Griffin and Secretary, Department of Family and Community Services

[2005] AATA 343

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 343

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/586

GENERAL ADMINISTRATIVE  DIVISION

Re:         JACINTA MARY GRIFFIN

Applicant

And:       SECRETARY,
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             19 April 2005

Place:            Melbourne

Decision:      The Tribunal affirms the decision under review.

(sgd) Regina Perton
  Member

SOCIAL SECURITY ‑ parenting payment (partnered) ‑ overpayment ‑ failure to notify exact amount of husband’s income ‑ non deductible employment related expenses ‑ debt to Commonwealth ‑ waiver of debt ‑ write‑off of debt ‑ special circumstances ‑ decision affirmed

Social Security Act 1991 ss 8(1), 1068, 1223, 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 ss68 (2), 98, 99, 100

Data-matching Program (Assistance and Tax) Act 1990 s11

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

Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797

Re Coralie Hales and Secretary, Department of Social Security (AAT, 012159, 27 August 1997)

REASONS FOR DECISION

19 April 2005  Regina Perton, Member

1. This is an application by Jacinta Mary Griffin (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 8 April 2004.  The SSAT affirmed a decision of a delegate of the Secretary to the Department of Family and Community Services (the respondent) dated 17 December 2003 that the applicant had been overpaid parenting payment (partnered) (PPP) from 17 April 2002 to 25 November 2003 (the relevant period) and that, as a result, she owed $3,069.29 to the Commonwealth.

2. At the hearing on 14 December 2004, the applicant’s husband, Mr Brendan Griffin, represented her.  The applicant did not attend.  Ms Kayren Paul, a Centrelink advocate, represented the respondent.

3. The Tribunal received into evidence the documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975 (the T documents) and medical reports and a newspaper article submitted by the applicant.

BACKGROUND

1. The applicant has been in receipt of PPP for most of the period since 20 December 2000.  During that time, there have been a number of changes in employment and income for the applicant and her husband.  These changes have impacted on the amount of PPP to which the applicant has been entitled.

2. On 20 February 2002, Centrelink stopped payment of PPP to the applicant on the basis that her husband was no longer receiving an income support payment.   Payments were reinstated on 22 February 2002 after Centrelink was made aware of the applicant’s then current income and that of her husband.  The applicant was instructed in a letter dated 25 February 2002, and in subsequent correspondence, of the requirement to inform Centrelink if her and her husband’s combined income was above a certain level.

3. A data‑matching review between Centrelink and the Australian Taxation Office (ATO) for the 2001/2002 financial year revealed a difference between the two bodies as to the amount attributed to Mr Griffin as income.  On 11 November 2003 Centrelink undertook further investigations including seeking details directly from Mr Griffin’s employer about his salary and allowances.  On 18 December 2003, the respondent’s delegate wrote to the applicant informing her that she had been overpaid $3,069.29 in PPP between 17 April 2002 and 25 November 2003.  The respondent also raised a recoverable debt in that amount.  

4. On 22 January 2004 the applicant sought review of the delegate’s decision to raise the debt and on 24 February 2004, an authorised review officer affirmed the delegate’s decision.  On 4 March 2004, the applicant applied to the SSAT for review of the decision.  On 8 April 2004, the SSAT affirmed the decision.  An application for review with this Tribunal was lodged on 17 May 2004.

5. The issue before the Tribunal is whether the applicant owes a debt to the Commonwealth, and if so, whether the debt should be waived. 

EVIDENCE

1. In written submissions filed with the Tribunal on 2 July 2004, 20 September 2004 and 5 November 2004, Mr and Mrs Griffin stated that it was their belief that Centrelink was kept informed of the correct level of income earned by Mr Griffin at all pertinent times.  They stated that Centrelink had been advised of a salary increment paid to Mr Griffin from May 2002 and claimed that the respondent had not accurately recorded the information provided.  They cited other alleged errors made by Centrelink in relation to their payments and those of others, attaching a newspaper article on the topic.  They expressed the view that the overpayment had arisen due to administrative error on the Centrelink’s part.  They stated that Mr Griffin, who teaches disabled students, receives a special school allowance in addition to his salary.  However, due to the nature of the work, he spends more than the allowance on work related expenses.  They stated that the special school allowance and other expenses he incurs as a result of his work should not be included as income for social security purposes.  They also stated that the returns received from shares and the $10,000 which his late mother gave to their son, Joseph, for his future education, prior to her death in January 2000, should not be included as their income as Mr Griffin was holding the money on trust for his son.   

2. In their submissions they also suggested that the debt should be waived due to special circumstances, namely Mr Griffin’s state of health.  Mr Griffin’s mother, to whom he was close, passed away in 2000; and his brother, for whom Mr Griffin was a carer, had a double lung transplant in that same year.  These events exacerbated the stress Mr Griffin was experiencing at the time as a first‑year teacher.  Mr Griffin stated that he was subsequently unfit for work in the second half of 2001.  In an attached report dated 11 June 2004, Dr John C. Lloyd, consultant psychiatrist, stated that Mr Griffin had been a patient of his for over 10 years and suffered from severe stress, chronic headaches and other stress related conditions for which he has had four hospital admissions, with the last two having been in late 2003.  Dr Lloyd was of the opinion that further stress could easily lead to a readmission.

3. In oral evidence Mr Griffin amplified the points that had been made in the submissions.  He told the Tribunal that he taught 10 to 12 year olds diagnosed with autism and other problems.  He said that he received an additional allowance due to the nature of the students and that this was separate from his salary.  He said that the allowance had pushed up his taxable income even though the allowance, and more, was spent on repairing damage to clothes and property caused by the students’ behaviour.  Mr Griffin stated that he had originally believed that income he received while he was on sick leave did not need not be included as income for the calculation of income for social security purposes, but that he now realises that this is not the case.  He said that his wife had telephoned Centrelink and advised of income changes during the relevant period.  He could not understand why the information provided was not properly recorded.  He stressed that he and his wife had been honest in their dealings with Centrelink and believed that Centrelink had been correctly advised about their income.

4. The contents of several of the T documents were brought to Mr Griffin’s and the Tribunal’s attention by Ms Paul, in particular, reference was made to several computer entries by Centrelink employees including:

   ·           an entry dated 7 May 2002 which indicates that the applicant telephoned that day:

   …

   Cust recvd PPP/SUS-PSC letter of 1/05/02 – I explained eans for ptr coded that same day so she has now changed from PPP/NSS to PPP/LOW.  Cust adv her ptr is employed on a contract so earnings will remain constant.  Adv her of necessity to pho us within 14 days if any changes an entry dated 4 November 2002 following a telephone call from the applicant:

   …

   Income details provided are as follows:

   Financial year:  2002/2003

   Taxable income….      Cust:  $8490  Ptr:  $20000

   TOTAL  Cust:  $8490  Ptr   $19750    Total:  $28240

   Customer Estimate is reasonable – unchanged

   Partner Estimate is reasonable – Change in work hours/pay rate

   The Reconciliation Process was explained to the Customer.

   …

   ·           an entry dated 17 October 2003 following a telephone call from Mr Griffin:

   ptr…

   states is still working with department of education approx 20,000 per annum.  permitted employers to be contacted to verify

   no other changes in circumstances

   …

5. In response, Mr Griffin indicated that he and his wife had given approximate figures and were not aware of the need to give exact details, as the Centrelink employees did not press for further detailed information.  On being questioned by Ms Paul as to whether he or his wife had read the instructions in several letters from Centrelink, of the requirement to advise Centrelink if their income was above a certain stated level, Mr Griffin said that only two of the letters they received in the relevant period contained such information.  He said that they believed that they had kept Centrelink informed of the relevant income.  Mr Griffin also stated that, in his view, Centrelink was breaching contract law in its dealings with him and his wife. 

6. Mr Griffin provided the Tribunal with further information about the nature of the ill-health he had experienced in the past, and continues to experience.  He submitted that this was a ground upon which the Tribunal should waive the debt, if it found that there had been an overpayment that was not wholly attributable to an error by Centrelink.

CONSIDERATION OF THE ISSUES

1. Section 1068B of the Social Security Act 1991 (the Act) sets out the rate calculator for PPP, and provides that a person’s income, and that of their partner, will affect the rate of payment. The income test is set out in Module D of section 1068B and requires Centrelink to take account of the applicant and her partner’s ordinary income. Module D of section 1068B of the Act provides:

   Effect of income on maximum payment rate

   1068B-D1.  This is how to work out the effect of a person’s ordinary income, and the ordinary income of the person’s partner, on the person’s maximum payment rate:

Method statement

Step 1.Work out the amount of the person’s ordinary income on a fortnightly basis.

Note: The amount of the person’s ordinary income is affected by points 1068B-D2 to 1068B-D21.

Step 2.Work out the partner income free area using point 1068B-D22.

Note: The partner income free area is the maximum amount of ordinary income the person’s partner can have without affecting the person’s rate.

Step 3.Use point 1068B-D23 to work out the person’s partner income excess.

Step 4.Use the person’s partner income excess to work out the person’s partner income reduction using point 1068B-D24.

Step 5.Work out whether the person’s ordinary income exceeds the person’s ordinary income free area (see point 1068B-D27).

Note: A person’s ordinary income free area is the maximum amount of ordinary income the person can have without affecting the person’s rate.

Step 6.If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.

Step 7.If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.

Step 8.Use the person’s ordinary income excess to work out the person’s ordinary income reduction using points 1068B-D29 to 1068B-D31.

Step 9.Add the person’s ordinary income reduction and partner income reduction: the result is the person’s income reduction referred to in step 5 of the method statement in point 1068B-A2.

Note 1:For ordinary income see section 8.

Note 2:See point 1068B-A2 (step 6) for the significance of the person’s income reduction.

Note 3:The application of the ordinary income test is affected by provisions concerning the following:

(a)      the general concept of ordinary income (sections 1072 and 1073);
(b)      business income (sections 1074 and 1075);
(c)      deemed income from financial assets (sections 1076 to 1084);
(d)      income from income streams (sections 1095 to 1099D);

(e)      disposal of income (sections 1106 to 1112).

1. Ordinary income is defined in section 8(1) of the Act:

   "ordinary income" means income that is not maintenance income or an exempt lump sum.

   Note 1: for "maintenance income" see subsection 10(1).

   Note 2: amounts received as a series of periodic compensation payments may result in reduction of the person's rate of social security pension or benefit under Part 3.14: if this happens the amounts are not counted as ordinary income (see section 1171).

   Note 3: For provisions affecting the amount of a person's ordinary income see sections 1072 and 1073 (ordinary income concept), sections 1074 and 1075 (business income), sections 1076-1084 (deemed income from financial assets) and sections 1095-1099D (income from income streams).

2. As can be seen in the notes to the above definitions, there are a considerable number of provisions which need to be taken into account when calculating income for purposes of PPP.  The Tribunal notes that the range of payments that are included as ordinary income have been spelled out in depth in the SSAT’s decision.  The Tribunal concurs with the SSAT’s analysis in relation to what should have been included as income.  In particular, the Tribunal finds that allowances such as the special school allowance and the sick leave paid by Mr Griffin’s employer are properly included as income for the purposes of PPP.   The Tribunal is also satisfied that the additional superannuation payments made by Mr Griffin under salary sacrificing arrangements are not included as income for the purposes of PPP. 

3. Given the wording of the definitions of income, ordinary income and the multiplicity of exclusions spread throughout the Act, the Tribunal is not surprised that the applicant and her husband originally believed that the special school allowance, which they contended was fully spent on work‑related expenses incurred by Mr Griffin, need not be declared as income.  However, that assumption was misconceived. 

4. The data‑matching exercise between the ATO and Centrelink, and information obtained subsequently, from Mr Griffin’s employer and from Mr and Mrs Griffin directly, has revealed that the level of income on which PPP was calculated was incorrect.  The Tribunal is satisfied that there was an overpayment of PPP; that the amount totalled $3,069.29 for the period between 17 April 2002 and 25 November 2003; and that this sum became a debt due to the Commonwealth.

5. Mr and Mrs Griffin submitted that the debt should be waived under section 1237A(1) of the Act as the applicant’s failure to advise Centrelink of changes of income was not their fault, but rather it arose solely due to administrative error by Centrelink.

6. Ms Paul noted in her submissions that Centrelink sent several letters to the applicant between April 2002 and November 2003 in which Mr and Mrs Griffin’s then recorded combined income level for PPP purposes was set out and Mrs Griffin was informed that it was her obligation to notify Centrelink if the income was higher than that specified in the letter. She submitted that the applicant’s and her husband’s combined annual income was higher than that advised to Centrelink and that the overpayment had arisen due to their failure to advise Centrelink of the correct amount. She submitted that it was only after taxation records were matched with Centrelink records in 2003 that the discrepancy was discovered. Ms Paul submitted that the debt cannot be waived under section 1237A(1) of the Act as it did not arise solely through administrative error on the part of Centrelink.

7. Section 1237A of the Act provides for waiver of a debt arising from administrative error:

   1237A.(1)   Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

   1237A.(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.

8. Following the reinstatement of the applicant’s PPP on 22 February 2002, Centrelink wrote to the applicant several times during the relevant period. Centrelink’s records indicate that on or about 1 May 2002, the applicant informed Centrelink of a significant increase in Mr Griffin’s income.  In a letter dated 1 May 2002, Centrelink indicated its records showed Mr Griffin’s income as $21,142.42 per annum.  The applicant was informed of the requirement to inform Centrelink if Mr Griffin’s total personal income exceeded $813.17 per fortnight and if hers was above $62.00 per fortnight.  A file note by a Centrelink officer on 7 May 2002 indicates that the officer spoke to the applicant that day and that the applicant indicated that her husband’s earnings would remain constant as he was employed on a contract.  The officer noted that he had advised the applicant of the requirement to telephone Centrelink within 14 days if there were any changes.  There are file notes indicating telephone conversations between Centrelink officers and the applicant or her husband during the relevant period.  A file note dated 4 November 2002 indicates a Centrelink officer spoke to the applicant that day and that the estimates for her income in the previous financial year were updated.  A file note dated 17 October 2003 indicates that Mr Griffin spoke to a Centrelink officer that day and that he estimated his income at $20,000. 

9. On examination of the T documents and taking into account the applicant’s written and oral evidence and that of her husband, the Tribunal is of the view that there have been some misunderstandings by the applicant and her husband of the income provisions. The Tribunal finds that there were various factors contributing to the underestimate of income, including the changes of employment status of Mr and Mrs Griffin and their lack of awareness of the need to declare the exact amounts of income including allowances for the purposes of PPP. The Tribunal accepts that Mr and Mrs Griffin did not deliberately underestimate their income. However, it cannot be satisfied that the fault lies entirely with Centrelink. The documentary evidence indicates that Centrelink officers advised the applicant orally and in writing of the requirement to advise it of any rise in income levels above those specified. Therefore, the Tribunal finds that the debt cannot be waived under s 1237A(1) of the Act as it did not arise through sole administrative error on the part of Centrelink.

10. Section 1237AAD of the Act provides for waiver of the debt in certain other circumstances:

    1237AAD.  The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

    (a)the debt did not result wholly or partly from the debtor or another person knowingly:

    (i)       making a false statement or false representation; or

    (ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and

    (b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

    (c)it is more appropriate to waive than to write off the debt or part of the debt.

1. As indicated earlier, the Tribunal is satisfied that the applicant and her husband misunderstood the income provisions relating to PPP. It is also satisfied that the under-reporting of Mr Griffin’s income and the subsequent debt did not arise due to the applicant or her partner knowingly making false statements or failing to comply with a provision of the Act. There is no evidence to suggest that they deliberately withheld information from Centrelink. The Tribunal finds that the applicant did not knowingly make false statements or representations to Centrelink; nor did she deliberately fail to comply with a provision of the Act. She therefore meets the criteria in s 1237AAD(a) of the Act.

2. Ms Paul submitted that there were no special circumstances that would justify waiving the debt. She cited Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal held that the special circumstances, as referred to in s 1237AAD(b) of the Act, must be unusual, uncommon or exceptional.  Ms Paul also cited Re Groth and Secretary, Department of Social Security (1995) 37 ALD 797, in which the Tribunal held that special circumstances arise where the situation is out of the ordinary and the application of the legislative provisions will result in an unjust or unreasonable outcome. Mr Griffin referred the Tribunal to the  Re Coralie Hales and Secretary, Department of Social Security (AAT, 012159, 27 August 1997) in which the Tribunal waived a debt on the basis of special circumstances, where the applicant had been in ill-health, had resumed employment and was particularly vulnerable to stress. 

3. The Tribunal accepts that Mr Griffin has health problems, is vulnerable to stress and has experienced a number of stressors on both the personal and professional front in recent years.  However, the Tribunal is not satisfied that the situation that Mr and Mrs Griffin find themselves is vastly different from other social security recipients who have received overpayments. The Tribunal is not satisfied that the circumstances in this case constitute special circumstances (other than financial hardship alone). Hence, the waiver provisions of s 1237AAD of the Act do not apply.

4. Therefore, the applicant owes a debt of $3,069.29 to the Commonwealth. 

DECISION

1. The Tribunal affirms the decision under review. 

I certify that the thirty [30] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of hearing:  14 December 2004

Date of decision:  19 April 2005
Advocate for applicant:  Mr B. Griffin, applicant’s husband
Advocate for respondent:  Ms K. Paul, Centrelink