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

Carper and Secretary, Department of Social Services (Social services second review) [2018] AATA 3191 (28 August 2018)
Division:GENERAL DIVISION
File Number(s): 2017/0373
Re:Mark Carper
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member K Parker
Date:28 August 2018
Place:Melbourne

The Tribunal sets aside the decision under review, and in substitution decides that the debt raised by Centrelink against Mr Mark Carper for overpayments of his carer payments from 4 April 2012 to 16 February 2016 be waived under s 1237A and s 1237AAD of the Social Security Act 1991 (Cth).
...........[sgd].............................................................
Member K Parker
Debt – debt raised to recover overpayments of carer payments – overpayments arose because debtor’s wife’s income from invalidity pension not factored into calculation – debtor’s wife’s invalidity pension information disclosed to Centrelink but not coded onto system – whether Centrelink provided incorrect advice to debtor about effect of invalidity pension on carer payments – whether whole or part of debt should be written off – whether debtor had no capacity to repay the debt – whether deductions from benefits to repay the debt would cause severe financial hardship – whether whole or part of the debt should be waived – whether debt solely attributable to an administrative error on the part of the Commonwealth – consideration of periodic information notices provided to the debtor – whether debtor received the overpayments in good faith – whether debtor knowingly failed to comply with his statutory obligations – whether special circumstances exist to warrant waiver of debt – whether more appropriate to waive rather than write off the debt – circumstances warranted waiver of debt – decision under review set aside
Legislation
Social Security Act 1991 (Cth) s 8, 9, 210, 1064, 1072, 1099D, 1223, 1236, 1237, 1237A, 1237AAD
Social Security Act (Administration) Act 1991 (Cth) s 68, 72, 73
Superannuation Industry (Supervision) Act 1993 (Cth)
Cases
Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Re Drake and Minister for Immigration and Ethnic Affairs (No.2)(1979) 2 ALD 634
Dranichnikov v Centrelink [2003] FCAFC 133
Groth and Secretary, Department of Social Security (1995) FCA 1708
Haggerty v Department of Education Training & Youth Affairs [2000] FCA 1287
Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484
Oberhardt v Secretary, Department of Education, Employment and Workplace Relations (2008) FC 1923
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565
Secretary, Department of Social Security v Hulls (1991) 13 AAR 414
Secondary Materials
The Social Security Guide – published by the Department of Social Services and available on its website
REASONS FOR DECISION
Member K Parker
28 August 2018

Mr Mark Carper is the recipient of carer payments under the Social Security Act 1991 (Cth) (Act). He cares for his wife, Mrs Felicity Carper, who is a recipient of a disability support pension (DSP) under the Act. Mrs Carper has cerebral palsy, diabetes, hypertension and a temporary pancreatic disorder.[1]
[1] The Secretary lodged a set of documents with the Tribunal pursuant to its obligation under s 37 of the Administrative Appeals Act 1992 (Cth) (T-Documents). Refer T-Document T9.
On 18 April 2016 Centrelink raised a debt of $22,576.23 against Mr Carper to recover overpayments made to him from 4 April 2012 to 16 February 2016.[2] Mr Carper was paid amounts to which he was not entitled under the Act because Mrs Carper was paid income in the form of an invalidity pension by ComSuper under the Public Sector Superannuation Scheme (PSS). This pension was not factored into the calculation of Mr Carper’s rate of carer payments.
[2] Refer T-Document T28.
Following a review by a Centrelink authorised review officer (ARO), the debt was changed to $21,764.51 referrable to the period from 4 April 2012 to 16 February 2016.[3] Mr Carper sought review before the Child Support and Social Services Division of the Administrative Appeals Tribunal (AAT1) seeking that the debt be waived.
[3] Refer decisions of the ARO on 2 June 2016 (T-Document T18) and 22 June 2016 (T-Document T20).
On 20 December 2016, the AAT1 set aside the ARO’s decision and remitted the matter to Centrelink for reconsideration in accordance with a direction that the portion of the debt referrable to the period from 4 April 2012 to 27 July 2012 be waived pursuant to s 1237A(1) of the Act, on that bases that:[4]
(a)it was solely attributable to an administrative error on the part of the Commonwealth (i.e. Centrelink failed to apply information provided to it by Mrs Carper on 24 January 2012); and
(b)Mr Carper had received the overpayments in good faith.
[4] Refer T-Document T3/19-29.
The Secretary, Department of Social Services (Secretary) accepts the decision of the AAT1. Specifically, the Secretary accepts that the debt referrable to the period 27 February 2012 to 27 July 2012 should be waived.[5] Accordingly, the Secretary contends that the AAT1 decision should be affirmed.
[5] Refer paragraph [5.18] of the Secretary’s Statement of Facts, Issues and Contentions dated 30 October 2017 (Secretary’s SFIC) and paragraph [3.10] of the Secretary’s Further Submissions dated 1 December 2017 (Secretary’s Further Submissions).
However, the Secretary contends that no part of the debt for the period from 28 July 2012 to 16 February 2016 was solely attributable to an administrative error on the part of the Commonwealth. Instead, the Secretary contends that it arose due to Mr Carper’s and Mrs Carper’s “failures to notify Centrelink of material facts”, being the income received by Mrs Carper.[6]
[6] Refer paragraph [3.12] of the Secretary’s Further Submissions.
Mr Carper contends that the debt for the entire period from 4 April 2012 to 16 February 2016 should be waived for the reasons set out in more detail below.
The hearing of this application took place jointly with the hearing of an application for review lodged by Mrs Carper in relation to a debt raised by Centrelink against her to recover overpayments of DSP arising from the same set of circumstances.[7]
[7] Refer AAT application numbered 2017/0534.
ISSUES
The issues arising for determination by the Tribunal are:
(c)whether the debt was properly raised against Mr Carper; and
(d)if so:
(i)whether discretion to write off the debt (or any part of it) is enlivened under s 1236 of the Act (because the debt is irrecoverable at law or there is no capacity to repay the debt without causing severe financial hardship) and if so, whether it should be exercised;
(ii)whether the debt (or any part of it) should be waived because the circumstances set out in s 1237A apply to Mr Carper (i.e. the debt was solely attributable to an administrative error on the part of the Commonwealth and the overpayments were received in good faith);
(iii)whether discretion to waive the debt (or any part of it) is enlivened because the circumstances in s 1237AAD apply to Mr Carper (including that special circumstances exist) and if so, whether it should be exercised.
LEGISLATIVE FRAMEWORK
Section 210 of the Act provides that a person’s rate of carer payments is worked out using Pension Rate Calculator A at the end of s 1064 of the Act. A person’s income and assets are taken into account in calculating the rate of carer payments. There was no dispute between the parties that Mr Carper was partnered with Mrs Carper for the purpose of applying the income test and assets test.
Part 3.10 of the Act sets out general provisions relating to the ordinary income test. Section 1072 provides that a reference to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated with any reduction, subject to an exception that is not relevant in this application. “Ordinary income” is defined in s 8 of the Act to mean “income that is not maintenance income or an exempt lump sum”. In turn, “income” is defined in s 8 of the Act to include “an income amount earned, derived or received by the person for the person’s own use or benefit”.
Section 1099D of the Act deals specifically with payments received from a defined benefit scheme, in which case the person is taken to have received the annual payment less a deductible amount. “Defined benefit scheme stream” is defined in s 9(1F) of the Act including that the income stream is taken to be a pension for the purposes of the Superannuation Industry (Supervision) Act 1993. The Tribunal is satisfied that the superannuation pension paid to Mrs Carper by ComSuper under the PSS met the definition of a defined benefit scheme stream; that it should have been factored into the calculation of Mr Carper’s carer payments; and that the debt was properly raised. This was not an issue that was in dispute between the parties at the hearing.
Section 68(2)(a) of the Social Security (Administration) Act 1991 (Administration Act) empowers the Secretary to give a notice to a person to whom a social security payment (such as a carer’s payment) is being paid, requiring that person to inform the Department (Centrelink) if a specified event or change of circumstances occurs or is likely to occur. Section 72 of the Administration Act requires the notice be given in writing, personally, by post or in any other manner approved by the Secretary; specifying how the information is to be given by the person to the Department; and specifying when the information is to be given. Section 72(3)(b) of the Administration Act provides that a person must give the information required to be given under the s 68 notice within 14 days after the day on which the event or change of circumstances occurs; or the day on which the person becomes aware that the event of change of circumstances is likely to occur.
Section 1223(1) of the Act provides as follows:
(1) 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.
Section 1236 of the Act provides that the Secretary may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise. Sections 1236(1A), (1B) and (1C) provide that:
(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…
(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or …
(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor's social security payment; or
(b) …;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
Section 1237 of the Act provides that the Secretary may waive the Commonwealth’s right to recover a debt, in part or in whole, only in the circumstances set out in specific provisions of the Act. These provisions include s 1237A (on the grounds of administrative error) and s 1237AAD (on the grounds of special circumstances). Once a debt has been waived, recovery of the debt cannot be pursued at a later time.[8]
[8] Refer paragraph 6.7.3.20 of the Social Security Guide.
Section 1237A of the Act provides as follows:
(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).
(1A) Subsection (1) only applies if:
(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
Section 1237AAD of the Act provides as follows:
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.
Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
BACKGROUND
Mrs Carper worked at Centrelink for approximately eight years. Her employment ended in January 2012; at which time she applied for and received a retirement invalidity pension from ComSuper under the PSS. Centrelink assisted Mrs Carper to make an application to receive the retirement invalidity pension. Before that time Mrs Carper was previously in receipt of a partial pension.
Centrelink records indicate that Mrs Carper made contact with Centrelink on 11 January 2012, and it was noted that Mrs Carper had been granted “a medical pension” and was “considering her options”. It was noted on the Centrelink records that Mrs Carper wanted to make an appointment at the Geelong Centrelink office.[9]
[9] Refer T-Document T33/373. Mr Carper stated in his letter lodged with the Tribunal on 6 December 2017 that he and Mrs Carper went to the Geelong Seniors Centrelink office because that office specialised in serving disabled customers.
Centrelink records show an entry for 25 January 2012 in relation to Mrs Carper’s mobility allowance.[10] This record notes that Mrs Carper had retired on 18 January 2012.
[10] Refer T-Document T33/372.
Centrelink records show a further entry for 25 January 2012, noting details of a Financial Information Service (FIS) interview with Mr and Mrs Carper. The following note was made by Centrelink on its computer system:[11]
Felicity attended to discuss the PSS super scheme and how the end benefit is calculated._Felicity advised that she has been granted a PSS invalidity retirement. Contacted ARIA and confirmed that the invalidity calculation is based final average salary*Muliple at age 60.-Also confirmed with Aria that the final average salary is based on super salary at her last 3 birthdays._Discussed with Felicity that she may wish to consider ceasing her employment after her next birthday on 5/2/2012 as it would have a positive impact on her lifetime pension._Assisted Felicity complete the PSS paperwork for her lifetime pension with the assistance of PSS member services via the phone._ Paperwork handed to DHS HR department to forward to the PAC team to complete their part of the PSS paperwork._Referred Felicity to CSO to lodge paperwork as she has recently been granted a PSS pre assessment payment which is paid up until a decision is made around retirement on invalidity grounds._Flagged with felicity that as a result of the pre assessment payment she may have been overpaid DSP and Mark carer payment. Discussed that felicity will need to notify when her lifetime pension commences.
[11] Refer T-Document T33/372.
Mr Carper and Mrs Carper gave evidence that they attended a meeting at Centrelink’s offices on 8 February 2012. Mrs Carper was required to sign employment termination papers. Mr Carper contended that by that time Mrs Carper had already received her first pension payment and that Centrelink knew about it, “because we documented the transaction that we had received our first payment made 8 February 2012 at a Centrelink office in Geelong”.[12] Mr and Mrs Carper gave evidence that they were informed by the Centrelink representatives (eight in total) at that meeting, that they need not worry about the pension payment and that Mrs Carper would receive the maximum amount. Mr and Mrs Carper gave evidence that they were told by the Centrelink representatives that Mrs Carper was going to have “special waivers” because they had an “unusual situation” and that “it was fine to get both”. Mrs Carper said she kept asking if it was fine and was assured by the Centrelink representatives at the meeting that “it was fine to get both”.
[12] Refer Mr Carper’s submission lodged with the Tribunal on 6 October 2017.
There were no records of the meeting on 8 February 2012 in the T-Documents. The Tribunal called for production from the Secretary of Centrelink’s HR file relating to Mrs Carper for 2011 and 2012 in anticipation that it may contain notes or other documents evidencing what took place at that meeting. Mrs Carper gave evidence that “Matt” the FIS officer, took notes at the meeting. The Tribunal notes from the AAT1 decision that Mrs Carper gave the following evidence about a meeting with an FIS officer that she said she attended on 25 January 2012:[13]
…[Mrs Carper] recalls that the FIS officer was trying to make an entry onto her computer records about the invalidity pension she would be receiving and was having difficulty and had to call in others to help. By the end there were a number of people present and they ended up having a round table discussion about her entitlement and they calculated her rate of disability support pension based on the information she provided from ComSuper. They told her that her case was unique.
[13] Refer T-Document T3/22 (at paragraph [22] of the AAT1’s Reasons for Decision).
It appears that there may have been some confusion on Mrs Carper’s part about whether the meeting with the eight Centrelink representatives took place on 25 July 2012 or 8 February 2012. However, I do not consider that anything turns on it. Either way, Centrelink was requested to search for copies of any notes taken at that meeting. The Secretary informed the Tribunal after the hearing, that the Secretary did not have in its possession any further documents in relation to the (alleged) meeting on 8 February 2012 or the meeting on 25 January 2012 (except for T-Document T33/372).[14]
[14] Refer to Secretary’s Further Submissions.
On 3 April 2012 Mrs Carper was sent an information notice by the Secretary.[15] This notice contained information about his carer payments, income and other details. The notice included a request to contact Centrelink if any of the stated details had changed.
[15] Refer T-Document T21/208.
Mr Carper was sent further information notices by Centrelink on 19 June 2012 and 2 July 2012, stating that his combined income with Mrs Carper was 42 cents.[16] He was requested to contact Centrelink if that information was incorrect. Mrs Carper was sent a letter from Centrelink dated 3 July 2012 stating that her combined annual income was 42 cents and requesting that she advise Centrelink if this was wrong or if her income had changed.[17]
[16] Refer T-Documents T21/200&194.
[17] Refer T-Document T32.
Mr Carper stated that he and Mrs Carper were told by two Centrelink representatives on 27 July 2012, following “a thorough interview”, that they would have no further need to contact Centrelink unless their situation changed.

A Centrelink record created on 25 July 2012 stated as follows:[18]
documents scanned to comp tem to assess compensation payments received by customer com supers invalidity assessment section approved pre-assessment payments (PA_...scanned file to follow up payments received by customer. Paperwork previous lodged but nothing been updated for customer. Paperwork filed scan batch gee esc 25072012
[18] Refer T-Document T33/371.
A Centrelink record annotated on 14 April 2016 stated that:[19]
(a)“Scanned doc UNS005 dated 25/07/2012 shows Geelong office scanned the Comsuper letter to customers record”. Following a search by the Secretary after the hearing, the Secretary confirmed that the scanned document UNS005 was a copy of a letter dated 6 January 2012 from Payroll Services, Recruitment, Pay and Advice Branch of the Department of Human Services to Mrs Carper to advise that ComSuper’s Invalidity Assessment Section had approved pre-assessment payments for her;
(b)the Geelong Centrelink office referred this document to the Compensation Team”;[20] and
(c)“Compensation Team actioned the referral on 27/07/2012 & deemed an inappropriate referral. No further action done”.
[19] Refer T-Document T22/237.
[20] Refer T-Document T22/235.
On 27 July 2012, a Centrelink record shows that Mrs Carper contacted “COMP VIC AND TAS” regarding “COMSUPER payments”. The record states (emphasis added):[21]
Customer is in receipt of payments through COMSUPER. See corre on ECD). As payments made to customer are part of her Superannuation Plan, the payments are not regarded as a payment of compensation for the purposes of the Social Security Act and therefore the payments cannot be assessed under Part 3.14 of the Social Security Act. These payments are to be means tested as income streams. Section 9(1) of the SSAct, deals with ‘income streams’ and captures payments made under arrangements that are regulated by the Superannuation Industry Supervision (SIS) Act. This applies REGARDLESS of whether or not there is an ‘offset clause’ in the policy or whether the CUSTOMER did or did not make contributions to the Policy. Any payments from these policies are to be means tested as income streams and to be coded on SUPS/SUPL Guide Regs: 4.3, 9.30, 4.9.1.30 and E-ref 108.05160. Your office needs to follow up payments made, code and monitor. PLEASE NOTE: Compensation Recovery Teams do not deal with these cases. CMS record closed – NAC (Not affected by compensation provisions)
[21] Refer T-Document T33/370.
There was no evidence before the Tribunal that Centrelink had undertaken the action identified by it as highlighted in the above file note. There was no evidence before the Tribunal that Centrelink’s views as set out in this file note were conveyed to Mr and Mrs Carper. It appeared to be a message from staff in one section of Centrelink to staff in another section of Centrelink.
Mr Carper was sent an information notice from Centrelink on 10 August 2012 setting out details of his income, assets, savings and value of his personal effects.[22] This notice stated that Mr Carper’s income was 21 cents annually and that the combined annual income (i.e. combined with income received by Mrs Carper) was 42 cents. It requested that Mr Carper contact Centrelink if any of the information on that notice was incorrect. The notice makes the following request:
You must tell us within 14 days if any of the changes listed below happen or are likely to happen to you and/or your partner… or the person(s) you care for. This request is an information notice given under social security law…
Your or your partner’s gross income changes. Changes means your income starts, stops, recommences or amounts vary. Gross income includes, but is not limited to: Earnings; Employment income; if you voluntarily sacrifice earnings into a superannuation fund; paid leave such as annual, long service or sick leave, sick or accident insurance; or commissions, director’s fees and non-cash fringe benefits from your employer… Pensions and annuities: An income stream from an allocated, lifetime or term pensions from other countries. Other income: Income from rent, boarders or lodgers, lump sum payments, other regular payments, regular gifts or allowances, other government payments, matured life insurance policies, fringe benefits or any other income from any source (including income from other countries)…
If you are not sure about the information you need to provide, please contact us as soon as possible.
[22] Refer T-Documents T21/186.
Mrs Carper was also sent a letter from Centrelink on 10 August 2012 stating that her combined annual income (with Mr Carper) was 42 cents and requesting her to contact Centrelink within 14 days in relation to a change or likely change to her income.[23]
[23] Refer Document T32/321.
Mr and Mrs Carper said that they attended Centrelink’s Geelong Seniors office in person on this day.[24] Centrelink records show that on 10 August 2012 Mrs Carper and Mr Carper contacted “GEELONG SENIORS” about “income statement – immediate”.[25] The Secretary’s representative contended that the reference to “issued immediate income confirmation” was a common line or sentence used by Centrelink to indicate that an income letter had been generated to the customer and the reference to “G7R” was a reference to the Centrelink file note itself.[26]
[24] Refer submission sent to the Tribunal by Mr Carper by email on 4 December 2017.
[25] Refer T-Document T33/370 and T22/244.
[26] This contention was made by the Secretary’s representative at a telephone directions hearing before the Tribunal on 28 August 2018.
Mr Carper said that he and Mrs Carper had called Centrelink and PSS many times to ensure that they had followed “due diligence in reporting” and were told on the telephone by Centrelink representatives to ignore the information provided on the notices. The amount of combined income recorded on those notices was 42 cents. At the hearing, Mrs Carper said she contacted Centrelink at least every six months and they had told her it was fine.
Separately, Mr Carper gave evidence that he and Mrs Carper had been told that the PSS had directly notified Centrelink of the payment and that it had done so on a semi-annual basis.[27]
[27] Refer also paragraph [45(d)] of these Reasons for Decision.
Mrs Carper’s telephone records were submitted showing details of her telephone contact with Centrelink on its general number 132717 or “older Australians” number 132300, as follows:[28]
(a)three calls on 11 January 2012 at 9.15am for 3 minutes, at 9.19am for 22 minutes and 9.41am for 5 seconds;
(b)one call on 3 February 2012 at 8.17am for 22 minutes;
(c)two calls on 23 July 2012 at 9.09am for 11 minutes and 9.55am for 34 minutes;
(d)two calls on 25 February 2014 at 2.35pm for 2 minutes and at 2.37pm for 3 minutes;
(e)two calls on 31 March 2014 at 2.04pm for half a minute and at 2.06pm for 32 minutes;
(f)one call on 2 May 2014 at 2.38pm for 3 minutes;
(g)one call on 1 July 2014 at 12.06pm for 25 minutes; and
(h)one call on 10 July 2014 at 12.54pm for 29 minutes.[29]
[28] Refer set of Virgin mobile telephone records addressed to Mrs Carper dated 17 August 2017 which were lodged at the hearing of this application, and further email sent by Mr Carper to the Tribunal on 25 August 2017.
[29] Centrelink records show that Mrs Carper contacted Centrelink on 10 July 2014 to advise that her father (for whom she was nominee) had passed away.
Subsequent contact by Centrelink in 2016 and the raising of the debt against Mr and Mrs Carper
Mrs Carper was contacted by Centrelink on 1 February 2016 for an “unearned income intervention” noting that she had received a retirement invalidity pension from ComSuper.[30] The record of this contact indicates that Mrs Carper informed Centrelink that she had already provided this information to Centrelink. The record states, “Cus also advised her Father passed away and she received an inheritance, which she also states he has advised us about”.[31]
[30] Refer T-Document T33/360.
[31] Refer T-Document T33/360.
On 17 February 2016, PSS sent a letter to Centrelink to provide details of Mrs Carper’s PSS pension for the period from 8 February 2012 to 25 December 2015.[32]
[32] Refer T-Document T11.
A Centrelink record dated 14 April 2016 contained details of payments received by Mrs Carper from ComSuper for the period. Those records also stated that:[33]
(a)“customer” had advised Centrelink of payments and had provided verification;
(b)Centrelink had not coded the information onto “customers records”;
(c)Centrelink had sent to “customer/partner” letters dated 3 April 2012, 3 July 2012 and 10 August 2012 clearly showing what was being held on “customers/partners” Centrelink records;
(d)Comsuper information suggested that Comsuper payments had increased twice a year in June and December and they were not advised by “customer” to Centrelink.
[33] Refer T-Documents T22/237&238 and T33/361.
A Centrelink record referrable to Mr Carper dated 15 April 2016 refers to a debt for the period from 8 February 2012 to 3 April 2012 and states that it was waived due to a clerical error and the payments had been received in good faith.[34]
[34] Refer T-Document T 22.236&237.
A further Centrelink record referrable to Mr Carper dated 15 April 2016 refers to a debt for the later period from 4 April 2012 and 16 February 2016.[35] It is stated on this record that the “waive option” was considered but it was “not appropriate”. It was noted that “cust failed to advise partner’s Other Income from 08 February 2012”.
[35] Refer T-Document T22/236.
There is an entry on Centrelink’s records on 20 May 2016 that Mr Carper agreed to make repayments of the debt by $15 instalments, to be deducted fortnightly from his payment.[36]
[36] Refer T-Document T22/232.
In an email to the Tribunal dated 25 August 2017, Mr Carper attached an email received from Mr Jonathan Keegan, Customer Information Representative, PSS. Mr Keegan’s email confirmed the following:
(a)Mrs Carper’s PSS pension commenced on 8 February 2012;
(b)the type of scheme held was a Public Sector Superannuation Scheme;
(c)the scheme was an invalid pension; and
(d)the pension payment details comprising the gross fortnightly amount, tax free component and effective date had been provided to Centrelink “as a part of our general CPI run every 6 months. Therefore, Centrelink should have these details within their files”.
Financial position of Mr and Mrs Carper
Mr and Mrs Carper gave evidence about their current financial position. They said that Mrs Carper was receiving a net amount of $827.06 per fortnight from ComSuper and $127 per fortnight for DSP and Mr Carper was receiving $127 per fortnight for carer’s payment. The total household income is $1,081.06 per fortnight. Mr Carper said that the rent for their home was $660 per fortnight. This home has been modified to provide disability assistance to Mrs Carper. Mr and Mrs Carper have $421.06 per fortnight remaining after rent, to pay for their day-to-day living expenses. Mrs Carper and Mr Carper said their joint savings at the time of the hearing were $13,000. Mr and Mrs Carper said that they did not own any property.
CONSIDERATION
The Tribunal has considered the various documents and submissions lodged with the Tribunal by Mr and Mrs Carper and the Secretary.
Should the debt be written off under s 1236
Discretion to write off the debt under s 1236 of the Act will be enlivened where the debt is irrecoverable at law or the debtor has no capacity to repay the debt.
By operation of s 1236(1C)(a) of the Act, a debtor is taken to have a capacity to repay the debt if it is recoverable by means of deductions from the debtor's social security payment, unless recovery by those means would result in the debtor being in severe financial hardship. At the time of the hearing, an agreement had been reached between Centrelink and Mr and Mrs Carper for debt repayments to be made as a deduction from their benefits of $15 per fortnight. The Tribunal considers that continued deductions at that level are likely to result in significant financial hardship for Mr and Mrs Carper, but not to the extent that it could be characterised as “severe”.
Accordingly, the Tribunal concludes that discretion under s 1236 of the Act to write off the debt is not enlivened.
Should the debt be waived under s 1237, read in conjunction with s 1237A
Section 1237A provides that the debt must be waived if the following two circumstances set out in subsection (1) apply:
(a)the debt is solely attributable to an administrative error made by the Commonwealth; and
(b)the debtor received the overpayments in good faith.
Administrative error
In relation to the first requirement, the notation at the end of s 1237A of the Act clarifies that this provision does not apply where a part of a debt was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
The Tribunal notes the observations of Selway J in the Full Federal Court of Australia decision in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 at paragraph [35]:
The ordinary or usual interpretation of the phrase “attributable solely to” is that it refers to the single or sole cause of the relevant act or event. The work “attributable” means “capable of being attributed”. It involves an objective assessment of causation. The words “a debt attributable solely to an administrative error” can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error…
The Social Security Guide at paragraph 6.7.3.30 provides that:[37]
[37] The Tribunal considers it appropriate to consider this Guide and act consistently with it, unless there are good reasons not to or unless the Tribunal considers it to be inconsistent with the legislative regime – see Re Drake and Minister for Immigration and Ethnic Affairs (No.2)(1979) 2 ALD 634.
In general, wherever a mistake has been made in administering a payment, the debt will arise ‘solely to an administrative error’ providing the recipient’s conduct has not contributed to the debt in any way.
Examples of administrative error include mistakes in:
·calculating the amount of a payment,
·determining which social security payment/s a person is entitled to be paid, and
·correctly actioning information provided by the recipient.
The requirement that part of the debt must have arisen ‘solely’ from administrative error means that there must have been no other factors that caused the debt to arise or contributed to the debt arising. The part of the debt must have arisen as a result of administrative error alone.
Example: Henry receives [youth allowance] and reports that he started earning income. He continues to receive [youth allowance] at the full rate for 3 weeks without realising that Centrelink has made a mistake. Henry receives a notice stating that his income is zero, and that he must inform Centrelink within 14 days if this is wrong. Henry does not notify Centrelink as required. Centrelink raises a debt against Henry 9 weeks later. The amount that was overpaid between the time that he reported his income to Centrelink and receiving the letter is due solely to administrative error. However, the remaining part of the debt cannot be attributed solely to administrative error as Henry contributed to the debt by not complying with his notification obligations.
The Secretary accepts that the debt for the period from 8 February 2012 to 27 July 2012 should be waived on the basis that:[38]
(a)on 24 January 2012 Mrs Carper provided Centrelink with the letter from ComSuper dated 6 January 2012;
(b)Centrelink did not code this information onto Mrs Carper’s computer records;
(c)the debt for the period from 8 February 2012 to 3 April 2012 was caused solely by administrative error and the payments were received in good faith;
(d)the Secretary also accepts the AAT1 decision to waive the debt for a subsequent period from 4 April 2012 to 27 July 2012 on the basis that Mrs Carper contacted Centrelink about her disability pension and Centrelink was to “means test” the income received from her superannuation scheme.
[38] Refer Secretary’s SFIC at paragraphs [5.18] to [5.19] inclusive.
However, the Secretary contends that no part of the debt that arose from overpayments on or after 28 April 2012 should be waived because that part arose due to Mr and Mrs Carper’s “failure to notify Centrelink of material facts”, being income received.[39] The Secretary contends that Mr Carper was sent an information notice on 10 August 2012. However, the telephone records showed that the next time calls were made to Centrelink by Mrs Carper were not until 25 February 2014 and 2 May 2014 and that they were of “minimal” duration and that there is no “objective evidence” of what was discussed.[40]
[39] Ibid at paragraph [5.20] and Secretary’s Further Submission at paragraph [3.12].
[40] Refer the Secretary’s Further Submission at paragraph [3.11].
The Tribunal is not satisfied that the overpayments made to Mr Carper on or after 28 July 2012 arose as a result of an error on the part of Mr or Mrs Carper, as contended by the Secretary, for the reasons set out below.
The Tribunal found both Mr and Mrs Carper to be credible witnesses. The Tribunal accepts Mr and Mrs Carper’s evidence that a meeting took place between them and about eight representatives of Centrelink on 8 February 2012. At this time Mrs Carper’s long period of employment with Centrelink was coming to an end, necessitating the completion of paperwork.
The Tribunal also considers that at some stage, there existed Centrelink documents evidencing what took place at that meeting (i.e. at the very least notes taken down by the FIS Officer named “Matt” that Mrs Carper witnessed during that meeting). However, it is apparent that such documents were not retained by HR or any other Centrelink representative (as a search for them facilitated by the Secretary’s representative after the hearing of this application did not uncover such documents). Nor were any of those representatives called by the Secretary to give evidence at the hearing or to provide a witness statement in this matter about what happened at that meeting, in the absence of such documents.
There was no evidence before the Tribunal sufficient to challenge what Mr and Mrs Carper said took place at the meeting; and, in particular, to dispute their evidence that they were given assurances that Mrs Carper’s ComSuper payments would not affect their benefits. The Tribunal accepts Mr and Mrs Carper’s evidence about what was discussed at that meeting and finds that those assurances were provided by Centrelink. The Tribunal finds that Mr and Mrs Carper subsequently relied upon those assurances. By those assurances, Mr and Mrs Carper were under a false impression that those PSS pension payments would not matter; and that Mrs Carper was able to get both payments and that she would receive the maximum payment for DSP.
Based on the matters set out in paragraphs [29] to [31], the Tribunal finds that Mr and Mrs Carper proactively contacted Centrelink on 25 and 27 July 2012, to disclose full details of the PSS pension payments that were being paid to Mrs Carper. At that point Centrelink failed to code that income information correctly onto Mr and Mrs Carper’s computer record held by Centrelink, or to adjust the rate of Mr Carper’s carer payment and Mrs Carper’s DSP.
Based on the matters set out in paragraph [33] to [35], the Tribunal finds that on 10 August 2012, after Mr and Mrs Carper received information notices from Centrelink stating that their combined annual income was 42 cents, they attended in person the offices of Centrelink in Geelong about the income statement. Centrelink at this point failed to code the information correctly or to change the rate of payment of Mr Carper’s carer payments and Mrs Carper’s DSP.

The Tribunal finds that Mr and Mrs Carper were given incorrect advice by the representatives of Centrelink with on 8 February 2012 about the effect of the PSS pension payments. The Tribunal finds that Mr and Mrs Carper acted in reliance on those mistaken representations and continued in the belief that they could ignore the information notices because the pension payments would not affect the payment of benefits. The Tribunal is satisfied that if Mr and Mrs Carper had been given different advice by Centrelink on 8 February 2012 and subsequently, when Mrs Carper contacted Centrelink to check on this, they would have acted in a proactive way as they had in the past to ensure that they were receiving the correct payments. They had demonstrated a consistent, forthright, honest and transparent approach in their previous dealings with Centrelink by disclosing those matters previously in January, February, July and August 2012 and later in 2014 and 2015.
The Tribunal considers that the overpayments were not attributable in part or at all to any action or inaction by Mr and Mrs Carper. They made repeated disclosures to Centrelink to no avail. Centrelink’s failure to add the disclosed information to Mr Carper’s and Mrs Carper’s computer records reinforced to Mr and Mr Carper the incorrect advice that had been provided to them on 8 February 2012 that such information would not affect their benefits.
For these reasons, the Tribunal concludes that the debt arising from the overpayments of carer payments to Mr Carper from 4 April 2012 to 16 February 2016 is attributable solely to an administrative error made by the Commonwealth.
Mr Carper’s and Mrs Carper’s situation is different from the example provided in the Social Security Guide as set out in paragraph [54] of these Reasons for Decision. In the example provided, the debtor had not been given advice by Centrelink of the kind that the Tribunal has found was provided to Mr and Mrs Carper. Accordingly, the Tribunal considers that the conclusion reached by it in this application is consistent with the guidance provided in the Social Security Guide.
Good faith
The second requirement for s 1237A to apply is that Mr Carper received the overpayments in good faith.
The concept of “good faith” was considered by Finn J in the Federal Court of Australia decision in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565 (Prince), in the context of s 298(2) of the Student and Youth Assistance Act 1973 (SYA Act). Section 298(2) is similar in terms to s 1237A of the Act mandating a waiver requirement that “the person received in good faith the payment or payments that gave rise to the debt”.
The Tribunal notes the observations of Finn J (emphasis added):
The significance of the statutory context in which the formula is used is in the illumination it gives as to what is that required state of affairs. It has correctly been observed that the term "good faith" (or its now less fashionable Latin equivalent "bona fide") is a protean one having longstanding usage in a variety of statutory and, for that matter, common law contexts…
The burden of the formula can vary significantly given the purpose it is intended to serve in a given setting. In one context it can focus inquiry upon a person's reason for action (eg as with the good faith duty of company directors); in another, to a person's state of knowledge when a particular event occurs.
For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received - ie 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 concept of “good faith” was subsequently considered by the Federal Court of Australia in Haggerty v Department of Education Training & Youth Affairs [2000] FCA 1287.[41] The Tribunal notes the observations of French J (emphasis added):
[15]…A waiver can only, in my opinion, be declined where there has been a receipt, without good faith, of moneys mistakenly paid. This accords with the general approach taken by Finn J whose construction of the provision is related to the criteria for want of good faith.
[16] Consistently with what his Honour said in the Prince case, want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient. That proposition is quite consistent with the view that the existence of such facts may support an inference that the recipient disbelieved or doubted or was suspicious about his or her entitlement. "Reason to know" as Finn J used that term in Prince does not necessarily import a criterion of imputed as distinct from actual want of good faith as I have described it.
[41] In the context of s 43B of the SYA Act, which is in similar terms to s 1237A of the Act.
In Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484, Cooper J of the Federal Court of Australia found the Administrative Appeals Tribunal had erred in law by failing to taking into account evidence by the debtor that she had disclosed receipt of the redundancy payment to Centrelink in deciding whether to waive a debt arising on account of her original income estimate becoming obsolete by the receipt of the redundancy payment. Cooper J held that:
[24] In the present case, if the appellant provided the information and documents to Centrelink which she swore she did, the issue to be determined was whether the disclosure was sufficient to have required Centrelink pursuant to s 860 of the Act to recalculate the appellant's entitlement in the light of the information contained in the documents…
Paragraph 6.7.3.30 of the Social Security Guide provides as follows:
The decision of whether the recipient received the payment in good faith must be based on the recipient’s state of mind at relevant times, based on the best evidence available. It is essential to consider all circumstances of a case, including, but not limited to:
·Information given to the recipient via letters and other literature, interviews, and phone contact. This may help to establish the recipient’s reasonable expectation about their payments.
·Information provided by the recipient about their circumstances. This may help to establish their expectations about future payments and the impact of any new information they provided to Centrelink.
·The recipient’s regular pattern of payment – what would they reasonably expect to receive on a regular basis? What would be an unexpected payment or amount?
·The amount of the excess payment – it might be expected that a recipient would question a large amount.
·The period of time over which the incorrect payments were made – a short period could be considered by the recipient to be administrative delay in actioning new information, while a longer period may not.
·Whether the recipient had questioned the payment and received incorrect assurances that all was in order. In such cases, there may be grounds for attributing good faith, if the recipient has a well-grounded belief that they are entitled to some payment.
Based on the findings set out in paragraph [57] to [63] of these Reasons for Decision, the Tribunal concludes that when Mr and Mrs Carper questioned Centrelink at the meeting on 8 February 2012 about the effect of the invalidity pension payments on their benefits, and subsequently questioned the income details in the information notice with Centrelink, they had been assured by Centrelink that they could ignore the income information and that the invalidity pension would not affect the payment of benefits. Based on this advice, reinforced by the fact that Centrelink had failed to change the rate of payments after Mr and Mrs Carper had disclosed the pension information to Centrelink on a number of occasions in the first half of 2012, the Tribunal is satisfied that Mr Carper had a well-grounded belief at the time he received the overpayments that he was entitled to receive them. The Tribunal is satisfied on the evidence that Mr Carper had an absence of knowledge or any reason to know that he was not entitled to the carer payments received by him between 4 April 2012 and 16 February 2016.
The Tribunal concludes that the overpayments were received in good faith by Mr Carper.
It follows from the findings set out in paragraphs [65] and [74] that the Tribunal must waive the whole of the debt raised against Mr Carper because the two circumstances set out in s 1237A of the Act apply. Section 1237A(1A) does not apply in this case to exclude a waiver under this provision, as the debt was raised against Mr Carper approximately three years after the overpayments were made.
Should the debt be waived under s 1237, read in conjunction with s 1237AAD
If the Tribunal is wrong in its decision about whether the two circumstances specified in s 1237A of the Act applies to Mr Carper, it has also considered whether discretion to waive any part of the debt is enlivened under s 1237, read in conjunction with s 1237AAD; and if so, whether it should be exercised.
Discretion to waive the debt is enlivened under s 1237AAD if there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt; the debt did not result from the debtor making a false statement or representation or failing or omitting to comply with a statutory obligation; and it is more appropriate to waive than to write off the debt.
For circumstances to be considered special circumstances for the purpose of s 1237AAD of the Act, they must be unusual, uncommon or exceptional[42] and the hardship or unfairness should be sufficient to justify a departure from the general rule.[43]
[42] Refer the Full Court of the Federal Court of Australia decision in Dranichnikov v Centrelink [2003] FCAFC 133, Re Beadle and Director-General of Social Security (1984) 6 ALD 1 and Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25.
[43] Refer Branson J in Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 and Groth and Secretary, Department of Social Security (1995) FCA 1708.
The Secretary also highlighted to the Tribunal the observations of Deputy President Forgie in Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114 (Davy) as follows:
… “special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances…that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it… He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement… The system of administration of the Social Security Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security 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…
Each case must be considered on its own merits and the assessment should take into account all of the debtor’s circumstances.[44]
[44]Refer Federal Court decisions in Secretary, Department of Social Security v Hulls (1991) 13 AAR 414 and Oberhardt v Secretary, Department of Education, Employment and Workplace Relations (2008) FC 1923.
The Secretary contended that there is no evidence to suggest that Mr Carper’s circumstances were such that they could be considered “special” to the extent that a waiver of the debt under s 1237AAD of the Act was warranted.
From Mr Carper’s perspective, he considers that the debt arose because Centrelink had failed to code the PSS pension payments correctly when he and Mrs Carper initially (and repeatedly) informed Centrelink of those payments; and also because Centrelink had given him and Mrs Carper incorrect advice about whether such payments would impact their benefits, and that they could ignore the information notices they received stating that the combined income was 42 cents.
Mr Carper also complained about Centrelink allowing three years to pass before deciding to raise a debt against him and Mrs Carper on account of overpayments, once Centrelink had identified that it had not factored Mrs Carper’s PSS pension payments into the calculation of their benefits when it should have done so.
Mr Carper made the following request in his submission to the Tribunal on 7 October 2017:
I request that waivers be made on Felicity’s and my behalf based on compassionate grounds. The whole reason Felicity ‘cashed out’ of her childhood home was based on the very premise that Centrelink’s payments would always keep a roof over our heads and provide the ‘basics of life’… the new forced debt has already created massive mental stress and hardship and is damaging Felicity’s health.
Mr Carper contends that the Tribunal should take into account his financial circumstances and Mrs Carper’s various medical conditions.
Dealing first with Mrs Carper’s various medical conditions, while it is most unfortunate that Mrs Carper has had to endure her medical conditions, in cases involving the recovery of debts from DSP recipients and their carers, applicants seeking a waiver are often dealing with the impact of medical conditions causing poor health and functional impairment. This alone does not satisfy this Tribunal that there were special circumstances, namely, that Mr and Mrs Carper’s situation was uncommon or unusual in a case of this type, warranting the waiver of the debt.
Mr Carper has also contended that his (and Mrs Carper’s) financial situation should be taken into account. The Tribunal acknowledges that Mr and Mrs Carper are likely to face significant financial challenges if required to repay the significant debts that have been raised by Centrelink against them. In particular, Mr and Mrs Carper gave evidence at the hearing indicates that after they pay their rent, they only had a total combined fortnightly income of $421.06 remaining to meet their day-to-day living expenses. In this financial context, the Tribunal is satisfied that repayment of the debt will impose a significant degree of financial hardship on Mr and Mrs Carper; albeit alleviated to some extent by Centrelink’s agreement to receive repayment of the debt by way of $15 fortnightly deductions from their benefits. The Tribunal has taken this circumstance into consideration. However, as the wording of s 1237AAD(b) dictates, this factor alone is not enough to establish special circumstances in this case.
The Tribunal considers that special circumstances under s 1237AAD of the Act do arise in Mr Carper’s case, on account of the following two factors.
Firstly, this is case where Mr and Mrs Carper have all times proactively attempted to do the right thing. They have disclosed on a number of occasions the relevant PSS pension information to Centrelink and it could not be suggested that they have in any way tried to conceal this information from Centrelink. They have actively sought advice from Centrelink about the impact of those payments on their benefits when the pension payments commenced.
The Tribunal is satisfied that Mrs Carper subsequently followed up with Centrelink about the pension payments and income information on the statement. The evidence does not support a finding that this follow up took place as frequently as Mrs Carper had suggested (i.e. as frequently as every six months as this was not supported by the telephone records), but the Tribunal accepts Mrs Carper’s evidence that it was followed up by her when she attended Centrelink’s offices on 10 August 2012 and contacted Centrelink by telephone in 2014.
Further, based on the email from PSS referred to in paragraph [45(d)], the Tribunal finds that PSS provided notification to Centrelink on a six-monthly basis when the rates of pension payments changed. Despite those advices, Centrelink did not code the updated information in a way that would have allowed for Mr and Mrs Carper to have been paid the correct rate of DSP and carer payments, thereby avoiding the creation of a significant debt arising from the subsequent overpayments spanning a period of three years.
Secondly, Mr and Mrs Carper were provided with advice from Centrelink about the PSS pension but unfortunately that advice was incorrect. Consistent with this advice, Centrelink failed to code those income payments on the computer records held by Centrelink for Mr and Mrs Carper, when it was disclosed in the first half of 2012. The Tribunal refers to its findings as set out in paragraph [63] of these Reasons for Decision.
Taking these matters into account, the Tribunal is satisfied that there were special circumstances in this application as required by s1237AAD(b) of the Act. This was a mandatory requirement for the discretion under s 1237AAD of the Act to be enlivened. As the Tribunal has found that this mandatory requirement was met, it is necessary for the Tribunal to consider whether the other two mandatory requirements under s 1237AAD(a) and (c) of the Act are also met.
Section 1237AAD(a) requires that the debt did not result wholly or partly from the debtor or another person making a false statement or a false representation or failing to omitting to comply with relevantly, the Act or the Administration Act. The term “knowingly” is not defined in the Act. The Secretary drew the attention of the Tribunal to the decisions in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435, Davy and Re Anderson and Secretary, Department of Families and Community Services (2002) 69 ALD 484. The first two decisions support an interpretation requiring that “knowingly” requires actual knowledge, as opposed to constructive knowledge. The third decision finds that it was open to the Tribunal to infer that the applicant had actual knowledge of his obligations under the Act, where there were opportunities for that knowledge to be gained, and where there were no obstacles to him acquiring that knowledge.
However, given the findings above, this is a case where Mr and Mrs Carper initially suspected that Mrs Carper’s pension might have had an impact on their benefits. They made due enquiries with Centrelink at the time those payments commenced and made the appropriate disclosures with details of the payments on more than one occasion. Mr and Mrs Carper were given assurances (mistakenly) that the pension would not affect the payments. There is insufficient evidence in this case to find that Mr Carper knowingly made a false statement or representation, or that he failed or omitted to comply with a provision of the Act or the Administration Act. On the occasions that Mr and Mrs Carper did not respond to the information notices issued by Centrelink, they did so on the basis of the incorrect assurances that they could ignore the income information, as Mrs Carper’s pension would have no effect on their benefits.

The other mandatory requirement under s 1237AAD(c) of the Act is that the Tribunal must be satisfied that it is more appropriate to waive the debt, rather than to write it off. In the circumstances of this case, given Mrs Carper’s permanent medical conditions, the Tribunal does not have confidence that Mr and Mrs Carper’s financial position will improve in the future. Their available income to meet daily living expenses was very low. The Tribunal acknowledges that Mr and Mrs Carper have at all times acted with propriety by actively disclosing matters and attending Centrelink in person to clarify matters they are unsure about. The Tribunal also takes into consideration that it has taken three years for a debt to be raised against Mr and Mrs Carper which had contributed to its significant quantum. This could have been minimised if Centrelink had identified its error in calculation at a much earlier point in time.
This is not intended to be critical of Centrelink. The Act provides a complicated set of provisions specifying what is included or not as income or assets with respect to an extremely wide array of payments that might be received by Centrelink customers which may affect their benefits. The Tribunal acknowledges the unenviable challenge this imposes on the administrator of those payments, particularly in light of the sheer volume of payments that Centrelink is required to administer across Australia at any one time.
For the reasons stated above, I consider that it is more appropriate to waive the debt than to write it off.
The Tribunal is satisfied that it is desirable to exercise its discretion enlivened under s 1237AAD in favour of waiving the whole of the debt raised against Mr Carper. The Tribunal considers it desirable to do so in light of the findings that Mr and Mrs Carper have always acted to do the right thing; they disclosed to Centrelink the pension payments on a number of occasions and before those payments commenced; they checked in with Centrelink more than once about those payments; it was reasonable for them to rely upon the assurances provided to them by Centrelink to the effect that the pension would not affect their benefits and they could ignore the notices; and Mr Carper will suffer significant financial hardship if required to repay the debt. Mr Carper’s ability to work to improve his financial position is significantly limited on account of his role as the carer for his wife. Mrs Carper gave evidence at the hearing before the AAT1 that she is bound to her wheelchair, can no longer weight bear and relies on Mr Carper “totally to assist with mobility and other activities of daily living”.
CONCLUSION
The Tribunal sets aside the decision under review and in substitution, decides that the debt raised by Centrelink against Mr Carper for overpayments of his carer payments for the period for 4 April 2012 to 16 February 2016 be waived under s 1237A and s 1237AAD of the Act.
A further issue arose about whether an inheritance received by Mrs Carper by way of two lump sums ($40,000 on 16 April 2015 and $161,660 on 3 June 2015) were exempt lump sums under s 8(11) of the Act. Although it was not entirely clear from Centrelink’s records, it seemed that the ARO may have incorporated into the debt some overpayments that arose as a consequence of taking into account the inheritance and adjusting Mrs Carper’s rate of DSP and by extension, possibly also Mr Carper’s carer payments. The AAT1 considered this issue and found that the two lump sums comprising Mrs Carper’s inheritance were exempt lump sums under s 8(11) of the Act. The Secretary indicated to this Tribunal that it accepted that aspect of the AAT1’s decision. Nevertheless, the Secretary requested that this Tribunal also make a finding with respect to this issue. This Tribunal agrees with the AAT1’s findings and the reasons upon which they are based, as expressed in the AAT1’s Reasons for Decision at paragraphs [18] to [21] which have been reproduced in Annexure A to this Decision.[45]
[45] Refer T-Document T3/10&11.
I certify that the preceding one hundred and one (101) paragraphs are a true copy of the reasons for decision of Member K Parker
[sgd]………………………………………
Associate
Dated: 28 August 2018
Advocate for the Applicant:  Self-represented
Advocate for the Respondent:  Nam Nguyen, Senior Associate
Solicitors for the Respondent:  Sparke Helmore
Date of the hearing:  10 November 2017
Date final closing submissions received:      4 December 2017
ANNEXURE A
Extract from AAT1 Reasons for Decision
Review number 2016/M099812
Applicant: Mrs Felicity Carper
Decision date: 20 December 2016
…
[18] Mrs Carper has also received an inheritance consisting of $40,000 on 16 April 2015 and $161,660.96 on 3 June 2015. Centrelink appear to have taken the total of this amount into consideration when calculating the debt of disability support pension. The Tribunal has gone on to consider whether this inheritance is income as defined in the Act. Section 8 of the Act defines income to include “income that is not maintenance income or an exempt lump sum”. As regards an exempt lump sum, subsection 8(11) of the Act provides that an amount received by a person is an exempt lump sum if: (a) the amount is not a periodic amount; and (b) the amount is not a leave payment; and (c) the amount is not income from remunerative work undertaken by the person; and (d) the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.
[19] Even if a lump sum satisfies paragraphs (a)-(c) of subsection 8(11) of the Act it does not automatically become an exempt lump sum. The Secretary must make a written determination to this effect under paragraph (d). If the Secretary has not made a determination in respect of a particular lump sum, or category of lump sum, there is authority to the effect that it is not open to the Tribunal on review to make a new exempt lump sum determination.[46]
[46] As stated by Downes J in Stauss and SDFaCS (2005) AATA 608. See also Beer and Repatriation Commission [2006] AATA 396; Kenna and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 536.
[20] Further, the “Note” to paragraph 8(11)(d) of the Act provides some examples of the kinds of lump sums that the Secretary may determine to be exempt lump sums, including a lottery win or other windfall, a legacy or bequest or one-off gift. Centrelink’s Guide to Social Security Law (Centrelink’s Guide) provides the following in relation to exempt lump sums at 4.3.2.35:
What are section 8(11) exemptions?
Some lump sums are NOT treated as income for social security purposes.
Section 8(11) determinations allows the Secretary of DSS to exempt certain lump sums that are not periodic amounts, leave payments or income from remunerative work.
Section 8(11) was introduced, together with amendments to section 1073, on 28 March 1998 to make a fairer and more consistent income test treatment of lump sums by aligning the allowance and pensions income test treatments.
Section 8(11) applies to specific lump sums where a delegate has signed the appropriate instrument.
The characteristics of an exempt lump sum payment are that it is unlikely to be repeated, cannot reasonably be expected to be received or necessarily anticipated, and does not represent receipt of monies for services rendered.
[21]     The Tribunal is satisfied the provisions of subsection 8(11) are met and Mrs Carper’s inheritance is an exempt lump sum and is not to be assessed as income for the purposes of determining her entitlement to disability support pension. It is unclear to the Tribunal from the authorised review officer’s decision and the documents provided to show how Centrelink has assessed Mrs Carper’s inheritance in the debt raised. The Tribunal noted that the authorised review officer refers to a recalculation of Mrs Carper’s rate of disability support pension based on the inheritance that she received in 2015 and this infers it has been included in the debt amount.
[22]     The Tribunal requested and received further information from Centrelink in relation to how Mrs Carper’s inheritance was used in the calculation of the overall debt. Centrelink have provided the additional information and according to this, the original debt raised was $21,855.27 on 14 April 2016. On 15 April 2016, an amount of $811.70 was waived as this portion was considered to have been paid as a result of administrative error on Centrelink’s part and because it was considered that Mrs Carper received the payments in good faith. The income from the inheritance was coded on 26 May 2016 resulting in an additional debt amount of $720.62 and the overall debt amount was adjusted to $22,576.23 less the waived amount of $811.70 resulting in a debt amount of $21,764.51. The Tribunal is satisfied that this amount is correct.
…

[2018] AATA 3191

28 August 2018

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