Drake and Department of Family and Community Services - [2001] AATA 157

DECISION AND REASONS FOR DECISION [2001] AATA 157

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/1641

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

DECISION

Tribunal Dr J D CAMPBELL, Member

Date 2 March 2001
Place Sydney

Decision The Tribunal determines that the decision under review be varied in so far as: (a) the period in which over payment occurred and for which a debt is owed by the Applicant is 4 December 1997 to 12 March 1998; and (b) the amount owed is $6030.80.

…………………………………
Dr J D Campbell
Member

DIRECTION TO AMEND WRITTEN DECISION

TribunalDr JD Campbell, Member
Date6 April 2001
PlaceSydney
WHEREAS:

Dr JD Campbell released a written decision in this matter, which was dated 2 March 2001;
It has come to the Tribunal's attention that there is an error in the decision and reasons for decision provided to the parties in so far as the amount owing has been incorrectly calculated. That is, an amount of $862.40, representing payment for the payday of 12 March 1998, was inadvertently left out of the calculation;
The Tribunal notes that the period for which the debt is owed remains unchanged, and is inclusive of both dates;

The Tribunal wishes to amend the written decision so as to rectify the error and wishing to do so with the least cost and inconvenience to the parties, applies the provision of section 43AA of the Administrative Appeals Tribunal Act 1975;

NOW THE TRIBUNAL THEREFORE DIRECTS:

That the decision of the Tribunal as recorded on the cover page should read as follows:
"The Tribunal determines that the decision under review be varied in so far as:
(a)the period in which over payment occurred and for which a debt is owed by the Applicant is 4 December 1997 to 2 March 1998 inclusive; and
(b)the amount owed is $6893.20."
That paragraph 59 at page 25 of the reasons for decision should read as follows:
"59.The Tribunal determines that the decision under review be varied in so far as:
(a)the period in which over payment occurred and for which a debt is owed by the Applicant is 4 December 1997 to 2 March 1998 inclusive; and
(b) the amount owed is $6893.20."

[Sgd] Dr JD Campbell
Member

CATCHWORDS
Social Security – family allowance – redundancy – estimated lump sum superannuation payment – incorrect estimate of income – overpayment – administrative error – good faith – special circumstances
Social Security Act 1991
Scott v Secretary, Department of Social Security [1999] FCA 1774
Re Ebrahimi and Secretary, Department of Social Security (AAT 12872, 11 May 1998)
Re Chilcott and Secretary, Department of Social Security (AAT 13086, 13 July 1998) Secretary, Department of Education, Employment, Training and Youth v Prince (1997) 152 ALR 127
Re Beadle and Director General Social Security (1984) 6 ALD 1.

REASONS FOR DECISION

Dr J D Campbell, Member

Mrs Brenda Drake ("the Applicant") in this matter seeks a review of the decision of the Social Security Appeals Tribunal ("SSAT") dated 16 September 1999 which affirmed the decision of a Centrelink delegate of the Secretary, Department of Family and Community Services ("the Respondent") dated 17 June 1999, as varied by an authorised review officer on 12 August 1999, to raise a debt of $13687.36 and to set aside the decision to recover the debt and substitute a new decision that the Commonwealth's right to recover the debt from the first pay day after 12 March 1998 is waived and that part of the debt before and including 12 march 1998 is to be recovered.
A hearing was held before the Tribunal on 12 September 2000 at which the Applicant was represented by her husband, Mr Drake. The Respondent was represented by Ms Schuster, an advocate from the Advocacy and Administration Law Section of Centrelink. Ms Koen provided oral evidence to the Tribunal.
The following material was placed into evidence before the Tribunal:

Exhibit No              Description
T1-T81 pp1-303 Documents prepared pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975
A1      Applicant's statements in reply to statement of issues, dated 16 January 2000
A2      Applicant's statements in reply to conference one, dated 20 January 2000
A3      Applicant's submission, dated 10 September 2000
A4      Applicant's submission, dated 11 September 2000
R1      Respondent's statement of facts and contentions, dated 10 April 2000
R2      Statement of Ms M Koen dated, 29 March 2000

issues

The relevant issues in this matter are whether:
         (a) The Applicant received an overpayment of family allowance and/or
              family payment on the pay days from 20 November 1997 to 18 June 1998;
              and

(b) whether the Applicant owes a debt for this period; and

(c) if a debt is owed, should it be recovered.

legislation

The relevant legislation in this matter is the Social Security Act 1991 ("the Act") and in particular sections 8, 23, 885, 891, 1069, 1223, 1237A, 1237AAD and 1296.
background file evidence
For calendar year 1997 the Applicant's family allowance payments were based on the base year income 1995/96 of $33703. On 7 July 1997 the Applicant lodged a further claim for family payment, family tax payment and maternity allowance following the birth of a seventh child (T3). On 8 July 1997 the Respondent wrote to the Applicant indicating that family payment would be made at the rate of $776.59 per fortnight and that the Applicant must advise if the combined family income exceeds $37073.30, and/or if her partner ceases work or starts self employment (T4).
On 12 September 1997 the Applicant rang the Respondent requesting an additional parenting allowance claim form and asking questions as to what sort of information would be required. The Respondent advised that such information was needed to show how finances are divided and any earnings from them. The Applicant indicated that her partner is now retired and is waiting for his redundancy payments to be paid (T5).
In an application for additional parenting allowances completed by the Applicant on 14 September 1997 and lodged with the Auburn Office of the Respondent on 17 September 1997, the Applicant details a sum of $122,000 at paragraph 7 and refers the reader to a note on the ANZ Bank Statement, where she states:
"My spouse will receive redundancy payments including a superannuation lump sum. The date of receipt is not known, but it should be within a month. He intends putting the bulk of this money into some sort of investment account. Other total balance $122,000.00. For social security purposes consider this balance his. Until he finds full time employment, we will be living on part of the money. He retired on 10 September 1997." (T78, P298)

Further as part of the accompanying documents to the claim form lodged 17 September 1997, a copy of the Applicants partner's superannuation information statement as at 30 June 1996 was attached, together with details of the severance pay calculation (T78, P290, 291).

On 17 September 1997 the Applicant sent a letter to the Respondent which the latter received at the Auburn Office on 18 September 1997. In this letter the Applicant advised of a notifiable event (the redundancy of her partner on 10 September 1997): She drew attention to attachments to her claim for additional parenting allowance and attached further copies thereof, severance and superannuation pay outs in particular. The Applicant indicated some of the difficulties associated with making an estimate of income for financial year 1997/98 at this stage. Nevertheless the Applicant proceeded to make such an estimate for financial year 1997/98 and nominates an estimate of $27,742 comprising $4 for herself and $27738 for her husband, which included wages payments to 10 September 1997, total redundancy taxable pay outs, a projection of likely earnings from newstart allowance and NEIS work, business earnings and interest. The Applicant indicated that she would notify the Respondent if there was a 10% variation in the estimates (T79, P292). Further at question 10 of the additional parenting allowances claim form, the Applicant is recorded as answering "yes" to her partner having money held and preserved in a superannuation fund (T78, P293).
On 19 September 1997 the Applicant lodged a claim for a Health Care Card at the Auburn Office, in which it was stated that her husband had been made redundant on 10 September 1997 (T6). In response the Respondent requested verification of any payments received by the Applicant's partner since his redundancy on 10 September 1997 and, if not received, an approximation of the amount and the date on which he is likely to receive such payments together with a copy of an employer superannuation certificate (T7). The latter certificate was lodged with the Respondent's Parramatta Office on 26 September 1997, and it nominated an amount of $41956.37 as the employees net final payment, but did not nominate a date on which it was to be paid (T8, P77). On 28 September 1997 a copy of an ANZ balance of account statement dated 26 September 1997 was lodged at the Parramatta Office of the Respondent indicating an account balance of $45687.79 on 25 September 1997 (T79, P300).
On 3 October 1997, the Respondent wrote to the Applicant on the matter of rent assistance, nominating that the Applicant must inform them if combined family income is likely to exceed $29,805.40 and either her or her partner starts work, changes jobs or becomes self employed (T9). On 10 October 1997 the Applicant responded, referring the Respondent to the letter of 17 September 1997, and seeking advice as to when issues were going to be solved (T10, P81-84). On 27 October 1997, the Respondent elected to action outstanding issues, while still awaiting superannuation documents (T81, P303) and notified the Applicant of this on 30 October 1997 (T16). In a reply dated 27 October 1997 to the Applicant's letter of 10 October received on 14 October 1997, the Respondent indicated that they were not using the Applicant's estimate of $27,742, but rather the figure of $27,094 which is the threshold for maximum family payment for seven children (T11, P85).
On 30 October 1997 the Applicant lodged copies of the employment separation certificate for her husband, bank statements and a copy of her birth certificate at Parramatta, which were later received at Auburn on 3 November 1997. (T14/15)
On 18 November 1997 the Applicant lodged a new estimate of income for 1997/98 of $27081, because of her husband's commencement with NEIS payments on 13 November 1997 (T19). On 20 November 1997 the Respondent reduced the amount of family payment to $194.60 per fortnight (T20). Following assessment and consideration of combined estimated income it was increased to $859.40 on 4 December 1997, and the Applicant was notified in a letter on 24 November 1997 (T22). This was confirmed as a result of further assessment on 28 November 1997 (T26). In both letters to the Applicant of 24 and 28 November 1997, the Respondent notified the Applicant that they were to advise if the estimated combined income for the financial year was to exceed $29,803.40.
On 12 March 1998 the Applicant wrote a letter to the Respondent, which was received at the Auburn Office on 17 March 1998, advising the Respondent of a new estimate for the financial year 1997/98 of $28,974. In working up the estimate, the Applicant stated the following in relation to superannuation:
"…
My gross lump sum was $104,657.15 (eligible termination payment). Part of the payment was taxed at a fixed 21.5% and a part at a fixed 31.5%. Tax of $23,500.40 was deducted giving him a net lump sum of $81,156.75.
According to Comsuper, my husband is liable to pay tax in 5% of the pre July 1983 component, that is, 5% of $12,366.34 = $618.32.
…" (T27, P129)
On 6 April 1998 the Respondent wrote to the Applicant detailing the amount of family allowance payable as from 23 April 1998, and indicating that the Applicant must notify if the combined income is to exceed $37,583.40 (T28). Following a letter from the Applicant on 14 April 1998 (T29) the Respondent recognised an error in calculation of the family allowances, and instructed the Applicant to notify if combined taxable income was greater then $31,871.40 for the financial year 1997/98, which recognised the Applicant's estimate of $28974 (T32). On 20 April 1998 the Applicant sent a further letter reducing the combined estimate for the financial year 1997/98 to $25,369, because of a large increase in her husbands deductions and a decrease in his interest payments (T35, P150).
On 16 June 1998 the Applicant, in a letter to the Respondent, in noting that she had furnished a revised estimate of the combined income of $27,133 for the financial year 1997/98, indicated that she had received further advice from the Australian Taxation Office and that as a consequence her husband's taxable income for the financial year 1997/98 would be $112,175 (T37). The Applicant's husband notice of assessment dated 15 September 1998 indicated a taxable income of $99,797 (T41) and that of the Applicant as $5446 (T61, P232).
In the Applicant's letter of 16 June 1998, the Applicant nominated a combined estimated taxable income for the financial year 1998/99 of $23,933 (T37), and this estimate is used by the Respondent for family tax payments and allowances (T43, 17 December 1998) and again on 21 December 1998 for family allowance (T44, P166). On 15 December 1998, the Applicant provided the Respondent with a second estimate for the financial year 1998/99 of $12,613 (T45, P170) and confirmed this in a change to income and assets form completed on 29 December 1998 and received by the Respondent on 31 December 1998 (T47).
In a report, undated and unsigned at T64, the particular circumstances of the matter were addressed. A decision was taken by the Respondent, and notified to the Applicant on 16 June 2000, that family allowance should not have been paid from 20 November 1997 to 2 July 1998 as the combined income for financial year 1997/98 was $105,243, the allowable limit being $85,471 in 1997 and $85,729 in 1998 for a family as nominated (T66), and that an over payment of $14,622.90 was a debt due and owing (T67).
In a response dated 20 June 1999, the Applicant indicated to the Respondent that relevant information concerning her husband's superannuation pay out was included in the letter of 12 March 1998; that all relevant information had been provided and that a request for a review by an authorised officer was requested. (T68, P252) On 22 June 1999, the Applicant's husband makes an annotation that the ANZ Statement of Account for the period 14-28 November 1998 "was sent to DSS in 1997 (it may have been presented at the counter)" (T70, P265). On further review the Centrelink manager confirmed his view and notified the Applicant of such on 29 June 1999 (T72) and that a debt of $14,622.90 was owed.
In a letter to the Applicant dated 12 August 1999 the authorised review officer concluded that there was no sole administrative error for the period 20 November 1997 to 18 June 1998, but that there was a sole administrative error and payment was received in good faith when the Respondent failed to act upon the advice given by the Applicant on 16 June 1998 (T75), and thus reduced the recoverable debt to $13,687.36.
In the SSAT's decision on 16 September 1999, the Tribunal notes that the Applicant's husband remembered discussing superannuation payments with an employee of the Respondent named Nathan in early September 1997 and that he would be getting about $100,000, of which $20,000 to $30,000 would be tax. He was told that his superannuation would be regarded as an asset (T1, P9).
The SSAT concluded that the debt beyond 12 March 1998 was caused solely by administrative error, and that up to the recognition of the error by her husband in mid June 1998, the Applicant received such payment in good faith. As such the debt from 12 March 1998 to 18 June 1998 was waived under section 1237A of the Act.
Mr Drake
Mr Drake, the Applicant's husband, told the Tribunal that he agreed with the facts as nominated in the Respondent's statement of facts, with the exception of item 6 where he contended that the Applicant did notify the Respondent when combined income was over $29,803.40 for the financial year 1997/98. He stated that the Respondent tended to ignore such advice and that this was constant conduct.
Mr Drake stated that he was made redundant on 10 September 1997 and that he had attended a number of seminars concerning redundancy, with matters of tax being raised by Comsuper, and when he asked questions about social security issues he was told to seek advice from the Department of Social Security. In further comment Mr Drake stated that he never spoke to an accountant, and the only information he received from the Department of Social Security is what he learned from the social security claim forms.
Mr Drake stated that he received newstart allowance from 16 October 1997 to 13 November 1997, commencing on NEIS assistance payments after that date. Further, when applying for newstart, he told Mr Nathan on 11 September 1997 about his equity statement in superannuation, his ANZ bank account indicating a balance of $3000 and his severance payment calculation of approximately $44,000. On 12 September 1997 Mr Drake stated that general enquiries were made and he was told that he had to submit an estimate of income for family payment. Mr Drake stated that on 14 September 1997 an application for additional parenting allowance was forwarded to the Respondent detailing a sum of $122,000, which was expected as a result of his after tax payments of redundancy and superannuation. Mr Drake further stated that a letter was sent to the Respondent on 17 September 1997, in which the Applicant detailed a combined income estimate for the financial year 1997/98 of $27,742 (T79, P292). Further he stated that it was never intended that it go into a roll over fund and that he always intended it to be placed in a bank account as he intended to buy a house.
Mr Drake also noted that superannuation was not mentioned in the departmental claim form for family tax payment, family payment, maternity allowance and childcare assistance (T3) and that they always provided an estimate in accordance with this form. Further Mr Drake stated that there is evidence that the matter of the superannuation was reviewed and put to one side as a consequence of the notation on the file copy of material sent to the Applicant on 24 September 1997 (Exhibit A3, P7).
Mr Drake was firmly of the view that lump sum superannuation payments and general taxable income would be dealt with separately by the Tax Office, as it was his conviction that superannuation was separate, and that he had been told on more than one occasion that superannuation was an asset. Mr Drake did not believe that lump sum superannuation was income in the normal sense; that it was a thank you for years of service; that it was not like normal wages and that it was separate and not quite the same as income; that the Respondent seemed to be treating it quite separately and that he did not appreciate the reality until June 1998.
Mr Drake stated that by 17 September 1997 Mr Nathan had been provided with full details. They were enclosed with the application lodged for additional parenting allowance and further accompanied a letter from the Applicant to the Respondent. In the letter the Applicant notified the Respondent of the change in her husband's employment status as from 10 September 1997, attaching the same material which had been lodged in relation to the Applicant's husband's redundancy pay out, his superannuation lump sum expectation and an estimate of $27,742 for financial year 1997/98.

Mr Drake stated that the Applicant submitted a revised estimate for a combined income of $27,081 for financial year 1997/98 in a claim dated 13 November 1997, which was lodged with the Respondent on 18 November 1997 for family allowance under the income test. He stated that the figures thereafter for the combined estimate were very similar until June 1998. Mr Drake stated that he dealt with all payment matters with the Respondent on behalf of his wife, and at no stage did anyone ever speak to or ask him about matters concerning his lump sum superannuation payment until he raised the issue with the Respondent in June 1998. Mr Drake further stated that when he received the ANZ Bank Statement of 28 November 1997, the statement was either sent or presented at the counter at Auburn ( as noted at T70, P265) on 22 June 1998.
Mr Drake stated that full details of his superannuation lump sum payment was given by the Applicant to the Respondent on 12 March 1998 and nothing was done. In June 1998, as part of his financial planning in relation to NEIS, he contacted the Australian Taxation Office and was told that superannuation was added into income and then tax was deducted at the marginal rate with reimbursement where appropriate by way of tax rebate. Mr Drake stated that he was surprised at this method of treatment. It had never crossed his mind that it was treated in any other way to how he had thought. He stated that no questions had ever been asked; that he had followed the instructions of the Respondent implicitly; that he had given all the details when required; that all he knew was that he was receiving a large sum of money; that he tried to ensure all the estimates provided were reasonable; that he believed it unreasonable for the Respondent to accept estimates which were clearly unreasonable and that he relied on the Respondent to know what it was doing, particularly when it had been his practice to maintain a full and continuous disclosure of all matters to the Respondent.
Mr Drake told the Tribunal that he was born in 1951, completed his higher school certificate at age 18, completed a Bachelor of Applied Science in 1974 and worked as a biochemical and physical biologist at Royal North Shore Hospital while completing a master of science degree. Mr Drake stated he left the hospital in 1977, travelled for four months and undertook further studies until 1979 when he joined a Commonwealth Department, which he left and returned to again in 1981, a year in which he was married In 1991 he completed his Diploma in Education.
In response to questions in cross examination, Mr Drake stated that he had had many discussions about taxable income in relation to estimates for family payments and that they were told on many occasions, in relation to a payment of a lump sum superannuation amount, that it was an asset.
Mr Drake stated that he made many enquires by telephone to the Parramatta Office and he would visit the Auburn office. He stated that at no stage was he given any advise concerning taxable income, but that he understood the issues of estimates and the family payment procedures.
Mr Drake understood that the Applicant would receive family payment at the highest rate when he was receiving newstart allowance, but he was never told that family payment would be paid at the highest rate while he was on NEIS payments. Mr Drake also stated that the claims completed on 13 November 1997 (T19) and 14 September 1997 (T78) were not discussed with anyone, neither was the letter of 17 March 1998 (T27).
Ms Koen
Ms Koen stated that in 1997 she was in the Auburn office, and that she later moved to the Area office in 1998. Ms Koen stated that she remembered speaking with Mr Drake on 27 November 1997 over the number of letters the Applicant had received and that at no stage was there any discussion on financial matters (Exhibit R2). Ms Koen had no memory of the claim lodged on 18 November 1997 (T19) or the note made at T21, P118, but in review there did not seem to be anything unusual about the estimate.
On the issue of raising the overpayment, Ms Koen stated that she had been transferred to the Area office in April 1998 and in January 1999 became a member of a team tackling a backlog in raising overpayments. Ms Koen does remember having a conversation with Mr Drake on 22 June 1999 on the issue of the Applicant's overpayment, and she made a file note of the conversation that is to be found at pages 242-245 of the Tribunal's documents. Further it is noted that the Respondent did not receive a copy of the Applicant's and Mr Drake's tax assessment notices for the financial year 1997/98 until 5 February 1999.
submissions: the applicant
Mr Drake contended on behalf of the Applicant that the totality of the debt should be waived for the following reasons:
(a) that the Applicant had provided the Respondent with timely and accurate information at all times during the period in question;
(b) that such information had been provided in the course of completing appropriate claim forms, in responding to particular requests and requirements of the Respondent and during telephone and personal representation by Mr Drake on behalf of the Applicant.
(c) that, in particular, information was provided to the Respondent as to the nature and make up of Mr Drake's redundancy payments, the likely quantum and timing of his lump sum superannuation payment and evidence that the lump sum superannuation payment had been made in mid to late November 1997 in the form of an ANZ Bank Statement, indicating a sizeable balance for the second fortnight of November 1997;
(d) that the Respondent, knowing that Mr Drake was to receive a lump sum superannuation payment had a duty:
(i) to inform the Applicant as to any effect the receipt of such payments would have on the family payments; and
(ii) to inform the Applicant that such payments would be treated as income; and
(iii) to assess any claims lodged in the light of the information provided; and
iv) at any time during the process of acceptance of an estimate made by the Applicant, to seek further and necessary information, if it was pertinent to the decision;.
(e) that as a consequence of the Respondent's failure to carry through these duties, overpayment occurred for the period 4 December 1997 until 2 March 1998; and
(f) that as a consequence of the Respondent accepting the Applicant's detailed estimate lodged on 17 March 1998, with particulars of the lump sum superannuation payment being nominated in the detailed estimate, any overpayment therefore should be waived to 16 June 1998 and the Respondent's sole administrative error should be recognised in accepting an estimate which clearly contained significant error.
Further it was submitted on behalf of the Applicant that the Applicant at all times received such payments which led to the overpayments in good faith.
It was contended by the Applicant that if sole administrative error by the Respondent was found not to exist in relation to whole or part of the overpayment, the circumstances existing should be considered to be special and the overpayment waived.
submission: the respondent
The Respondent contends that the factual circumstances in the matter clearly define that the Applicant failed to consider the issue of lump sum superannuation payment as income. As a consequence the Applicant failed to include the payment in any estimate put forward from 13 November 1997 to 16 June 1998. The direct result of this was an underestimation of combined income for financial year 1997/98 with a resultant overpayment of family allowance to the Applicant for the period 4 December 1997 to 18 June 1998.
The Respondent contends that the provision of the correct information is the responsibility of the Applicant; and if there was doubt about a particular issue the Applicant should have made an inquiry about the particular issue to the Respondent. It was further contested that there is no evidence which particularises such an inquiry by or on behalf of the Applicant. The Respondent stated that there is evidence of the Applicant informing the Respondent of an expected lump sum superannuation payment, but that there is no evidence contained within the Respondent's file to demonstrate that the Applicant forwarded the ANZ Bank statement for the last two weeks of November 1997, and even if such was forwarded, it is argued by the Respondent that all such a statement does is give an indication of an increase in Mr Drake's account balance at a point in time. This in itself is not evidence of the source and the quantum and the nature of the increase, nor can any inference be drawn as to what intentions are held as regards the use of the money. As a consequence the Respondent contends that any overpayment has been the direct result of the Applicant not providing the necessary information and forwarding a number of estimates which either failed to detail the necessary information in relation to the lump sum superannuation payment or alternatively provide the information in an aberrant way as evidenced by the estimate forwarded on 12 March 1998.
The Respondent contents that it is the Applicant's failure to correctly provide the necessary information which is the cause of the over payment, and that the Respondent in the circumstances of the matter provided all the necessary information that was requested of it and in doing so discharged its duties according to the Act. The Respondent contends that in no way should it be held responsible for the errors of the Applicant.
consideration and findings
The Tribunal, in detailing the particulars of the facts to the extent that it has done, notes that both parties are accepting of the facts as outlined, with perhaps the one outstanding factual difference being whether or not the Applicant did forward a copy of Mr Drake's ANZ Bank statement for the last two weeks of November 1997, when received by Mr Drake in early December 1997.
In a consideration of the totality of the evidence outlined earlier in this decision, the Tribunal makes the following findings of fact:
(a) that Mr Drake undertook the management of the Applicant's dealings with the Respondent during the period in question;
(b) that Mr Drake was made redundant on 10 September 1997 and on a number of occasions the Applicant advised the Respondent that Mr Drake was going to receive a redundancy payment and a lump sum superannuation pay out;
(c) that the Respondent sought details as to the date and quantum of such payments to Mr Drake;
(d) that the Applicant forwarded details of the redundancy payment to Mr Drake and further advised the Respondent that when the superannuation lump sum payment was received, it would be put into an investment account;
(e) that Mr Drake was paid newstart allowance from 16 October 1997 to 13 November and on 13 November 1997 commenced self-employment with assistance through the NEIS scheme;
(f) that on 13 November 1997 the Applicant submitted a completed income and assets detail form for family payment assistance and within that form nominated an estimate of $27,081 for the combined income of her and her partner for financial year 1997/98;
(g) that the Respondent accepted the estimate, and paid family allowance at the rate of $859.40 per fortnight commencing 4 December 1997;
(h) that the Respondent did advise the Applicant on a number of occasions (24 November 1997, 28 November 1997) that the Applicant must advise the Respondent if combined income for the financial year 1997/98 was to exceed $29,803.40;
(i) that on 12 March 1998 the Applicant did advise the Respondent of a revised estimate of $28,974 for the combined income for financial year 1997/98;
(j) that as part of the 12 March 1998 letter and estimate, the Applicant did advise the Respondent of the following:
"Superannuation: My gross lump sum was $104,657.15 (eligible termination payment). Part of this payment was taxed at a fixed 21.5% and a part at a fixed 31.5%. Tax of $23,500.40 was deducted giving me a net lump sum of $81,156.75.
According to Comsuper, my husband is liable to pay tax of 5% of pre July 1998 component, that is, 50% of $12,366.34 = $618.32."

The Applicant included a figure of $618 as income in the estimate (T27, P129).

(k) that this estimate of $28,974 was accepted by the Respondent as was a later estimate of combined income for the financial year 1997/98 of $25,369 submitted on 20 April 1998 (T30, P139) and relevant payments of family allowance were paid;.
(l) that the Applicant provided a further estimate of $27,133 on 1 June 1998 for the combined income for financial year 1997/98;
(m) that on 16 June 1998 the Applicant advised the Respondent that the Tax Office had advised that a sum of $91,415 would be added to Mr Drake's taxable income for the financial year 1997/98, making Mr Drake's taxable income $112,175 for the financial year 1997/98 (T37, P152).
(n) that Mr Drake's taxable income for the financial year 1997/98 was $99,797 as contained in the Australian Taxation Office notice of assessment dated 15 September 1998, that the Applicant's taxable income for the same year was $5446 (Australian Taxation Office notice of assessment date 17 September 1998), and that the combined taxable income for financial year 1997/98 was $105,243;
(o) that the income ceiling for payment of family allowance in 1997 was $85,471 and in 1998 was $85,729;
(p) that Mr Drake, in preparation for his redundancy, did attend and take advice on matters of superannuation and taxation and that he continued to seek advice from the Australian Tax Office from time to time and further there is evidence of significant communication, both verbal and in writing, between the Applicant and the Respondent during the period September 1997 and June 1998;
(q) that at all times up to the receipt of advice from the Australian Taxation Office in June 1998, Mr Drake had formed and held a belief that a lump superannuation payment was treated differently and did not form part of taxable income, and further Mr Drake believed that he had been informed that his superannuation was considered an asset and remained under this impression up to the advice from the Tax Office in June 1998; and
(r) that at no stage during 1997 did the Applicant provide a breakdown on details of Mr Drake's actual lump sum payment from superannuation, with the actual quantum first being detailed as $104,657.15 in the Applicant's letter of 12 March 1998 (T27, P129).

In further consideration the Tribunal notes the following statutory framework within which this matter is to be considered. Section 23(1) of the Act defines taxable income as having the same meaning as in the Income Tax Assessment Act 1997. Section 838(1) of the Act defines that a person is qualified for family payment if (a) and (b) are satisfied and (c), the person's income for the relevant family payment period does not exceed the person's income ceiling. Subsection (d) defines that the value of the person's assets must also not exceed $376,750. Section 1069-H2 of the Act defines family payment income for a particular tax year as: (a) the person's taxable income for the year; (b) the person's adjusted fringe benefits value for that year; (c) the person's target foreign income for that year and (d) the person's net rental property loss for that year. Subsection 1069-H3 further defines that where the person is a member of a couple the person's income includes the income for the year of the person's partner. A person's taxable income for a tax year is either the person's taxable income for that year or an accepted estimate being defined in subsections 1069-H10 and H11. Subsections 1069-H13 and H14 define the appropriate tax year as the base tax year, that is, the tax year ending on 30 June in the calendar year that came immediately before the calendar year in which the payday occurs. Application of the outlined module determines the rate of family payment to be made and can only be worked out again using the same module section 1069, where a notifiable event has occurred, or the person revises that estimate of income or where there has been an underestimate of income (section 860). Recalculation is to occur when the person's income exceeds 110% of the estimated income (section 885), with the later determination to have effect on the day the earlier determination took effect (section 891).
In applying the facts to this statutory framework the Tribunal, in noting that the Applicant's income for financial year 1997/98 was clearly more than 110% of estimated income for the same period and that the Applicant's income for this period did exceed the Applicant's income ceiling for the period finds that the Applicant did not qualify for family allowance for the period 4 December 1997 to 18 June 1998, with the date of effect being the date on which the earlier determination took effect, namely 4 December 1997. As a consequence the Tribunal finds that the Applicant has been paid an overpayment amount of $12,930 during the period 4 December 1997 to 18 June 1998, a recalculation of the Applicant's entitlement having been undertaken pursuant to section 885 of the Act (underestimate of income).
In noting subsections 1223 (3) and (4) of the Act, the Tribunal concludes that the overpayment of $12,930 is a debt due to the Commonwealth.
In addressing the issue of whether the debt of $12,930 should be waived, the Tribunal again notes the waiver of debt due to administrative error provisions contained within subsection 1237A(1) and (1A) of the Act, and the waiver in special circumstances contained within subsection 1237AAD of the Act.
Waiver for administrative error
Waiver of a debt must occur where the debt or a proportion of the debt is attributed solely to an administrative error made by the Commonwealth and the debtor received in good faith the payments that gave rise to that proportion of the debt.
In considering the issue of administrative error in this matter, and having earlier particularised the evidence in this matter, the Tribunal observes that because a notifiable event occurred, the Applicant had to provide an estimate of income. This did occur, but it did not include the superannuation lump sum payment as at that point in time (13 November 1997). It had not been received, but clearly was anticipated, a fact which had been made known to the Respondent on a number of occasions since notice of Mr Drake's redundancy of 10 September 1997 was served on the Respondent in mid September 1997. Further, at this point in time (mid November 1997) it is clear that the Respondent did accept the estimate given, and in the Tribunal's view a correct decision was made. The Respondent on 20 and 24 November 1997 issued two advices to the Applicant and in both the Applicant was instructed to notify the Respondent if combined taxable income for the financial year 1997/98 was to exceed $29,803.40. Further the Tribunal also notes that while the Applicant had made an annotation dated 14 September 1997 on the ANZ Bank Statement for the period 22 August 1997 to 5 September 1997 that the total of all the lump sums would be $122,000 (this document accompanying the additional parenting allowance application of 17 September 1997), the Respondent wrote to the Applicant on 24 September 1997 requesting an approximate date and the amount expected to receive in a statement signed by both the Applicant and Mr Drake (T7, P74).
Mr Drake asserted that this statement was completed when he forwarded a copy of the ANZ Bank statement for the last two weeks in November 1997 in early December 1997. The Respondent stated that they have no record of this being received. The Tribunal in assessing the situation considers that the statement, while indicating a balance in excess of $100,000, did not indicate the nature, date or details of the superannuation lump sum, which as far as the Tribunal can ascertain were first provided in the Applicant's letter of 12 March 1998.
The Tribunal in assessing the issue observes that the error that created the problem was the provision of the estimate on 13 November 1997 by the Applicant. The Applicant's partner said that he had taken and sought advice from many parties, including the Respondent, and that he had formed the opinion that the lump sum superannuation payment was not part of his taxable income. This clearly was a wrong conclusion in the circumstances of this matter, but in other circumstances, if such a payment was paid to an appropriate fund within a particular time frame, his conclusion may have been correct.

The Tribunal further notes that the Applicant argues that the Respondent had a duty to provide him with appropriate advice and information as regards the issues surrounding the treatment for social security purposes of a lump sum superannuation payment. Further the Applicant argues that he was left with a view as a consequence of his discussions with officers of the Respondent that such payments of superannuation were considered to be an asset.
In considering the issues raised the Tribunal concludes that an administrative error did cause the circumstances whereby the Applicant was overpaid for the period commencing 4 December 1997. Further the Tribunal finds that both the Applicant and the Respondent made particular contributions to the administrative error.
(a) the provision of the estimate by the Applicant on 13 November 1997 was an estimate provided by the Applicant and at that time correctly in the Tribunals view accepted by the Respondent with the Applicant being instructed to notify the Respondent on both 20 and 24 November 1997, if the combined taxable income for the financial year 1997/98 was to exceed $29,803.40.
(b) The Applicant did not comply with the above, for in no way does the provision of an ANZ Bank Statement for the last two weeks of November 1997 indicating a particular balance indicate anything more than money has been placed into the account.
(c) While the Applicant may have formed an erroneous view as to the proper treatment of her partner's lump sum superannuation payment, the fact remains that this view was formed and was erroneous as far as the circumstances of this matter.
(d) The Respondent, in having been provided with the knowledge that the Applicant was to receive such a superannuation payment, and having asked to be provided with details as to quantum and date of payment, should have continued to monitor the process of such payment as part of the appropriate procedure of accepting an estimate. In this regard the Tribunal finds that the Respondent is no more than doing its duty under the Act and clearly within the functions defined in the various subsections of 1296 of the Act. In so finding, the Tribunal accepts that once the Respondent is put on notice of a likely receipt of a lump sum superannuation payment, it too has a duty to follow the matter through and satisfy itself as to whether the lump sum has been received, the date of receipt, and ascertain the clear intention of the party as to whether or not it is to be placed in an approved deposit fund or treated as taxable income in the year of receipt, which in turn indicates the need for them to be provided with correct and timely information.
(e) While it is noted that the Applicant's partner had formed an erroneous view of how his superannuation lump sum should be treated in these particular circumstances, the formation, arising from distillation of inputs from the many sources, of his view is his and his alone and must be adjudged, in the Tribunals view, to be as much of his own making as to contribution from others. In the Tribunal's view the issue as to whether or not the payment was taxable income is straight forward – it is part of taxable income, as it is taxed albeit at special rates, or it is not if it is not taxed and place in an appropriate approved fund. In the Tribunal's opinion neither the Applicant nor the Respondent can hide behind a view that it was difficult to appreciate as to whether such a lump sum payment was or was not part of taxable income. In this regard the Tribunal acknowledges the education and experience of the Applicant, the general understanding of the processes involved and the resources available to the Respondent and their duties nominated in the Act.
The Tribunal notes that on 12 March 1998 the Applicant did provide a new estimate, which clearly nominated the amount of Mr Drake's lump sum superannuation pay out and the fact that it was subject to tax at varying percentages. It is noted that the Respondent accepted the estimate without any inquiry or detailed examination. While the Applicant may have formulated the estimate, the decision to accept the estimate was the Respondent's and the Respondent's alone. It is the finding of the Tribunal that this is a sole administrative error on the part of the Respondent, for clearly in a process of accepting an estimate there is a duty to observe at least as to whether there is an apparent error on the face of the record. The Tribunal has already established that superannuation lump sum when taxed is part of taxable income. This is knowledge that a person would be expected to have or to source before making a decision to accept an estimate. In making a decision to accept an estimate there is a duty on the decision maker to ensure that where there is a patent error or anomaly, enquiry of sufficient notice is made to satisfy the decision maker of circumstances pointed to by the anomaly and/or error. In making such a finding the Tribunal is acknowledging that such a duty is consistent with the Respondent's duties and responsibilities under the Act.
As a consequence of the Tribunal's finding of sole administrative error on the part of the Respondent, the Tribunal turns to a consideration of whether the money was received in good faith by the Applicant. The Tribunal is acknowledging that Mr Drake conducts the process and procedures with the Respondent, finds that no evidence has been adduced to indicate that the Applicant knew or ought to have known that the conduct of the financial dealings were other than proper and that her husband's understanding of the issues were other than correct, as evidenced by the Applicants acceptance of her estimate forwarded on 12 March 1998. Further the Tribunal observes that when advised of their errors by the Australian Taxation Office in June 1998, the Applicant ensured that the Respondent was made aware of the error. The Tribunal concludes that the Applicant, in placing reliance on her husband for such advice and dealings, did not know, nor ought to have known, that her husband's dealings with his own superannuation lump sum payment was in error, for it was something about which he and he alone had formed a view, as a consequence of advice from many parties.
As a consequence of the Tribunal's findings of sole administrative error and that the payments were received by the Applicant in good faith for the period from 12 March 1998 to 18 June 1998, the Tribunal finds that any debt relating to this period should be waived, with the debt to be waived amounting to $6899.20.
In considering waiver of the remaining debt of $6030.80 for the period 4 December 1997 to 12 March 1998, the Tribunal having considered the discussion of what constitutes special circumstances in Re Beadle and Director General of SocialSecurity (1984) 6 ALD1, finds that there is nothing within the circumstances of this matter that could be considered to be exceptional, uncommon or unusual. In the Tribunal's view the redundancy and subsequent payment of a lump sum superannuation quantum is not unique, nor are the circumstances where there is a misconstruction by one party to properly understand the nature of their payments and to provide an estimate which reflects such a misconstruction. Further where such an estimate is accepted by the Respondent and the Respondent undertakes no further inquiry, while party to earlier information and awaiting further substantiation and a more detailed evaluation of the earlier information is not in the Tribunal's view an uncommon or unusual or exceptional circumstance in the conduct of administrative activity. While this may be not be the most desirable of administrative practices, it certainly does not constitute a special circumstance and the Tribunal is not in a position to consider waiving the remaining debt under subsection 1237 AAD of the Act.

determination

The Tribunal determines that the decision under review be varied in so far as:
(a) the period in which over payment occurred and for which a debt is owed by the Applicant is 4 December 1997 to 12 March 1998; and
(b) the amount owed is $6030.80.
I certify that the 59 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell, Member
Signed:         .....................................................................................
  Associate
Date/s of Hearing  12 September 2000
Date of Decision  2 March 2001
Counsel for the Applicant        John Drake
Counsel for the Respondent Hannelore Schuster