Ford and Secretary, Department of Family and Community Services
[2000] AATA 178
•29 February 2000
DECISION AND REASONS FOR DECISION [2000] AATA 178
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q1999/1186
GENERAL ADMINISTRATIVE DIVISION )
Re DIANNE FORD
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Dr E K Christie, Member
Date29 February 2000
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and in substitution thereof decides: 1. to waive the family allowance overpayments accrued over the period 15 January 1998 to 4 March 1998; and 2. that the family allowance overpayments accrued over the period 5 March 1998 to 19 November 1998 remains as a debt due to the Commonwealth.
..............(Signed)................................
Dr E K Christie
Member
CATCHWORDS
SOCIAL SECURITY – family allowance – overpayments – whether appropriate to waive -right to recover debt by reason of administrative error or special circumstances
Social Security Act 1991: s.1237A
ORAL REASONS FOR DECISION
29 February 2000 Dr E K Christie, Member
This is an application to review a decision of the Social Security Appeals Tribunal ("the SSAT") made on 15 September 1999 which affirmed a decision of an Authorised Review Officer of the Department of Family and Community Services ("the Department") made on 5 August 1999 to raise and recover an overpayment of Family Allowance of $1805.30 for the period 15 January 1998 to 19 November 1998.
FACTS
The general facts were not in dispute and may be stated briefly:
Ms Ford was in receipt of family allowance in respect of her two children during the period 15 January 1998 – 19 November 1998.
In November 1997, Ms Ford drew down $40,000 from her superannuation funds to purchase a business on 21 November 1997.
On 8 December 1997, Ms Ford attended the Caloundra Centrelink office and was assisted in completing a 'Request for Income and Asset Details' form.
On 8 December 1997, Ms Ford enquired about what effect her superannuation draw down would have on her payments and was advised that if the funds were used to purchase a business and not for living expenses then 'that's OK'.
On 4 March 1998, Ms. Ford provided an estimate of combined taxable income for the 1997/98 tax year of $29,141.
On 10 June 1998, Ms Ford provided an estimate of combined taxable income for the 1997/98 tax year of $28,950.
The rate of family allowance payable to Ms Ford during the period 15 January 1998 – 19 November 1998 was calculated on the basis of these estimates.
Ms Ford's actual combined taxable income for 1997/98 tax year was $49,183.
Ms Ford's spouse applied for newstart allowance ('NSA') in August 1997 (T4). Her spouse then cancelled his NSA when he became fully self-employed (T9, 12 November 1997).
Ms Ford was retrenched in January 1997 and then had lived on her retrenchment moneys until August 1997. In January 1998 Ms Ford found employment.
The Departmental Advocate acknowledged that Ms Ford had received the family allowance overpayments in "good faith".
ISSUES TO BE DECIDED
The issues to be decided by the Tribunal were whether whole, or part, of the family allowance could be waived under the "administrative error" or "special circumstances" provisions (ss.1237A, 1237AAD) of the Social Security Act 1991 ("the Act).
CONTENTIONS AND SUBMISSIONS OF THE PARTIES
Ms Ford said that she had completed a large number of social security forms relating to eligibility for entitlements and estimation of payments (T11-T15). At all times she completed the details as far as she could before seeking assistance from Centrelink counter staff in areas she did not understand. As a result, it was her contention that Centrelink were aware of her circumstances and so should have provided her with correct advice on her entitlements.
Ms Ford said that she was very aware of the need for her taxable income not to exceed 110% of her income estimate as it would lead to an overpayment. Consequently, she was "very cautious and strove to do the right thing". She said that she was "meticulous" in making sure Centrelink were aware of any change in her circumstances.
Moreover, Ms Ford submitted that whilst she had advised Centrelink of changes in her circumstances, Centrelink had never advised her how a change in her circumstances, in a certain way, would affect her entitlements.
Ms Ford said that she had not made any further queries about her superannuation drawdown. She believed that she had no reason to do so because of the advice given to her by Centrelink staff on 8 December 1997 (see paragraph 2) and that this advice was correct.
Ms Ford stated that there was no negligence on her part or any intent to defraud the Department.
Under cross-examination by Mr Foster, Ms Ford said that she would not have asked a specific question of Centrelink staff whether superannuation would affect her family allowance. Rather, a question whether superannuation should go on the particular form being completed by her.
Furthermore, she agreed that she would have received the Centrelink notification notice (T15, 4 March 1998) which required her, inter alia, to advise of any change in her, or her partner's income, because of changes arising from the withdrawal of funds from superannuation rollovers or from some investments. She said that this was the first time information provided to her by Centrelink had made a specific reference to superannuation.
In response to a letter she had sent to Centrelink (T36, undated), where she had written "….I had already asked previously whether withdrawing my superannuation would affect my income" (Folio 109), she said that 'income' meant "the rate of social security entitlements".
The Departmental Advocate said that at the time Ms Ford's spouse was granted NSA (see T4, 28 August 1997), as a partner, Ms Ford would have been entitled to family allowance (FA) at the full rate and parenting payment (PgP) ie the effect of Social Security Act s.1069 H-1. Accordingly, he contended that Centrelink advice provided on 8 December 1997 in response to her question of the effect of a superannuation drawdown (in order to purchase a business) on her FA and PgP would have been correct.
However, in January 1998 Ms Ford's circumstances changed significantly. Her spouse had become fully self employed and she had commenced work (2 January 1998; see T18, T22). As a result, there were significant differences in the rate of her entitlements from 1998 compared to the last quarter of 1997.
Mr Foster submitted that the overpayments could not be waived because of administrative error. Centrelink had not given the incorrect advice in December 1997 (see paragraph 15). A withdrawal from superannuation funds when section 1069 H-1 applied, would only affect PgP if the drawdown earned income ie by being banked. In Ms Ford's situation this was not the case as it was used to buy a business.
Mr Foster submitted that the Change in Income and Assets Form (T23, 4 March 1998) was crucial as this information was used to calculate the rate of entitlements. However, the superannuation figure was not included on this Form. Ms Ford's evidence indicated that the reason for this was that she relied on information given to her in late December 1997. However, the employment situation of her spouse and herself changed in January 1998.
Moreover, it was Mr Foster's contention that the Centrelink notification notice (T25, 4 March 1998 Folio 87) provided Ms Ford with an opportunity to query superannuation and the rate of her entitlements. However, no such query was made to Centrelink.
Mr Foster submitted that there was nothing "unusual", "uncommon" or "exceptional" to warrant the description of "special circumstances" so as to waive the debt. It was unfortunate, but Ms Ford had taken advice from one employment situation ie the last quarter of 1997, and applied it to another employment situation ie from January 1998.
Ms Ford made the following submissions to conclude her application for review:
That the administrative error was solely caused by the Commonwealth. Whereas she had advised Centrelink of changes in her circumstances, Centrelink had never advised her how a change in circumstances, in a certain way, would affect her entitlements.
That her query to Centrelink sought specific advice as she had always sought to do the right thing at all times.
That Centrelink's failure to give proper advice on the effects of her superannuation drawdown was an error solely caused by the Commonwealth.
That superannuation was not mentioned in any Centrelink forms she had completed. In addition, superannuation would be treated as a capital asset under the Income Tax Assessment Act.
CONSIDERATION OF THE ISSUES
This is one of the many cases which come before the Tribunal where problems associated with the receipt of lump sum payments, such as superannuation, affect social security entitlements. In addition, problems arise from different interpretations of "income" in the Social Security Act and the Income Tax Assessment Act. However, the objective of the Tribunal is to review administrative decisions, not only on their merits, but in accordance with the law at all times. The relevant legislation is the Social Security Act 1991.
The first question to be considered relates to the credibility of Ms Ford and the veracity of her account as to her dealings with Centrelink. I accept Ms Ford to be a witness of truth and to have acted honestly in all her dealings with Centrelink.
Section 1237A of the Act provides for circumstances where a debt due to the Commonwealth by a recipient of social security may be waived.
"SECTION 1237A – WAIVER OF DEBT ARISING FROM ERROR
1237A(1) Administrative error. 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)."The Departmental Advocate, Mr Foster has acknowledged that the issue of "good faith" is not an issue in Ms Ford's case.
The Tribunal finds that, administrative error solely caused by the Commonwealth, has resulted in only part of the family allowance overpayments hereby made to Ms Ford. That is, the administrative error of the Act only applies to the period 15 January 1998 to 4 March 1998.
The Tribunal accepts the submissions of Ms Ford that she had been meticulous in providing Centrelink with details on her changes in circumstances. That is, based on her interaction with Centrelink staff, in completing various social security entitlement forms, and in seeking advice on the period September to December 1997. The Tribunal concludes that, on the balance of probabilities, Ms Ford had reason to rely on advice that her superannuation drawdown would not affect her rate of family allowance entitlement, for part of the period overpayments were received. However, the Tribunal also concludes that the receipt of the Centrelink letter (T25) on 4 March 1998, should have acted as a "trigger" for Ms Ford to at least query Centrelink as to the effect of superannuation on her entitlements. Unfortunately, this was not done.
Accordingly, the Tribunal finds that beyond this date ie 5 March 1998 to 19 November 1998, Ms Ford had contributed to the administrative error by not raising a query with Centrelink on this issue. Such a query was even more justified, given that the employment situation of Ms Ford and her spouse, as well as the social security benefits they were entitled to, changed significantly between the last quarter of 1997 and from early January 1998 onwards (see T18, 2 January 1998).
The outcome of this application may be regarded as unfortunate. It is one in which the Tribunal has no other alternative than to find that Ms Ford has contributed in some way to the administrative error for some of the period overpayments were made.
Given the above finding of partial waiver of debt, because of administrative error, the Tribunal has a need to consider the question of waiver for "special circumstances".
For the above reasons, the Tribunal sets aside the decision under review and in substitution thereof decides:
(i)To waive the family allowance overpayments accrued over the period 15 January 1998 to 4 March 1998;
(ii)That the family allowance overpayments accrued over the period 5 March 1998 to 19 November 1998 remains as a debt due to the Commonwealth.
I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Dr E K Christie, Member.
Signed: .....................................................................................
B. Hitchcock, SecretaryDate/s of Hearing 29 February 2000
Date of Decision 29 February 2000
Applicant Ms Ford, herself
Respondent Mr. N. Foster, Departmental Advocate
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