Cone and Secretary, Department of Education, Employment and Workplace Relations
[2008] AATA 245
•28 March 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 245
ADMINISTRATIVE APPEALS TRIBUNAL )
)No 2007/4033
GENERAL ADMINISTRATIVE DIVISION ) Re TANYA CONE Applicant
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Deputy President P E Hack SC Date28 March 2008
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
..............Signed...............
Deputy President
CATCHWORDS
SOCIAL SECURITY – overpayment debt – decision to recover – overpayment the result of administrative error - requirement of good faith – debt cannot be waived – no special circumstances – decision under review affirmed
Social Security Act 1991 (Cth) – ss 1223, 1237A, 1237AAD
Social Security (Administration) Act 1999 (Cth) – s 135(1)(b)
Director-General of Social Services v Hangan (1982) 70 FLR 212
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213
REASONS FOR DECISION
28 March 2008 Deputy President P E Hack SC 1.In March 2007 the applicant, Mrs Tanya Cone, was receiving parenting payments at the single rate. When she married on 24 March 2007 she notified Centrelink of the fact of her marriage as she understood (correctly) that she was obliged to do so.
2.Centrelink, having been informed of the marriage, ought to have commenced making parenting payments to Mrs Cone at the “partnered” rate. It did not do so. As a result of its failure to act on the information provided by Mrs Cone she was paid at the higher single rate from 24 March 2007 to 2 May 2007. The fact of Mrs Cone being paid at the single rate rather than the partnered rate eventually came to the attention of someone at Centrelink in early May 2007, and resulted in a decision made on 9 May 2007 to raise and recover an overpayment debt in the amount of $423.15.
3.There was a further consequence of Centrelink’s failure to act on the information provided by Mrs Cone. The rate at which she was entitled to be paid parenting payment depended, as well, on the income her spouse received. But because Centrelink had not acted on the information and noted the fact of her marriage Mrs Cone was not asked to report the amount of those earnings.
4.The fact of those earnings not being brought into account when determining Mrs Cone’s entitlement was not realised by Centrelink until 20 June 2007 when an authorised review officer was undertaking a review of the earlier decision to raise and recover the debt of $423.15. On that day the authorised review officer varied the amount of the debt to $1,517.69 to take into account the earnings of Mrs Cone in the period between 24 March 2007 and 2 May 2007.
5.Subsequently the Social Security Appeals Tribunal affirmed that decision. Mrs Cone now seeks a review of the decision to raise and recover the debt of $1,517.69.
6.The starting point in the present case is s 1223(1) of the Social Security Act 1991 (Cth) (the Act). The effect of that sub-section is that where a social security payment (which includes parenting payment) has been made and the recipient 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.”
Sub-section 1223(1AB) of the Act makes it plain that the person is taken not to have been entitled to obtain the benefit if the payment was made as a result of, amongst other things, administrative error, as was the case here.
7.Mrs Cone does not dispute that there is a debt in the amount determined by Centrelink; her complaint is that she ought not be required to repay it where it has arisen as a result of Centrelink not acting in a timely fashion on the information provided by her.
8.That brings into play s 1237A of the Act which provides, so far as is presently material:
“(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.”
9.At the outset it is necessary to identify the “debt”. Superficially, there appear to be two debts – one raised on 9 May 2007 and the other on 20 June 2007. But that confuses the existence of the debt with the administrative steps involved in identifying the debt and seeking its recovery. In reality there were three occasions when a debt arose by operation of the statute. The first was when a debt of $455.89 arose on 5 April 2007 when Mrs Cone was paid a total of $530.90 (before tax) when she was only entitled to $75.01. Thereafter on 20 April 2007 and 4 May 2007 Mrs Cone was again paid $530.90 when, as a consequence of her husband’s earnings, she was not entitled to be paid any amount. On both of those days a debt in the amount of $530.90 arose. That seems to me to be the effect of s 1223(1) of the Act.
10.The Secretary accepts that the debts in issue here are attributable solely to administrative error by Centrelink. But her submission is that s 1237A(1) of the Act does not operate in the present circumstances because it is excluded by s 1237A(1A) of the Act.
11.As it seems to me, the word “debt” is used in different senses in s 1223(1) of the Act and in s 1237A(1A) of the Act. In the former sub-section it describes the statutory debt that arises from the fact of an overpayment, that is, payment of an amount to which the recipient had no entitlement. The debt arises by operation of the statute. But unless and until it is recognised within Centrelink as an overpayment and acted upon there is no debt capable of being “raised” in the sense that debt is used in s 1237A(1A) of the Act[1]. When used in s 1237A(1A) of the Act the debt is the end product of the administrative process of recognising the fact of an overpayment, identifying the amount of it and “raising” an entry in the books of account of Centrelink. It is significant that s 1223 comes within Part 5.2 which deals with “AMOUNTS RECOVERABLE UNDER THIS ACT” and that s 1237A comes within Part 5.3, “METHODS OF RECOVERY”.
[1] Cf. Director-General of Social Services v Hangan (1982) 70 FLR 212 at 220.
12.But in this sense used in s 1237A of the Act, there were two occasions when that administrative process was undergone, the first on 9 May 2007 when a debt of $423.15 was raised by administrative action and the second on 20 June 2007 when the authorised review officer raised a debt of $1,517.69. At first blush that indicates that there were two occasions when a debt was raised but the Secretary submits that there was only one debt. That follows, it is said, from a consideration of the task being performed by the authorised review officer. That task was not one of making another decision but rather one of reviewing the decision already made on 9 May 2007. The authorised review officer was not empowered to make an additional decision; the power conferred by s 135(1)(b) of the Social Security (Administration) Act 1999 (Cth) on a review of the decision was limited to affirming the decision, varying it, or setting it aside and substituting a new decision. It is plain from the material, it is submitted, that the authorised review officer in the present case varied the original decision.
13.But that analysis seems to me to overlook the variety of administrative tasks involved in a decision to raise a debt. As was recognized in Secretary, Department of Social Security v Alvaro[2], a decision to “raise and recover” a debt involves four separate processes – the calculation and recognition of the recoverable debt i.e. the amount of the overpayment, a decision that action should be taken to recover it, a determination of the mechanism of recovery and that the discretion to waive ought not be exercised. When viewed in this light it is wrong, in my view, to treat the decision of the authorised review officer as merely one involving a variation of the original decision of 9 May 2007. Whilst the authorised review officer described his decision as a variation of the earlier decision in reality it involved a separate decision to “raise” an additional debt of $1,094.54. That decision involved the four elements of identifying and calculating the debt, determining that it ought be recovered, determining the mechanism of recovery and, most importantly, considering whether to exercise the discretion to waive.
[2] (1994) 50 FCR 213 at 220.
14.The result of this analysis is that the debt of $423.15 was raised on 9 May 2007 within a period of 6 weeks from the first payment that caused the debt, i.e. the payment of 5 April 2007.
15.It is difficult, as a matter of language, to see how the debt could have arisen “because” Mrs Cone complied with a notification, however if “because” in s 1237A(1A)(b) of the Act is read in the sense of “after”, then the debt was raised within a period of 6 weeks from the end of the notification period. One of the matters that Mrs Cone was obliged to tell Centrelink was the fact of marriage and to tell Centrelink within 14 days from the event. Thus the notification period ended on 7 April 2007 and the debt was raised within 6 weeks of that date.
16.It follows that, in relation to the debt of $423.15, s 1237A(1A) of the Act operates to exclude the operation of s 1237A(1) of the Act and that the debt cannot be waived under the latter sub-section, notwithstanding that the debt was solely the result of administrative error.
17.A different conclusion follows in relation to the other component of the overall debt, the additional amount of $1,094.54 raised by the authorised review officer on 20 June 2007. That component of the debt was not raised within the period of 6 weeks from the first payment that caused the debt nor within 6 weeks from the end of the notification period and thus, in my view, it is necessary to consider the operation of s 1237A(1) of the Act in relation to this debt.
18.The subsection operates to require waiver where the debt is attributable solely to administrative error and the payment or payments were received in good faith. The first element is conceded by the Secretary.
19.“Good faith” in this context means that the recipient did not know, and had no reason to know, that he or she was not entitled to the payments made. A finding of an absence of good faith does not involve any finding of bad faith or any element of wrongdoing and I ought make it plain that I make no criticism of Mrs Cone in finding that she did not receive the payments in good faith. But that finding must be made because Mrs Cone knew that Centrelink had not acted upon the fact of her marriage and knew that she was being paid at a higher rate than that at which she was entitled to be paid. Indeed, as she observed, she was increasingly frustrated by Centrelink’s failure to act. The result is that, in these circumstances, the debt cannot be waived under s 1237A of the Act.
20.It is finally necessary to consider the power to waive in “special circumstances”. That power is contained in s 1237AAD of the Act. The Secretary does not suggest that paragraphs (a) and (c) are not satisfied; the issue is whether paragraph (b) is satisfied, that is, whether:
“there are special circumstances (other than financial hardship alone) that make it desirable to waive …”
21.The expression “special circumstances” is not capable of precise definition. It is enough for present purposes to say of the phrase that it requires that there be “something to distinguish [Mrs Cone’s] case from others, to take it out of the usual or ordinary case”[3].
[3] Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545
22.Mrs Cone says that there are two matters that amount to special circumstances - the consistent failure of Centrelink to act upon her notification and the fact that she has been deprived of an opportunity to receive another Centrelink benefit.
23.It is difficult not to feel a degree of sympathy for Mrs Cone who conscientiously met her obligations to report changes in her situation to Centrelink. As she put it, using Centrelink’s glib marketing phrase, she supported the system that supported her. But it needs to be borne in mind that Centrelink is a very large organisation that deals on a daily basis with perhaps thousands of people. Any human system is capable of error. So much is recognised by the existence of s 1237A of the Act. Given that the Act expressly recognises the existence of the possibility of administrative error I am unable to conclude that the administrative error here amounts to circumstances that take Mrs Cone’s case out of the usual or ordinary case.
24.Mrs Cone is justifiably frustrated with what she sees as inefficiency, but to give effect to that frustration by waiving repayment of an amount to which she had no entitlement would be to punish Centrelink for inefficiency rather than identifying special circumstances. Equally, it cannot amount to special circumstances that Mrs Cone fully satisfied her obligations to report changes in circumstances. The system for social security payments operates on the assumption that there will be compliance with its requirements. Non-compliance is penalised rather that compliance being rewarded.
25.Mrs Cone suggested at the hearing that the existence of the debt prevented her from receiving a benefit. That was the subject of supplementary submissions from the Secretary. Those submissions satisfy me that there is no absolute loss; it is, instead, a timing difference. The fact of the debt (and another, unrelated debt) prevents Mrs Cone being paid family tax benefit in advance. She is still entitled to that benefit but in fortnightly accruals, not in advance. This does not constitute special circumstances.
26.I am thus satisfied that there is no basis upon which the debt should be waived and would, therefore, affirm the decision under review.
I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC
Signed: .....................Signed.............................................
Jacqueline Woods, AssociateDates of Hearing 6 February 2008, 19 March 2008
Date of Decision 28 March 2008
Applicant In personRespondent’s advocate Departmental Advocate
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