Cooper and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 828

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 828

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No: 2008/1440   

GENERAL ADMINISTRATIVE DIVISION		)        No: 2008/1443
Re		BERYL COOPER   RAYMOND COOPER

Applicants

And SECRETARY, DEPT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal   Senior Member Ms G Ettinger

Date  8 September 2008

Place  Perth

Decision For the reasons given orally at the hearing, the decision of the Social Security Appeals Tribunal must be set aside. In substitution I find that half of Mr and Mrs Cooper’s debts should each be waived.  I remit the matter to Centrelink for calculation of the appropriate amounts.

........(sgd) Ms G Ettinger .............

Senior Member  

CATCHWORDS

Overpayment of age pension – whether notification given to Respondent – part of debt already recovered – no write off –  special circumstances  found – part of the debt waived.

Social Security Act 1991 ss 1223, 1236A, 1237AAD

Social Security (Administration) Act 1999

McKnight v Department of Social Security (1994) 83 SSR 1212

Re Falconer v Secretary, Department of Social Security (1996) 41 ALD 187

Secretary, Department of Education Employment Training and Youth Affairs  v Prince (1997) 26 AAR 385

Re Callaghan v Secretary, Department of Social Security (1996) 45 ALD 435

Secretary, Department of Family and Community Services v Temesgen (2002) 72 ALD 563

Re Balancio v Secretary, Department of Family and Community Services (2003)

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

Re Beadle v Director‑General of Social Security (1985) 7 ALD 670.

Angelakos v Secretary, Department of Employment and Workplace Relations (2007) FCA 25

REASONS FOR DECISION

8 September 2008  Ms G Ettinger, Senior Member

1.      Mr Raymond Cooper and Mrs Beryl Cooper have exercised their rights of appeal to bring a matter before this Tribunal.  They are very upset that they have incurred a debt in relation to overpayment of their age pension because the CPI increase in Mr Cooper’s Commonwealth Bank Superannuation Fund between 1 July 1999 and 10 July 2007 was not recorded and taken into account in calculating the couple’s pension payability.  Mr Cooper appeared in person at the Tribunal with his son, Mr Michael Cooper, who also spoke at the hearing.  Ms Wallwork appeared for the Secretary, Department of Families, Housing and Community Services and Indigenous Affairs, the Respondent in this matter.

2.      The decision under review was that of the Social Security Appeals Tribunal dated 19 March 2008, which affirmed the decision of the Authorised Review Officer of 18 January 2008, to find that the overpayments to the value of $5,651.47 each for Mr and Mrs Cooper had been made, and that they should not be waived or written off. 

3.      I wish to put on record that I am in full agreement with the findings of the Social Security Appeals Tribunal to the extent that it found Mr Cooper “to be a candid and truthful witness, and one who conscientiously attempted to acquit his responsibilities towards Centrelink.”

ISSUES BEFORE THE TRIBUNAL

4.      The issues I have to decide are:

·     whether Mr and Mrs  Cooper were each overpaid age pension of $5651.47 for the period 1 July 1999 to 10 July 2007; and if so,

·     whether all or part of either or both of the debts should be written off for a period, or waived on the grounds of administrative error or special circumstances.

LEGISLATIVE CONTEXT

5.      The relevant legislation in this matter is the Social Security Act 1991, (the Act), in particular, sections 1223, 1236A, 1237AAD, and the Social Security (Administration) Act 1999.  To consider whether Mr and Mrs Cooper were each overpaid age pension, a person’s rate of age pension is to be worked out according to instructions in section 1064 of the Act. 

6.      Both parties agreed that Mr and Mrs Cooper have been receiving age pension since 23 January 1997, and that the overpayments were made for the period 1 July 1999 to 10 July 2007.  Mr Cooper said he could not be sure if the debt amount of $5,651.47 for each was correct, as calculation of exact amounts had been very difficult. He appeared, however, to accept that the amount was correct, and I accepted it as calculated, noting that withholdings from the pensions of Mr and Mrs Cooper have been made and continue.  The latest figure available was $1,852.77 and remains outstanding for each Mr and Mrs Cooper.  I was concerned that although the couple had been told of their appeal rights in correspondence, they had not been informed that they could request a stay of the implementation of the decision of the Social Security Appeals Tribunal, and they have therefore not been able to do so.

7.      Now, as to how the debts arose.  It is not in dispute that when Mr and Mrs Cooper applied for age pension, they supplied all the information which was required, and is listed in the Respondent’s Statement of Facts and Contentions.  Mr and Mrs Cooper also provided a copy of a Commonwealth Bank pay advice indicating that at 18 July 1996, Mr Cooper was in receipt of $25,644 per annum, or $983.61 per fortnight from his Commonwealth Bank Officer Superannuation Fund.  Mr Cooper drew to my attention in particular a form which is at T6/92, and was also in a bundle of documents tendered by Mr Cooper which is Exhibit A1 before the Tribunal.

8.      Mr Michael Cooper emphasised that he considered that this was perhaps the most important document in the whole proceeding.  Ms Wallwork agreed it was more likely than not that the document was in the T-documents only because Mr Cooper gave it to Centrelink.  It is dated 26 July 1998, signed by Mr and Mrs Cooper, and informs Centrelink, to whom it was submitted, that Mr and Mrs Cooper are in receipt of a Commonwealth Super Fund payment. The Coopers’ thereby authorised their Bank to inform Centrelink about their income stream products. 

9.      Ms Wallwork told me that there is no copy of the completed income stream product form on Mr and Mrs Cooper’s Centrelink file. However, it appears information was provided by the Commonwealth Bank Superannuation Fund to Centrelink, because on 15 February 1999, Centrelink wrote separately to Mr and Mrs Cooper advising, among other things, that Centrelink had assessed their combined yearly income as being $29,344.64, which was made up of deemed investments of $3,437.72 and Super/Income stream of $25,906.92. Ms Wallwork was able to tell me that the current practice where a product is subject to CPI increases is that Centrelink will write to the recipient annually and ask for annual updates of the figures.  It is more likely than not that did not happen, though, in the relevant years.

10.     However, the Respondent’s case is that Mr and Mrs Cooper regularly received correspondence indicating their total annual income, and that each letter indicated they had to keep Centrelink informed of any changes to their income or assets.  Mr Cooper acknowledged receiving such correspondence, but he said that the forms and letters were extremely difficult to comprehend in terms of working out the components and deemed figures used for calculating pensions, and that if nothing else came of his application, he would like to see them clarified and made more intelligible for the use of the recipients of pensions.

11.     Mr Cooper told me that between 1999 and 2007, he received no letter from Centrelink which made clear to him, and from which he could calculate, that his and his wife’s pension payments were being calculated on the basis on the original figure provided for the superannuation fund.  It was only in 2007 that the breakdown of figures provided a mechanism for him to understand that the wrong figure was being used, and that the overpayments had accordingly been made.  He said that he was in hospital at the time but notified Centrelink as soon as he was able. 

12.     Ms Wallwork did not refute the above, but has detailed in the Secretary’s Statement of Facts and Contentions the number of times and dates on which Mr and Mrs Cooper were sent correspondence.

13.     Mr Cooper confirmed receipt of those letters.  He also said that if he had understood he needed to give annual updates for his superannuation payments, he could easily have done so, because he received an update each year.  He relied, however, on the fact that there was an annual CPI increase, and assumed that that would be taken into account by Centrelink because it had been disclosed on that 1998 form, and that Centrelink would use it in calculating the pensions.

14.     I find Mr Cooper is extremely meticulous and has kept excellent records, including copies of letters written to Centrelink, not only in response to its letters seeking updated information, but that he reported changes spontaneously, as he should, whenever his financial situation changed. Mr Cooper took me through quite a number of such documents which he had assembled and tendered as Exhibit A1. 

15.     It is not in question that he was required to notify Centrelink of any changes to his financial situation. He knew that, and he omitted to do so, in regard to the Commonwealth Bank Officer Superannuation, which was in fact not taken into account when Centrelink was calculating the rate of age pension, that is, to include the CPI increases. 

16. Because of that, on 22 November 2007, Centrelink determined that Mr and Mrs Cooper each had legally recoverable age pension debts of $5,651.47 pursuant to section 1223(1) of the Act, because the annual increases had not been taken into account in calculating their rate of pension.

17.     Accordingly, as accepted by both parties, I find that Mr and Mrs Cooper have been receiving age pension since 23 January 1997, and that the overpayments were correctly made for the period 1 July 1999 to 10 July 2007 as calculated by Centrelink.

WHETHER THE TRIBUNAL SHOULD WRITE-OFF OR WAIVE ALL OR PART OF THE DEBTS

18.     I then move to consider whether all or part or either of the debts should be written-off for a period, or waived on the grounds of administrative error or special circumstances.

Administrative Error

19.     Taking administrative error first; section 1237A(1) of the Act states that 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.

20.     Mr Cooper submits that the error in overpaying him and his wife age pension is solely that of Centrelink, because he gave Centrelink all the information it needed to calculate his pension, the forms he received were difficult to interpret, and Centrelink did not, between 1999 and 2007, detail the amounts of his superannuation pension to him in correspondence in a way in which the amounts and basis for the calculation could be identified.

21.     Mr Cooper admits he knew he had to disclose any changes.  He is convinced he did so faithfully, pointing to the forms and correspondence he has tendered. 

22.     Ms Wallwork emphasised that Mr and Mrs Cooper had a duty to inform Centrelink about their income and assets levels and any changes to those, and that the annual CPI increase in the superannuation product needed to be disclosed.  She admitted that the current practice is to write to the pensioner recipients directly about that aspect of their income, but was unable to say when that practice commenced, or whether it was the practice between 1999 and 2000.  She accordingly admits there is error on the part of Centrelink, but submits that it is not sole administrative error, and that in any case Mr and Mrs Cooper were obliged to keep Centrelink fully informed of any financial situation as it changed. 

23.     I accept Ms Wallwork’s submission, because I am not satisfied that the error which arose was due to sole administrative error because Mr Cooper had a duty to inform Centrelink regarding changes to his superannuation product. I am satisfied however that he relied upon the authorisation he gave to the Bank to disclose the amounts of superannuation he received, and find that it is a reasonable assumption for him to have made when he signed the authority on 26 July 1998. 

24.     I am satisfied that although the authority cannot now be located, given the correspondence which ensued and is referred to above, it was made available to Centrelink. 

25.     Now sole administrative error has been discussed in the case law and I refer to the case of Re McKnight v Department of Social Security, (1994) 83 SSR 1212.

26.     I have noted that section 123A(1) also requires the Tribunal to consider whether the overpayment was received in good faith.  The meaning of “good faith” has been considered by the Tribunal in many cases.  Two leading cases are Re Falconer v Secretary, Department of Social Security (1996) 41 ALD 187 and Secretary, Department of Education Employment Training and Youth Affairs v Prince, (1997) 26 AAR 385.

27.     In Re Falconer the Tribunal held that if a person knows he is not entitled to the payment, then it cannot be said he received it in good faith. 

28.     In Prince, the Tribunal stated:

“ …  [good faith is concerned], 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, - i.e. is not entitled to use the moneys received as his or her own -  that person does not receive the payment in good faith….” 

29.     Ms Wallwork argued that although Mr Cooper may not have known that his pension was being calculated on an incorrect figure, he had constructive knowledge of it, and should have known that.  Ms Wallwork emphasised again that there is no suggestion that Mr and Mrs Cooper acted dishonestly or fraudulently in not advising their correct income. She contended however, that if Mr and Mrs Cooper had properly read the letters they received from Centrelink, they would have become aware that they were being paid age pension at an incorrect rate, and that in the circumstances, Mr and Mrs Cooper cannot be said to have received the age pension payments in good faith in the legal sense of that phrase. 

30.     I have noted the arguments and the case law.  However, because I cannot find that sole administrative error occurred in the Coopers’ case, section 1237A has no application here, and the debt cannot be waived on the grounds of administrative error. 

Write-off

31. I next considered write-off. Section 1236A of the Act provides for the possibility of writing off of a debt for a period, and states that a debt can be written off for a stated period only if the debt is irrecoverable at law or the debtor has no capacity to repay the debt, or the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor, or it is not cost effective for the Commonwealth to take action to recover the debt.

32. On the evidence before me, I am satisfied that Mr and Mrs Cooper have the capacity to repay the debt and that recovery has, in fact, been undertaken. Consequently, it is inappropriate to write-off the debts under section 1236A of the Act.

Whether the debts should  be waived in part or in full

33. I next moved to consider whether the debts should be waived in full or in part by the application of the special circumstances test. Section 1237AAD of the Act provides for the possibility of waiving all or part of a debt on the grounds of special circumstances, and states:

“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.”

34.     Now the word “knowingly” was considered in the Tribunal case of Re Callaghan v Secretary, Department of Social Security (1996) 45 ALD 435.  The Tribunal there said:

“There is nothing in section 1237AAD 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.” 

35.     In Re Callaghan the Applicant was found to have knowingly omitted to comply with the provision of the Act because he had received letters from Centrelink which he had read and knew accordingly that he had to advise a change of income. 

36.     Ms Wallwork submitted that the Tribunal recognised that the presence of actual knowledge may be inferred from the circumstances where a debtor had the opportunity to gain that knowledge, and there were no obstacles to him or her acquiring that knowledge. She cited two other cases, Re Secretary, Department of Family and Community Services v Temesgen  (2002) 72 ALD 563 and Re Balancio v Secretary, Department of Family and Community Services (2003) AATA 466. She submitted that Mr and Mrs Cooper received valid notices under section 68 of the Administration Act, and knew or had the opportunity to acquire the knowledge from the letters they received setting out their obligation to advise Centrelink if their income changed. She contended that as Mr and Mrs Cooper failed to advise of changes to their income, they knowingly omitted to comply with a provision of the Act, and that section 1237AAD(a) was therefore not satisfied.

37.     Ms Wallwork submitted that if the Tribunal finds that Mr and Mrs Cooper did not knowingly make a false statement, or fail or omit to comply with a requirement under the Act, then the  issue of whether or not there are special circumstances that make it desirable to waive the recovery of the debt must be considered.  

38.     Now, based on:

·     the totality of the evidence;

·     the format of the correspondence from Centrelink to Mr and Mrs Cooper between 1999 and  2007; and

·      my acceptance of Mr Cooper’s evidence that he relied upon his 1998 form authorising information regarding his superannuation pension to be disclosed to Centrelink; and

·     the fact that it disclosed a CPI annual increase,

I am satisfied that Mr and Mrs Cooper did not knowingly make a false statement, or fail or omit to comply with a requirement under the Act.  Accordingly, the issue of whether or not there are special circumstances that make it desirable to waive the recovery of the debt in full or in part must be considered.

39.     The term “special circumstances” is not defined in the Act. However it has been extensively considered in case law before the Tribunal and the Federal Court.  The most frequently cited cases are probably Beadle, Ivovic, Angelakosv Secretary, Department of Employment and Workplace Relations [2007] FCA 25 and there are others. In Beadle v Director-General of Social Security (1984) 6 ALD 1, the Tribunal stated as follows: 

“… An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique, but they must have a particular quality of unusualness that permits them to be described as special…”

40.     This approach was approved by the Federal Court on appeal in Re Beadle v Director‑General of Social Security (1985) 7 ALD 670. The Court did note, however, they would place less emphasis on the dictionary definition of “special”.  In Angelakos, where there was an overpayment of parenting payment, and where administrative error, (but not sole administrative error), had occurred, Besanko J held: 

“… I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances.  The danger is that the test will be overstated if the word ‘exceptional’ is emphasised.  It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case.  There is less risk of over-statement if the words ‘unusual’ or ‘uncommon’ are emphasised….”

41.     These words indicate correctly, in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. 

42.     Ms Wallwork contended there are no special circumstances in this case that make it desirable to waive the debt. 

43.     I am mindful that Mr Cooper was self-represented at the Tribunal and was unable to articulate what special circumstances he wished me to rely upon to find waiver of his and Mrs Cooper’s debts.  I have considered the totality of the evidence, as I must, and I am satisfied that Mr Cooper did everything possible to disclose his income from all sources, to Centrelink.  He wrote regularly to Centrelink to disclose any changes of his financial situation, as he was required to do, not only in response to its letters, but at other times.

44.     I accept that he did not have any idea and could not be vested with the constructive knowledge that his written authorisation of his index superannuation pension amounts would not be disclosed to Centrelink annually.  I find that that is a special circumstance in itself, and I am satisfied after considering the totality of the evidence, that half the debt should therefore be waived in recognition of that situation, that is, half the debt for each of the members of the couple.  I remit the matter to Centrelink for calculation of the appropriate amounts.

DECISION

45.     My decision is therefore that the decision of the Social Security Appeals Tribunal must be set aside. In substitution I find that half of Mr and Mrs Cooper’s debts should each be waived.  I remit the matter to Centrelink for calculation of the appropriate amounts.

I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member

Signed: ......(sgd) T Freeman.............
  Associate

Date of Hearing  8 September 2008         
Date of Decision  8 September 2008
Applicant  Self represented

Respondent  Ms C Wallwork    
  Centrelink Legal Services