Dean and Secretary, Department of Family and Community Services - [2002] AATA 912

DECISION AND REASONS FOR DECISION [2002] AATA 912

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2002/237

GENERAL ADMINISTRATIVE DIVISION       )
           Re      KEELY DEAN
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date11 October 2002
PlaceBrisbane

Decision The decision of the Social Security Appeals Tribunal dated 30 January 2002 is set aside and its place is substituted the decision of the Tribunal that that part of the debt which represents parenting payment for the period 17 October 2001 to 23 October 2001 is waived.

...............…(Sgd)...................
Ms J Cowdroy
Member
CATCHWORDS
SOCIAL SECURITY – parenting payment – overpayment – whether debt arose solely due to administrative error - whether special circumstances exist

Social Security Act 1991
Social Security (Administration) Act 1999

Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Beadle v Director General of Social Security (1985) 7 ALD 670
Secretary, Department of Social Security v Hales [1998] FCA 219

REASONS FOR DECISION

11 October 2002 Ms J Cowdroy, Member

Background to Application:

By decision dated 30 January 2002, the Social Security Appeals Tribunal ("the SSAT") affirmed a decision made by Centrelink to raise and recover an overpayment of parent payment in the amount of $3,104.49 for the period 23 April 2001 to 23 October 2001.
Hearing:
The matter was heard in Brisbane on 19 August 2002. The applicant and her partner, Mr Adam Waterhouse, gave evidence. The respondent was represented by Mr T Ffrench who called an officer of Centrelink, Ms T Harvey, to give evidence. The T documents, pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, were admitted into evidence as E1 and other material was admitted into evidence as exhibits E2 and E3. The matter was decided on the basis of the material in the exhibits, the oral evidence and the written submissions.
Applicant:
Ms Dean lodged a claim for parenting payment on 5 February 2001. She and her partner, Mr A Waterhouse, attended at a Centrelink office and they were assisted by a Centrelink officer to complete an income estimate form. At that interview she was told by the Centrelink officer that there was no need to provide pay slips. On 3 April 2001 she returned a parent payment (partnered) review form (T6). On that document she recorded her partner's gross wages for the past 13 weeks and copies of payslips were subsequently provided.
She received a letter from Centrelink dated 5 April 2001 (T9), which recorded assets of $5,837.00, her partner's annual income of $728, her fortnightly earned income of $70.12, and other annual income $56.68. She pointed out that in the review form she had declared assets of $3,000 and she was unable to reconcile the amount of $5,837.00. Other information on that letter contained income details which did not reflect the reality of the situation. She contended that the letter was invalid in that none of the information on its front page was correct. She had queried such inaccuracies with Centrelink in the past and had been told to ignore the information in those letters.
Although the back page of that letter refers to an obligation that she must advise if her partner's total personal income goes over $546.00 per fortnight, the applicant did not take steps to notify Centrelink of its inaccuracy. Under cross-examination, she stated she could not recall specifically reading the back page of that letter at that time.
On 19 April 2001, Mr Waterhouse attended Centrelink, Caboolture. Mr Waterhouse had commenced work with the Department of Families, Youth and Community Care. He took with him three pay slips, and the information from only one of them was "keyed in". The amount recorded as fortnightly earnings was $411.96 (T10). After that interview, both she and Mr Waterhouse believed that the amount of parenting payment would be based on the income estimate given to Centrelink in February of that year.
She acknowledged receipt of another letter from Centrelink dated 8 August 2001 (T11). She did not question the contents of that letter and could not specifically recall reading the second page. She accepted that the information contained in that letter contained inaccurate information about income and in retrospect, she should have queried it.
It was not until some time in October 2001 when the applicant rang Centrelink with a query about a Health Care card that she became aware that Centrelink had been paying parenting payment on the basis of her partner's fortnightly earnings of $411, when the reality was that he was earning in excess of $500 a week gross. Payslips for the period commencing 11 March 2001 were provided by Mr Waterhouse. Ms Dean ascertained that Centrelink had been recording two different income amounts, one for the purposes of assessing family tax benefit and another for the purposes of assessing parenting payment. It was only then that she became aware that Centrelink was basing her parenting payment on income other than the $600 per week she had declared on the forms she had completed in February of that year.
In relation to the slight increases in her payment, she did not query those as she believed that the changes were attributable to increases in the consumer price index. She contended that the entire debt up until 8 August 2001 was due to administrative error on the part of the respondent.
In answer to questions from the respondent in regard to her obligations, Ms Dean stated that she believed that she was required to advise Centrelink if her partner's income increased beyond that advised to Centrelink in February. (A perusal of the application for family tax benefit lodged on 5 February 2001 discloses an estimated total income of $26,851.19).
Ms Dean recalled receiving a letter from Centrelink dated 31 July 2001 (S9-56) which referred to her failure to advise of an increase in her partner's earnings. She acknowledged that the reference to reliance on her partner's income should have alerted her to the fact that payments were based on fortnightly income. However, she was aware after reading that letter that there had been an overpayment.
Mr Waterhouse attended a Centrelink office on 19 April 2002 and took his recent pay slips. He had recently commenced with a new employer. He took with him the letter of 5 April 2001 and he thought he probably pointed out that it contained incorrect information.
At that interview, he queried whether there was need to provide his pay slips, as he had previously phoned Centrelink about his income when he was receiving Newstart Allowance. He understood from advice he received that he was not required to bring in any more pay slips, but he could not recall specifically the precise words that were used by the Centrelink officer.
In answers to question from the respondent, Mr Waterhouse stated that he understood that two lots of payments were involved, however he did not understand how the payments were calculated. He had been advised that the "whole system had changed" and that the current process was to provide an estimate of income. He had been told that it was preferable to give an estimate over and above what he was likely to receive in order to avoid an overpayment occurring. He read the letters sent to Centrelink by the applicant, including the material on the second page. He basically "knew I had to tell certain things"; however he thought that his income estimate provided to the Centrelink was sufficient. He explained that his income varied and that $600 per week was the maximum he received over the period of the overpayment.
In submissions, Ms Dean submitted that the debt arose solely from administrative error and that it was unjust to expect her to have knowledge that the amount being maintained as income was incorrect. Whilst the matter of ReWard and Secretary, Department of Family and Community Services[2000] AATA 212 referred to by the respondent was relied on to support error on her part on the basis she did not respond to Centrelink's letters, her non-response to those letters was entirely attributable to the fact that those letters contained administrative errors. She did not believe that the respondent could rely on those letters as constituting advice of her notification requirements, in view of the fact that they contained incorrect information, and they should be held to be invalid.
In relation to "special circumstances", the applicant expressed her dissatisfaction with Centrelink's notification process, with particular reference to letters from Centrelink containing obviously incorrect and confusing information. Despite having had an interview in February 2001 to ensure she understood the payment process, she had received conflicting information
Respondent:
Ms T Harvey, has been employed at Centrelink for three years, at least two years of which have been at Centrelink's Caboolture office. A document headed "Customer Record Access Monitor Report" includes a reference to FZ8, which is her user log on and identifies any work that she does at that office. Additionally, T10-40 is a document raised by her after a completed activity. Both documents refer to activities carried out by her on 19 April 2001. She had provided a statement in relation to her activities on that day.
The Monitor Report reveals an activity at 13:17:33 relating to the applicant's file. The record of what occurred (T10/40) would have been raised either whilst processing the query at the reception or, in busy times, immediately after the activity had been completed. She had read Mr Waterhouse's statement about his attendance at Centrelink office on 19 April 2001. She did not specifically recall speaking to Mr Waterhouse. If she had been told that income would be increasing, it would not be a standard response to advise that there was no necessity to provide further pay slips. Usually advice would be provided that there would be no requirement to provide further pay slips in circumstances where a person was in receipt of a regular wage. The document at T10-40 only refers to updated earnings and does not refer to the fact that any further matters were discussed.
In submissions, Mr Ffrench pointed out that the transaction between Mr Waterhouse and Ms Harvey lasted approximately five minutes. The record of what transpired was created either at the time of the conversation or shortly thereafter.
The calculation relating to the overpayment, which is not disputed by the applicant, appear at T17-72.
In terms of recovery, the applicant is currently repaying $30 per fortnight towards another overpayment, consequently write-off is not appropriate in these circumstances.
In relation to the provisions relating to waiver, the overpayment did not occur solely due to administrative error. The matter of in Re Ward was drawn to the Tribunal's attention and in particular the statement that:
"the Secretary's duty to waive does not extend to those debts which are attributable to errors… which are independent of the Commonwealth's administrative error and that … it makes no difference that those other errors… are minor." (at paragraph 47)
Whilst there may have been confusion in the applicant's mind between the eligibility requirements for family tax benefit and parenting payment due to the fact that the system is a complicated one, the letter dated 5 April 2001 made it clear that income was not being recorded correctly and it advised the applicant of an obligation to advise if her partner's income exceeded $546 per fortnight. It seems that the fortnightly earned income amount of $70.12 recorded in that letter was based on the information contained in the Pay Advice slip (T7-33). That was coded in the applicant's record as that was the most recent pay advice. However, clearly the applicant's partner earned in excess of that sum almost immediately thereafter, in that his income exceeded $546 per fortnight, yet the figures set out in that letter were ignored.
The asset figure shown in the letter of 8 August 2001 (T11-41), was based on the figure of $3,000 disclosed at T6-29, together with the information provided by the applicant at T6-27 in relation to balances held in bank and building society accounts. These total $4,837. Although the remaining $1,000 said to constitute the asset total of $5,837 is in error, Mr Waterhouse had in the past declared a figure of $1,000 which was continued for the purposes of assessment. However, such an error was not crucial as it would not be of concern unless a person was getting close to the assets threshold, which was not the case.
The reverse side of the letters sent to, and received by the applicant from Centrelink set out clearly her notification obligations. There was some confusion as to precisely what transpired on the visit to Centrelink on 19 April 2001. Whilst Mr Waterhouse's belief was that he was not required to provide pay slips, such advice was unlikely if he had advised the counter officer that his income was going to increase. There is no recorded documentation in relation to the applicant's assertion that on 19 April 2001 advice was given not to declare further income.
The applicant's lack of response to the various letters sent to her by Centrelink removed the overpayment from the sphere of sole administrative error. Advice about Mr Waterhouse's income was provided on 17 October 2001 and the overpayment continued until 23 October 2001. The Tribunal may consider that payment for the period 17 October 2001 until 23 October 2001 was solely due to administrative error.
In relation to waiver because of "special circumstances", it was contended that special circumstances cannot be found to exist if the error that is pointed to is the provision of incorrect advice.
Findings and Consideration:
I find that the applicant provided information in relation to parenting payment and family tax benefit on 5 February 2001. In respect to the claim for family tax benefit, an annual income of approximately $26,000 was declared. In respect to the claim for parenting payment, by letter dated 20 February 2001, Centrelink requested evidence of her partner's earnings for the previous four weeks, which was provided. The payslips relate to Mr Waterhouse's employment with Endeavour Foundation.
The applicant received a letter from Centrelink dated 5 April 2001, which required her to notify if her partner's income exceeded $546.00 per fortnight. On 19 April 2001, Mr Waterhouse attended the Caboolture Office of Centrelink to advise that his employment details had changed and he took with him copies of recent payslips from his new employer. I find that after this time Mr Waterhouse's wages increased significantly. No advice was received from the applicant about this aspect until 17 October 2001 when it became apparent to her, after discussion with an officer of Centrelink, that her partner's income was in excess of the amount being assessed by Centrelink.
The applicant received another letter from Centrelink dated 31 July 2001 stating that a debt had been raised because income earned by Mr Waterhouse whilst employed at Endeavor Foundation had not been taken into account for the relevant fortnight. She also received a letter dated 16 August 2001 advising that she was required to notify Centrelink if her partner's income exceeded $546.00.
I find that the applicant failed to respond to the letters dated 5 April 2001 and 16 August 2001. Her explanation for failing to do so was attributed to the fact that letters she had received on previous occasions contained inaccurate information and she had been told by Centrelink staff to disregard the correspondence.
Whilst all of the information in the letter of 5 April 2001 appeared to be incorrect to the applicant, it contained a figure of $70.12 representing fortnightly earned income, which was in fact the amount Mr Waterhouse earned for the fortnight ended 25 March 2001.
In respect to what transpired on 19 April 2001, I find that Mr Waterhouse spoke to Ms Harvey about his new employment and that he provided pay slips. In his oral evidence, he said that he took with him the letter of 5 April 2001 and pointed out that the information contained in that letter was incorrect. In cross-examination, he conceded that he could not definitely recall this. Further, I note that he was not certain about this aspect in his written statement, stating that "It is possible that I made a query regarding the parenting payment form received on April 5th, as the information on the form was incorrect".
I find that both the applicant and Mr Waterhouse were credible witnesses, who held an honest belief that they had provided all the necessary information to Centrelink at that time.
However, ultimately, I am not satisfied that the inaccuracies in the letter of 5 April 2001 were brought to Centrelink's attention. I find that whilst there may have been some mention about an increase in wages in the future, it was not sufficiently specific to alert Ms Harvey to the need to advise that payslips would need to be provided. What is clear that at the time of speaking to Ms Harvey, Mr Waterhouse had an understanding that pay slips would not be required. This understanding was established at the interview with Centrelink staff on 5 February 2001. I am not satisfied that he adequately conveyed that understanding to Ms Harvey, sufficient for her to have confirmed that this was the case. That is not to say that I disbelieve Mr Waterhouse on any aspect, simply that his evidence as to what precisely was said was vague and he acknowledged as such in his evidence.
I find that for the fortnight ended 6 May 2001, Mr Waterhouse's income was in excess of $546.00 and continued to be the case thereafter with the exception of one fortnight. In order to avoid a debt being incurred, the applicant should have advised Centrelink at that time that income was being incorrectly assessed.
I find that there was no attempt to correct the assumptions made by Centrelink in relation to income in the letter of 5 April 2001, or later correspondence from Centrelink, notwithstanding the applicant's awareness that it was incorrect. I find that the applicant's non-responsiveness to the various letters, coupled with her erroneous understanding of the manner in which income was assessed, contributed to the debt. In particular, the letter of 31 July 2001 should have put the applicant on notice that income was being assessed fortnightly as it is couched in clearer terms than the other letters from Centrelink.
In relation to the legislative provisions, section 68(2) of the Social Security (Administration)Act 1999 states that the Secretary may give a notice that requires a person to inform the Department of a specified event or change of circumstances. One such change of circumstances is an increase in income. I find that letters of 28 February 2001 (S8), 5 April 2001 and 8 August 2001 were notices given pursuant to that section.
Section 1223(1) of the Act relates to the creation of a debt arising from a recipient's lack of entitlement to a social security payment. I find that there is a debt due to the Commonwealth.
In respect to non-recovery of the debt, there were a number of legislative provisions which were considered. The first relates to whether there were grounds established to write off the debt. Section 1236 of the Act sets out the requirements which must be met in order for this to occur. It provides, in part, that if a debt is able to be repaid by way of deductions from a person's social security payments, then the debtor is taken to have the capacity to repay the debt unless the deductions would result in severe financial hardship. I am satisfied that this is not the case here.

Section 1237 of the Act provides for waiver of a debt in certain circumstances. It provides that waiver must occur where the debt arose solely because of administrative error on the part of the Commonwealth, and the payments which constitute the debt were received by the recipient in good faith.
I am not satisfied that during the conversation on 19 April 2001 Mr Waterhouse was told in unequivocal terms that he did not need to provide any payslips. However, I accept that he believed that this was the case, and it seems to me that it arose because of some misconception about the differing ways in which income is assessed.
However, of significance is the fact that any misconception about this aspect should have been quickly dispelled upon the applicant's receipt of the letters from Centrelink dated 31 July and 8 August 2001. Those letters state in no uncertain terms that income was being assessed on an ongoing basis. Consequently, I find that the debt did not arise solely from administrative error, as the applicant's failure to meet her notification obligations is implicated.
I find however, that once the respondent had been notified of Mr Waterhouse's income on 17 October 2001, the continued payment of parenting payment at a rate in excess of that to which the applicant was entitled, was a matter which was due solely to administrative error.
In relation to the issue of good faith, I have commented earlier on the credibility of the applicant. It is clear that throughout the overpayment period, she held a genuine belief that she was receiving her proper entitlement. Accordingly, the debt arising from the period 17 October 2001 from 23 October 2001 is to be waived.
I also considered section 1237AAD of the Act, which permits waiver in the following 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."

It is not contended that the applicant knowingly made a false statement or false representation. The decisions discussed and followed in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 are to the effect that the word "knowingly", unless the legislation specifies to the contrary, is understood to mean actual knowledge. Applying those principles, there is no evidence in the present matter that the applicant knowingly failed or omitted to comply with a provision of the Act.
In deciding whether special circumstances exist, the Tribunal has had regard to the principles outlined in Beadle v Director General of Social Security (1985) 7 ALD 670, which described special circumstances as "extremely unusual, uncommon or exceptional". In Secretary, Department of Social Security v Hales [1998] FCA 219, French J discussed Beadle's case and the application of section 1237AAD in the following terms:
"The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose."

There was no evidence before me which would constitute a finding of "special circumstances". Whilst I accept the applicant's evidence that the respondent did not provide an adequate explanation of the method of assessing income for the purpose of calculating family tax benefit and parenting payment, as well as her evidence that Centrelink's correspondence contained information which was not always correct, these aspects, of themselves, are not sufficient to fulfil the criteria of special circumstances.
The decision of the Social Security Appeals Tribunal is set aside and in its place is substituted the decision of the Tribunal that that portion of the debt of $3,107.49 representing overpayment of parenting payment from 17 October 2001 until 23 October 2001 is to be waived.
I certify that the 50 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member
Signed:         Sarah Oliver
  Associate
Date of Hearing  19 August 2002
Date of Decision  11 October 2002
The Applicant Appeared In Person
Solicitor for the Respondent    Mr T Ffrench, Departmental Advocate