Coolwell and Secretary, Department of Social Services (Social services second review)
[2016] AATA 933
•23 November 2016
Coolwell and Secretary, Department of Social Services (Social services second review) [2016] AATA 933 (23 November 2016)
Division
GENERAL DIVISION
File Number
2016/0908
Re
Nancy Coolwell
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Senior Member D R Davies
Date 23 November 2016 Place Brisbane The Tribunal affirms the decision under review.
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Senior Member D R Davies
CATCHWORDS
DEBT RECOVERY – overpayments - recovery of parenting payment - recovery of penalty amount - recklessly provided false information in relation to income - decision under review affirmed.
LEGISLATION
Social Security Act 1991 (Cth) ss 1223, 1228, 1228B, 1236, 1237, 1237A and 1237AAD
CASES
Re Callaghan and Secretary Department of Social Services [1996] AATA 413.
Re Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72.
Pirotta and Secretary of Department of Social Services [2015] AATA 874.SECONDARY MATERIALS
Lexis Nexis Australian Legal Dictionary, 2ndEditionButler, Susan (ed), Macquarie Dictionary
REASONS FOR DECISION
23 November 2016
BACKGROUND
This is an application by Nancy Coolwell (the Applicant) for a review of a decision made by the Administrative Appeals Tribunal Social Services and Child Support Division on 14 December 2015 (“AAT1”). This decision affirmed the decision made by the Department of Human Services (“Department”) to raise and recover a parenting payment (single) debt totalling $2,487.30 against the Applicant for the period 1 July 2004 to 17 August, 2006. AAT1 also affirmed the decision to recover a penalty amount which was stated to be $248.10.[1]
[1] Exhibit 1 – T Docs, T2.
On 8 December 2006 a delegate of the Department decided to raise and recover a parenting payment single debt of $2487.30 against the Applicant for the period 1 July 2004 to 17 August 2006. It was also decided to seek payment of a 10% penalty.
The Applicant sought review some years later on 30 April 2015. On 4 June 2015 an Authorised Review Officer (ARO) confirmed the previous decision and decided that the debt was $2,487.30 for the same period. The ARO also decided to affirm the decision to impose a recovery fee of $247.80.[2]
[2] Exhibit 1 – T Docs, T12 p120 – 124.
The evidence before the Tribunal is contained in the T Documents lodged by the Respondent which are Exhibit 1. The Respondent also lodged its Statement of Facts Issues and Contentions which is Exhibit 2. The Applicant attended the hearing by telephone and gave oral evidence.
The Applicant was in receipt of a parenting payment since September 1993.[3]
[3] Exhibit 2 – Para 1.
On 29 April 2004 the Department sent the Applicant a Reporting and Income Statement advising her about her rate of payment and the requirements to report income[4].
[4] Exhibit 1 – T Docs, T11, page 90-92.
On or about 19 June 2004 the Applicant commenced work with the Department of Communities (Qld) as is evidenced by a payslip for the period ended 11 July 2004.[5]
[5] Exhibit 1 – T Docs, T5, page 19.
On 26 April 2006 the Department conducted a data matching review with information indicating there was a discrepancy in the amount of income declared by the Applicant in the 2004/2005 financial year.[6]
[6] Exhibit 1 – T Docs, T4 p 10-16.
On 14 November 2006 the Department requested the Department of Communities (Qld) to provide information in relation to the Applicant’s earnings during the period 1 July 2004 to 14 November 2006.[7]
[7] Exhibit 1, T Docs, T5, page 17-18.
On 24 November 2006 the Department of Communities provided its pay records in relation to the Applicant’s earnings.[8]
[8] Exhibit 1, T Docs, T5, page 19-47.
On 8 December 2006 the Department calculated that the Applicant had been overpaid $2,487.30 in respect of the period 1 July 2004 to 17 August 2006 and that a 10% recovery fee was imposed.[9]
[9] Exhibit 1, T Docs, T6, page 50 and T9, page 58-63.
On 8 December 2006 an advice letter was sent to the Applicant advising her of the decision to raise a debt of $2,487.30 and that a recovery fee of $248.70 had been imposed as she had not correctly declared her earnings.[10]
[10] Exhibit 1, T Docs, T11, page 117.
As at that date the Department was also taking action to recover the Applicant’s existing debts which included a debt of $11,400.21 raised on 25 October 2002[11]by way of fortnightly withholdings from her parenting payment.[12]
[11] Exhibit 1, T Docs, T16, page 135.
[12] Exhibit 2 – attachment 1, page 19.
On 26 April 2007 the Applicant sought review of this decision and on the same date an original decision maker decided not to change the decision.[13]
[13] Exhibit 1, T Docs, T10, page 83.
A notice was sent to the Applicant advising her of this decision.[14]
[14] Exhibit 1, T Docs, T11, page 118-119.
The Applicant continued to make repayments of her debts by way of fortnightly withholdings from her ongoing social security payments.
On 22 August 2013 one of the Applicant’s previous debts, for $11,400.21 originally registered on 25 October 2002 was taken to be fully repaid.[15]
[15] Exhibit 1, T Docs, T16, page 135.
At the hearing, the Respondent advised that as at the date of the hearing the debt, the subject of this application, was $1,038.43 and the correct amount of the recovery fee of 10% of the original debt was $248.70.
LEGISLATIVE PROVISIONS
The relevant legislation is in Sections 1223, 1228, 1228B, 1236, 1237, 1237A and 1237AAD of the Social Security Act 1991 (“the Act”).
Section 1223(1) provides that where a social security payment is made and the 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 1228B(1) of the Act provides for an additional 10% to be added to a debt that arose wholly or partly because the person refused or failed to provide information in relation to his or her income, or knowingly or recklessly provided false or misleading information in relation to his or her income.
Section 1228B(2) provides that the amount to be added by way of penalty is an amount equal to 10% of so much of the debt as arose because the person failed to provide the information or provided false or misleading information.
Section 1228B(4) provides that the section does not apply if the person had a reasonable excuse for refusing or failing to provide the information.
Section 1236 of the Act provides the criteria under which a determination can be made to write off a debt. The only ground for write off which could be relevant here is that the debtor has no capacity to repay the debt.[16]
[16] Section 1236(1)A(b).
Section 1237 of the Act provides that the Commonwealth’s right to recovery may only be waived in certain circumstances.
Section 1237A of the Act states:
“(1)Subject to subsection (1A) the secretary must waive the right to recover the proportion of the 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”.
Section 1237AAD of the Act provides that:
“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;
(ii)Failing or omitting to comply with a provision of this Act, the Administration 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”.
ISSUES FOR THE TRIBUNAL
The issues to be considered by the Tribunal are:
·Is there a debt for the period 1 July 2004 to 17 August 2006?
·If there is a debt is there a basis to write-off or waive recovery of the debt?
·If there is no basis to write-off or waive the recovery of the debt, should a recovery fee be imposed?
CONSIDERATION
Is there a debt for the period 1 July 2004 to 17 August 2006?
The Applicant in her evidence to the Tribunal said that she was aware that whilst she was in receipt of a parenting payment, she was required to report any income which she received to the Department. She said that she undertook casual employment with the Department of Communities and was not in receipt of a regular set payment.
The Applicant said that she reported her income to Centrelink by telephone every two weeks. Whilst she said that she fully declared her income to Centrelink she also said that she advised Centrelink on the basis of what was in her bank account and not on the basis of the income recorded in her payslip.
The Department’s records of the Applicant’s telephone calls reporting her income are set out in Exhibit 1, T Docs, T10, page 73-86.
The Applicant’s payslips from the Department of Communities are contained in Exhibit 1 T Docs, T5, pages 17-47. It is apparent that the income amounts reported by the Applicant are less than the amounts she was being paid according to her payslips.
I am satisfied that the Applicant did not correctly advise the Department of her income from the Department of Communities during the period 1 July 2004 to 17 August 2006.
Accordingly I find that the Applicant was overpaid parenting payment (single) in the amount of $2,487.30 for the period 1 July 2004 to 17 August 2006 and that there was a debt due to the Commonwealth in that amount at that time.
Is there a basis to write-off the debt?
As I have previously mentioned, the only relevant ground on which the debt can be written off under s1236 of the Act is that the debtor has no capacity to repay the debt.[17] However s1236(1C) of the Act provides that where a debt is recoverable by means of deductions from a social security payment, the debtor is taken to have a capacity to repay the debt unless recovery by deductions would cause the debtor severe financial hardship. The evidence in this case, is that over a number of years the Applicant has had a number of debts due to the Commonwealth in respect of overpayments of social security payments, including one debt of $11,400.21 raised in 2002 which was repaid from withholdings from her ongoing social security entitlements.[18] Further, the amount of the current debt has now been reduced to $1,038.43 by deductions of $20.00 per fortnight from her payments. The Applicant has not provided any evidence of severe financial hardship.
[17] Section 1236(1)A(b).
[18] Exhibit 1, T Docs, T16, page 135.
I find that the Applicant does have a capacity to repay the debt by deductions from social security payments which she receives and that this will not cause the Applicant severe financial hardship.
Accordingly, I find that there are no grounds to write-off the debt.
Is there a basis to waive recovery of the debt?
As I have previously mentioned, the right to recover a debt must be waived where the proportion of the debt is attributable solely to an administrative error made by the Commonwealth.
In the present case there is no evidence of any administrative error by the Commonwealth in relation to the debt. On the contrary, it is apparent that the debt has arisen because the Applicant underreported the income which she was receiving. Accordingly the debt cannot be waived on that ground.
The right to recover a debt may also be waived under s1237AAD of the Act where:
·The debt did not result from the debtor or another person knowingly making a false statement or representation or failing to comply with the Act;
·There are special circumstances (other than financial hardship alone) that make it desirable to waive; and
·It is more appropriate to waive than to write-off the debt or part of the debt.
Knowingly
The first element to be considered is whether the Applicant knowingly made a false statement or representation or knowingly failed to comply with a provision of the Act.
The use of the word “knowingly” clearly requires that there be some element on intent in the making of the false statement or representation or failure to comply.
The Macquarie Dictionary defines knowing as:
“conscious, intentional, deliberate”.
The Lexis Nexis Australian Legal Dictionary[19]defines knowingly as:
“With knowledge or consciousness. A person cannot do something or be in a particular relationship “knowingly” unless the person thought about the matter and formed a particular point of view on it: R v Turner (1980) 24 SLSR 217.”
[19] 2016 Second Edition.
In Re Callaghan and Secretary Department of Social Services[20] the Tribunal commented at para 48:
“There is nothing in s1237AD which suggests that the word “knowingly” should be given any meaning other than that a person has actual knowledge rather than constructive knowledge that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.”
[20] [1996] AATA 413.
In Re Secretary, Department of Family and Community Services and Jonauskas[21] the Tribunal said at 73 that:
“Knowingly in the context of s1237AD is a deliberate choice and means actual knowledge”,
and that it does not encompass reckless disregard although recklessness could be relevant in determining whether special circumstances existed.”
[21] [2001] AATA 72.
In the present case, the evidence is that the Applicant reported her income to the Department based on the deposits into her bank account and not on the income recorded on her payslips. She gave evidence that she did not look at her payslips. She also gave evidence that she was aware that there were other deductions being made from her social security payments for rent and other items. Whilst in so doing, she may have been reckless, I am not satisfied that there was a deliberate or conscious intent to make false statements or representations or to fail to comply in relation to accurately reporting her income to the Department.
I find that the Applicant did not knowingly make a false statement or representation or fail to comply with the Act.
Special Circumstances
Accordingly it is now necessary to consider whether there are special circumstances making it desirable to waive the debt.
The meaning of the expression “special circumstances” for the purposes of the Act, has been considered by the Tribunal and the Courts on many occasions. In Pirotta and Secretary of Department of Social Services[22] the Tribunal stated at para 26:
“It is ‘by its very nature incapable of precise or exhaustive definition’ and contemplates circumstances that are ‘unusual uncommon or exceptional’: Beadle and Director-General of Social Security (1984) 6 ALD1. Other formulations are circumstances that distinguish an Applicant’s case from others and take it ‘out of the usual or ordinary case: Groth and Secretary of Department of Social Services [1995] FCA 1708”.
[22] [2015] AATA 874.
The Applicant in her evidence claimed that there has been a personal vendetta against her. She also maintained this before AAT1. However there is no evidence to support that assertion.
The Applicant also argued in her evidence and submissions to the Tribunal that the debts have been dragging on for a long time. Whilst that is indeed true, there is evidence that during this period she has also been repaying other debts to the Commonwealth in respect of overpayment of social security entitlements.
I am also satisfied that in the present case, whilst the Applicant did not knowingly make false statements or representations, she nevertheless was reckless in failing to advise the Department of her income based on her payslips rather than the amounts being deposited into her bank account. This is especially so given the experience which she already had in 2002 with a debt being raised against her as a result of other overpayments.
I find that there are no special circumstances in the present case and that there are no grounds for waiver of the debt under s1237AAD of the Act.
Imposition of Recovery Fee
The remaining matter to consider is the imposition of the recovery fee of $248.70.
As I have previously mentioned, s1228B(1) of the Act provides for an additional 10% to be added to a debt that arose wholly or partly because the person failed to provide information in relation to his or her income or knowingly or recklessly provided false or misleading information in relation to his or her income. However, this does not apply if the person had a reasonable excuse for failing to provide the information[23].
[23] S1228B(4).
In the present case, as I have previously mentioned, I am satisfied that the Applicant recklessly provided false information in relation to her income. It is therefore necessary to consider whether the Applicant had a reasonable excuse for failing to provide the information.
In Pirotta and Secretary of Department of Social Services[24] the Tribunal stated at para 33:
“The expression ‘reasonable excuse’ is an ordinary one and should be given its ordinary meaning. In the context of s1228B(2) the Guide to Social Security Law which represents government policy, describes the meaning of reasonable excuse as ‘discretionary’ but one that an ordinary member of the community would accept as reasonable in the circumstances”.
[24] [2015] AATA 874.
The Respondent submits that the Applicant does not have a reasonable excuse for failing to provide accurate information of her income to the Department. I have already found that her failure to provide the correct information was reckless. Accordingly I find that she does not have any reasonable excuse for her failure.
Accordingly I find that the 10% recovery fee of $248.70 was properly imposed by the Department.
CONCLUSION
The Application must fail. The decision under review is affirmed.
I certify that the preceding 61 (sixty -one) paragraphs are a true copy of the reasons for the decision herein of ..................................[Sgd]......................................
Associate
Dated 23 November 2016
Date of hearing 3 November 2016 Applicant In person Respondent In person Advocate for the Respondent Rick McQuinlan
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