, that when the documents were lodged in relation to the claim, a Centrelink officer would have entered the information as provided. He said there was nothing on the face of the documentation to suggest there was anything untoward. Mr Gibbs had said the superannuation pension complied; it was a lifetime pension, issued by a retail provider. Thereafter, at annual reviews, Centrelink officers would simply update the income amounts and adjust the rate of age pension accordingly.
I am satisfied that Centrelink was not in error in accepting the information provided by Mr Gibbs and taking it at face value. Mr Gibbs was acting as the Cameron’s agent in these dealings, and Centrelink was entitled to rely on the information he provided, he being a specialist in these kinds of products. Not unlike the Australian Taxation Office, Centrelink relies increasingly on self-reporting in order to assess a person’s entitlements. I could find nothing in the documentary materials to suggest that Centrelink was at fault at any stage of the assessment process over the years in which the debts were incurred.
The income from the pensions was simply updated annually, with nothing to disturb the Centrelink belief that these were complying pensions. I find that the debts were not attributable solely to administrative error by the Commonwealth, and so the debts cannot be waived on this ground.
Section 1237AAD of the Act provides for waiver of a debt where there are special circumstances (other than financial hardship alone).
Mr and Mrs Cameron submitted that a number of grounds make their circumstances “special”. In particular, Mrs Cameron emphasised that the purpose of the discretion is to ensure against injustice. They relied on their honest attempts to provide all requested information to Centrelink and their reasonable reliance upon their financial adviser to correctly complete Centrelink forms concerning their investments. However, they did not accept that their respective debts should stand because, in their words, it would be “unfair and unjust” to hold them responsible for a debt caused by the actions of another (Mr Gibbs). They found it untenable that their innocent error had been allowed to continue for the time that it did, and result in such a large burden of debt. In those circumstances, they submit, it would be most unjust and would cause hardship to recover from them the amounts owing.
In Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33], Besanko J stated, in respect of “special circumstances”:
I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances … It was not the intention of parliament to confine the exercise of the discretion to an exceptional case … there must be something that distinguishes the case from the ordinary or usual case.
In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, the Federal Court said that only sufficient cases of hardship or unfairness would justify departure from the general rule that overpaid moneys should be recovered.
In exercising the discretion it must be remembered that the primary consideration is always to ensure that moneys paid out of the public purse incorrectly are restored. It would undermine the effect of that principle to waive the debts here, because Mr and Mrs Cameron are in a position to repay the amounts they incorrectly received (even though the repayments will continue for a number of years).
Mr and Mrs Cameron do have other resources, having apparently been careful to ensure that they would be largely self-funded in retirement. In that regard, it seems to me that their modest style of living is covered by their current income. It seemed clear, on the evidence presented, that Mr and Mrs Cameron are able to pay, without undue distress, the $222 per fortnight that Centrelink is presently accepting as fortnightly instalments to discharge the debts.
Mr and Mrs Cameron have significant savings. I fully appreciate that, for age pensioners in their eighties, to incur debts of this size is a burden that has caused them much stress, and will continue to impact on them in their retirement years. However, I cannot conclude that there are any grounds of financial hardship, as understood in the law, on the evidence before me. Mr and Mrs Cameron do have some capacity to repay by withholdings.
Even if I was satisfied, which I am not, that Mr and Mrs Cameron’s circumstances were sufficiently special, I would not exercise the discretion to waive the debts in whole or in part at this point in time. Mr and Mrs Cameron are taking action against their financial adviser, thorough the Financial Ombudsman’s office. Their case has not been determined, but has been referred to a panel for consideration. It is only appropriate that Mr and Mrs Cameron exhaust their other available remedies against the adviser whose error created the problem, ahead of seeking remedies under the Act.
Taking all matters into account, I find that the circumstances, although distressing and difficult, do not constitute “special circumstances” and that the debts should not be waived in whole or in part.

DECISION

The Tribunal affirms the decision under review.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of M J Carstairs, Senior Member.

Signed: ..................[Sgd]...............................................
Mátyás Kochárdy, Associate

Dates of Hearing  20 July & 13 September 2010
Date of Decision  1 October 2010
The Applicants were self-represented
Solicitor for the Respondent     Sparke Helmore