Carpenter and Secretary, Department of Social Services (Social services second review)

[2016] AATA 307

Carpenter and Secretary, Department of Social Services (Social services second review) [2016] AATA 307 (13 May 2016)

Division	GENERAL DIVISION
File Number(s)	2015/5736
Re	Mr Henry Carpenter
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Mr Conrad Ermert, Member
Date	13 May 2016
Place	Melbourne

The Tribunal affirms the reviewable decision.

..................[sgd]..........................................

Mr Conrad Ermert, Member

SOCIAL SERVICES - age pension - details of income stream - non-disclosure of income from superannuation fund - age pension debt - whether debt due solely to an administrative error made by the Commonwealth - whether special circumstances - decision affirmed

LEGISLATION

Social Security Act 1991 (Cth)

CASES

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

Groth and Secretary, Department of Social Security (1995) FCA 1708

REASONS FOR DECISION

Mr Conrad Ermert, Member

INTRODUCTION

1. On 29 April 2011 Mr Carpenter, the Applicant, applied for an age pension.  On 27 May 2011 Centrelink granted his age pension to be paid from 29 April 2011.  Centrelink is the service provider for the Secretary, Department of Social Services, the Respondent.

2. On 19 February 2015 Mr Carpenter advised Centrelink that, on 17 December 2014 he and his wife had made purchases with money derived from the closure of his superannuation fund.  Centrelink sought further information from Mr Carpenter about income from the fund.  Mr Carpenter provided the information as requested.

3. On 1 May 2015 an officer of Centrelink determined that during the period 29 April 2011 to 16 December 2014 Mr Carpenter had been paid $56,473.59 but was entitled to receive only $20,088.52.  Centrelink raised a debt of $36,385.07.

4. Mr Carpenter sought a review of the decision to raise the debt.  On 16 June 2015 an Authorised Review Officer (ARO) of Centrelink affirmed this decision.  Mr Carpenter sought a review of the ARO decision.  On 25 September 2015 a Tribunal of the Social Services and Child Support Division decided to set aside the decision of the ARO and send the matter back for reconsideration in accordance with the following directions:

   ·Mr Carpenter owes a debt of $36,120.44 for the period 29 April 2011 to 16 December 2014; however

   ·The debt for the periods 29 April 2011 to 30 June 2011 and 5 October 2012 to 29 June 2013 must be waived on the basis of administrative error under subsection 1237A(1) of the Social Security Act 1991; and

   ·The remainder of the debt is recoverable.

5. This matter is a second tier review of that decision.

   HEARING

6. At the hearing Mr Carpenter represented himself with the support of his wife.  Mrs Susan Carpenter gave evidence under oath and also made submissions on his behalf.  Ms Vincci Chan, a departmental lawyer, represented the Respondent.

7. I had before me the documents provided by the Respondent in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (the T-documents).

8. For the Respondent, I took in for consideration the Respondent’s Statement of Facts and Contentions dated 31 March 2016.

   LEGISLATION

9. The relevant legislation for this matter is contained in the:

   ·Social Security Act 1991 (Cth) (the Act);

   ISSUES

10. At the hearing both parties confirmed that Mr Carpenter owes a debt to the Commonwealth of $36,385.07 for the receipt of pension benefits to which he was not entitled.  The Respondent concedes that the debt from 29 April 2011 to 30 June 2011 and from 5 October 2012 to 29 June 2013 should be waived.  This concession has the effect of reducing the amount of the remaining debt to $31,069.44.

11. The only issue between the parties is whether the recovery of the remaining debt should be waived.  

12. Two sections of the Act allow for the waiver of debt:

    ·Section 1237A(1) requires the Secretary to 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 the payment in good faith.

    ·Section 1237AAD of the Act provides a discretion to waive the right to recover all or part of the debt if the Secretary is satisfied that: the debt did not arise from the person knowingly making a false statement; or omitting to comply with the Act; and there are special circumstances that make it desirable to waive the debt.

13. The issues I must determine are whether the remainder of Mr Carpenter’s debt must be waived (s 1237A(1)), or may be waived (s 1237AAD).

    EVIDENCE

14. Mrs Carpenter said that they believed they had provided all the information required.  She said that in October 2012 they advised Centrelink that they had withdrawn $40,000 from their superannuation fund to buy a caravan.  Mrs Carpenter said that the Centrelink officer told them there was no need to provide this information as they still lodged tax returns each year. 

15. Mrs Carpenter explained that in December 2014 she and her husband had changed their self-managed superannuation fund into a managed fund.  They advised Centrelink of the change.  She also said that the Centrelink officer told them that she could not enter the information into the computer as the computer did not show an income stream for the previous four years. 

16. Mrs Carpenter recalled receiving several letters from Centrelink. 

17. Ms Chan asked whether the realisation that they were withdrawing about $20,000 more each year from their superannuation fund triggered an awareness of increased income.  Mrs Carpenter said that they were doing nothing differently from their practices of 2012.  Because the Centrelink officer had told them in 2012 that they need not provide the information, they thought there was no need for them to do anything.  She said they told Centrelink when they made the changes to their superannuation fund. 

18. When referred to the Centrelink file note dated 5 October 2012 Mrs Carpenter denied that  they were advised will need 2012 tax returns when completed by next April.

    TRIBUNAL CONSIDERATIONS

    Section 1237A

19. Section  1237A of the Act provides relevantly:

    (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).

20. The first issue for consideration is whether the portions of the debt not included in the Respondent’s concessions are attributable solely to an administrative error made by the Commonwealth. 

21. There is no dispute that the income Mr Carpenter derived from the superannuation fund increased over the 2012, 2013 and 2014 income years.  In her submissions Ms Chan referred to the entries in the records of the Carpenter Superannuation Fund which show payments from the fund of $21,522 in 2012; $44,972 in 2013 and $61,136 in 2014. 

22. Ms Chan submitted that Centrelink issued the following notices advising of the need to inform Centrelink of changes in income:

    ·27 May 2011 - which advised also that Mr Carpenter’s age pension was being paid under the income test;

    ·27 May 2011 - which advised also that the rate of payment was based on a combined annual income of $843.24; and

    ·4 July 2012 - which also re-iterated that Mr Carpenter’s pension was being paid under the income test.

23. Mr Carpenter’s first advice of additional income was on 5 October 2012 when he informed Centrelink that he had withdrawn $40,000 from his superannuation fund.  There is no evidence of advice regarding the income of $21,522 in the 2012 income year nor of the $61,136 income in the 2014 income year.

24. During the period 1 July 2011 to 16 December 2014 the evidence is that Mr Carpenter’s income increased in the order of $20,000 per year.  The only advice given to Centrelink was that of 5 October 2012, which has already been taken into account within the concession for the period 5 October 2012 to 29 June 2013.  Despite having been informed by Centrelink of the need to advise changes in income Mr Carpenter did not do so. 

25. Subsection 1237A(1) of the Act requires the Secretary to waive the right to recover the portion of a debt that is attributable solely to an administrative error made by the Commonwealth. In relation to the periods not included in the Secretary’s concessions Mr Carpenter did not advise Centrelink of his increased income. By not advising Centrelink of the increase he contributed to the error which resulted in his debt for the period. Therefore the debt is not attributable solely to an administrative error made by the Commonwealth. Accordingly the provisions of the subsection are not satisfied and the Secretary is not required to waive the right to recover the debt under the provisions of section 1237A of the Act. I find accordingly.

    Section 1237AAD

26. Section 1237AAD of the Act provides relevantly:

    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, the

    Administration 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.

27. There is no evidence that Mr Carpenter knowingly made a false statement or knowingly failed to comply with a provision of the Act.  I accept the evidence that Mr Carpenter believed he had been told by a Centrelink officer in 2012 that he did not have to provide further information.  I am satisfied that Mr Carpenter did not knowingly make a false statement and did not knowingly comply with provisions of the Act.

28. In considering whether Mr Carpenter’s circumstances are special circumstances within the meaning of the Act I follow the decisions made in Beadle and Director-General of Social Security (1984) 6 ALD 1 and Groth and Secretary Department of Social Security (1995) FCA 1708. The effect of these decisions is that for circumstances to be considered as special they must, in their context, be unusual, uncommon or out of the ordinary and that nothing unfair, unintended or unjust had occurred as a result.

29. Although not making specific contentions as to special circumstances I accept from his evidence that Mr Carpenter considers as special that he had no knowledge of having to supply an income stream and was not asked to provide one.  I also accept that he was not aware of having been advised by Centrelink of the requirement to provide his 2012 tax returns.

30. While I accept that Mr Carpenter did not understand the requirement I do not accept that a claimed lack of knowledge or information of his obligations is unusual, uncommon or out of the ordinary in the context of claims for benefits.

31. I accept that Mr Carpenter regards the requirement to repay the debt as unfair.  However Mr Carpenter had been advised in the notices from Centrelink that the rate of his pension was based on the income test and changes in his income would affect his pension payments.  He was aware that his income increased by about $20,000 per year for each year in question.  He was also in a position to know that such amounts exceeded the amount of income on which his pension payments had been calculated.  Further, over the period he enjoyed the use of the extra amount of pension being paid to him, an amount to which he was not entitled. 

32. I consider that a decision to waive a debt on the basis of an uncorroborated statement of an applicant which is contrary to a documented file note would be an unfair burden on all other taxpayers.  A decision to waive under such circumstances would also be detrimental to the operation of the administration of the scheme of benefits. 

33. A decision to not waive the rights to recover the debt does not create an outcome which is unintended.  The provisions of the Act are clearly intended to provide for the recovery of debts that are not due to special circumstances.  As the decision to recover the debts is not unfair, does not result in an outcome that is unintended and is in accordance with the provisions of the Act it cannot be unjust.

34. I find that Mr Carpenter’s circumstances are not special circumstances within the meaning of the Act.  Accordingly I am not able to exercise the discretion available in subsection 1237AAD of the Act.

    CONCLUSION

35. I have found that the debt for the periods from 1 July 2011 to 4 October 2012 and from 1 July 2013 to 16 December 2014 was not attributable solely to an administrative error of the Commonwealth. As a result the Secretary cannot waive the right to recover the debt under the provisions of subsection 1237A(1) of the Act.

36. I have found that there are no special circumstances that would allow the Secretary to waive the right to recover the debt under the provisions of section 1237AAD of the Act.

37. There are no other provisions in the Act under which the right to recover the debt could be waived.  Accordingly the debt for the periods not included in the concessions remains recoverable.  I find that the decision under review is correct.

    DECISION

38. I affirm the reviewable decision.

I certify that the preceding 38 (thirty -eight) paragraphs are a true copy of the reasons for the decision herein of Mr Conrad Ermert, Member

...........[sgd]..........................................

Associate

Dated 13 May 2016

Date(s) of hearing	28 April 2016
Applicant	In person
Advocate for the Respondent	Ms Vincci Chan, Government Lawyer