Gollan and Secretary, Department of Family and Community Services

[2004] AATA 204

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 204

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2002/323

GENERAL ADMINISTRATIVE DIVISION		)
Re		ANGELA DESIRÉE GOLLAN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Michael Sassella, Senior Member

Date1 March 2004

PlaceSydney

Decision The decision under review is set aside and the tribunal substitutes its own decision that recovery of the applicant’s debt due to the Commonwealth is waived in full.

[sgd] M J Sassella

Senior Member

CATCHWORDS

SOCIAL SECURITY – social security debt – recipient failed to notify Centrelink of husband’s income – Centrelink failed to act on notification by applicant’s husband of his income changes – debt not solely attributable to Centrelink error – special circumstances justifying waiver – house fire as special circumstances

Social Security Act 1991 ss 1223(1), 1224(1), 1236, 1237A(1), 1237AAD

Social Security (Administration) Act 1999 s 179(2)(b)

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1998) 152 ALR 127

Re Jones and Secretary, Department of Family and Community Services [2003] AATA 62

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

1 March 2004 Michael Sassella, Senior Member           

RESULT

The tribunal has decided that the debt owed by Mrs Gollan is to be waived in full because of the special circumstances present in this case.

BACKGROUND

1.      On 21 April 2001 Centrelink, on behalf of the Secretary, Department of Family and Community Services (“the respondent”), sent a notice to Angela Desirée Gollan (“the applicant”) advising that she owed Centrelink a debt amounting to $30,868 and due for payment on 13 May 2001.  The debt accrued between 11 July 1996 and 10 April 2001 when Mrs Gollan received Carer Pension (Carer Payment from 1 July 1997) in respect of her mother who lived with Mrs Gollan’s family until she died in 2001.  Carer Pension/Payment was in fact not payable in that period because the combined income of Mrs Gollan and her husband, David, was above the allowed limit.

2.      Mrs Gollan queried the decision to recover this money and to cancel Carer Payment.  A Centrelink authorised review officer (“ARO”) varied the decision by waiving that portion of the debt that accrued between 23 May 2000 and 10 April 2001 because there had been notification of the Gollan family’s income details on 23 May 2000.  The decision to recover the debt that accrued from 11 July 1996 to 22 May 2000 was approved by the ARO.  The recoverable debt amounted to $36,962.10.  In a separate review the ARO recalculated a separate debt resulting from Mrs Gollan’s Family Tax Payment/Family Tax Benefit payments and increased that from $9,799.55 to $11,509.33.  The family payments were overpaid also because of the alleged failure to notify Centrelink regarding Mr Gollan’s income.  The Gollans have two children, Rebecca and Ashlea.

3.      Mrs Gollan appealed the ARO’s decisions to the Social Security Appeals Tribunal (“SSAT”) which decided that there were recoverable debts in respect of Carer Pension/Payment and Family Tax Payment/Family Tax Benefit, albeit with some reduction in the amount of the family payments debt.  The result was still a substantial debt to be repaid by Mrs Gollan.  I was advised at the tribunal hearing that the debts are $30,048.21 (carer debt) and $10,068.89 (family payments debt).

4. The reviewable decision, in accordance with s 179(2)(b) of the Social Security (Administration) Act 1999 (“the Administration Act”)[1], is the ARO’s decision as varied by the SSAT.

[1] issues arising are:

(a)Are there Carer Pension/Payment and Family Tax Payment/Family Tax Benefit debts?

(b)If the answer to (a) is yes, what is the correct quantum of the debt?

(c)If the answer to (a) is yes, can the debt be waived because of administrative error by Centrelink and Mrs White’s receipt of the money in good faith?

(d)If the answer to (c) is no, can the debt be waived because of special circumstances?

FINDINGS ON MATERIAL QUESTIONS OF FACT WITH REFERENCE TO THE EVIDENCE AND OTHER MATERIAL IN SUPPORT OF THOSE FINDINGS

(A)Are there Carer Pension/Payment and Family Tax Payment/Family Tax Benefit debts?

6.      I find that there are debts in respect of these social security payments. 

7.      Material before the tribunal indicated that Mr Gollan had worked for income between March and August 1996, between March and September 1997 and consistently from August 1998.  The s 37 documents show that Mr Gollan, who became unemployed in December 1995 and was granted Newstart Allowance (“NSA”) in February 1996, notified Centrelink of his earnings for the purposes of his NSA.  However, Mrs Gollan did not separately notify this income in connection with her receipt of the carer and family payments. 

8. Section 1224(1) of the Social Security Act 1991 (“the SSA”)[2], as it was prior to 1 October 1997[3], applied to the excess payments made to Mrs Gollan from 11 July 1996 to 30 September 1997 if she indeed did not notify Centrelink of Mr Gollan’s earnings. Section 1224(1) provided that a debt to the Commonwealth arose where an amount was paid to a recipient by way of social security payment under the SSA and the amount was paid because the recipient failed or omitted to comply with a provision of the SSA. In the present case Mrs Gollan had a personal obligation under the SSA to notify Centrelink of changes in Mr Gollan’s income position. The s 37 documents contain a number of copies of letters sent to Mrs Gollan requiring her to make these notifications. These were formal notices under specific provisions of the SSA.

[2] of 1 October 1997 the law changed and s 1223(1) began to apply to create a debt due to the Commonwealth wherever an amount by way of a social security payment was paid to a recipient and that amount was not payable to the recipient.  That was the situation here as Mr Gollan’s income in the relevant period meant that Mrs Gollan received money to which she was not entitled.

(B) If the answer to (a) is yes, what is the correct quantum of the debt?

10.     The tribunal finds that the quantum of the debt due to the Commonwealth is $40,117-10 (see [3] above).  This was accepted as a starting point for argument by the applicant in her statement of facts and contentions.

(C) If the answer to (a) is yes, can the debt be waived because of administrative error by Centrelink and Mrs White’s receipt of the money in good faith?

11. The tribunal finds that the debt cannot be waived in accordance with s 1237A of the SSA, the provision requiring waiver in cases of Centrelink’s administrative error. The elements in s 1237A(1) that must be established for waiver are:

·     The debt must be attributable solely to an administrative error made by the Commonwealth; and

·     The recipient must have received in good faith the payments that gave rise to the debt.

12. Centrelink argues that the debt did not arise solely because of error on its part. Centrelink’s error was to fail to act on Mr Gollan’s notifications regarding his earnings by reviewing Mrs Gollan’s payments. Centrelink received and acted on Mr Gollan’s notifications by cancelling Mr Gollan’s NSA. There is no good reason for its failure to note that Mr Gollan’s spouse was also in receipt of income-affected payments. However, the difficulty is that, had Mrs Gollan notified her husband’s changes in income, Centrelink may well have reduced her payments as required under the SSA. In failing to notify Centrelink Mrs Gollan contributed to the cause of the overpayment. The debt was not attributable solely to administrative error by the Commonwealth, ie Centrelink. Ms Collis, advocate for the respondent, noted that Mr Gollan had not declared his income from Drake Personnel and Mayne Nickless.

13.     Mrs Gollan argued that Centrelink’s errors were as stated in [12] above and in Centrelink’s failure to conduct an income and assets review of her carer payments at any stage.  The inference was that, had such a review been conducted, Mr Gollan’s income position would have surfaced.  There had been a Carer Pension review in August 1997 but it had concentrated on qualification criteria for that pension, not on assessment issues.  Mrs Gollan thought that she had been reviewed about five times, each time without any queries raised regarding income.

14.     Mrs Gollan argued that she received the payments in good faith because she understood the carer payments not to be income tested.  She received Domiciliary Nursing Care Benefit (“DNCB”) in respect of her aged mother until it was replaced by Carer Allowance on 1 July 1999.  Neither DNCB nor Carer Allowance involved any income test.  Mrs Gollan understood (erroneously) that the same principle applied to Carer Pension and Carer Payment.  As regards the series of letters received which informed Mrs Gollan of her notification obligations, Mrs Gollan advised that she read the letters and interpreted them as requiring her to notify “changes” in circumstances.  At a pre-grant interview for Carer Pension on 11 April 1996 Mrs Gollan had explained Mr Gollan’s employment situation with Wooollahra Council, the employer that later took him on full-time, and she did not consider the circumstances to have “changed” when Mr Gollan’s casual employment became ongoing and full-time.  Mr Gollan had been retained virtually daily by the council during the period when he was a casual employee, yet another reason said Mrs Gollan why circumstances had not changed.  Some of the letters quoted the combined income of Mr and Mrs Gollan as only $10, demonstrably an incorrect figure.  Mrs Gollan could not recall seeing this in any letter. 

15.     There were some unsatisfactory elements to Mrs Gollan’s evidence.  She had told the SSAT that she only read the reverse side of Centrelink notices sometimes.  However she told the tribunal that she read the reverse side notices on every occasion.

16.     Ms Collis raised also that Mr Gollan had had a number of temporary jobs not notified by either her or her husband to Centrelink.  Mrs Gollan had seen these as just casual jobs for short periods.  She thought the income from them was below “allowable amounts”..  This sat inconsistently with Mrs Gollan’s other evidence that she thought her payments were not income tested. 

17.     As regards the family payments, Mrs Gollan recalled receiving Family Tax Benefit forms in April or May 2000.  She could not recall if income and assets forms were included.  She was confident she told Centrelink in these forms of her husband’s work for the council.  She recalls receiving no review forms for family payments and was at the hearing unaware of the basis for calculating income for family payment purposes. 

18.     Ms Collis asked Mr Gollan a number of questions in cross-examination that bore upon good faith aspects of receipt of the social security moneys by Mrs Gollan on behalf of the family unit.  Several of the themes raised were that Mr Gollan had made statements to the effect that he and Mrs Gollan had saved the government a lot of money by caring for Mrs Gollan’s infirm mother.  The inference was that he might not be too much bothered if some level of overpayment accrued.  He could be expected to have seen a number of letters sent to his wife in which the family income was noted as $10 a year, clearly too low a figure.  Mr Gollan said under oath that he had not seen or noted this item in Mrs Gollan’s letters.  Mr Gollan’s taxable income appeared to have risen greatly from some $14,000 in 1996 to some $35,000 in 1997 and then to over $42,000 in 1998.  It was suggested that he must have expected that to affect the rate of Mrs Gollan’s payments.  Mr Gollan replied that this was not so.  He was unaware that his wife was on maximum rate carer’s payments; he knew Centrelink had been told of his work for the council and he saw the carer and family payments as linked.  He also said at one point that he was unaware that his income was relevant to Mrs Gollan’s social security benefits.

19.     The Gollans’ house burned down in late 1995.  They recovered proceeds from an insurance policy and bought a new house in April 2003 for $600,000.  It was suggested that this expenditure occurred with a disregard for any obligation to repay the debt to Centrelink.  Mr Gollan explained that that he and Mrs Gollan had considered the debt claimed by Centrelink but they were involved in the appeals process and thought they might succeed.  Mr Gollan explained also that he has the money set aside in a company account, as he now runs his own company.  He said that he would need to take advice from his accountant before using that money. 

20.     In relation to the house fire, the new house purchase and Mr Gollan’s self-employment I noted the following.  As I said earlier, the earlier house was destroyed late in 1995.  The Gollans rented for a time.  Their insurance covered the house fabric but not the contents.  The fire was traumatic for each of the adults in the house.  The fire was caused by some sloppy work by a tradesman.  Legal action ensued.  The matter was settled outside court.  Damages in respect of post-traumatic stress disorder were paid to the Gollans.  Mrs Gollan was awarded $30,000.  Mr Gollan was awarded $40,000.  Mrs Gollan’s mother was awarded $30,000.  Costs were $26,000.  That house was sold and raised $540,000.  Mr Gollan began his own business with Mrs Gollan included in the business.  That is a garbage contracting business.  Mr Gollan operates two trucks in that business.  He invested $160,000 from the house sale in the business.  As noted earlier, the new house cost $600,000, the Gollans borrowing $400,000 on security of a mortgage. 

21.     My assessment of the Gollans’ position as regards good faith is that Mrs Gollan did receive the excess payments in good faith..  While it is true that she could and should have read the letters from Centrelink with a greater sense of inquiry, I am satisfied with the explanations she gave as regards her understanding of the situation.  While she could have “known better”, she did not in fact know better.  I find the same as regards Mr Gollan.  The Federal Court discussed good faith in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1998) 152 ALR 127, 130 and held that the test is whether, at the time of receiving money, the person knows, or has reason to know, that he or she is not entitled to receive the payment. It is arguable here that Mr and Mrs Gollan had reason to know that Mrs Gollan was not entitled to receive the payments in question. However, my view is that their explanations mean that they gave the matter consideration and genuinely concluded that they were fulfilling their obligations. I noted some unsatisfactory or inconsistent elements in the evidence earlier in these reasons. I attribute these to a combination of nervousness in giving evidence at the tribunal hearing and to an unsophistication in understanding the social security system.

22.     I noted the commendable work ethic both demonstrated.  When Mr Gollan lost his job in 1995 he was quick to find new work and was not too proud to take on the unglamorous work of a garbage collector.  It appeared that accepting social security was an uncomfortable experience for them and they were keen to return to a self-funded lifestyle, although it must be conceded that Mrs Gollan received carer payments for a lengthy period of time.  This was, however, in the belief that the payments were justified because the Gollans were saving the treasury a great deal of money by caring for Mrs Gollan’s mother at home.

23. As I said above at [11], I have found that I cannot waive recovery of the debt under s 1237A of the SSA because debt was not attributable solely to an administrative error made by the Commonwealth (ie Centrelink). It is more likely than not that, had Mrs Gollan understood and acted on her notification obligations as set out in letters to her from Centrelink, the debt would not have arisen or would have been lower in quantum.

(D) If the answer to (c) is no, can the debt be waived because of special circumstances?

24.     I find the preferable decision is that the debt should be waived because of special circumstances.

25. Section 1237AAD of the SSA permits the Secretary to waive recovery of a debt where there are special circumstances that make it desirable to waive the debt. The Secretary’s delegates had refrained from utilising this power. If s 1237AAD is to apply the following requirements set out in that section must be met:

·     The debt must not result wholly or partly from the debtor or another person knowingly making a false statement or representation; and

· The debt must not result wholly or partly from the debtor or another person failing or omitting to comply with a provision of the SSA; and

·     There must be special circumstances (other than financial hardship alone) that make it desirable to waive; and

·     It must be more appropriate to waive than to write off the debt.

26. Considering the issue of write off first, s 1236 of the SSA governs the Secretary’s power to write off a debt. Write off is appropriate where any of the following circumstances exist:

·     The debt is irrecoverable at law.  This usually refers to a debt that is statute barred because of delay in seeking recovery.

·     The debtor has no capacity to repay the debt.  Mr and Mrs Gollan run a business and it seems could repay the debt, possibly over a period of time, if required.

·     The debtor’s whereabouts are unknown.  The Gollans’ whereabouts are well known to Centrelink.

· The debtor is not receiving a social security payment under the SSA and recovery of the debt would not be cost effective. While the Gollans do not receive income support any longer under the SSA recovery of the debt would not likely be cost ineffective. The Gollans are respectable and responsible people who could be expected to enter into reasonable discussions about repayment if required to do so.

For these reasons I do not consider that write off of the debt would be appropriate under the SSA.

27. I find that neither Mr nor Mrs Gollan, nor any other person, knowingly made a false statement or knowingly failed or omitted to comply with a provision of the SSA.

28.     I find that there are special circumstances in the Gollans’ case that make it desirable to waive recovery of the debt.  The circumstances taken into account are:

·     Mr Gollan lost his job as a driver for Janson’s Pies in December 1995.  He had that job since July 1995.  Previously he and Mrs Gollan were partners in a courier business working for TNT.  Mr Gollan was unused to being out of work.  He found casual work for a period before becoming a full-time employee at the Woollahra Council quite some time later in 1998. 

·     The house fire.  A house fire must be a distressing event at any time.  This fire occurred when the Gollans’ children and Mrs Gollan’s mother were inside the house.  I note Mr Gollan’s evidence regarding the damages settlement in the Gollans’ favour.  The legal action was by the Gollans’ insurer against the insurer of the tradesman who caused the fire.  Defendants’ insurers and their legal advisers are reluctant to concede the presence of post-traumatic stress disorder in an affected person in the absence of reasonably strong evidence.  That the defendant’s insurer was prepared to settle claims based on the adults in the house suffering from post-traumatic stress disorder I regard as indicative of a fairly serious problem affecting Mr and Mrs Gollan. 

·     The death of Mrs Gollan’s mother.  Mrs Gollan’s aged mother died in 2001, having been placed in a nursing home towards the end of her life.

29.     As tribunal Member Carstairs helpfully summarised in Re Jones and Secretary, Department of Family and Community Services [2003] AATA 62 in paragraph 26, court and tribunal decisions have established that special circumstances are circumstances having a particular quality of unusualness that sets one case apart from the usual. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 this was described as circumstances that are unusual, uncommon or exceptional.

30.     My finding is that the above circumstances, most notably the post-traumatic stress disorder and the house fire, take the Gollans’ case outside the usual run of cases involving recovery of debts.  When Mr Gollan’s insecure employment position and Mrs Gollan’s mother’s health status are factored into the period when the debt accrued, I consider that there was a combination of factors contributing to special circumstances operating throughout the relevant time.

31. Waiver under s 1237AAD is discretionary. Even if special circumstances exist and the other preconditions are established a decision-maker can nevertheless decide against waiver. I see no reason here, however, to refuse to exercise the discretion to waive. Ms Collis submitted that the house fire had no ongoing effect on the family, that they “moved on”. I see this as inconsistent with the diagnosis of post-traumatic stress disorder.

CONCLUSION

32. I have decided that the debt is to be waived in full in accordance with the provision on special circumstances in s 1237AAD of the SSA.

DECISION

33.     The decision under review is set aside and the tribunal substitutes its own decision that recovery of the applicant’s debt due to the Commonwealth is waived in full.

I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Michael Sassella, Senior Member

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

Date of hearing  27 October 2003
Date of decision  1 March 2004
Counsel for the applicant          Mr Brett Thomas
Solicitor for the applicant          Willis & Bowring, Solicitors and Attorneys
Advocate for the respondent     Ms Cheryl Collis
Solicitor for the respondent      Centrelink Service Recovery Team