Estate of Sarah Wheatley and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2011] AATA 902
•16 December 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 902
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2011/2750
GENERAL ADMINISTRATIVE DIVISION ) Re ESTATE OF SARAH WHEATLEY Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr P Wulf, Member Date16 December 2011
PlaceBrisbane
Decision The decision under review is affirmed. .................[sgd].......................
Member
CATCHWORDS
SOCIAL SECURITY – Age pension – Application by Estate of deceased pension recipient – Pension recipient in receipt of UK War Widow’s and Australian age pension – Overpayment of age pension – Debt due to the Commonwealth – No scope for write-off – No administrative error or special circumstances justifying waiver – Decision under review affirmed
Administrative Appeals Tribunal Act 1975 (Cth) s 37
Social Security Act 1991 (Cth) ss 43, 556, 1064, 1223, 1236, 1237A, 1237AAD
Social Security Act (Administration Act) 1999 (Cth) s 100REASONS FOR DECISION
16 December 2011 Mr P Wulf, Member 1. Mr Peter Wheatley, acting on behalf of the Estate of Mrs Sarah Wheatley (“the applicant”),[1] seeks review of a decision made by Centrelink on 14 November 2002 that the Estate must repay a debt incurred by the late Mrs Wheatley with respect to an Australian age pension overpayment.[2] Mr Wheatley, some eight years later, sought review of that decision and, on 12 November 2010, an Authorised Review Officer (“ARO”) affirmed the 2002 decision.[3] That decision was subsequently affirmed by the Social Security Appeals Tribunal (“SSAT”) on 23 June 2011.[4]
[1] Exhibit A, T-Document 1/1 – 6.
[2] Exhibit A, T-Document 21/71-93; 27/155 and 29/231.
[3] Exhibit A, T-Document 23/95-103.
[4] Exhibit A, T-Document 2/3-16.
ISSUES
2.The issues for the Tribunal are:
(a)Whether the late Mrs Wheatley was overpaid an amount of age pension;
(b)If Mrs Wheatley was overpaid, whether the overpayment is a debt due to the Commonwealth; and
(c)If so, whether the debt is recoverable or whether there are circumstances justifying waiver or write off of the debt.
LEGISLATIVE SCHEME
3. Age pensions are paid under Part 2.2 of the Social Security Act 1991 (Cth) (“the Act”), with a person qualifying for payment of an age pension if they meet the criteria set out in s 43. A person’s rate of age pension is calculated using the Rate Calculator in s 1064 of the Act, as a daily rate.[5] That rate is worked out by dividing the annual rate calculated according to the Rate Calculator by 364.[6]
[5] Social Security Act 1991 (Cth) s 55(a).
[6] Social Security Act 1991 (Cth) s 1064-A1.
4. A person receiving social security payment (including an Australian age pension) has a number of obligations. As part of those obligations, s 68(2) of the Social Security (Administration) Act 1999 (Cth) (“the Administration Act”) provides that:
2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a) inform the Department if:
(i)a specified event or change of circumstances occurs; or
(ii)the person becomes aware that a specified event or change of circumstances is likely to occur; and
(b) give the Department one or more statements about a matter that might affect the payment to the person of the social security payment.
5. Where a recipient does not comply with a notice under s 68(2) of the Administration Act, s 100 of the Administration Act states that there is an automatic rate reduction in the amount of a social security payment that is payable to them:
(1)(a) the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
(b) the event or change of circumstances occurs; and
(c) the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
(d) because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.
6.Section 1223(1) of the Act is also important in that if:
(a) a social security payment is made; and
(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
7. Where a recipient receives payments that they are not entitled to, s 1236 of the Act provides the option of writing off a debt owed to the Commonwealth.[7] Section 1236 provides:
[7] Part 5.2 of the Act provides that an amount of social security to which a recipient is not entitled is a debt which is recoverable by the Commonwealth.
(1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
(1B)For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a) the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa) the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
(1C)For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor’s social security payment; or
(b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c) setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
(2)A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision—on the day on which the decision is made; or
(b) if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).
(3)Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.
8. Section 1237 of the Act provides a limited power to waive the Commonwealth’s right to recover a debt. Section 1237 states:
Secretary’s limited power to waive
(1)On behalf of the Commonwealth, the Secretary may waive the Commonwealth’s right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD and, if the debt is an assurance of support debt, subject to section 1237AAE.
When waiver takes effect
(2)A waiver takes effect:
(a) on the day specified in the waiver (whether that day is before, after or on the day on which the decision to waive is made); or
(b) if the waiver does not specify when it takes effect—on the day on which the decision to waive is made.
9. Section 1237A of the Act allows waiver of a debt arising from an administrative error. The section states:
Administrative error
(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).
(1A)Subsection (1) only applies if:
(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
Proportion of debt
(3) For the purposes of this section, a proportion of a debt may be 100% of the debt.
10. Section 1237AAD of the Act also allows the Secretary, and therefore the Tribunal, the option of waiving a debt in special circumstances:
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(c)the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(d)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(e)it is more appropriate to waive than to write off the debt or part of the debt.
EVIDENCE
10. The evidence before the Tribunal was comprised of:
(a)The “T-Documents” lodged by the respondent in accordance with s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”);[8]
(b)A bundle of documents forming the applicant’s submissions;[9]
(c)A letter to the National Australia Bank from Centrelink dated 31 October 2002;[10]
(d)The respondent’s Statement of Facts and Contentions;[11]
(e)A bundle of Centrelink documents tendered by the applicant;[12] and
(f)Oral evidence by telephone of Mr Alex Karas for the applicant.
[8] Exhibit 1, T-Document 1 – 32/1 – 283.
[9] Exhibit 2.
[10] Exhibit 3.
[11] Exhibit 4.
[12] Exhibit 5.
CONSIDERATION
11. The late Mrs Wheatley passed away on 23 November 2005. Prior to her passing, Mrs Wheatley was in receipt of an Australian age pension from 23 March 1995 until 26 March 2002. Centrelink advised the applicant on 3 October 1997[13] and 28 April 1999[14] that she was eligible for a UK War Widow’s pension. The letters sent to Mrs Wheatley, consistent with all letters sent by Centrelink, advised her of her obligations should her circumstances change, eg if she started receiving a UK War Widow’s pension (constituting a notice under s 68(2) of the Administration Act). The receipt of a UK War Widow’s pension would obviously have implications for the rate of Australian age pension that Mrs Wheatley would receive. The relevant facts of the receipt of the pension during this period are discussed below.
[13] Exhibit A, T-Document 29/179 – 182.
[14] Exhibit A, T-Document 29/183 – 184.
12. After an investigation covering a period of approximately one year, Centrelink became aware that Mrs Wheatley was also in receipt of a UK War Widow’s pension in addition to her Australian age pension. It subsequently cancelled her Australian age pension on 26 March 2002. As a result of that finding, after significant correspondence, on 14 November 2002 Centrelink raised a debt for the overpayment of the Australian age pension from 10 June 1999 to 26 March 2002. Centrelink calculated the amount of the debt as $24,347.46.[15] Centrelink has calculated that the current amount now owing is $18,419.30.[16]
Was there an overpayment of Australian age pension to Mrs Wheatley, resulting in a debt due to the Commonwealth?
[15] Exhibit A, T-Document 22/94.
[16] Exhibit A, T-Document 32/276.
13. There was a concession by Mr Wheatley that there was an overpayment of the age pension to his late mother and accordingly there is a debt due to the Commonwealth under s 1223(1) of the Act. Therefore, the only issue remaining is whether circumstances exist which would justify the Tribunal exercising its discretion to waive or write off the debt.
Can the debt be written off?
14. The Tribunal finds that the debt cannot be written off under s 1236(1A) of the Act.
Can the debt be waived as a result of administrative error?
7 June 1999
15. Where there is an administrative error by Centrelink, the Tribunal has the power to waive a debt under s 1237A of the Act.
16. Mr Wheatley argued that the debt should be waived from 7 June 1999. He submitted that an administrative error was made by Centrelink in that it failed to amend its records to note that his late mother was in receipt of a UK War Widow’s pension and, therefore, the Estate should not be liable to repay the debt. This argument must fail for the following reasons.
17. On 20 May 1999, Mrs Wheatley was granted a UK War Widow’s pension.[17] She was paid the UK War Widow’s pension from that date until her passing. On 7 June 1999, Mrs Wheatley contacted Centrelink at its Wynnum office. This is an important date in Mr Wheatley’s argument. Mr Wheatley argued that on this date his late mother specifically advised Centrelink that she was in receipt of the UK War Widow’s pension and, moreover, advised Centrelink of how much she would be receiving. He argued that this information was specifically contained within a letter she handed to Centrelink during that visit.
[17] Exhibit A, T-Document 25/106.
18. Mr Wheatley argued two matters with respect to the letter. Firstly, he argued that the letter was deliberately destroyed by Centrelink when he filed a Freedom of Information request with respect to his late mother’s file. The Tribunal finds this argument entirely flawed and completely frivolous as Mr Wheatley could not adduce any evidence that someone had deliberately tampered with the file and destroyed the letter. Moreover, it would be a criminal offence for a person to destroy a document of the Commonwealth, particularly during a Freedom of Information request. The Tribunal cannot accept the suggestion that a Commonwealth public servant would put himself or herself at risk of criminal prosecution over release of a letter in relation a customer’s rate of payment, particularly when they had nothing to gain.
19. Secondly, Mr Wheatley argued that the letter contained the specific information relevant to his late mother’s UK War Widow’s pension. On this matter Mr Karas' evidence is important. Mr Karas advised the Tribunal that he had taken Mrs Wheatley to Centrelink’s Wynnum office and was aware that Mrs Wheatley had a letter with her. However, Mr Karas indicated that he was unaware of the contents of the letter as he did not wish to become involved in Mrs Wheatley’s financial matters. All Mr Karas was able to say was that when Mrs Wheatley left the Centrelink office, she was in good spirits.
20. Therefore, the only available evidence with respect to this visit is the Centrelink file note, which states:
…Rec advice from cust that she has applied for a vet affairs widow’s pension. No adv as yet of grant – letter stored in EOO doc box.[18]
[18] Exhibit A, T-Document 28/172.
21. A second file note of 8 June 1999 confirms that which is contained within the file note of 7 June 1999 in that it stated that Mrs Wheatley had applied for the UK War Widow’s pension but had not yet received a reply as to what she would be paid.[19]
[19] Exhibit A, T-Document 28/173.
22. The Tribunal therefore finds that the letter could not have contained information that Mrs Wheatley was in receipt of a UK War Widow’s pension. The notes on file clearly state that she had applied for the UK War Widow’s pension but that it had not been granted. As such, there was clearly no administrative error by Centrelink on 7 June 1999.
17 April 2001
23. On or about 14 March 2001, Centrelink commenced a review in relation to Mrs Wheatley’s property assets. On or about 14 April 2001, the NAB provided Centrelink with account details that suggested Mrs Wheatley may have been in receipt of a UK War Widow’s pension. Mr Wheatley argued that if the debt was not waived from 7 June 1999 (as argued above), then, in the alternative, the debt should be waived from 17 April 2001 when Centrelink became aware that Mrs Wheatley might have been in receipt of a UK War Widow’s pension. He argued that Centrelink should have immediately stopped her Australian age pension payment, which would have minimised the debt. The Tribunal does not agree for the reasons given below.
24. Firstly, the Tribunal considers that it would have been negligent for Centrelink to make a finding of fact without doing a full and thorough investigation to obtain evidence as to whether Mrs Wheatley was being overpaid. If, for example, Centrelink found that, after obtaining all the relevant evidence, Mrs Wheatley was not being overpaid, then it would have had significant detrimental financial implications on Mrs Wheatley if her Australian age pension payments were stopped.
25. Secondly, and more importantly, between June 1999 and March 2001 Centrelink sent many letters to Mrs Wheatley, including, for example, a letter of 26 November 1999 advising her that it was aware that her annual income was $14.82 and that she needed to advise Centrelink if this amount was incorrect.[20] Additional letters were sent to Mrs Wheatley advising her of her age pension payment amounts and that she needed to advise Centrelink of any changes in her financial circumstances and her obligations.[21] From the available evidence, at no time did Mrs Wheatley ever advise Centrelink that she was in receipt of a UK War Widow’s pension. Therefore, Centrelink continued to pay her an Australian age pension.
[20] Exhibit A, T-Document 29/185 – 186.
[21] Exhibit A, T-Document 29/187 and 189.
26. Between 14 March 2001 and 26 March 2002, Centrelink undertook an investigation into Mrs Wheatley’s payments. During this time, Centrelink contacted the NAB and, on 17 April 2001, received copies of Mrs Wheatley’s passbook account. The passbook indicated that Mrs Wheatley was receiving a UK War Widow’s pension.[22]
[22] Exhibit A, T-Document 4/36-39.
27. Following a letter of 2 May 2001 to the UK Pensions and Overseas Benefits Directorate,[23] Centrelink was advised on 7 August 2001 that Mrs Wheatley had been granted a UK pension on 9 August 1993 and had received benefits up to 10 October 1999.[24] However, Centrelink were advised that the pension was only stopped as she was entitled to a UK War Widow’s pension that was more beneficial and her rate had increased. It is noted that Mrs Wheatley was advised annually as to increases in her UK War Widow’s pension but at no time did she appear to comply with her obligations to notify Centrelink.
[23] Exhibit A, T-Document 29/197 – 198.
[24] Exhibit A, T-Document 5/41.
28. Following extensive correspondence, on 5 December 2001 Centrelink contacted Mrs Wheatley with respect to her payments, again indicating that she had disclosed an annual income of $14.82 and that she had obligations to notify Centrelink should her circumstances change.[25] They requested that she advise Centrelink of any changes that may have occurred. On 18 March 2002, as no reply to their letter of 5 December 2001 had been received, Centrelink again contacted Mrs Wheatley requesting that she provide details of her UK War Widow’s pension. The letter warned that she needed to provide the information within 14 days to avoid having her pension cancelled.[26]
[25] Exhibit A, T-Document 29/205 – 206.
[26] Exhibit A, T-Document 29/207.
29. On 3 April 2002, Centrelink stopped Mrs Wheatley’s Australian age pension.[27] On 11 April 2002, Centrelink received a letter from Mrs Wheatley indicating that she had advised Centrelink “moons ago” of the information requested.[28] It would appear strange that Mrs Wheatley refused to acknowledge the previous letters from Centrelink but as soon as she became aware that her pension may be cancelled, she replied for the first time.
[27] Exhibit A, T-Document 27/166 and 29/208.
[28] Exhibit A, T-Document 8/45 and 29/166.
30. It is clear from the evidence that Mrs Wheatley retained many of these letters as a result of an uneasy relationship with Centrelink Stones Corner. Additional letters were sent to Mrs Wheatley requesting information concerning her UK War Widow’s pension,[29] yet in her replies she made no reference to the requested information.[30]
[29] Exhibit A, T-Document 5/41.
[30] Exhibit A, T-Document 9/46 and 10/47.
31. Mr Wheatley suggested that both he and his late mother believed that particular staff at Centrelink Stones Corner had a desire to undermine Mrs Wheatley. The Tribunal finds these statements absurd and fanciful. Mr Wheatley also made a statement as to relations that worked at Centrelink’s Stones Corner office, but, based on Mr Wheatley’s evidence, the Tribunal finds this evidence of limited persuasive influence and is irrelevant to the proceedings.
32. Based on the above examination of the factual circumstances, it is clear that Centrelink undertook a proper investigation between March 2001 and March 2002 prior to determining that Mrs Wheatley had not complied with her obligations and that she was being overpaid age pension. As such, there was no administrative error on the part of Centrelink.
Can the debt be waived on the grounds of special circumstances?
33. It is also relevant to consider whether special circumstances exist that would allow the Tribunal to exercise its discretion to waive the debt owed by the late Mrs Wheatley. As identified, s 1237AAD of the Act sets out a number of important aspects that must be considered prior to making such a determination. The following criteria must be satisfied:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of this Act, the Administration 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.
34. Based on s 1237AAD, the Tribunal cannot waive a debt if it resulted from a recipient knowingly failing or omitting to comply with a provision of the Act. The Tribunal considers that the only reason for the overpayment, and therefore the resulting debt to the Commonwealth, is due to the failure of the applicant to properly notify Centrelink of her changes in circumstances, even though she was advised of her obligations on numerous occasions. However, if the Tribunal was of the opinion that Mrs Wheatley did not knowingly fail or omit to comply with a provision of this Act and the Administration Act, then the Tribunal is of the opinion that there are no special circumstances (other than financial hardship alone) that would make it appropriate to waive the debt or part of the debt.
35. The Tribunal notes that the Estate of the late Mrs Wheatley has extensive funds from which to repay the debt, as its main asset is a house. Moreover, it is noted that there have been discussions between the parties with respect to repaying the debt, which would suggest that Mr Wheatley acknowledges that there are no special circumstances that warrant the debt being waived. The Tribunal notes that no other reasons as to why the debt should be waived were postulated by Mr Wheatley at the hearing; therefore, on this basis alone, there are no special circumstances and s 1237AAD(1)(b) is not satisfied.
Additional considerations
36. A number of very important additional matters to the above were relevant in making a determination. Firstly, it is noted that Mr Wheatley, on his own admission, had very little contact with his mother from 1999 until her passing in 2005. During that time, Mr Wheatley was living in Cairns, Papua Niugini and for a very short time in Brisbane. Therefore the Tribunal finds that it is highly unlikely that he was fully conversant with all the events and correspondence related to his late mother’s financial matters. The only person that was likely to have been aware of these items in the Tribunal’s view is Mr Karas; however, his evidence was that he was there to assist Mrs Wheatley in a personal capacity, for example in taking her to Centrelink, the bank and the like, but he made it clear in his evidence that he did not become involved in her financial affairs.
37. It is also noted that even though Mr Wheatley should have been aware in the normal course of events that his mother was being investigated as early as 2001 as a result of letters being sent to her, he did not contact Centrelink on her behalf until September 2002, some six months after the debt had been raised. More importantly, when asked to provide relevant information, Mr Wheatley did not provide that information and has not, until now, provided the relevant information to Centrelink. On this basis alone, the failure to provide this information would demonstrate that there was not an administrative error and the debt should not be waived.
38. It is also noted that Mr Wheatley himself was found to be misleading Centrelink and incurred a debt as a result of incorrect information being provided to the Commonwealth while in Cairns. On this basis, little weight has been placed on the evidence of the applicant, in contrast to the evidence of the respondent.
39. It is also of significant concern to the Tribunal that Mr Wheatley took so long to appeal Centrelink’s decision and, moreover, that he has not distributed his late mother’s estate some six years after her passing. While the Tribunal notes Mr Wheatley’s evidence as to his brother and his appeal, it is also of concern to the Tribunal that he has not undertaken his duties diligently as Executor, particularly in that the Estate owes monies to other family members. This appeal, in the Tribunal’s mind, demonstrates that the only motivation for any appeal is Mr Wheatley’s own financial circumstances and has nothing to do with the actual debt owed by his late mother.
DETERMINATION
40. The Tribunal affirms the decision under review.
I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Mr P Wulf, Member
Signed: ............................[sgd]............................................
Associate
Date/s of Hearing 2 November 2011 Date of Decision 16 December 2011 Applicant Mr Peter Wheatley, Executor for the Estate Solicitor for the Respondent Jasmine Forsyth, departmental advocate
1
0
3