Caspersz and Secretary, Department of Employment and Workplace Relations

[2006] AATA 211

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 211

ADMINISTRATIVE APPEALS TRIBUNAL          № V2005/382

GENERAL ADMINISTRATIVE DIVISION

Re:           joanne caspersz

Applicant

And:           Secretary,

Department of employment and workplace relations

Respondent

DECISION

Tribunal:       Mr E. Fice, Member

Date:8 March 2006

Place:Melbourne

Decision:The decision under review is affirmed.

(sgd) Egon Fice

Member

CATCHWORDS – parenting payment partnered – debt recovery – working credit balance – debt waiver – administrative error – special circumstances – settlement – without prejudice negotiations

Social Security Act 1991 s 1073D, 1073F, 1223(1), 1223(1AB), 1237AAD 1237AAB 1237A(1)

Social Security (Administration) Act 1999 s 99

Administrative Appeals Tribunal Act 1975 s 42C

REASONS FOR DECISION

8 March 2006  Mr E. Fice, Member

1.      Mrs Caspersz was receiving parenting payment partnered (PPP) when she commenced employment on 26 April 2004.  Although her husband notified Centrelink on 7 May 2004 that she had started working, she continued to be paid the PPP until 13 May 2004.  At the time she started working, she had built up a working credit of $687.18.  According to Centrelink, she had expended her working credit by 4 May 2004 although she continued to receive the PPP between 4 May 2004 and 13 May 2004, resulting in an overpayment in the amount of $250.79.  The Secretary of the Department of Employment and Workplace Relations (the Secretary) sought repayment of the amount overpaid as a debt due to the Commonwealth.  Mrs Caspersz requested a review by an Authorised Review Officer (ARO).  On 4 November 2004 the ARO determined that the decision to raise and recover the debt of $250.79 was correct.  Mrs Caspersz then sought review of the ARO’s decision by the Social Security Appeals Tribunal (SSAT).  The SSAT affirmed the ARO’s decision on 23 March 2005.  Mrs Caspersz now seeks a review of the decision by this Tribunal.

BACKGROUND

2.      When Mrs Caspersz commenced work on 26 April 2004, she had a working credit balance of $687.18.  That meant that income from her employment did not immediately affect her rate of PPP as each dollar of working credit is offset against one dollar of income from employment.  This permitted Mrs Caspersz to retain the PPP until such time as her working credit was reduced to zero.

3. On 7 May 2004 Mr Caspersz notified Centrelink that his wife had commenced employment on 26 April 2004. Although Centrelink initially denied that Mr Caspersz had notified Centrelink on that day because it had no record of it, it subsequently conceded that contact may have been made on 7 May 2004. Mr Caspersz said that he was advised to wait until his wife received her next payslip before submitting it to Centrelink because the current payslip did not reflect the true salary that his wife would be receiving on a fortnightly basis. Mr Caspersz provided Centrelink with his wife’s payslip on 21 May 2004. Upon receipt of that advice, Centrelink adjusted Mrs Caspersz’ PPP, taking into account the fact that she had last received a payment for the fortnight ending 13 May 2004. Applying s 99 of the Social Security (Administration) Act 1999, Centrelink determined to adjust Mrs Caspersz’ PPP rate effective from the day on which the working credit balance was reduced to zero. 

4.      According to Centrelink, Mrs Caspersz’ working credit balance was reduced to nil on 4 May 2004 and, between that date and 13 May 2004, Mrs Caspersz received PPP in the amount of $250.79.  Mrs Caspersz was not at fault for the overpayment;  rather it resulted from the delay in notifying Centrelink with the precise income figure and the fact that Mrs Caspersz’ income needed to be set off against her working credits until such time as those credits were reduced to zero. 

5. Because the small overpayment occurred after Mrs Caspersz’ working credit was reduced to zero on 4 May 2004, Centrelink seeks to recover the amount of PPP which Mrs Caspersz received between 4 May 2004 and 13 May 2004 as a debt due to the Commonwealth under s 1223(1) of the Social Security Act 1991 (the SS Act).

CONSIDERATIONS

6. On 20 September 2003 the SS Act was amended to encourage persons below the Aged Pension age, who receive income support payments, to take up paid employment by allowing them to keep more of their income support payments while working. Working credits are accrued at times when a person has little or no income and they are used to reduce the amount of later earnings that are counted under the income test. One working credit is used to offset $1.00 of income from employment. This results in persons keeping more of their Centrelink payments when they first start work. On becoming entitled to a working credit by reason of falling within the definition of “a working credit participant” pursuant to s 1073D of the SS Act, a working credit participant has a balance of nil. A working credit balance is limited to the sum of $1,000.00. The method of calculating working credit accruals and depletions is set out in s 1073F of the SS Act. In essence, if a participant’s rate of total ordinary income, on a fortnightly basis, for a day is less than $48.00, an accrual of an amount equal to one fourteenth of the amount by which $48.00 exceeds that rate occurs to the participant’s working credit balance for the day,. In Mrs Caspersz’ case, her accrual rate was calculated at $45.70. No accrual occurs if a person has an income of $48.00 or more. When a participant’s rate of ordinary income is more than the applicable ordinary income‑free area on a fortnightly basis, the working credit is depleted by an amount equal to the least of:

(a)the employment income; or

(b)one fourteenth of the amount by which the ordinary income exceeds the ordinary income‑free area, both on a fortnightly basis or the available working credit balance.

7.      Mrs Caspersz’ working credit reached a maximum of $687.18 on 16 April 2004.  Because Mrs Caspersz recommenced work on 26 April 2004, her working credit balance was reduced to $374.98 on 30 April 2004; and further reduced to $20.12 on 4 May 2004.  On 5 May 2004, her working credit balance was nil.

8. However, due to the short delay between the time that Mrs Caspersz recommenced work and the time that a payslip became available to send to Centrelink, Mrs Caspersz received a PPP of $351.10 for each fortnight ended 29 April 2004 and 13 May 2004. After applying the depletion method set out in s 1073F of the SS Act, Centrelink calculated that Mrs Caspersz had been overpaid by $250.79.

9.      There is no question that the debt arose as a consequence of the delay in Centrelink receiving a payslip from Mrs Caspersz.  As mentioned above, that is not to suggest Mrs Caspersz was at fault, and I am satisfied that she was not.  In fact, the Secretary accepted that Mrs Caspersz’ husband notified Centrelink of the amount of her earnings on 7 May 2004, within the fourteen day notification period required by Centrelink.

10.     The Secretary also accepted that the debt arose solely as a consequence of administrative error.  Because an error was made by Centrelink, Mrs Caspersz argued strongly that she should be relieved from her obligation to repay the overpayment.

11. Section 1223(1) of the SS Act provides:

Debts arising from lack of qualification, overpayment etc.   . . .

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.

. . .

12.     A person is taken not to have been entitled to obtain the benefit of a Social Security payment which has been made because of an administrative error (s 1223(1AB)). However, the Secretary must, under s 1237A(1) of the SS Act, waive the right to recover the portion of the debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received the payment in good faith. That obligation does not apply if a debt is not raised within a period of six weeks from the first payment that caused the debt or the debt arose because a person has complied with a notification obligation and the debt was not raised within a period of six weeks from the end of the notification period, whichever is the latter (s 1237A(1)). Because Mrs Caspersz returned to work on 26 April 2004, her fourteen day notification period expired on 10 May 2004. The debt was raised on 26 May 2004 which is clearly within six weeks of the end of the notification period. Therefore, in my opinion, the Secretary has correctly declined to waive the debt under this provision. I need not examine whether Mrs Caspersz received the payment in good faith; although it is quite possible that she did given that it is unlikely that she was aware that her working credit had been reduced to nil by 4 April 2004.

13. Mr Caspersz, in his submissions, relied strongly on s 1237AAD of the SS Act which provides:

Waiver in special circumstances   

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

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

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

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

(b)there are special circumstances (other than financial hardship alone) that 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.

Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt.

In particular, Mr Caspersz contended that the special circumstances provision in s 1237AAB applied because he claimed that he had reached a settled agreement with Centrelink for part payment in satisfaction of the full amount of the debt. Section 1237AAB(2) of the SS Act provides:

. . .

Waiver in relation to settlements

If the Secretary has agreed to settle proceedings before the AAT relating to recovery of a debt on the basis of the debt will pay less than the full amount of the debt, the Secretary must waive the right to recover the difference between the debt and the amount that is the subject of the settlement.

. . .

14. Mr Caspersz said that he had negotiated a settlement arrangement with a representative of the Secretary who sent to him a draft of the agreement terms. He admitted that he did not agree with the draft and that he contacted the sender by telephone, whereupon they agreed upon amendments. However, the first Centrelink delegate then went on holidays and the matter was taken over by a second delegate. Apparently the second delegate was not prepared to resolve the dispute between the Secretary and Mrs Caspersz on the terms previously indicated. For that reason, there was no agreement in writing upon which Mr Caspersz could rely. Nevertheless, Mr Caspersz said that because he believed an agreement had been reached with the first delegate of the Secretary, that in itself constituted special circumstances for the purposes of s 1237AAD of the SS Act. Mr Perdon, the Centrelink advocate representing the Secretary, argued that the Tribunal had no jurisdiction to enter upon an examination of any settlement negotiations conducted by the parties.

15.     In my opinion, because settlement negotiations over a dispute are conducted on a without prejudice basis, the Tribunal should not in any way become involved in that process. Where parties in fact reach agreement and the terms of that agreement are reduced to writing and are signed by or on behalf of the parties, then the Tribunal, under s 42C of the Administrative Appeals Tribunal Act 1975, has the power, if it appears to the Tribunal to be appropriate to do so, to make orders in accordance with those written terms.  However, that is a very different matter to what was suggested by Mr Caspersz.  What Mr Caspersz was suggesting was that the Tribunal ought to have a look at the state of the negotiations between the parties and determine whether or not an agreement had been reached.  That, in my opinion, is impermissible.  Further, the purported agreement does not constitute a special circumstance for the purposes of s 1237AAD of the SS Act. Not only was there no evidence before me that an agreement had in fact been reached, but if it were permissible to rely on the provisions of s 1237AAD in these circumstances, it would subvert the very purpose of having without prejudice negotiations.  Parties should be able to negotiate settlement of a dispute fully and freely without any concern that matters arising from those negotiations will subsequently be referred to the Tribunal. 

CONCLUSION

16.     In my opinion Mrs Caspersz was not entitled to the payment of $250.79 received by way of PPP in May 2004 and a debt was properly raised by the Secretary.  That debt is recoverable and cannot be waived.  Therefore, the decision made on 27 May 2004 to raise and recover the debt of $250.79 should be affirmed.

I certify that the sixteen [16] preceding paragraphs are a true copy of the reasons for the decision of:

Mr E. Fice, Member

(sgd)       Catherine Lake

Clerk

Dates of hearing:  27 January 2006

Date of decision:  8 March 2006

Representative for the applicant:      Mr R. Caspersz

Advocate for the respondent:           Mr D. Perdon, Centrelink Legal Services