Derriman and Secretary, Department of Family and Community Services - [2002] AATA 215

DECISION AND REASONS FOR DECISION [2002] AATA 215

ADMINISTRATIVE APPEALS TRIBUNAL ) No N2001/699 and

) N2001/964

GENERAL ADMINISTRATIVE DIVISION       )
           Re      WARREN DERRIMAN ELIZABETH DERRIMAN
  Applicants
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Ms N Bell, Member

Date4 April 2002
PlaceSydney

Decision The Tribunal sets aside the decisions under review and substitutes therefor: a) in respect of Mr Warren Derriman, the decision that there is no debt to the Commonwealth pursuant to section 1224 of the Social Security Act 1991. b) in respect of Mrs Elizabeth Derriman, the decision that there is no debt to the Commonwealth pursuant to section 1224 of the Social Security Act 1991.

[SGD] Ms N Bell Member
CATCHWORDS
SOCIAL SECURITY – overpayments – recipient notification notice - whether applicants failed or omitted to comply with notices

Social Security Act 1991 - sections 132, 172, 1224, 1237A, 1237 AAD

Re Vitalone and Secretary, Department of Social Security (1995) 38 ALD 169
Re Secretary, Department of Social Security and Hoy (1998) 52 ALD 477
Re Dingli and Secretary, Department of Social Security (AAT 11436, 28 November 1996)

REASONS FOR DECISION

Ms N Bell, Member

The Applicants in these applications are Mr Warren Derriman and Mrs Elizabeth Derriman. The Respondent to these applications is the Department of Family and Community Services. The applications are for a review of the decision of Social Security Appeals Tribunal ("the SSAT") on 18 December 2000 to affirm the decision of a Centrelink delegate to:

recover debts of invalid pension and disability support pension of $11,052.50 from Mr Derriman, for the period 1 August 1991 to 26 June 1997 and a debt of age pension of $1,518.00 from Mr Derriman for the period 10 July 1997 to 2 April 1998. The original decision was varied by an authorised review officer who determined, on 17 October 2000, that there is no debt prior to 26 March 1992, that there is a debt of disability support pension of $8,608.10 from 26 March 1992 to 31 October 1996 and that there is no age pension debt; and
to recover a debt of wife's pension from Mrs Derriman of $11,052.50 for the period 1 August 1991 to 26 June 1997 and a debt of age pension of $1,518.00 from Mrs Derriman for the period 10 July 1997 to 2 April 1998. The original decision was varied by an authorised review officer who determined, on 17 October 2000, that there is no debt prior to 26 March 1992, no debt of wife's pension beyond 31 October 1996 and no debt of age pension, but that there is a debt of wife's pension of $8,608.10 for the period 26 March 1992 to 31 October 1996.

At the hearing of these applications Mr and Mrs Derriman were represented by Ms Clark of the Welfare Rights Centre and the Respondent was represented by Mr George Lozynsky, an advocate from the Advocacy and Administrative Law Team at Centrelink. Mr Derriman and Mrs Derriman gave oral evidence to the Tribunal and the following documents were taken into evidence:
Exhibit           Document     Date
TD1 T1-T43 pp1-207 Documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975 ("T-documents")
A1      Medical Report from Dr Armytage 30 January 2002
A2      Applicant's Statement of Facts and Contentions (Walter Derriman)   29 January 2002
A3      Applicant's Statement of Facts and Contentions (Elizabeth Derriman)        29 January 2002
A4      Letter from Defence Force Retirement & Death Benefits to Mr Derriman     22 May 1992
R1      Respondent's Statement of Facts and Contentions     28 September 2001

background

The background to these applications is summarised by the SSAT in its Statement of Reasons as follows:
"1. Mr Derriman was in receipt of income in the form of superannuation, being Defence Force Retirement Benefits when he lodged a claim for Invalid Pension on 23 July, 1991. Mr Derriman disclosed his superannuation benefit by ticking the appropriate box on his application form. However, this was not taken into account by the former Department of Social Security when calculating his Invalid Pension entitlement. Because of this error, he was paid at a higher rate than he was entitled to be paid.
2. Invalid Pension was superseded by Disability Support Pension and Mr Derriman was granted DSP from 26 March, 1992. Again, his superannuation income was not taken into account when calculating his entitlement and he continued to be overpaid.
…
4. A series of letters were sent to Mr Derriman setting out his notification obligations. The first of these is dated 16 March, 1992. The letters advised Mr Derriman that he must inform DSS within 14 days if his and his wife's combined gross income exceeded $74. per week. Centrelink claim that Mr Derriman did not respond to any of these letters and as a consequence, his superannuation income was not taken into account in calculating his entitlement to Disability Support Pension. Further letters were sent to him on 8 November, 1996, 29 November, 1996 and 21 June 1997 advising that he must inform DSS (and the Centrelink) if his and his wife's combined gross income exceeded the figure shown in the letter. However, these letters did not in fact specify the figure above which he needed to provide the advice."
A Centrelink officer decided on 1 September 2000 to raise and recover debts arising out of the above circumstances in relation to Mr Derriman and Mrs Derriman. The amounts of the debts were varied by an authorised review officer as set out above.
Those decisions, as varied by the authorised review officer, were affirmed by the SSAT. Mr and Mrs Derriman now seek a review of those decisions by this Tribunal.
issues
The issue to be considered by the Tribunal in each of these applications is, first, whether Mr Derriman and Mrs Derriman owe a debt to the Commonwealth and, if so, whether the debt should be recovered. The question of whether the debts were properly raised by the Respondent under section 1224 of the Social Security Act 1991 ("the Act"), turns on whether the Applicants failed to comply with a provision of the Act.
legislation
The legislation relevant to these applications is sections 132, 172, 1222A, 1224, 1237A and 1237AAD of the Act.
Section 1224(1) provides:
"1224(1) If:
(a) an amount has been paid to a recipient by way of social security payment or fares allowance; and
(b) the amount was paid because the recipient or another person:
(i) made a false statement or a false representation; or
(ii) failed or omitted to comply with a provision of the social security law or this Act as in force immediately before 20 March 2000, the 1947 Act or the Social Security (Fares Allowance) Rules 1998;
the amount so paid is a debt due by the recipient to the Commonwealth."

Section 1237A(1) of the Act provides:

"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)"

Section 1237 AAD of the Act provides:

"1237AAD 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 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."

mr derriman's evidence

Mr Derriman, who will turn seventy this year, told the Tribunal that he spent twenty years in the Army and then commenced work with Sanyo Australia where he worked for 11 years until he became ill with cerebellar ataxia which caused a loss of balance. He said that he went on Sickness Benefits and then went back to work for a short time but was unable to continue and went back on Sickness Benefits. Mr Derriman said that he applied for a pension from the Department of Defence in 1978. He was paid a pension from the Department of Defence from 1978 and the pension is now administered by Comsuper.
Mr Derriman said that he also suffers from high blood pressure, osteoarthritis, and throughout the period 1992 to 1996 he was very depressed. His depression was treated with the medication Prothiaden.
Mr Derriman told the Tribunal that during the period 1992 to 1996 he and his wife were living in a two bedroom flat in Eastwood in Sydney. Mr Derriman found that he was unable to leave the flat because of his severe balance problems and became depressed and agoraphobic. He became so depressed at that time that he prepared documents for an application for widow's pension by his wife (see Exhibit A4, a letter from the Pension Fund to Mr Derriman which acknowledges his enquires about widow's pension).
Mr Derriman now lives with his wife on the Central Coast close to their daughters who provide assistance to them and his health and disposition has improved somewhat.
Mr Derriman said that during the relevant period he was unable to perform many functions and relied on his wife to do everything for him. However, he said that he always had the responsibility for their financial and other dealings, particularly with government departments.
Mr Derriman said that he applied for Invalid Pension, as it then was, in 1991 and on his pension claim form, at question 25, he answered "yes" to the question "Do you get superannuation or Defence Force Retirement and Death Benefit ("DFRDB") payments?"
Mr Derriman acknowledged he received notices from Centrelink throughout 1992 and 1993, which advised him "You must tell us within 14 days if… your and your wife's combined gross income (before tax) goes above $74.00 a week". He said, however, that in his mind he had told Centrelink of his and his wife's income in his claim form. He said that he thought nothing was amiss in relation to the rate of payment he was receiving and that throughout the period 1992 to 1996 he had no suspicion that he was being paid an incorrect rate.
Mr Derriman said that in the period from 1992 to 1996 the notices from the department were sent to both him and his wife but Mrs Derriman handed responsibility in relation to any dealings with Centrelink to him.
Mr Derriman told the Tribunal that in 1997 Centrelink did a review of his payments because he was turning 65 that year and would be going onto the age pension. He said he received a letter from Centrelink some ten months later advising him that his rate of pension would be reduced. He telephoned Centrelink and was advised by an officer that his payment would be reduced to take into account his Comsuper payments but that because he had been paid age pension at a higher rate than he was entitled to, as a result of Centrelink's mistake, Centrelink would not seek to recover the overpayment. He said that the next substantial contact he had with Centrelink was when Centrelink's officer by the name of 'Peter' conducted a home visit in December 2000 and told Mr Derriman about Centrelink's error from 1991 in not taking into account Mr Derriman's Comsuper payments.
Mr Derriman confirmed that he did not provide any documentation to Centrelink about his Army pension when he claimed Invalid Pension in 1991 and considered that Centrelink, as a Commonwealth Government department, would obtain information relevant to his superannuation payment from its counterpart Commonwealth Government department. He said that he did not make any enquires through the course of 1992 to 1996 about his correct amount of payment because he assumed that Centrelink knew precisely what his Comsuper payments were and were paying him the correct amount after taking the Comsuper payments into account. Mr Derriman confirmed that every year his super fund gives him an update on what his payment rate for the year will be and that generally there is a small cost of living increase. Again he stressed that he thought there was communication between Centrelink and Comsuper.
Mr Derriman told the Tribunal that he and his wife have a debt to Harvey Norman for the purchase of furniture, which he repays at the rate of $50.00 per month. He and his wife pay rent of $185.00 per week and withholdings of $60.00 per fortnight are made from each of their pension payments in respect of the debt, which is the subject of this application.
mrs derriman's evidence
Mrs Derriman, who is 65 years old, said that in 1992 she and her husband were living in a flat and that at that time her husband's health was very poor. She said that his legs would collapse under him and so he spent most of his days just sitting at home. She said that she did not have her own bank account at that time and her pension was paid into her husband's bank account.
Mrs Derriman told the Tribunal that she took care of housekeeping matters and that her husband would take care of financial matters. She said if she received a letter from Centrelink she would read it but then show it to her husband and he would say that he would take care of it. Mrs Derriman said that from 1992 to 1996 she never considered that there might be anything wrong in relation to her payments. Mrs Derriman confirmed that she has had many attacks of angina, has high blood pressure and takes numerous medications (see Exhibit A1, report of Dr Armytage dated 30 January 2002).
Mrs Derriman was shown document T7, a computer generated copy of a notice from Centrelink to her dated 16 March 1992. She was unable to recall having received that notice. She said that in 1992 she was not aware that she and her husband could have a combined weekly income of $74.00 before their payments were effected. She said that in 1992 she knew that her husband was receiving a superannuation payment but did not know the amount of that payment.
other evidence
At T8 of the T-documents are computer generated copies of the Respondent's letters to Mr Derriman and Mrs Derriman dated 16 March 1992, 22 June 1992, 14 September 1992, 24 March 1993 and 20 September 1993. All of these letters contained the following statements:
"You get the full pension with fringe benefits. You and your wife (husband) can have combined income (apart from the pension) of up to $74.00 a week (later $76.00) and still get the full pension." and
"You must tell us within 14 days if ….you and your wife's (husband's) combined gross income (before tax) goes above $74.00 (later $76.00)."
Document T10 is a record of a Centrelink data matching exercise with Comsuper, which advises of details of Mr Derriman's superannuation pension. Document T14 details amounts of superannuation paid to Mr Derriman by Comsuper. Documents T22 to T29 detail the calculations made by the Respondent in relation to the amounts overpaid to the Applicants and notes the advice to them, on 1 September 2000, of the debts owed to the Commonwealth.
submissions
Ms Clark, for the Applicants, submitted that as the overpayments arose before October 1997, section 1222A of the Act applies. That section provides:
"Debts due to the Commonwealth
1222A. If an amount has been paid by way of social security payment under this Act or the 1947 Act, or by way of fares allowance under the Social Security (Fares Allowance) Rules 1998, the amount is a debt due to the Commonwealth if, and only if:
(a) a provision of this Act, the 1947 Act, the Social Security (Fares Allowance) Rules 1998 or the Data-matching Program (Assistance and Tax) Act 1990 expressly provided that it was or expressly provides that it is, as the case may be; or
(b)       the amount:
(i)        should not have been paid; and
(ii)       was paid before 1 January 1991; and
(iii)      was not an amount to which subsection 245B(2) of the 1947 Act applied."
Ms Clark then referred the Tribunal to section 1224 of the Act and submitted that there had been no contravention of the Act of the type envisaged by section 1224. She referred the Tribunal to the decision of the then President of the Tribunal, Mathews J, in Re Vitalone and Secretary, Department of Social Security (1995) 38 ALD 169 and submitted that the decision in Vitalone has application to the circumstances of Mr and Mrs Derriman. She also referred the Tribunal to its decisions in Re Secretary for Department of Social Security and Hoy (1998) 52 ALD 477 and Re Dingli and Secretary, Department of Social Security (AAT 11436, 28 November 1996).
Mr Lozynsky for the Respondent, submitted that it was incumbent on the Applicants to read the whole of the notices forwarded to them by the Respondent. He referred in particular to the first page of the notices which advised that the Applicants were receiving the full rate of pension. He also submitted that the Applicants' payments from Comsuper were well in excess of the $74.00 or $76.00 noted in the notices and the Applicants should have made enquires about the correct rate of their payments.
Mr Lozynsky also sought to distinguish the facts of these applications from the facts relevant to the decision in Vitalone (supra).
consideration
The Tribunal accepts that Mr Derriman advised Centrelink, on his application form for age pension, in 1991, that he was in a receipt of superannuation payments arising out of his military service. The Tribunal also accepts that notices dated 16 March 1992, 22 June 1992, 14 September 1992, 24 March 1993 and 20 September 1993 were sent by the Respondent to Mr and Mrs Derriman and that those letters were in the terms set out in document T8.
The Tribunal considered Mr and Mrs Derriman to be witnesses of truth and accepted their evidence that during 1992 to 1996 they considered nothing in the rate of their Social Security payments to be amiss. The Tribunal also accepted that generally Mrs Derriman handed over responsibility for dealing with the Respondent to Mr Derriman and that he considered that he had discharged his obligations to notify the Respondent of his income by having declared to the Respondent in 1991 that he was in receipt of superannuation payments. The Tribunal further accepted that Mr Derriman considered that the Respondent, as a Commonwealth Department, was in communication with the Commonwealth Department that was responsible for the payment of his superannuation.
Section 132 of the Act provides:
"132(1) The Secretary may give a person to whom disability support pension is being paid a notice that requires the person to inform the Department if:
(a) a specified event or change of circumstance occurs; or
(b) the person becomes aware that a specified event or change of circumstances is likely to occur.
132(2) An event or change of circumstances is not to be specified in a notice under subsection (1) unless the occurrence of the event or change of circumstances might affect the payment of the pension.
132(3) Subject to subsection (3A), a notice under subsection (1):
(a) must be in writing; and
(b) may be given personally or by post; and
(c) must specify how the person is to give the information to the Department; and
(d) must specify the period within which the person is to give the information to the Department; and
(e) must specify that the notice is a recipient notification notice given under this Act.
132(3A) A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (3)(c) or (e).
132(4) Subject to subsections (4A) and (4B), the period specified under paragraph (3)(d) must end at least 14 days after:
(a) the day on which the event or change of circumstances occurs; or
(b) the day on which the person becomes aware that the event or change of circumstances is likely to occur.
132(4A) If a notice requires the person to inform the Department of any proposal by the person to leave Australia, subsection (4) does not apply to that requirement.
132(4B) If the notice requires information about receipt of a compensation payment, the period specified under paragraph (3)(d) in relation to that information must end at least 7 days after the day on which the person becomes aware that he or she has received or is to receive a compensation payment.
132(5) A person must not, without reasonable excuse, refuse or fail to comply with a notice under subsection (1) to the extent that the person is capable of complying with the notice.
132(5) A person must not, without reasonable excuse, refuse or fail to comply with a notice under subsection (1) to the extent that the person is capable of complying with the notice.
Penalty: Imprisonment for 6 months.
…"

Section 172 of the Act is in similar terms save that it applies to wife pension.
The Tribunal considered the decisions in Vitalone (supra) and Hoy (supra) and in particular the following passages which referred to similar notice provisions. In Vitalone (supra) Matthews J said:
"31. Section 163 is a penal provision. Non compliance with it is potentially punishable by imprisonment. Accordingly, it needs to be interpreted in a manner which is favourable to the individual concerned. It should certainly not be construed so as to impose a strict liability. An element of fault on the part of the individual concerned is thus inherent in the concept of 'refusing or failing' to comply with the section."
In relation to notification obligations generally, the Tribunal, in Hoy (supra), said:
"The primary responsibility in cases like the present is the responsibility of the DSS to ensure that the notification obligations imposed by the recipient notification notices given under the various provisions of the Act - including section 872 - are expressed with sufficient certainty as to leave a recipient in no reasonable doubt as to the content of the relevant obligation. It is especially important that the DSS ensure that such notices are certain in their meaning because of the potentially very adverse possible consequences to the recipient in the event of failure to comply with the notification requirements of such a notice - namely, the incurring of a debt to the Commonwealth and a criminal penalty of up to six months imprisonment."
In Hoy (supra), a similar argument to that raised by the Respondent in this application was considered and rejected:
"Before parting with this case the tribunal notes that, in the course of a written submission made on behalf of the applicant, it was stated in connection with the requirement of the notice of 20 September 1995 that the respondent notify the DSS if she or her partner "change jobs":
"If Mrs Hoy had been unsure if it [that is, the change in Mr Hoy's employment circumstances on 16–19 January 1996] constituted a change of jobs she may have requested clarification from the department but she did not."
The Tribunal's comment on that submission is this. The primary responsibility in cases like the present is the responsibility of the DSS to ensure that the notification obligations imposed by recipient notification notices given under the various provisions of the Act — including s 872 — are expressed with sufficient certainty as to leave a recipient in no reasonable doubt as to the content of the relevant obligation. It is especially important that the DSS ensure that such notices are certain in their meaning because of the potentially very adverse possible consequences to the recipient in the event of failure to comply with the notification requirements of such a notice — namely, the incurring of a debt to the Commonwealth and a criminal penalty of up to six months imprisonment. As regards cases like the present, if recipient notification notices are intended to impose a broad obligation to notify the DSS of changes in employment circumstances generally — not merely changes of jobs in the strict sense — that intention can easily be made clear by a simple re-wording of such notices."

The words used in the notices to Mr and Mrs Derriman were in similar terms to those used in the notice considered by the Tribunal in Vitalone (supra). In the case of the present applications the notices asked for notification in the event that income "goes above" a figure which had always been well below the weekly combined gross income of Mr and Mrs Derriman. In Vitalone (supra) the relevant phrase in the notices was "becomes more than" a specified amount which had already been exceeded.
In relation to the particular terms of the notices sent by the Respondent in Vitalone (supra), Matthews J said:
"Had the notices required notification only of any changes in the recipients' income, then the applicants' failure to inform the respondent of Mrs Vitalone's current wage level would, in all probability, have constituted a failure to comply with a notice under subsection 163(1). However, even this cannot be stated with complete certainty, for Mrs Vitalone had already informed the Respondent in her original application that her wages "varied". But the notices which were sent to the applicants required not only that there have been a change in their income, but also that that change had the effect of increasing their income so that it crossed a particular threshold. In the applicants' case, this threshold was never crossed, for their income already exceeded it."
The Tribunal considers that, as in Vitalone (supra), the notices required that the Respondent be notified "…in the case of eventualities which never occurred in the case of the Applicants". On this basis, there was no failure or omission to comply with any of the notices and there was therefore no failure or omission to comply with a provision of the Act.
A similar approach was adopted by the Tribunal in Dingli (supra):
"7. The respondent relies on s.1224(1)(b)(ii) and says Mrs. Dingli failed to comply with a provision of the Act. It is contended that the notice of 20 September 1993 amounted to a requirement pursuant to s.68(1)(a) of the Act that Mrs. Dingli notify the Department if the combined income her husband and herself went above $76 per week. I reject that argument. Their combined income was already above $76 per week. It did not go above $76 per week after the receipt of that notice. Therefore no event occurred which Mrs. Dingli was required to notify the Department of. "
In Dingli (supra), however, the Applicant had failed to include vital information on her claim form:
"8. However in my view Mrs. Dingli's claim form of May 1992 included a false representation within the meaning of s.1224(1)(b)(i) of the Act. As I have said, she made no response in relation to her husband to the question asking whether she or he had been employed in the previous twelve months. The claim form also required her to state the gross amount per week that her husband was then earning, and the gross amount earned by him in the last twelve months. She left those parts of the form blank. As a result, her form conveyed the impression that her husband was not earning anything, and had not earned anything in the last twelve months. Submitting the form with the parts in question left blank therefore amounted to a representation that her husband was not earning an income and had not done so within the previous twelve months. "
In this case, however, Mr Derriman advised the Respondent of his superannuation payments in his claims for both sickness benefits and Invalid Pension. There was no misrepresentation by Mr Derriman.
The consequence of this is that there was no failure or omission to comply with a requirement of the Act nor was there any false statement or false representation by the Applicants. It follows that there is no debt due by the Applicants to the Respondent pursuant to section 1224 of the Act.
decision
The Tribunal sets aside the decisions under review and substitutes therefore:

a) in respect of Mr Warren Derriman, the decision that there is no debt to the Commonwealth pursuant to section 1224 of the Act.

b) in respect of Mrs Elizabeth Derriman, the decision that there is no debt to the Commonwealth pursuant to section 1224 of the Act.

I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Member
Signed:         .....................................................................................
  Associate
Date of Hearing  4 February 2002
Date of Decision  4 April 2002
Solicitor for the Applicant         Ms Clark
Advocate for the Respondent Mr George Lozynsky