Georgiou; Secretary, Department of Family and Community Services

[2000] AATA 218

DECISION AND REASONS FOR DECISION [2000] AATA 218

ADMINISTRATIVE APPEALS TRIBUNAL      )

)     NoV1999/774

GENERAL ADMINISTRATIVE DIVISION          )          

Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        

Applicant

And    ANDREA GEORGIOU       

Respondent

DECISION

Tribunal       Mr J. Handley, Senior Member     

Date16 March 2000

PlaceMelbourne

Decision      The decision under review is affirmed.   

........Sgd. Mr J. Handley........
  Senior Member
CATCHWORDS
SOCIAL SECURITY – family payment – respondent failed to notify of change in circumstances – applicant undertook data matching process – respondent not entitled to family payment – applicant continued to make payments to respondent – overpayment – waiver of debt – administrative error – decision affirmed. 
Data-Matching Program (Assistance and Tax) Act 1990
Social Security Act 1991 ss. 23, 872, 1224, 1237A, 1302A.
Re Secretary, Department of Family & Community Services & D'Amelio (Oral decision, 13 December 1999 V1999/490)

REASONS FOR DECISION

16 March 2000        Mr J. Handley, Senior Member                 

1. The applicant applied to review a decision of the Social Security Appeals Tribunal ("SSAT") dated 7 June 1999 which affirmed a decision previously made by an Authorised Review Officer ("ARO") to raise a debt of $1,175 incurred as an overpayment of family payment paid for the period 1 January 1998 to 3 December 1998.  The SSAT however also decided to vary the decision with respect to recovery of that sum and decided that any payments made beyond 11 May 1998 should not be recovered.

2. At the hearing of the application the applicant was represented by Ms D'Cunha.  Mrs Georgiou appeared without representation.

3. The facts giving rise to the application are not in dispute and may be briefly summarised as follows. Prior to December 1997, Mrs Georgiou was in receipt of family payment. On 3 December 1997 the applicant forwarded to her a notice known as a "Recipient Notification Notice" ("RNN") pursuant to s.872 of the Social Security Act 1991 ("the Act"). This notice required Mrs Georgiou to advise the applicant within 14 days if her combined taxable income in the 1996/1997 financial year exceeded $69,239, being the cut off limit of entitlement to family payment.

4. Mrs Georgiou stated that she did not receive that notice. However, she said had she received it she would have immediately notified the applicant of the financial circumstances of her family. Those circumstances would have revealed a combined income for the 1996/1997 year in excess of $69,239. Mrs Georgiou acknowledges that she would have had no entitlement to benefit beyond the date of notification had she contacted the applicant and given this information. The applicant argues that the RNN was correctly addressed and posted to Mrs Georgiou by pre-paid post. In those circumstances it submits that the notice should be deemed to have been "given" to Mrs Georgiou. The applicant relies with respect to this part of its submission upon s.23(12) of the Act.

5. On 11 December 1997 Mrs Georgiou did contact an office of Centrelink at St Albans and provided new details with respect to her and her husband's bank accounts.  That contact was made by telephone.

6. On 27 March 1998 the applicant entered into a data matching exercise between data that it held and data that it obtained from the Australian Taxation Office ("ATO").  The data was received at the St Albans office of Centrelink approximately 2 weeks after 27 March 1998.  Within a further 2 or 3 weeks of that date the applicant detected that there was a possible overpayment of benefits that had been paid to Mrs Georgiou.  The cross matching of data also revealed that taxation assessment notices recording the income that had been paid to Mrs Georgiou and her husband in the 1996/1997 income year had been received by Mr and Mrs Georgiou in August 1997.  This was some five months prior to the dispatch of the RNN.

7. On 27 November 1998 the applicant wrote to Mrs Georgiou and notified her that there had been an overpayment of family payment.  Mrs Georgiou apparently telephoned the St Albans office of Centrelink on 9 December 1998 and agreed with the income data that the applicant held.

8. The applicant cancelled Mrs Georgiou's family payment on 9 December 1998.  Despite having had information from the ATO since April 1998, the applicant continued to make payments of family payment to Mrs Georgiou throughout 1998 until cancellation on 9 December 1998. 

9. For the period 1 January 1998 until 3 December 1998 Mrs Georgiou was paid $1,175 in family payment.  The applicant argues that that sum has been overpaid, that it is a debt due to the Commonwealth and that Mrs Georgiou is liable to repay it in full.  To date $735 has been recovered and $440 remains outstanding.

10. The SSAT decided that a debt did exist in the sum of $1,175 but that family payment after 11 May 1998 was paid by reason of administrative error on the part of the Commonwealth and that benefits paid beyond that date were received by Mrs Georgiou in good faith.  In those circumstances the SSAT decided that the applicant had no entitlement to recover overpayment of benefits paid after 11 May 1998.  The amount paid after that date was $705.
    Submissions

11. Ms D'Cunha submitted that there was no sole administrative error on the part of the Commonwealth beyond 11 May 1998.  Whilst acknowledging that the applicant should not have made payments beyond that date, she submitted that there was a continuing error on the part of Mrs Georgiou in that she consistently failed to notify the applicant of the change in financial circumstances being the increase in the combined income of herself and her partner.  In those circumstances she submitted the administrative error giving rise to the overpayment could not be said to be "solely" on the part of the Commonwealth. 

12. Mrs Georgiou submitted that she did not receive the RNN in December 1997.  She did not therefore notify the applicant of the change in circumstances.  She acknowledged that she had previously received a letter in about December of every year asking her to notify the applicant of any altered circumstances.  She submitted that on all occasions she always notified the applicant if circumstances had changed.  She submitted that because she did not receive a letter in December 1997 she believed she was not required or obliged to notify the applicant of any changes in income.  She submitted that she was aware of reporting requirements and as evidence of this referred to her notification to the applicant of altered bank accounts.

13. Additionally she submitted that if the Tribunal accepted that she had no entitlement to benefit beyond December 1997 because the combined income of her husband and herself had exceeded the income threshold, the applicant was in error by continuing to pay her a benefit.  That is to say, if she had no entitlement to a benefit the applicant should not have paid it to her.  She submitted she received the benefit in good faith because she believed by having been paid it that she was entitled to it. 

14. In reply Ms D'Cunha submitted that the applicant complied with the time limitations imposed upon the applicant, being an agency having received information from a "source agency" under s.10(2) and (3) of the Data-Matching Program (Assistance and Tax) Act 1990. Further it was submitted that whilst Mrs Georgiou contacted the applicant on 11 December 1997 and notified of altered banking arrangements, it was also then open to her to notify the applicant of alterations in the family income in the proceeding calendar year. The applicant further relied on a decision of the Administrative Appeals Tribunal in Re Secretary, Department of Family & Community Services & D'Amelio (Oral decision, 13 December 1999, V1999/490).  Ms D'Cunha submitted that the circumstances in D'Amelio were very similar to the present application particularly because the overpayment in D'Amelio was detected within the same data matching exercise, which was undertaken at the St Albans Centrelink office within which the alleged overpayment to Mrs Georgiou was detected.
    Legislation

15. Section 872(1) of the Social Security Act 1991 provides-

    "The Secretary may give a recipient of Family Allowance a notice that requires the recipient to inform the Department if-

    a)A specified event or change of circumstances occurs; or

    b)The recipient becomes aware that a specified event or change of circumstances is likely to occur".

1. Mrs Georgiou said that she did not receive this letter which is the RNN. In those circumstances she said she was not aware that she was required to inform the applicant of the combined income being greater than the limits recorded in the letter. The applicant however argues that the letter should be deemed to have been received by reason of the provisions of s.1302A(1) of the Act which says-

   "If a notice of a decision under this Act is-

   a)delivered to a person personally; or

   b)left at the address or the place of residence or business of the person last known to the Secretary;

   c)sent by pre-paid post to the postal address of the person last known to the Secretary;

   Notice of the decision is taken, for the purposes of this Act, to have been given to the person". 

Additionally the applicant also relies on s.23(12) which says-

"If

a)section 1302A of this Act applies to a notice of a decision under this Act; or

b)sections 28A and section 29 of the Acts Interpretation Act 1901 apply to a notice under this Act;

Section 1302A applies or section 28A and section 29 apply, to the notice, even if the Secretary is satisfied that the person did not actually receive the notice".

1. I have some reservations regarding whether s.1302A(1) applies. I cannot conceive that the letter forwarded on 3 December 1997 is a "notice of a decision" within the meaning of s.1302A(1). Nor can it be a "decision," applying the every day meaning to that word. The letter may constitute a "notice" but there is no "decision" of which the letter gives notice.

2. I am satisfied that s.28A of the Acts Interpretation Act 1901 is more appropriate because it records-

   "For the purposes of any Act that requires or permits a document to be served on the person, whether the expression "serve", "give" or "send" or any other expression is used then unless the contrary intention appears the document may be served.

   a)on a natural person

   i)by delivering it to the person personally: or

   ii) by leaving it at or by sending it by pre-paid post to the address of the place of residence or business of the person last known to the person serving the document or ….."

Section 29 of the Acts Interpretation Act provides-

"Where an Act authorises or requires any document to be served by post whether the expression "serve" or the expression "give" or "send" or any other expression is used then unless the contrary intention appears the service shall be deemed to be effected by properly addressing pre-paying and posting the document as a letter and unless the contrary is proved to have been effected at the time of which the letter would be delivered in the ordinary course of post".

1. For the purposes of the present application I am satisfied that the respondent forwarded a letter on 3 December 1997 to the applicant at her address which was at that date and remains at Taylors Lakes. I am satisfied that that letter was pre-paid. Whilst I am also satisfied and prepared to find as a fact that the document was not actually received by Mrs Georgiou, I am satisfied for the purposes of s.28 and 29 of the Acts Interpretation Act that service of the letter has been effected. I am also satisfied, having made these findings, that the document was not returned to the applicant (refer also Australian Trade Commission v Solarex Pty Ltd 1988 78 ALR 439, particularly Beaumont J at 443).

2. Section 876 of the Social Security Act was also relied upon by the applicant because of the consequences that apply to non-compliance with a section 872 notification. That section records-

   "If-

   a)a recipient is given a notice under s.872 and

   b)the notice requires the recipient to inform the department of the occurrence of an event or change in circumstances within a specified period (the "notification period") and

   c)the event or change in circumstances occurs; and

   d)the recipient does not inform the department of the occurrence of the event or change in circumstances within the notification period in accordance with the notice:

   and;

   e)because of the occurrence of the event or the change in circumstances

   i)the recipient ceases to be qualified for family allowance or

   ii)family allowance ceases to be payable to the recipient

   iii)family allowance ceases to be payable to the recipient on the day on which the event would change in circumstances occurs

3. Sections 1223(1) and section 1223(3) record that any amount paid to a recipient who is not qualified to receive a social security payment shall be a debt due to the Commonwealth. Section 1224(1) also records similar consequences in circumstances where there has been a contravention of the Act by a beneficiary either by reason of making a false statement or giving a false representation or failing or omitting to comply with the provision of the Act.

4. Section 1237A(1) provides-

   "Subject to section (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".

5. Section 1237AAD provides-

   "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".

Conclusion & Reasons For Decision

1. Mrs Georgiou said that in years previous to 1997 she received letters from the applicant, usually in December, advising of income thresholds.  She also said that she was aware of her obligation to report any change of circumstances.  Indeed she contacted the St Albans office of the applicant on 11 December 1997 to notify of altered bank details applicable to herself and her husband (refer also T-5, p.13).  Nonetheless she said she did not receive the letter of 3 December 1997 and was therefore not aware of the income thresholds.  Whilst she acknowledges that she was throughout 1998 not entitled to a benefit because the income earnt in the 1997 year exceeded the income thresholds, she was not aware of that fact (because the letter notifying of the thresholds was not received).

2. I am obliged to find as a matter of law that an overpayment to Mrs Georgiou did occur throughout 1998 because she received a benefit to which she was not entitled. 

3. The issue then is whether the debt must be waived because it was 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".  (s.1237A(1)).

4. I will return to this aspect later because it is relevant also to consider that the applicant eventually became aware that Mrs Georgiou in fact did not have any entitlement to a benefit, despite Mrs Georgiou failing to notify the department of her combined income exceeding the income thresholds, by reason of information that it received from the Australian Taxation Office.  This is because in about March 1998 the applicant entered into a data matching exercise where it cross-referenced its own data with income data received from the ATO.  Apparently 5 or 6 weeks after the data was received it became apparent to the applicant that Mr and Mrs Georgiou had a combined income in the 1997 income year which exceeded the thresholds recorded in the letter of 3 December 1997. 

5. It was submitted on behalf of the applicant, by reference to an affidavit of Ms Monteiro who was a team leader at the St Albans Centrelink compliance section in 1998, that only two persons were responsible for processing approximately 600 "matches" during the data matching exercise which gave rise to the identification of the overpayment to Mrs Georgiou.  It was submitted that the exercise was conducted manually and was long, arduous and time consuming.  It was said that the extent of the exercise and the manual nature of it was responsible for Mrs Georgiou formally being notified of the overpayment in November 1998, which was more than six months after the data was received and when the overpayment was first detected.  In her affidavit, Ms Monteiro said, in part-

   "The "date selected" on the Data-matching Program Review was the date that the master list was generated.  The master list was received at the Customer Service Centre within 1-2 weeks of that date.  The matching cycles occurred every 3 months.  A master list would vary between 200 to 300 matches.  Arrears could build up depending on the size of the previous master list and the action required to be taken on each case on that list.  The master list for March 1998 was exceptionally large and contained about 600 matches.
   When the master list was received, the matches were sorted out according to the characteristics of the case.  The matches with possible overpayments were given priority over others.  This was done within 2-3 weeks of the master lists being received.  These were then set aside to be actioned as soon as the previous cycle was completed.
   Each match was sent a letter advising the customer of the data match.  The case was then set aside for a period of 34 days as required by policy to allow the customer to respond to the letter.  When the customer responded, or after 34 days, the payment was adjusted or cancelled as appropriate.  Debts were then raised if appropriate and the customer notified accordingly.  The master lists were destroyed 11 months after the date selected.  This was the "destruction date" on the Data-matching Program Review.  Al data matches had to be actioned by the destruction date".

6. Having regard to contemporary standards of administrative efficiency and a professed customer based focus, it is remarkable that the applicant's staff (of 2) found 600 "matches" and decided to manually process them without any apparent use of computers or similar technology.  Perhaps it is not remarkable that the applicant continued to pay benefits for another 8 months and then formally notify Mrs Georgiou that she had been overpaid.  From the time the applicant knew there was no entitlement, Mrs Georgiou was paid a benefit to which she was not entitled and which the applicant knew that she had no entitlement. 

7. There is no doubting that the overpayment initially commenced by reason of the failure on the part of Mrs Georgiou to notify the applicant of her changed circumstances.  It may be little comfort to Mrs Georgiou to reach this conclusion when the letter requesting information was not received but is deemed to have been received.  Mrs Georgiou's circumstances changed by reason of combined salary increases of herself and her husband in 1996/1997.  She did not notify the applicant of that change.  The overpayment from 1 January 1998 therefore occurred.

8. At least therefore from 1 January 1998, until such time as the Department became aware of Mrs Georgiou's combined income exceeding the 1997 income thresholds (being shortly after the ATO advice was received) the overpayment of benefits could not be said to be "attributable solely to an administrative error made by the Commonwealth". In those circumstances the amount paid by the applicant until it received the ATO advice amounts to a debt and it cannot be waived under s.1237A. Having regard to the conjunctive construction of s.1237AAD, I am satisfied that the overpayment giving rise to the debt for this period of time cannot be waived. This section is discretionary as opposed to s.1237A being mandatory as to waiver if the debt is found as a fact to be "attributable solely to an administrative error made by the Commonwealth". Because all of the circumstances found at s.1237AAD must be satisfied before the discretion to waive can be exercised, I can not find in the circumstances that it is "more appropriate to waive than to write off the debt or part of the debt" where a benefit has been paid from the public purse in circumstances where there was no entitlement. It would be in my view appropriate that the benefit paid for the period of time prior to receipt of the ATO records be repaid.

1. Insofar as the payments were made to Mrs Georgiou by the applicant shortly after receipt of the advice from the ATO, I am satisfied that there was sole administrative error made by the Commonwealth that gave rise to the benefits thereafter paid and received. It follows that the benefits paid after the applicant received the ATO advice must be waived under s.1237A. This is because from that date the applicant was aware that Mrs Georgiou had no entitlement. It nonetheless decided to continue to make payments. It would have taken little effort on the part of the applicant to either immediately cease payments (therefore not causing an accumulation of the debt) and/or it was open to the applicant to forward a notice to Mrs Georgiou advising that it intended to either suspend or end benefits and give her the opportunity to make submissions on this matter. Such a course is open to the applicant under s.11 of the Data Matching Program (Assistance and Tax) Act 1990.  This would have alerted Mrs Georgiou to the threshold limits and probably cause payments to then end.  There would not have been an overpayment beyond that date. 

2. The applicant submitted in its Statement of Facts and Contentions that it was permitted under the Data Matching Program (Assistance and Tax) Act 1990 to complete a data match within 9 months of a master list being generated.  Because the ending of benefits occurred (eventually) within 9 months of the absence of entitlement being known, it was submitted that there was compliance with that legislation.  In those circumstances it was submitted that the applicant made no administrative error at all.  I cannot with respect accept this submission.  The maintaining of records and alerting a beneficiary of an absence of an entitlement by reason of the cross-matching of data within a legislated time limit does not explain why the applicant continued to permit benefits to be paid.  As Senior Member Hallowes decided in Re Secretary, Department of Family & Community Services and D'Amelio (unreported decision of 13 September 1999)-

   "The twelve months provided under the data matching Act within which action may commence should not be relied on by the Secretary as a justification for not acting promptly. It could be argued that failure to act is not an administrative "error" but that point was not argued before the Tribunal".

1. With respect I agree with these conclusions but would say further that a failure to act on the part of the applicant can amount to an administrative error.  Clearly this was so in the present case.  The applicant was aware in March or April 1998 that Mrs Georgiou had no entitlement to a benefit.  It continued to make payments.  It failed to act upon the information that it had and had it acted on that information it should have either ended benefits or put Mrs Georgiou on notice that it was intended to end benefits (refer earlier).  It would appear, from the affidavit of Mrs Monteiro, that having learnt of the overpayment, the applicant's staff waited until "matches" from an earlier survey was completed.  Whilst this may explain the delay in ending benefits (conversely, it would also explain why benefits continued), the apparent absence of staff or efficient work practices cannot be visited on Mrs Georgiou.

2. The applicant also submitted that there was a continuing error on the part of Mrs Georgiou beyond the date of receipt of the ATO advice by her failure to notify the altered circumstances in 1997 of the combined income exceeding the income thresholds.  It was submitted that this continuing error contributed to the debt and in those circumstances the Tribunal should not find that there was sole administrative error.

3. This submission was made to support an earlier submission that the Tribunal should find as a fact that the letter of 3 December 1997 was received. Alternatively or additionally it was submitted that the Tribunal should find that that letter was received either actually or by the deeming provisions of s.1302A. Whilst I have dealt with that issue in part earlier, I have decided that as a fact that letter was not received. Whilst the letter can be said as a matter of law to have been served within the meaning of the Acts Interpretation Act, it would in my view be harsh, unconscionable and most unfair to find that there was continuing error on the part of Mrs Georgiou in failing to notify of combined incomes exceeding income thresholds when she was not aware of the thresholds because the letter was not received. The Acts interpretation Act by deeming that a letter has been served creates a legal fiction. A beneficiary cannot be expected to comply with the terms of a document, which was not actually received. In the context of beneficial legislation it surely cannot be maintained that payments made by the applicant to Mrs Georgiou from the date that the applicant became aware that no entitlement existed was not error solely due to its administration. Mrs Georgiou cannot be obliged to report changed circumstances if she was not aware that she was obliged to do so. Other than the provisions of the Family Allowance division of the Act with respect to acting upon notices received (s.872, 873A), I can find nowhere else in the Act of an overriding obligation on the part of beneficiaries to notify the applicant of changed circumstances. If such an obligation exists outside the Family allowance provisions of the Act, it was not submitted and it does not form part of the applicant's Statement of Facts and Contentions.

4. Curiously the respondent in Re Secretary Department of Social Security & D'Amelio was also subject to the applicant's scrutiny in the same data matching exercise.  It would appear from the reasons for decision of Senior Member Hallowes that the recipient notification notice was actually received.  Nonetheless the Department continued to make payments for many months after it became aware in the absence of advice from the beneficiary that there was no entitlement to a benefit.  It would appear that the continuing payment of benefit by the applicant to a person who had no entitlement when it was known there was no entitlement occurred by reason of administrative error on the part of the Commonwealth.  So far as Mrs Georgiou is concerned, having found as a fact that the letter of 3 December 1997 was not actually received and she was incapable therefore of notifying the Department of changed circumstances, I am satisfied that there was sole administrative error on the part of the Commonwealth (unlike D'Amelio where the RNN was received).  If there was any contribution to the error by Mrs Georgiou it could only have occurred by some conscious decision on her part or with knowledge of some obligation to comply, which she did not have.  She could not consciously comply with a requirement to provide information if she is not aware that such an obligation exists (not having received the letter) and she could not in the circumstances be in breach of that requirement because she had no knowledge that she was obliged to comply.

5. The Commonwealth must accept responsibility for the overpayment of benefits beyond the date that it received the ATO advice.  The payments beyond the date that it received the ATO advice are in my view attributable to error solely made by it, where it would appear its usually high administrative standards were deficient. 

6. This decision is similar in outcome but different in reasons to that made by the SSAT.  The decision under review will therefore be varied and it is decided that an overpayment of family allowance was paid to Mrs Georgiou, which constitutes a debt to the Commonwealth.  I have decided that the benefit paid after 1 January 1998 until such time as the applicant received advice from the ATO should be repaid by Mrs Georgiou to the applicant.  I am satisfied from the date that the applicant received advice from the ATO, that the overpayments were attributable solely to administrative error on the part of the Commonwealth and which were received in good faith by Mrs Georgiou.  In those circumstances that part of the debt must be waived. 

   I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J. Handley, Senior Member.

   Signed:         ......Carolyn Irons ........................................
     Secretary

   Date/s of Hearing  24 January 2000
   Date of Decision  16 March 2000
   Counsel for the Applicant         
   Solicitor for the Applicant         P. D'Cunha, Departmental Representative
   Counsel for the Respondent     
   Solicitor for the Respondent    unrepresented