Dreifuss and Department of Family and Community Services

[2000] AATA 420

DECISION AND REASONS FOR DECISION [2000] AATA 420

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N1999/807

GENERAL ADMINISTRATIVE DIVISION          )          
           Re      MS ADELE DREIFUSS     
  APPLICANT
           AND   SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  RESPONDENT

DECISION

Tribunal       Dr J D Campbell     

Date31 May 2000

PlaceSydney

Decision      The Tribunal affirms the decision under review.         

............................................
  Dr J D CAMPBELL
  Member
CATCHWORDS
Social Security – newstart allowance – permanent part time employment – overpayment – debt – administrative error – good faith – special circumstances
Social Security Act 1991, Module 1068G, sections 8, 658, 1223(5), 1224, 1237A and 1237AAD

Secretary, Department of Social Security and Danielson   (AAT 11760, 20 March 1997)
Secretary, Department of Social Security v Danielson   (1996) 44 ALD 19
McAuliffe v Secretary, Department of Social Security  (1992) 28 ALD 609
Beadle and Director General of Social Security (1984) 6 ALD 1
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1988) 152 ALR 127

REASONS FOR DECISION

Dr J D Campbell                 
 May 2000    

1. Ms A Dreifuss ("the Applicant") in this matter seeks a review of the decision of the Social Security Appeals Tribunal ("SSAT") dated 27 April 1999 which set aside the decision of an authorised review officer of Centrelink dated 2 March 1999.  This latter decision affirmed the decision dated 14 December 1998 made by a delegate of the Secretary, Department and Family and Community Services ("the Respondent") that there had been overpayment of Newstart Allowance to the Applicant and that the Applicant owed a debt to the Commonwealth.

2. A hearing was held before the Tribunal on 7 February 2000 at which the self represented Applicant gave evidence.  The Respondent was represented by Mr Lozynsky, an advocate from the Administrative Law section of Centrelink.

3. The following written material was placed into evidence :

Document prepared pursuant to section 37 of the Administrative Appeals Act 1975         T1 to T29 PP1 to 103   
Medical Report Dr E Crumlin dated 3 August 1999      Exhibit A1     
Medical Report Dr S Summers dated 2 August 1999   Exhibit A2     
Personal Reference Dr G Pantle dated 3 June 1999    Exhibit A3     
Personal Reference Mr M Conners dated 14 June 1999        Exhibit A4     
Personal Reference Mr L Borg dated 23 June 1999     Exhibit A5     
X-Ray report Dr Benn dated 8 May 1998 Exhibit A6     
Applicants weekly income and expenditure analysis at time of overpayment          Exhibit A7     
Advice of debt dated 9 July 1997  Exhibit A8     
Respondents Statement of Facts and Contentions dated 31 January 2000 Exhibit R1     

ISSUES

1. The relevant issues in this matter are:

a) whether the Applicant has incurred overpayment of Newstart Allowance for the period 24 June 1997 to 16 October 1988; and

b)whether any overpayment received constitutes a debt to the Commonwealth; 

and 

c)whether any of the debt has arisen as a consequence of administrative error 

made by the Commonwealth, and whether in such circumstances the 
          Applicant received such payment in good faith; and

d)whether special circumstances exist, which would permit the Secretary to   

exercise a direction to waive the right to recover such debt.  
LEGISLATION

1. The relevant legislation in this matter is the Social Security Act 1991 ("the Act") and in particular module 1068G and sections 658, 1223 (5), 1224, 1237A and 1237AAD.

BACKGROUND

1. The Applicant was born on 1 July 1948, and had been employed part-time by Grace Bros since 17 December 1990 (T6, p27).  In January 1994 the Applicant was granted Newstart Allowance.  This was regranted on 13 February 1996 (T3).  On 31 August 1998 a data matching review was undertaken which indicated a variance between income details held by the Respondent and those held by the Australian Taxation Office (T3, p21).  The Applicant was advised of this discrepancy (Respondent's records for financial year 1996/97 - $11,188 and for the same financial year the Taxation Office - $15,126) on 8 October 1998 (T5, p23) and asked to provide further clarification.  The Respondent sought an employment verification report from Grace Bros on 15 October 1998 (T6, p28) with the responses being received on 3 December 1998 (T6, p27).  The response included all payments made by Grace Bros to the Applicant from 14 March 1996 until 12 October 1998 (T6, p27).  On 14 December 1998, the Respondent raised a debt of $1349.08 as a result of the Applicants failure to correctly declare her earnings (T10).  Following a further review, the debt was established at $1260.84 (T20, pp81-82) and this was notified to the Applicant by the authorised review officer on 2 March 1999 (T26).  The SSAT set aside this decision on 27 April 1999, with the matter being referred to the Respondent for future consideration with directions that the Applicant has a debt for the period 24 June 1997 to 30 September 1997 (T2).  The Applicant was advised on 1 November 1999 that as a result of the recalculation, the debt was $1205.95  (Exhibit A8).

EVIDENCE
THE APPLICANT:

1. The Applicant informed the Tribunal that she is and has been a permanent part-time employee  of Grace Bros since 1990 and that she was working 47 hours per fortnight, with nett earnings currently approximating $710 per fortnight.  The Applicant stated that she did her best to ensure that she kept Centrelink informed of her previous fortnight's earnings, but at times she got somewhat confused as the work fortnight and the Newstart fortnight developed.  The Applicant considered that the overlap was the result of a mixed error, with her being responsible for a part of the mistake.

2. In response to questions in cross examination, the Applicant acknowledged that she had a responsibility to disclose her fortnightly earnings to the Respondent, but that occasionally she got the nett and gross figures mixed up and reported the nett as opposed to the gross figure to Centrelink.  The Applicant stated that figures were not her strong point; that she accepted what the Department paid her and that in 1997 as she had done in the past, she had repaid the full amount of overpayments when such had occurred.  Finally the Applicant stated that she had never neglected to enter or send a form to Centrelink, and that the actual debt is an accumulation of small overpayments over time.

3. In addressing issues of special circumstances, the Applicant stated that she believed in supporting herself, but requested that the Tribunal consider the following matters:

a)Health Problems:

(i)Asthma, allergies and insomnia;  the Applicant states that the impairments worsen with stress and that her asthma is controlled with Ventolin and Becotide inhalant therapy.  Further, there have been associated conditions of upper respiratory tract infection, bacterial pharyngitis and bronchitis during winter 1999 (Report of Dr Crumlin,  Exhibit A1).

(i)Anaemia:  was diagnosed six years ago and has been treated with iron tablets.

(ii)Lumbar Spondylitis:  degenerative disease process lower lumbar spine causing pain and for which she takes Panadol Forte (X-ray report, Exhibit A6).

b)Handicapped son:       

Aged 29, lives in Rudolph Steiner home in the country since the age of nine.  Expenses are met by the father, but his disability and care causes the Applicant much anxiety.

c)Applicant's mother:  

Aged mid eighties, has had a hip replacement and has arthritis.  Has lived in the Montefiore Home for the last ten years.

d)Financial:

The Applicant states that her nett earnings per fortnight are $710, and that her expenses are $705 per fortnight (Exhibit A7).  The Applicant told the Tribunal that she has to also pay $30 per fortnight to the St George Bank, associated with the creation of a debt.  She also stated that she is paying $8 per week to meet her Grace Bros account debit and that she owes money to some friends, but there is no time commitment to repayment.  The Applicant stated that she has no other assets and rents her current accommodation for $150 per week.

SUBMISSIONS

1. The Applicant contends that the overpayment has arisen as an accumulation over time, and while admitting she may have provided nett as opposed to gross figures to the Respondent on limited occasions, such actions were always done with the intent to comply with the Respondent's notification requirements, of which she stated she was well aware.  Any mistake or error on her part had arisen as a result of the many stresses she experiences, and which in her opinion constitutes special circumstances.  Further the Applicant contended that in the past, where there had been overpayments, she had readily addressed the repayments, but on this occasion, difficulties arose from the lack of congruence of the Grace Bros pay fortnight and the Centrelink fortnight, which further increased her confusion.  Finally the Applicant stated that she was not in a position of knowledge to question whether the amount of debt raised by the Respondent was a correct amount, but with that in mind, she was prepared to accept it as a correct amount.  Nevertheless it was the Applicants contention that the debt should be waived because of the special circumstances that she had declared to the Tribunal.

2. The Respondent contended that the Applicant had been receiving a Newstart Allowance for a considerable period and that she was well aware of her obligations to advise Centrelink correctly of her fortnightly gross pay, a matter that she had failed to do during the period in question. The Respondent, while conceding that there had been an administrative error associated with the payment of 15 May 1998 argued that the Applicant's familiarity with the Newstart Allowance scheme and her expected fortnightly entitlement, would not allow the Applicant to contend that she had received such a payment in good faith. The Respondent, in acknowledging that only three of the Applicant's primary imput documents to Centrelink could be found, argues that the computer data sheets and the Grace Bros records of payments made to the Applicant during the period in question are sufficient to demonstrate that there had been many more overpayments than underpayments on a fortnightly basis to the Applicant during the period in question and that as a result of the final summation a debt of $1205.95 was owed by the Applicant to he Commonwealth. It was the Respondent's contention that the debt had been correctly raised in accordance with the Act and that the debt could not be waived in whole or in part for either administrative error or special circumstances. As regards special circumstances the Respondent contended that the matters raised by the Applicant were neither uncommon, unusual or exceptional.

CONSIDERATIONS AND FINDINGS

1. In initial comment the Tribunal acknowledges the circumstances by which this matter has come to pass.  The Tribunal acknowledges that the Applicant has had a working association with the requirements and obligations that fall upon her when claiming a Newstart Allowance.  Further the Tribunal notes that the Applicant recognised that she had an obligation to inform Centrelink of her gross fortnightly earnings from Grace Bros, and further that she tried to carry through these obligations.  The Tribunal, in weighing the Applicants evidence finds that for reasons of a lack of numeracy in dealing with inconsistent fortnightly timetables between her pay timetable from Grace Bros and the fortnightly requirements of Centrelink, the Applicant made a number of errors which resulted in both under and overpayments of Newstart Allowance.  The Tribunal further finds that the Applicant did on occasion nominate nett pay instead of gross pay in informing Centrelink of her income for a particular fortnight.  Finally the Tribunal finds that an administrative mistake was made by Centrelink in relation to the payment made to the Applicant on 15 May 1998, in that it essentially failed to deal with the information provided by the Applicant which resulted in a considerable overpayment to the Applicant.

2. The Tribunal, in turning to the issue of overpayment must note the following relevant legislation:

a)the definition of income contained within subsection 8(1) of the Act.

"8 Income test definitions
 income", in relation to a person, means:

(a)an income amount earned, derived or received by the person for the person's own use or benefit; or

…

"income amount"  means:
…

(b)personal earnings; or

(c)moneys; or

(d)profits;

…

"income from personal exertion"  means an income amount that is earned, derived or received by a person by way of payment for personal exertion by the person but does not include an income amount received as compensation for the person's inability to earn, derive or receive income through personal exertion."

b)The further understanding of what an income amount earned, derived or received is nominated in section 8(2) of the Act.

"8(2) A reference in this Act to an income amount earned, derived or received is a reference to :

(a)  an income amount earned, derived or received by any means; and

(b)an income amount earned, derived or received from any source (whether  

within or outside Australia)."

c)The obligation to comply with a notice to provide to Centrelink is nominated within section 658 of the Act, which provides:

"658(1)  The Secretary may give a person to whom a newstart allowance is being paid a notice that requires the person to give the Department a statement about a matter that might affect the payment of the allowance to the person.

…

658(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."

d)In determining a person's rate for Newstart Allowance, section 1068G of the Act provides the method of calculation involving consideration of the person's income.

e)Where a person has received payments of Newstart Allowance for which that person is not entitled, any such payment made to a person is a recoverable debt, as provided for by subsections 1223(5) and 1223(1).

" 1223 (5)  If:

(a)   an amount (the received amount) has been paid to a person by way of

social security payment on or after 1 October 1997; and

(b)because the received amount had not been correctly calculated using the relevant rate calculator, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment that should have been paid to the person under this Act;

the difference between the received amount and the correct amount is a debt due to the Commonwealth.
…
1224(1)  If:

(a)  an amount has been paid to a recipient by way of social security payment; 

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 this Act or the 1947 

Act;

the amount so paid is a debt due by the recipient to the Commonwealth."

1. The Tribunal, having already found that the Applicant was aware of and did try to carry through her obligations, albeit in error or a number of occasions, further finds that the Applicant did receive payments to which she was not entitled (correct use of the relevant rate calculator with the correct amount of income) and that this has been properly quantified as $1205.95.  In arriving at such findings the Tribunal has noted that the Applicant received fortnightly notices which stated:  

   "we need to know how much you are earning so we can work out how much to pay you…  (T19, p76)
   "if yes what was the amount earned before tax or other deductions?  (you must tell us what you will get even if you have not been paid yet)"  (T19, p76)

2. For the most part, the Tribunal finds that the overpayment has occurred as a result of the Applicant providing incorrect financial earnings information to  Centrelink.  That this incorrect information was not provided deliberately by the Applicant does not alter the finding that such provision constitutes a false statement or a false representation (Secretary, Department of Social Security v Danielson (AAT 11760, 20 March 1997) and McAuliffe v Secretary, Department of Social Security (1992) 28 ALD 609 considered and applied).

3. As a consequence of the Tribunal's finding that Centrelink had made an administrative error in calculating the payment for 15 May 1998, section 1223(5) of the Act nominates that any such payment incorrectly calculated that results in an overpayment, then the amount of overpayment (ie the amount received less the correct amount) is a debt due to the Commonwealth.

4. The remainder of the overpayments in the matter have arisen as a result of false statements made by the Application and accordingly shall be dealt with as debts due by the Applicant per subsection 1224 (1) of the Act. (the issue of false statements being considered in paragraph 15)

5. Further the Tribunal notes that only three source documents were able to be provided by the Respondent as to the income information provided by the Applicant to the Respondent.  The Tribunal is satisfied that from the other evidentiary material provided (computer printouts of information received and the evidence of fortnightly payments made by Grace Bros to the Applicant) that it is able to infer the correct declaration of income. (In Secretary, Department of Social Security v Danielson (1996) 44 ALD 19 considered and applied.)

6. In considering the issue of waiver the Tribunal notes the following subsections of the Act which provide:

   "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.
   …
   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."

1. The Tribunal in considering section 1237A(1) notes that there has already been a finding that an administrative error was made in relation to the overpayment of 15 May 1998.  Nevertheless the Tribunal finds that the Applicant could not have received such an overpayment in good faith, by virtue of her long relationship in claiming and receiving Newstart Allowance payments and her recognition and response to overpayments in the past, the Applicant was not in a position to assert that such a mistaken overpayment was one to which she had an entitlement.  (Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1988) 152 ALR 127 considered and applied). As a consequence it is the Tribunal's finding that the debt arising from the overpayment of 15 May 1998, while solely due to administrative error was not received in good faith and accordingly such a debt cannot be waived.

2. In considering the matter of special circumstances, the Tribunal, mindful of the testing requirements of uncommon, unusual and exceptional nominated in Beadle and Director General of Social Security (1984) 6 ALD 1, has given careful consideration to the circumstances nominated by the Applicant in her evidence. The Tribunal, after careful consideration, finds that the Applicant does have a number of medical impairments, does experience tightened financial circumstances and does experience stress arising from her consideration for her disabled son and her ageing mother in a nursing home. Nevertheless the Tribunal finds that such circumstances are not of the character or extent which when considered either separately or together would allow them to be typified as exceptional, uncommon or unusual. As a consequence the Tribunal finds that the debt cannot be waived per subsection 1237AAD as special circumstances have not been established as required by subsection 1237AAD(6)(b)

DETERMINATION

1. The Tribunal affirms the decision under review and in so doing determines that a debt of $1205.95 is owed by the Applicant to the Commonwealth.

   I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of 

   Signed:         .....................................................................................
     Associate

   Date/s of Hearing   7 February 2000
   Date of Decision   31 May 2000
   Solicitor for the Applicant          Applicant unrepresented
   Solicitor for the Respondent    George Lozynsky