Daly and Secretary, Department of Family and Community Services
[2005] AATA 740
•4 August 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 740
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/140
GENERAL ADMINISTRATIVE DIVISION )
Re WILLIAM AND CHERYL DALY Applicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Dr KS Levy, Member Date4 August 2005
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and in substitution decides that:
(a) In respect of the debt relating to the increase in payments made to both the applicants as a result of non-reporting of commission earnings of Mrs Daly from 10 December 2001, the amounts of overpayments in that respect are waived; and
(b) The matter be remitted to Centrelink for recalculation.
..............................................
KS Levy
Member
CATCHWORDS
SOCIAL SECURITY – Disability support pension – partner allowance – overpayment – administrative error – advised commission based income not declarable income – special circumstances waiver of debt – debt attributable solely to administrative error of Commonwealth – debt waived – matter remitted to Centrelink for recalculation
Social Security Act 1991 s1068-G7B, 1223,1236, 1237
Gerhardt and the Secretary, Department of Employment, Education and Training [1996] AATA 10941
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 76 ALD 105,
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Dranichnikov v Centrelink (2003) 75 ALD 134.
Groth v Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Hales (1998) 153 ALR 259
Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) FCAFC 3REASONS FOR DECISION
4 August 2005 Dr KS Levy, Member 1. This is an application by William and Cheryl Daly lodged under section 29(1) of the Administrative Appeals Tribunal Act 1975. The application seeks redress through an appeal against a decision of the Social Security Appeals Tribunal dated 7 February 2005. That decision affirmed previous decisions (as revised) by Centrelink in respect of each of the applicants under the Social Security Act 1991 (“the Act”).
2. The previous decisions by Centrelink were initially made on 16 September 2004 and raised debts as follows:
(a)In respect of William Daly – a debt to recover overpaid disability support pension for the period 10 July 2001 to 28 March 2003 - $2,191.99;
(b)In respect of Cheryl Daly – a debt to recover overpaid partner allowance for the period 10 July 2001 to 3 March 2003 - $2,692.62.
3. Those decisions were varied by an Authorised Review Officer on 25 November 2004 by reducing the debts raised against each of the applicants to:
§In respect of William Daly - $2,072.35
§In respect of Cheryl Daly - $2,271.60
4. These revised debts were further amended on 25 May 2005 to waive debts which accrued due to the wages of Cheryl Daly, and following that waiver the following amounts were then determined to be the debts:
§ In respect of William Daly - $1,221.34 (an amount of $851.01 waived under section 1237A(1) of the Social Security Act 1991)
§ In respect of Cheryl Daly - $1,368.49 (an amount of $903.11 waived under section 1237A(1) of the Social Security Act 1991)
5. The hearing of this matter was conducted on 1 July 2005 in the Administrative Appeals Tribunal (“the Tribunal”). The applicants represented themselves. The respondent Department was represented by its Advocate Ms S Dole.
6. The applicants gave sworn evidence and also tendered documentary evidence. No other oral evidence was presented. However, documentary evidence was admitted as follows:
Exhibit 1Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (volumes 1 and 2);
Exhibit 2On-line document recording archive record dated 1 September 2000 (annexure A to Secretary’s Statement of Facts and Contentions);
Exhibit 3 Debt calculation letter dated 26 May 2005;
Exhibit 4 Letter from William and Cheryl Daly dated 24 June 2005;
Exhibit 5 Health reports in respect of each of the applicants
Issues
7. The issues for determination are as follows:
(a)Whether William Daly has been overpaid amounts of disability support pension;
(b)Whether Cheryl Daly has been overpaid amounts of partner allowance;
(c)Subject to (a) and (b) above, are any overpayments debts due to the Commonwealth?
(d)Subject to question (c), should all or any of the amount of debts identified (if any) be written-off, waived or recovered?
Legislation
8. The following provisions of the Social Security Act 1991:
“Claimant or recipient received lump sum amount for remunerative work
1068-G7B If a person whose claim for an allowance has been granted receives a lump sum amount after the claim was made that:
(a) is paid to him or her in relation to remunerative work; and
(b) is not a payment to which point 1068-G8 applies; and
(c) is not an exempt lump sum;
the person is, for the purposes of this Module, taken to receive one fifty-second of that amount as ordinary income during each week in the 12 months commencing on that on which the person becomes entitled to receive that amount.
1223.(1) Subject to this section, if:
…..
(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.
1223(1AB) Without limiting by implication the circumstances to which paragraph (1)(b) applies apart from this subsection, a person who obtained the benefit of a social security payment is taken not to have been entitled to obtain the benefit if the payment should not have been made for any one or more of the following reasons:
(a)the payment was made to the person by mistake as a result of a computer error or an administrative error;
(b)the person for whose benefit the payment was intended to be made was not qualified to receive the payment;
(c)the payment was not payable;
(d)the payment was made as a result of a contravention of the social security law, a false statement or a misrepresentation;
(e)the payment was made in purported compliance with a direction or authority given by the person who was entitled to obtain the benefit of the payment but the direction or authority had been revoked or withdrawn before the payment was made;
(f)the payment was intended to be made for the benefit of someone else who died before the payment was made.
1223(1AC) f a social security payment was made by mistake as a result of a computer error or an administrative error, subsection (1) applies:
(a) whether or not the payment was made under a determination that had effect at the time when the payment was made; and
(b)whether or not a determination in relation to the payment could be made after that time with effect from and including that time.
1223(1AD) Subsection (1AC) does not apply if the social security payment was made when it should not have been made because of the occurrence of an event or a change in circumstances where the event or change had not been notified to the Secretary but no valid requirement for notification had been made under the social security law.
Sect 1236 Secretary may write off debt
1236(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
Waiver of debt arising from error
Administrative error
1237A(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).
Sect 1237AAD
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”
The Evidence
9. A substantial volume of evidence was available in Exhibit 1 which contains two volumes of documentation, forms (SU19s) submitted by the applicants, 49 letters by Centrelink to Mr or Mrs Daly, application forms for allowances by the applicants, data matching information from the Australian Taxation Office, notes of enquiries made by William Daly, income details in respect of Mr and Mrs Daly, a priority correspondence briefing by an officer of Centrelink and the authorised review officer’s report of reconsideration of the amount of debt raised, and other miscellaneous documents. In addition, the applicant presented Exhibit 4, a seven page document of 61 paragraphs. William Daly also addressed the Tribunal on each paragraph, which dealt with the Social Security Appeals Tribunal hearing and the health of both applicants at that time; the question of reporting of income in respect of Cheryl Daly’s commission; submissions in respect of the report of the second review officer, Ms Christine McGuire, dated 25 November 2004; and a claim by Centrelink that William Daly failed to report that he had commenced employment in March 2003.
10. The thrust of the factual evidence focused largely on claims of the applicant that SU19 forms had been completed diligently and lodged fortnightly as required, and that all income had been reported on those forms. In particular, it was submitted that not only salary or wages income was included, but commission to which Cheryl Daly was expected to earn was a matter raised with Centrelink in September 2000 or December 2000. The applicant, William Daly, claims to have spoken to a Centrelink officer who was identified by name by the respondent’s advocate. Mr Daly gave evidence that the Centreline officer had advised him that commission payments need not be declared. However, his evidence was that the commission received by Mrs Daly was recorded on these forms nevertheless, on a fortnightly basis from September 2000 and until 10 December 2001 (approximately), when the Mitchelton Centrelink office advised Mr Daly that Mrs Daly was not required to report commission as income on the SU19 forms. In fact, at that time, the Centrelink officer refused to accept the form and insisted the commission be deleted and that Mrs Daly initial the altered form prior to its resubmission. Mr Daly questioned the officer concerned, who confirmed that Centrelink’s policy was that commission was not to be included on SU19 forms. Consequently, Mr Daly took the form to Mrs Daly’s place of work, had the amendments made and initialled, and returned the form to the Mitchelton office.
11. The following week on 17 December 2001, Mr Daly again made contact with the officer at the Mitchelton Centrelink office and questioned him by phone about the declaration of commission. He states that he was again advised there was no need to report commission as it was not treated as income.
12. The applicant’s evidence also queried various parts of a report by the review officer, Ms McGuire (see folios 299 to 313 of T documents). He submitted examples of parts of this report such as the entry for the period 13 November 2001 to 26 November 2001 which indicates there was no income declared on form SU19 from her employer, Fernwood Fitness Centre, although an amount of $1,020 is recorded as having been submitted by his wife on form SU19.
13. At folio 307, reporting of income appears to be verified although an amount of $1,010 is shown at that record. He also identified the fortnight for the period 27 November 2001 to 10 December 2001 and indicated that the form was lodged on 4 January 2002. The applicant referred to Ms McGuire’s report which shows no SU19 form was lodged for that period although he stated that an SU19 form was, in fact, lodged showing $880 in income and $2,240 in commission, with the commission subsequently being crossed out as advised to him by the officer at the Michelton office of Centrelink.
14. As a matter of interest, at folio 307, the summary record for that fortnight shows Centrelink’s recording $394 as income from Fernwood Fitness and $881.71 (being recorded as actual income proportioned into a Centrelink fortnight excluding commission). Again at paragraph 43 of Exhibit 4 and from oral evidence of Mr Daly, he stated no SU19 form is shown in Ms McGuire’s report for the period 11 December 2001 to 24 December 2001. He claims a form was submitted with income of $904 and for the following fortnight an income of $867 was recorded. At folio 307, it indicates income of $901.36 and $860.50 respectively for those two periods and implies that SU19 forms were in fact lodged for those two period.
15. Mr Daly also refers to an attachment to that report which highlights there are 23 errors which are “administrative errors”. He also referred to a record (cited as “…page 197 of information provided to SSAT Members, dated 9 July 2001”), which records a note by a Centrelink officer to the effect:
“This is still not being coded correctly from SU19 for partner allowance **** it must be coded as annual income to affect the DSP payment !!!
A/N has declared on PER that the income is $28,302 per annum from Fernwood Fitness; this is going to result in cancellation of partner allowance for spouse.”
16. Mr Daly stated that his wife’s partner allowance had been cancelled “on several occasions over the years and questioned whether this may have been due to incorrect coding”. He submitted that this raised a serious question over the accuracy of recording on SU19 forms more generally. Mr Daly made a number of emotive and sweeping statements about the level of error within Centrelink and whether these errors are related to a requirement to “balance the books”. He also submitted that one of the claims made is that he was required by Centrelink to advise them within 14 days if he commenced employment whilst receiving the Disability Support Pension. He commenced work on 14 March 2003 at the Leichhardt Community Centre. His evidence was that he endeavoured to contact Centrelink by phone on “a dozen occasions during the first two weeks of this employment”. He finally made contact on 29 March 2003, one day after the 14 day period. He also provided a record he kept on 14 June 2005 where he attempted to contact Centrelink about his wife’s application for disability pension. He recorded six occasions when the rang the office between 12.20pm and 2.32pm, and on each occasion the number was engaged. He then stated he finally successfully connected at 3.12pm that day and was left on hold for a period of time, but eventually spoke to an officer. He endeavoured to highlight the difficulty in making contact by phoning Centrelink’s officer.
17. Mr Daly also cited an incident said to have occurred on Friday 22 October 2004 when he requested his wife to report income for the previous fortnight and to advise of his income, wages plus commission. The officer concerned seemed to be a relatively inexperienced person who was not aware of the procedure for reporting commission on the income forms. The person concerned undertook to return the call later in the day, but this did not occur. The following Monday, 25 October 2004, he rang to confirm that the information had been submitted. He was advised by an officer who appeared to be quite experienced that the information record on the computer had been left in a locked or flagged position by the previous officer using it.
Cross-examination of Mr Daly
18. The advocate for the respondent mentioned at the commencement of examination that the debt now only relates to the amount of commission. She also referred the applicant to Exhibit 2 in relation to his claim that he was advised that commission did not need to be reported. Exhibit 2 shows that a query was raised by the applicant on 1 September 2000 and that he enquired about how much payment of commission should be reported. The records show that he was advised that his wife “may receive this in addition to wages. Advised this should be reported as a lump sum in F/N received. Rect 6567”. This was the official advice recorded about the response from the Centrelink officer who Mr Daly stated had told him that commission payments need not be reported.
19. The applicant was also referred to folio 31 and folio 116 of the T documents. He agreed that these documents had been sent to him at the correct address. He specifically recalled receiving letters with the same information on them. The applicant sated that he filed the letters but that he “didn’t read them”. Mrs Daly stated that they did not have time to read the letters nor did they understand them. Mr Daly stated however, that despite having read that information on the standard letters provided, the fact that he had been advised by an officer on the counter at Centrelink that reporting commission was not required and then being told the same thing on a second occasion, he followed that advice rather than that on the letter.
Submissions
20. Ms Dole submitted that as per the statement of facts and contentions lodged, the SSAT decision should be treated as an affirmation of the previous decisions. She indicated that Centrelink accepted that errors were made and that some amounts have been waived in respect of each of the applicants under section 1237A(1) of the Act. She submitted that the overpayments are debts under section 1223(1). In respect of lump sum payments, she referred to section 1068 – G7D of the Act and that such amounts are taken to be received as 1/52 of the amount for each week of the financial year. She also submitted that the file note in Exhibit 2 is the only official record of the advice that the Centrelink officer provided to Mr Daly in September 2000 and suggested that that record should be followed. She also submitted that the applicant had failed to advise Centrelink of change of income or circumstances and that the obligation had been brought to their attention via letters which were shown in various records of evidence before the Tribunal (see T6 – T39, T43, T45, T48, T52-54, T56, T58-61, T64-67).
21. The respondent also argued that the waiver provisions of section 1237AA in relation to administrative error are not relevant. She also argued that the “special circumstances” provisions under section 1237AAD also are not satisfied.
Findings of Fact
22. The following findings of fact are made:
(a)Mr Daly was in receipt of Disability Support Pension throughout the relevant period;
(b)Mrs Daly was in receipt of Partner Allowance throughout the relevant period;
(c)Mr and Mrs Daly both declared income from employment of fortnightly application for payment forms;
(d)As summarised in folio 307, the applicant declared income but not commission for the relevant periods, but that amounts declared compared with the amounts actually apportioned by Centrelink showed some income was under-declared in particular fortnights and some was overstated. Earnings were understated on 17 occasions and were over stated on eight occasions. Most errors were in the range of $1 to $100 with two occurrences between $100 and $500, three occasions of a discrepancy of between $500 and $1,000 and on one occasion there was an error over $1,000 ($1,010). All of the overstated income was in the range of $1 to $100 and all the understated incomes existed in all of the categories listed.
(e)The income for the 2001/2002 year was declared as $19,414 whereas the total income earned and apportioned into Centrelink records is $22,557. Therefore a net income under-declared is $3,143.
(f)Commission of $6,875.03 was earned but was not declared during the period.
(g)Mrs Daly’s total income for 2001/2002 year following data matching with the Australian Taxation Office records was $28,893.56.
(h)Mr Daly was employed by Leichhardt One Mile Community Centre from 13 March 2003 to 19 May 2003 and advised Centrelink of that employment on 28 March 2003, one day after the fourteen day required reporting period.
(i)The applicants were persons of truth and the facts as stated are accepted in relation to the advice concerning the reporting of commission income.
(j)For the 2001/2002 financial year, there were 23 administrative errors noted out of 26 fortnights reported (see folios 308 – 313).
(k)The administrative errors are accepted by both the applicant and the respondent as being partly due to the applicant as well as the respondent organisation. The records of SU19 forms have been destroyed and are not available as evidence to clarify the degree of error by Centrelink or the accuracy and timing of submissions by the applicant.
(l)The respondent Department has waived a significant amount of debt in relation to the overpayment to reflect the Department’s contribution to the errors involved.
Consideration
23. I have carefully considered all of the evidence presented by the applicants as well as the respondent. The statute law and the case law relevant to these facts has also been considered by the Tribunal in determining this matter.
Question 1 - Has Mr Daly Been Overpaid Disability Support Pension?
24. Based on the evidence and the fact that Mr Daly concedes that there have been errors in the documentation submitted by him, and taking account of the net result from Ms McGuire’s review report, the Tribunal finds that Mr Daly has been overpaid amounts of disability support pension, taking account of the income earned and verified against records of the Australian Taxation Office.
Question 2 – Has Mrs Daly been Overpaid Amounts of Partner Allowance?
25. For the same reasons as outlined in the previous paragraph, Mrs Daly has also been overpaid amounts of partner allowance for the periods in question.
Question 3 – Are the Overpayments to William and Cheryl Daly Debts Due to the Commonwealth?
26. The Social Security Act was amended on 1 July 2000 to clarify liability in respect of overpayments under the Social Security Act 1991. Section 1223(1) and 1224(1) are both explicit that overpayments in the current circumstances are debts due to the Commonwealth. The construction of those two provisions, particularly section 1223(1)(b) and 1224(1)(b) are amplified by section 1223(1)(AB) such that overpayments in the present circumstances are debts due to the Commonwealth. The debts are taken to arise at the time the recipient obtains the benefit concerned.
Question 4 - Are all or Any of These Debts to be Written off, Waived or Recovered?
§ Write-Off
27. The first question arises as to whether there are grounds to write-off the debts incurred. This is contained in section 1236(1) where a debt may be written off for a stated period or indefinitely. The circumstances in which such a debt may be written off are contained in section 1236(1A) and involves circumstances such as the debt being irrecoverable at law; the debtor having no capacity to repay the debt; the debtors whereabouts being unknown; and it is not cost effective to recover the debt. None of the circumstances in section 1236 are applicable to the applicants. Consequently write-off is not available to the applicants.
§ Waiver
28. Waiver may be considered where there is either administrative error or “special circumstances”. In respect of administrative error this is provided for in section 1237A(1). To satisfy that section, where the debt is “….attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments which gave rise to that proportion of the debt”.
29. The respondent has argued that the debt cannot be seen to be “solely” attributable to the fault of the Commonwealth. In considering attribution of the cause of administrative error, assistance is gained from consideration of Deputy President Forgie’s decision in Gerhardt and the Secretary, Department of Employment, Education and Training [1996] AATA 10941 where it was held that “solely” should be given its ordinary meaning but if other errors or factors which follow as a logical consequence of the Commonwealth’s error, then that debt (or part of the debt) might be regarded as being attributable solely to the Commonwealth’s administrative error. Also, in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190; (2003) 76 ALD 105, it was stated “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”.
30. Both the applicant and the respondent have conceded that there have been administrative errors attributable to each of them. This is certainly the case in relation to errors due to salary and wages income. On that basis it cannot be concluded on any reasonable basis that errors in that regard can be objectively regarded as being solely due to administrative error of the Commonwealth. Consequently, section 1237A(1) is not satisfied with respect to salary and wages income errors (excluding commission).
31. In respect of commission income in September 2000, the applicant made an enquiry with Centrelink and was advised that commission payments were not to be declared in the forms submitted. There is a record with Centrelink that such an enquiry was made although the response given does not accord with Mr Daly’s claim. However, the authorised review officer whose report and decision is dated 25 November 2004 referred again to this evidence and (at folio 306 of the T documents), she indicates that she sent an email to the officer concerned about that computer note. The response is that “basically he indicated that in September 2000 he had only been employed by Centrelink for five months. He stated he would have researched the issue about commission in reference material (possibly COWS) or asked a technical support officer as it is something he would not have known the answer to”. That record is made four years after the original notation in the official record. Also, the applicant provided in his submissions a claim that commission was always reported on the appropriate SU19 form until he was advised not to so report.
32. The applicant also gave evidence that he had to have his wife amend the form and resubmit it at the direction of a Centrelink officer. He contacted Centrelink on 17 December 2001 by telephone and also questioned an officer there about the declaration of the commission. He stated at that time he was again advised there was no need to report commission as it was not treated as income. The SU19 forms are not now available owing to the Department’s archiving policy. The officer who made the original notation and who provided email advice to the review officer, did not provide evidence at the Tribunal and was therefore, not cross-examined. Apart from those general disclaimers by Centrelink, no other evidence was provided to refute the claims of the applicant. Given the applicant’s otherwise diligent (and in some respects almost obsessive) recording and contact with Centrelink and the fact that the evidence of the applicants was regarded as truthful, it is accepted that the cessation of recording of commission payments was done solely on the basis of advice from Centrelink. While some doubt was clearly in the applicant’s mind when he made the initial enquiry, he made a subsequent enquiry and was given confirmation of the original advice. It is accepted therefore that his action was not negligent or cavalier, but was done diligently. Consequently, the payments were received in good faith and this occurred solely due to administrative error either directly or as a consequence of the administrative error and advice of Centrelink. In respect of commission payments therefore, section 1237A(1) is satisfied. I therefore find that the payments were made solely due to the administrative error made by the Commonwealth.
33. The note to section 1237A(1) states that waiver of part of a debt is not permitted where administrative error is attributable to both the Commonwealth and other factors (e.g. error by the debtor). While there were some reporting errors by the applicants, the evidence shows these were for the period 19 July 2001 to 17 March 2003 (see Folio 307). However, these were not relevant to the initial decision to report or not to report commission income. The decision by the applicants to report was made initially on 1 September 2000 when a Centrelink record shows he was advised of the need to report Mrs Daly’s commission income. This continued until 10 December 2001 (approximately) when, on submitting a form for Mrs Daly with her commission income included, Mr Daly was advised not to report commission. In fact, he was directed to have Mrs Daly alter the form and initial it and then resubmit it. Mr Daly’s evidence was that he again checked with Centrelink on 17 December 2001 (approximately 1 week later) and received confirmation of Centrelink’s previous advice. Therefore, “….the only cause that objectively can be ascribed to the relevant debt is an administrative error” (Sekhon’s case) which was attributable to the advice (twice) of Centrelink.
34. A question must arise as a result of that decision about the extent or duration of the applicant’s maintaining a belief that commission should not be reported. Some doubt might be raised given his regular and detailed interest taken in income matters and his regular interface with Centrelink.
35. However, given that he re-checked with the same Centrelink office and was given the same advice and that there is no other evidence which should have suggested to the applicant that his suspicion should be revived, he has probably taken more steps which are reasonable to ensure he was in compliance with the requirements. In fact, it appears that based on the advice from Centrelink, the applicant reasonably believed income from commission was not required to be reported. Consequently, it was not in fact reported. Equally, on the part of Centrelink subsequent to 10 December 2001 and at the times of fortnightly reporting by the applicant, there was no evidence by which Centrelink could then further query the non-reporting until a much later time when independent verification was undertaken with the records of the Australian Taxation Office. Nevertheless, the initiating event was the advice from Centrelink. As a result, I find that the non-reporting of the amount of commission payments for the whole of the period from 10 December 2001, is solely due to administrative error by the Commonwealth. In terms of section 1237A(1), the debt to the Commonwealth must be waived.
§ Special Circumstances
36. It was submitted that the Tribunal should consider whether the circumstances are such to warrant consideration under section 1237AAD which provides a statutory power of waiver for all or part of a debt. To do so, it must be shown that the debt did not result wholly or partially from a false statement or false representation or failing to comply with a provision of the Act; and also, that there are special circumstances (other than financial hardship alone) where it would be more appropriate to waive than to write off the debt of part of the debt.
37. The applicants honestly and diligently reported income to Centrelink as required. There is evidence of some discrepancies but considering the summary in folio 307 of Exhibit 1 some of the discrepancies are not significant and may well be due to timing differences between the reporting period of Centrelink and the period for which income was received. On the other hand, there is a question of the degree of accuracy of recording by Centrelink. Indeed for the Financial Year 2001/2002 shown in folios 308 – 311 (T87 of the T documents) there were 23 out of the 26 fortnights which incurred administrative errors. The applicant implied these are due to the respondent. They may well also be partially due to the applicant although no records exist to determine that definitively.
38. In the subsequent Financial Year 2002/2003, almost no administrative errors are identified by the authorised review officer. Again, amounts declared do not include commission payments and must be taken to be only salary and wages. It has been reported that there were some coding errors in 2002/03 but these were rectified by Centrelink. It would appear therefore that most of the difficulties occurred in the 2001/2002 year. There were also some errors by Centrelink in that period as shown by the report of the Authorised Review Officer (T87).
39. However, the commission payments extended until 2003 when Centrelink was able to review more accurately the amounts declared by the applicants. Given the advice received from Centrelink which remained unchanged and unchallenged throughout the period 10 December 2001 to 28 March 2003 (in the case of Mr Daly) and 10 December 2001 to 3 March 2003 (in the case of Mrs Daly), and accepting the applicants as truthful in their evidence, the amounts of commission payments and therefore the consequential erroneous payments of disability support pension or partner allowance, continued for the whole of the period of the debts in question. Therefore, are “special circumstances” within the meaning of section 1237AAD?
40. In considering “special circumstances” , it has been often quoted that this term is not capable of “precise or exhaustive definition” (see Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3. Also, the respondent referred the Tribunal to the case of Dranichnikov v Centrelink (2003) 75 ALD 134. In that case, it was stated “to some extent, the question whether there were special circumstances must depend on how it came about that the error occurred.” In that case also, the Tribunal found that “special circumstances” involves something unusual or exceptional, particularly in amount or degree of intensity, for example. These characteristics may relate to personal circumstances, financial circumstances or other matters.
41. The notion of “special circumstances” is also concerned with avoiding unfairness in unusual circumstances. In Groth v Department of Social Security (1995) 40 ALD 541 at 545, Her Honour Keifel J said that:
“‘Special circumstances’ show facts which distinguish themselves from other cases in that ….it would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”
42. In Secretary, Department of Social Security v Hales (1998) 153 ALR 259 at 267, French J emphasised that “special circumstances” is intended “…to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness…”. In Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) FCAFC 3 it was stated that “special circumstances” does not require extraordinary factors to exist before a discretion associated with special circumstances might be exercised.
43. In that case, it was also stated that the discretion is a broad one and all of the circumstances of the case must be examined. Indeed, such are the considerations as outlined above in considering the application of section 1237A(1). But after taking account of all of the circumstances, the Tribunal must be satisfied that it is proper to exercise a discretion in favour of the applicant where there are special circumstances. In such cases, there must be:
(a)an acceptable explanation of the circumstances to justify acceptance of the facts;
(b)the applicant should not have taken any action that might be seen to disadvantage the respondent or to avoid compliance with the law;
(c)the merits of the application must be properly weighed;
(d)the period of time over which the circumstances were in existence will be relevant;
(e)expressions of good faith by the applicant will be important e.g. willingness to repay a debt determined by a lawful authority.
44. In light of these considerations, the circumstances highlighted are “special circumstances” in that they are not the ordinary or usual case and the factors which led to the position in which the applicants now find themselves are essentially attributable to their interface with officers of Centrelink. The applicants, particularly Mr Daly who presented the case at the Tribunal and had undertaken most of the discussions with Centrelink on behalf of the Applicants, seemed honest, forthright and intelligent, and not lacking in capacity notwithstanding that Mr Daly now has serious heart problems and other medical difficulties. He seems to have regularly had contact with Centrelink and has not avoided or endeavoured to disadvantage Centrelink by withholding of information. He is accepted as a person of truth. The overpayments have occurred from December 2001 to March 2003 and sufficient irregularities have occurred in the records of Centrelink and the advice from Centrelink that the merits of the applicants’ case in this matter outweighs that of Centrelink.
45. Given the degree of diligence in checking requirements with Centrelink, which have been shown to be wrong, this unusual feature would result in unfairness if Mr and Mrs Daly were to pay the penalty for errors which emanate from Centrelink’s advice and affirmed by that agency. The Tribunal finds that the debt which has occurred as a result of non-reporting of commission payments and the consequential overpayments of allowances, emanating directly from Centrelink’s incorrect advice, are special circumstances.
46. Therefore the Tribunal finds that the debt should be waived under section 1237A(1) and under section 1237AAD.
47. The Tribunal sets aside the decision under review and in substitution decides that:
(a)In respect of the debt relating to the increase in payments made to both the applicants as a result of non-reporting of commission earnings of Mrs Daly from 10 December 2001, the amounts of overpayments in that respect are waived; and
(b) The matter be remitted to Centrelink for recalculation.
I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of Dr KS Levy, Member
Signed: .....................................................................................
AssociateDate/s of Hearing 1 July 2005
Date of Decision 4 August 2005
The Applicants appeared in person
For the Respondent Ms S Dole, Departmental Advocate
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