Ellis; Department of Family and Community Services - [2000] AATA 350

DECISION AND REASONS FOR DECISION [2000] AATA 350

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S99/337

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

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date 4 May 2000
Place Adelaide

Decision      Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor, decides that the amount of $1,284.28 is a debt recoverable by the Commonwealth and that the remaining $1,201.82 be waived.
  (Signed)
  J.A. KIOSOGLOUS
  (Senior Member)
CATCHWORDS
SOCIAL SERVICES – pensions, benefits and allowances – Newstart Allowance – Youth Allowance – overpayment – respondent in prison – departmental error – departmental error can be considered as part of special circumstances
Social Security Act 1991 ss.1160, 1224, 1237A, 1237AAD
Secretary, Department of Employment, Education, Training and Youth Affairs v Prince (1997) 50 ALD 186
Re Maurits and Secretary, Department of Social Security (AAT 12967, 5 June 1998),
Re Swaffer and Secretary, Department of Family and Community Services [1999] AATA 812
Re Najdovska and Secretary, Department of Social Security (AAT 13423, 30 October 1998)
Re Nehma and Secretary, Department of Family and Community Services [1999] AATA 219
Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113 Re Secretary, Department of Family and Community Services and Morgan [1999] AATA 390
Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543
Re Gale and Secretary, Department of Employment, Education and Training (1996) 42 ALD 477
Re Jamieson and Secretary, Department of Social Security (AAT 11,612, 29 January 1997)
Re Brittain and Secretary, Department of Family and Community Services [2000] AATA 161

REASONS FOR DECISION

4 May 2000 Senior Member J.A. Kiosoglous MBE

This is an application by the Secretary, Department of Family and Community Services (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 9 July 1999 (T2) which set aside a decision of an authorised review officer dated 5 May 1999 (T42) which had affirmed a decision of the delegate of the applicant dated 20 November 1998 (T27) to raise and recover a debt of $2,486.10.
The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T43), together with one exhibit lodged by the applicant (Exhibit A1). The applicant was represented by Mr J. Underwood, a departmental advocate and the respondent failed to attend the hearing. Accordingly, the Tribunal proceeded to consider the matter on the documentary evidence before it.
The issue before the Tribunal is whether there is a debt totalling $2,486.10; and, if so, whether part or all of the debt should be waived.
The SSAT, in its decision dated 9 July 1999, waived the entirety of the debt pursuant to section 1237AAD of the Social Security Act 1991 (the Act), stating (inter alia):
"…
The Tribunal concluded that the payment and withdrawal of the relevant benefit was probably due to fraudulent activity committed by the applicant's brother Rodney (see discussion of the evidence). Not only was the payment of the benefit caused by the fraudulent activity of a third party, but also the applicant had no opportunity whatsoever to benefit from the payment of those monies.
A decision to uphold the debt in this case would have extremely harsh and unfair consequences for the applicant given the above circumstances. …
Clearly in this case, a decision to uphold the debt would result in effect, in a penalty being imposed upon the applicant due to events which were beyond his control.
…"

legislation

The relevant legislation is contained in sections 1160 (effect of imprisonment), 1224 (raising debts), 1237A and 1237AAD (waiver provisions) of the Act as follows:
1160. A social security benefit (other than parenting payment) is not payable to a person in respect of a period during which the person is:
(a)in gaol; or
(b)undergoing psychiatric confinement because the person has been charged with committing an offence.
…
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.
…
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."

background of the application

The respondent was in gaol from 18 September 1998 until at least 17 November 1998. Amounts totalling $1,284.28 were paid into an account held in the name of the respondent for the period 18 September 1998 to 5 November 1998. A number of forms lodged between 8 October 1998 and 5 November 1998 (T21-23) contained false statements, in that the respondent had not been looking for work in those periods as he was in fact incarcerated. The respondent contended in various documents and before the SSAT that someone (most likely his brother) had fraudulently lodged those forms and withdrawn the money from his bank account. This was not disputed by Mr Underwood on behalf of the applicant.
The respondent also received an arrears payment on 12 November 1998 in the amount of $1,201.82 due solely to departmental administrative error.
applicant's submissions
Mr Underwood submitted that a debt has been correctly raised pursuant to section 1224 of the Act as the respondent was not entitled to benefit pursuant to section 1160 of the Act whilst imprisoned, and had been so paid as a result of false statements.
He submitted that section 1237AAD of the Act was not applicable as "another person" had knowingly made a false statement (referencing Secretary, Department of Employment, Education, Training and Youth Affairs v Prince (1997) 50 ALD 186).
In respect of the arrears payment, he conceded departmental administrative error, but submitted that the respondent did not receive the payments in good faith, as he was aware (from a letter dated 7 October 1998 (T20) and his own account to the SSAT (T2/5)) that he was not entitled to social security payments whilst imprisoned.
He submitted that the Tribunal cannot consider departmental administrative error as a special circumstance, as this renders useless Parliament's express provision of section 1237A of the Act to cover situations of administrative error.
discussion and findings
The Tribunal first considers the part of the debt representing payments in the period not covered by the 12 November 1998 arrears payment.
The respondent was clearly not entitled to receive benefit in the period of his incarceration. He was paid during part of this period as a result of a number of false declarations made on the claim forms (T21-23).
The Tribunal is reasonably satisfied that the documentary evidence supports the contention that the respondent did not make these declarations himself and that some other person (possibly his brother) fraudulently made these claims. The Tribunal notes that it has not however, had the opportunity of hearing from the respondent in this regard and would not presume to come to any definitive conclusion on this issue.
Notwithstanding that the respondent most likely remained unaware that social security monies were being paid into his account and in his name, he was clearly "paid" that money for the purposes of section 1224 of the Act. Furthermore, he was paid as a direct result of false statements made by whoever completed the forms. As a result, a debt necessarily arises pursuant to section 1224 of the Act and the Tribunal so finds.
Turning to the issue of waiver, there are clearly circumstances here which could be considered special. The respondent did not in fact actually have the monies "received" available for his use. In previous decisions the Tribunal has considered this to be part of the circumstances which may give rise to overall "special" consideration (Re Maurits and Secretary, Department of Social Security (AAT 12967, 5 June 1998), Re Swaffer and Secretary, Department of Family and Community Services [1999] AATA 812) and it is certainly relevant here that the respondent personally made no use of such monies.
Coupled with this is the fact that it would be unreasonable to penalise the respondent with a debt which results from another person perpetrating a crime to which the respondent had no association. Mr Underwood submitted that the respondent could pursue civil remedies, but this would clearly be difficult, especially in attempting to prove who actually committed the fraud, on the civil burden of proof. In Re Swaffer and Re Najdovska and Secretary, Department of Social Security (AAT 13423, 30 October 1998), relevant circumstances were found in the context of incorrect legal/financial advice about which legal action would be difficult to take, and similar consideration should be given herein to the fact that it would be extremely difficult for the respondent to commence civil proceedings in respect of this matter.
Despite these circumstances, what remains is that the payment arose as a result of another person making false statements on the claim forms (T21-23). The definition of "knowingly" is satisfied, given that that person must have known the respondent was in gaol, and certainly knew that they were not "DJ Ellis" when they signed the forms as such. This means that sub-section 1237AAD(a) cannot be satisfied.
Accordingly, the Tribunal is not in a position to waive that part of the debt under review despite the compelling circumstances which tempt it to do so.
In respect of the part of the debt of $1,201.82 being an arrears payment made on 12 November 1998, it is conceded by the applicant that this results solely from administrative error. It is argued by the applicant that such monies were not received in good faith. The Tribunal is in the difficult position of not having heard the respondent give evidence as to his state of knowledge since he failed to appear at the hearing. The letter sent to the respondent dated 7 October 1998 (T20) is not conclusive, as it uses the wording "may" affect a person's benefit, and was sent to the respondent's home address at a time when he was in gaol. Given the respondent's non-attendance at hearing however, the Tribunal is prepared to accept the SSAT's record of his evidence to that Tribunal as being accurate, and at page 3 of their reasons (T2/5) it is noted:
"Mr Ellis said that he discovered that there was money in his account when he spoke to his mother in about November 1998 and that he was surprised as he did not expect to receive any social security payments after entering prison."
This passage indicates that the respondent had a level of knowledge which was such that he "knew or ought to have known" that he was not entitled to receipt of the benefit arrears. As noted in previous Tribunal decisions, good faith does not require actual knowledge that a person has received the money, as the knowledge goes to eligibility (or entitlement) for that particular payment (Prince).
Accordingly, in the absence of good faith, the Tribunal cannot waive the debt pursuant to section 1237A of the Act. In respect of section 1237AAD of the Act, in this Tribunal's opinion, departmental error can form a part of the factual matrix which gives rise to special circumstances. This proposition has been canvassed in many Tribunal decisions, notably, Re Nehma and Secretary, Department of Family and Community Services [1999] AATA 219, Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113, Re Secretary, Department of Family and Community Services and Morgan [1999] AATA 390, Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543, Re Gale and Secretary, Department of Employment, Education and Training (1996) 42 ALD 477 and Re Jamieson and Secretary, Department of Social Security (AAT 11612, 29 January 1997).
As this Tribunal recently noted in Re Brittain and Secretary, Department of Family and Community Services [2000] AATA 161 at paragraph 43 (inter alia):
"… Section 1237A should not be read in isolation from s.1237AAD of the Act, and it is appropriate to consider departmental error in circumstances where it can either be said to be so significant in itself (as in Re Nehma) to give rise to special circumstances, or appears special when put together with all the other circumstances of a case."
In this case, when one combines the fact that the arrears payment of 12 November 1998 resulted from sole departmental administrative error with the circumstances detailed at paragraphs 17 and 18 herein, there are clearly circumstances which would make it unjust or unreasonable to seek to recover that amount from the respondent. There is also no argument from the applicant in respect of this part of the overall debt that it resulted from a false representation or statement. Accordingly, the Tribunal waives the amount of $1,201.82 pursuant to section 1237AAD.
decision
For the above reasons and pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor, decides that the amount of $1,284.28 is a debt recoverable by the Commonwealth and that the remaining $1,201.82 be waived.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE
Signed:         .....................................................................................
  Personal Assistant
Date/s of Hearing  18 April 2000
Date of Decision  4 May 2000
Counsel for the Applicant        Mr J. Underwood
Solicitor for the Applicant         Centrelink
Counsel for the Respondent    -
Solicitor for the Respondent    -