Groweg and Secretary, Department of Family and Community Services - [2000] AATA 313

DECISION AND REASONS FOR DECISION [2000] AATA 313

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q1999/1104

GENERAL ADMINISTRATIVE DIVISION       )
           Re      DIANE GROWEG
  Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent

DECISION

Tribunal Dr EK Christie, Member

Date20 April 2000
PlaceBrisbane

Decision The Tribunal affirms the decision under review.

(Sgd) EK Christie
MEMBER
CATCHWORDS
SOCIAL SECURITY - family payment - overpayment - whether debt due to the Commonwealth may be waived for special circumstances - whether debt may be written-off.
Social Security Act 1991 ss 1237, 1237AAD
Re Groth v Secretary, Department of Social Security (Unreported No. QG52/95 delivered 1 December 1995)

REASONS FOR DECISION

20 April 2000 Dr EK Christie, Member

This is an application by Diane Groweg for a review of a decision made by the Social Security Appeals Tribunal (SSAT) on 28 September 1999 to raise and recover an overpayment of family payment of $801.90. This decision affirmed a decision of an Authorised Review Officer made on 17 August 1999. The overpayment period was 29 January 1998 to 18 June 1998.
The reason raised by Mrs Groweg for her application was that the overpayment was due entirely to an administrative error by Centrelink. At the outset of the hearing, Mr Groweg conceded that he had contributed to the administrative error.
The evidence before the Tribunal comprised documents filed pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 (the "T" Documents) (Exhibit 1) and the following documents which were tendered as Exhibits.

Exhibit 2 Notes of Austudy Assessment to Mr E Groweg – 27 November
1997; 28 November 1997.
Exhibit 3 Statement of Shane Murphy – 15 December 1999
Exhibit 4 Statement of Maria Hand – 10 April 2000

The applicant was represented by her husband, Mr E Groweg. Mr N Foster, a Departmental Advocate, represented the respondent. Mr Foster called two witnesses: Mr Shane Murphy and Ms Maria Hand, both Centrelink officers at the Nerang office.
Mr Groweg acknowledged the following findings of fact made by the SSAT (Document T2 Folio 8):

On 19 January 1998 Mrs Groweg provided an estimate for 1997/98 of $20,012.00 taxable income; and
The verified income [for the 1997/98 financial year] was $35,944.00 because the taxable income included a redundancy payment which was not taken into account in calculation of the estimate.

At the date of the hearing, the residual balance of the debt was $571.86. However, a stay order had been in place since October 1999.
Issues before the Tribunal
The only issue for the Tribunal to decide was whether overpayment of family payment could be waived in part, or in full, because of "special circumstances"; alternatively, whether the debt could be written-off. There was no need for the Tribunal to consider waiver for "administrative error" (see paragraph 2).
Contentions and Submissions of the Parties
Mr Groweg stated that he had been given incorrect advice in relation to his social security entitlements by Centrelink staff at their Nerang office. Mr Groweg received assistance under Austudy. He said that in November 1997 and January 1998 he had been advised that as Austudy was an income support payment scheme, and that social security entitlements were based on current income assessment.
Mr Groweg said that he had been given an ETP on 16 September 1997. It was at this time he had applied for newstart allowance.
Mr Groweg said that when he applied for newstart allowance in 1997, he had provided information to Centrelink about his EPT ("redundancy payment") from his position as a computer programmer with the Gold Coast City Council. However, he had been advised by the Centrelink staffer not to apply for newstart allowance but Austudy. He had followed this advice. He had expected the information he had provided to Centrelink with his newstart allowance application to be given to Austudy. However, this was not the case.
Ms Hand's evidence was that in situations where a newstart allowance was withdrawn, "as little as possible" material would be coded as it would be unnecessary. Where there had been a "voluntary surrender of a claim" very little information would be put into the computer.
Mr Groweg said that he was unaware that redundancy payments would be used in determining the amount of his wife's social security entitlement. Mr Groweg said that he believed "taxable income from employment" to mean only moneys paid to him as salary. In response to a Tribunal question, Mr Groweg said that he could not recall and was uncertain whether he had ever raised a specific query with Centrelink in terms of: does my redundancy payment affect our social security entitlement?
Mr Groweg said that he had kept meticulous records and had done everything possible, as far as he understood their rights and obligations under the Social Security Act, to comply with Centrelink requirements.
Mr Groweg considered the actions of Centrelink to recover the debt to be unjust.
Contentions and Submissions of the Parties
In terms of waiver of the debt for "special circumstances", Mr Foster submitted:

that the issue of whether Mr Groweg knowingly failed to comply with a provision of the Social Security Act was not in issue;
that there was nothing to warrant waiver of the debt for "special circumstances". There was no evidence that Centrelink gave incorrect advice as to the effect of Mr Groweg's redundancy payment on their social security entitlements;
that there was no evidence that Mr Groweg queried whether his ETP should be included as part of his "income estimate";
that it was not Centrelink's responsibility to check whether every piece of information provided to them by social security recipients was correct;
that, in terms of application to the provisions of the Social Security Act; the meaning of "special circumstances" in Mr Groweg's case meant "unfair" or "inappropriate"; and
that the basis of calculating Mrs Groweg's family payment was quite independent of whether Austudy was an income support payment scheme.

In terms of write-off of the debt, Mr Foster contended that the debt should not be written-off because:

Mrs Groweg had a capacity to repay the debt. It had been previously recovered by withholding $30 per fortnight from Mrs Groweg's entitlements – without causing severe financial hardship;
that whilst the Growegs financial circumstances may be uncomfortable, they were not financially straitened; and
the Groweg family received a total of $880 per fortnight in social security entitlements and would have a capacity to repay the debt. The debt was not irrecoverable.

Mr Groweg contended that Centrelink had failed in their duty of care in processing his application. His circumstances would have been different if he had been advised correctly; and the debt would not have occurred if he had been given the correct advice.
Mr Groweg said that over the period September to October 1997 there had been a transition as Austudy came within the Centrelink umbrella. During this transition period, he submitted, "pure chaos was going on in Centrelink" which led to uncertainty in the determination of entitlements. His application was processed during this transition period. Mr Groweg contended that Centrelink had an obligation to keep their clients as informed as much as possible.
Mr Groweg submitted that the debt should be written-off since they endured a financial crisis because of the need to replace a number of major household goods.
Mr Groweg said that he hoped to complete his Bachelor's Degree in Vocational Education Training in two years.
Consideration of the Issues
The objective of the Tribunal is to review administrative decisions, on their merits, and in accordance with the law at all times. The relevant legislation is the Social Security Act 1991 ("the Act").
Section 885 of the Act provides for re-calculation if income exceeds 110% of estimated amount. Section 1223(3) of the Act provides that overpayment due to re-calculation, inter alia, for under-estimate (Section 885), is a debt due to the Commonwealth.
Section 1237AAD of the Act provides for circumstances where a debt due by a recipient of social security to the Commonwealth may be waived because of "special circumstances".
"SECTION 1237AAD – WAIVER IN SPECIAL 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 a 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."

The Tribunal recognises that the payment of family payment is dependent on the meaning of "taxable income" which is defined in subsection 23(1) of the Social Security Act as:
"'Taxable income' has the same meaning as in the Income Tax Assessment Act."

Centrelink has no discretion as to what constitutes taxable income beyond this definition. Consequently, the Growegs combined taxable income for the 1997/98 financial year, assessed in accordance with the Income Tax Assessment Act, was $35,994 – which was more than 110% of the estimate of $20,012 provided to Centrelink by Mrs Groweg. As such, it represented a "notifiable event" as set out in the Centrelink advice letter (Document T11, Folio 55, 22 January 1998). However, no such notification was made by either Mr or Mrs Groweg, leaving Centrelink no other alternative than to base payments of family payment on an incorrect estimate of combined taxable income. The Centrelink advice letter (Document T11) made it clear to Mrs Groweg that the amount of family payment "has been worked out using your combined estimate income [$20,012] for the 1997/98 tax year" (Folio 54).

In Groth v Secretary, Department of Social Security (Unreported No. QG52/95, 1 December 1995), Kiefel J considered whether "special circumstances" applied in a case involving Section 1184 of the Act. Kiefel J endorsed the approach adopted by the Administrative Appeals Tribunal at first instance; namely, in determining whether a person's circumstances are "special", one should look at the effect upon the claimant if the waiver provision were not applied. If the consequence was unintended by the legislation, or the effect on the person concerned was different from that which would be felt by others, then the circumstances may be "special".
The Tribunal concludes that the effect of the redundancy payments on Mrs Groweg's family payment entitlements is not one unintended by the legislation; nor is the effect upon Mrs Groweg different from that which would be felt by others. Mrs Groweg's family has endured the same consequences as any other social security recipient who receives an unintended lump sum payment - e.g. superannuation, retrenchment pay, long service leave - during the period social security entitlements are received, such that actual income for the financial year differs from their estimate for that financial year. Accordingly, the debt cannot be waived under the "special circumstances" provisions of the Act.
Whilst this conclusion may seem harsh, it would be fairer to say the outcome is unfortunate. The outcome is dependent on the legislation, but the legislation provides the Tribunal no discretion from which to depart. The Tribunal makes the observation that Mrs Groweg's case, unfortunately, is not the first case before this Tribunal where lump sum payments have created an equivalent problem of overpayments for social security recipients.
Section 1236 of the Act enables a debt to be written-off. Subsections 1236(1A) and (1B) are the relevant provisions:
"1236(1A)       [Class of debts]        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)the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt.
1236(1B)        [Meaning of "irrecoverable at law"]          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 from a person's youth training allowance, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; and
(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 discharge 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."
On the evidence before the Tribunal, the Tribunal concludes that on the balance of probabilities that the debt is not irrecoverable as Mrs Groweg has a capacity to repay the debt. Accordingly, the debt cannot be written-off.
However, the Tribunal makes the observation, that given:

Mrs Groweg is unemployed;
Mr Groweg is a full-time tertiary student; and
the beneficial nature of the Social Security Act

that Centrelink consider postponing further recovery of the debt for a period of twelve months to enable the Groweg family to achieve some financial stability in their lives. Furthermore, that any determination of the amount of instalments be conditional upon a completed Statement of Financial Circumstances by Mrs Groweg.

For all of the above reasons, the decision under review is affirmed. An overpayment of family payments of $801.40 has been made to Mrs Groweg which is a debt which must be recovered by the Commonwealth.
I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed:         Emma Oettinger
  Associate
Date/s of Hearing  14.4.00
Date of Decision  20.4.00
Rep. for the Applicant              Mr E Groweg, applicant's husband
Solicitor for the Respondent    Mr N Foster, Departmental Advocate

Actions

Download as PDF Download as Word Document

Citations

Groweg and Secretary, Department of Family and Community Services [2000] AATA 313

Cases Citing This Decision

0

Cases Cited

0

Statutory Material Cited

0