Ham and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 1058

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1058

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2006/674

GENERAL ADMINISTRATIVE  DIVISION		)
Re		PETER AND KATHERINE HAM

Applicants

And SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal   Dr EK Christie, Member

Date  30 January 2007

Place Brisbane

Decision  The decision under review is affirmed.  This means the application for review is unsuccessful.

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WRITTEN REASONS FOR ORAL DECISION

CATCHWORDS

SOCIAL SECURITY – age pension - overpayment – debt due to the Commonwealth – waiver - administrative error - special circumstances – observations on content of notification notices

Social Security Act 1991 ss 1237A, 1237AAD

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

14 February 2007 Dr EK Christie, Member     

1.       This is an application for review of the decision of the Social Security Appeals Tribunal (the “SSAT”) made on 12 September 2006 that decided (i) to raise a debt against each applicant of $4192.47 for the period 2 December 2002 to 6 June 2006, and (ii) to waive recovery of $2650.04 of each of those debts, because of administrative error arising solely on the part of Centrelink.  Consequently, a debt of $1542.43 could be recovered against each applicant as this was the residuary debt due to the Commonwealth.

2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” Documents) [Exhibit 1] and the various exhibits lodged by the parties.

3.      The applicant represented himself and his wife at the hearing and also gave oral evidence at the hearing. The respondent was represented by Mr R McQuinlan, a Departmental Advocate.  Mrs Ham did not appear at the Tribunal hearing.

Issues Before The Tribunal

4.      The only issues for the Tribunal to decide were whether the age pension debt paid during the relevant period 2 December 2002 to 6 June 2006 could be waived, in part or in full, under the “administrative error” or the “special circumstances” provisions of the Social Security Act 1991 (“the Act”).  As a preliminary point, the SSAT stated (T2 Folio 7):

“Mr and Mrs Ham have received separate pensions, Centrelink has raised separate debts against both applicants, and each applicant has lodged a separate appeals.  However, the issues raised in both appeals are identical, Mr Ham appeared on behalf of both applicants, and Mrs Ham did not appear before the Tribunal.  For convenience the Tribunal will deliver one decision for both appeals.  No party has been prejudiced by this approach.”

5.      I agree that the approach taken by the SSAT is equally applicable to this hearing before the AAT and the decision to be made.

Facts

6.      On the basis of the evidence before it the SSAT made the following Findings of Fact [T2, Folio 12]:

“(i)Mr and Mrs Ham each received age pension from 2 December 2002 onwards.

(ii)Mr Ham promptly provided all relevant information to Centrelink concerning Tara Super Fund as requested.

(iii)Centrelink failed to properly process information concerning Tara Super Fund which resulted in overpayments of $2650.04 to each applicant.

(iv)On 15 July 2003 Mr Ham advised Centrelink that Mrs Ham earned $1127.02 in the fortnight ending 27 June 2003.

(v)On 15 July 2003 Mr Ham advised Centrelink that Mrs Ham earned $1087.34 in the fortnight ending 11 July 2003.

(vi)In February 2004 Mr Ham advised Centrelink that Mrs Ham earned $435.23 in the week ending 12 January 2004.

(vii)In February 2004 Mr Ham advised Centrelink that Mrs Ham earned $361.32 in the week ending 26 January 2004.

(a)Mr Ham did not read, and therefore did not comply with, requirements in Centrelink notices that it be advised of increases to their combined income.

(b)Nor did Mrs Ham advise Centrelink of such increases.”

7.      At the commencement of the hearing, Mr Ham gave the following responses to the “Findings of Fact” made by the SSAT:

·that he agreed with findings (i), (ii) and (iii);

·that he was uncertain about findings (iv), (v), (vi) and (vii) as he could not recall the precise amounts cited;  and

·that he agreed with findings (viii)(a)(b)

Statutory Requirements And Case Law

8.      The Tribunal has applied the following legal requirements and principles in its interpretation of the law in its consideration of the outcome for Mr and Mrs Ham’s factual situation.

§The Tribunal’s Decision Making Powers

9.      There are a number of decisions possible in this application for review: whether the debt due to the Commonwealth can be waived under the “administrative error’ or “special circumstances” provisions of the Social Security Act 1991. Accordingly, the question for the determination of the Tribunal is whether the decision under review is the preferred one.

[see Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68]

10.     In this application for review, the Tribunal considers all the evidence and information before the Tribunal as at the date of the hearing - to the extent those facts are relevant to the decision by reference to the subject matter, scope and purpose of the legislation pursuant to which the discretion is conferred.

[See Haidar v Secretary, Department of Social Security (1998) 157 ALR 359 at 367].

THE ADMINISTRATIVE ERROR WAIVER PROVISION

11.     In this application for review, the “administrative error” provision is one issue in dispute for the Tribunal to decide. Section 1237A of the Social Security Act provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “administrative error”:

“SECTION 1237A – WAIVER OF DEBT ARISING FROM 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.

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).”  [Tribunal emphasis]

12.     For this section of the Social Security Act 1991 to apply to Mr and Mrs Ham’s factual situation, the applicant’s must not have contributed, in any way, to the administrative error that led to the overpayment.  In addition, they must have received their overpayments of social security entitlements in “good faith’.  Both these requirements must be satisfied in order for them to succeed under the “administrative error” provisions of the Social Security Act 1991.

13.     The legal meaning of “good faith” was considered by the Federal Court in Prince v Secretary, Department of Education, Employment and Youth Affairs [1997-98] 50 ALD 186. In this case, Finn J stated:

“If that person knows or has reason to know that he or she is not entitled to a payment received - i.e. is not entitled to use the moneys received as his or her own - that person does not receive the payment in good faith.  Absent such knowledge or reason to know, the receipt would be in good faith…the [legislation] does seem in all probability to be directed to a payee who receives the money (to put the matter positively) in the good faith belief that he or she is entitled to receive it.  In other words the frame of the section is to exclude from the right to a waiver, a person who knows or has reason to know that he or she is not entitled to receive the payment.  It would be surprising to find that the Parliament intended otherwise”.

The Special Circumstances Waiver Provision

14.     In this application for review, the “special circumstances” provision is another issue in dispute for the Tribunal to decide. Section 1237AAD of the Act provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “special circumstances”:

“1237AAD – WAIVER IN SPECIAL CIRCUMSTANCES

“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.”         [Tribunal emphasis].

15. For this section of the Social Security Act to apply to Mr and Mrs Ham’s factual situation, there must be “special circumstances” that led to the overpayment of social security entitlements. In addition, the applicants must not have “knowingly” made a false statement or false representation or “knowingly” failed to have complied with a provision of the Act. Both these requirements must be satisfied for them to succeed under the “Waiver in Special Circumstances” provision of the Social Security Act.

16.     The common law meaning and application of the expression “special circumstances” has been considered by the Federal Court and the Tribunal on many occasions. The relevant legal principles that have emerged, over time, that have been applied to provide a meaning for “special circumstances” can be summarised as follows:-

(a)“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. …This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

[See Re Beadle and Director-General of Social Security (1984) 6 ALD (at 3)]

(b)“…would require something to distinguish [the case to be decided] from others, to take it out of the usual or ordinary case…It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

[See Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545]

Findings of fact and Consideration of the Issues

17.     Based on the evidence and information before the Tribunal, the following conclusions can be made as they are relevant to the consideration of waiver of the age pension debt accrued over the period 2 December 2002 to 6 June 2006 for both (i) administrative error and (ii) special circumstances waiver provisions of the Social Security Act:

(a)Mrs Ham was employed as a shop assistant in a newsagency (see age pension claim T5).  At the time their claims were lodged (11 December 2002), Mrs Ham advised Centrelink that she worked as a casual employee, but without fixed hours (oral evidence Mr Ham).

(b)The number of hours Mrs Ham worked varied around 28-29 hours per week, but at busy times eg stocktake, the hours worked would be higher (up to 32 hours per week).  At other times of the year eg Christmas/New Year, the hours worked were much shorter (21-22 hours per week) (oral evidence Mr Ham).

(c)Mr Ham’s practice had been to provide his wife’s fortnightly payslips to Centrelink, from the time age pension entitlements were paid to them.  However, he was subsequently “given to understand” that, if weekly earnings did not vary, he could rely on annual tax returns as the source of weekly earnings received by his wife – rather than to continue providing fortnightly payslips (oral evidence of Mr Ham).

(d)Variations in actual payments (weekly earnings) received by Mrs Ham over 2002-2006, reflect the variation in hours worked (T95).  For example:

·6 December 2002 – 2 February 2003 Quarter:  $238 - $754

·5 November 2004 – 28 May 2004 Quarter:  $378 - $526

·1 July 2005 -  30 September 2005 Quarter:  $92 - $519

(e)Mr Ham and his wife were both aware that the weekly earnings received by Mrs Ham affected the amount of age pension entitlements they both received (oral evidence of Mr Ham).

(f)A key disputed issue giving rise to the problem of large overpayments of age pension was whether Mr Ham had advised Centrleink that his wife had returned to work following a short overseas holiday they both had in May – June 2006;  earlier in May 2005, Mr Ham had advised Centrelink that he and his wife were going overseas:

·Mr Ham’s oral evidence was that he was adamant that he had informed Centrelink that his wife had returned to work on 29 June 2005;

·However, the Centrelink File Note of this meeting on 29 June 2005 (T55 Folio 199) has no record that Mr Ham advised of the date his wife had returned to work and the record states:

“custs ptr [Mr Ham] attended & advised that cust [Mrs Ham] has had no income from KB electrical from 130505 when cust & ptr went o/seas.

Ptr has advised will notify when cust returns to work again.”

(g)Notwithstanding that there is “indefinite testimony” in regard to whether Centrelink had been informed that Mrs Ham had resumed work on 29 June 2005, the notification notice subsequently issued by Centrelink on 29 June 2005 (T57) stated that the information used for calculating their age pension payments was based on Combined Annual income of $11938.70 - but without any reference to Mrs Ham’s weekly earnings.  It is significant that the previous notification notice (T56, 1 May 2005) had based age pension payments on both combined annual income ($11966.70) and Mrs Ham’s regular fortnightly earnings ($722.64)

(h)However, Mr Ham’s evidence was that he did not raise any query with Centrelink on receiving the notification notice on 29 June 2005, after the holiday, notwithstanding that it made no reference to Mrs Ham’s fortnightly earnings being used to calculate their age pension entitlements.

(i)In addition, Mr Ham’s oral evidence acknowledged that he (or his wife) did not read the notification notices sent to them in any great detail.

(j)Mr Ham acknowledged in his oral evidence that their combined annual income in 2004/05 and 2005/06 financial years was in excess of $20,000 – significantly greater than the combined annual on which their age pension entitlements were based eg $11938.20 (T57, 29 June 2005).  However, at no stage did Mr Ham raise any query with Centrelink to query this discrepancy in financial information between Centrelink and them, notwithstanding it was a foundation for calculating their correct entitlements.

(k)Mr Ham’s evidence was that he had provided Centrelink with the financial information they required and relied on Centrelink to calculate their correct entitlements.

18.     I first consider the above conclusions in relation to waiver for administrative error.

19.     I find that Mr and Mrs Ham have both contributed to the administrative error that led to overpayments by failing to read notification notices sent to them.  Receiving correct pension entitlements is a “two way” process:  Centrelink provides the social security recipient with notification notices setting out the financial basis for calculating entitlements.  Centrelink relies on each social security recipient to read the notice and inform them if there is any discrepancy in the financial information used to calculate entitlements.

20.     Given the above findings, the debt due to the Commonwealth of $1542.43, cannot be waived for “administrative error” and must be recovered.

21.     Next, I find that a fact situation that neither Mr and Mrs Ham ever raised any query with Centrelink about discrepancies in financial information used by Centrelink and their actual financial situation in terms of Mrs Ham’s weekly earnings is a relevant fact in the consideration for waiver for special circumstances. This is especially the case, as Mrs. Ham’s income varied over time.  In addition, there was a discrepancy between two tax returns for financial years and Centrelink information used to calculate age pension entitlements.  Consequently, there is no basis to waive the debt for ‘special circumstances”.  There is nothing unusual, uncommon or exceptional in the facts, as no query was raised by Mr and Hrs Ham, relating to this issue.

22.     Given this finding, the debt due to the Commonwealth of $1542.43 cannot be waived for “special circumstances” and must be returned.

23.     In making these findings, I emphasise that the problem of overpayments did not arise through any dishonesty on the part of Mr and Mrs Ham.  I find Mr Ham to be an honest witness who has found he and his wife to be in a complex predicament for receiving social security entitlements against a background of variable or fluctuating income received by Mrs Ham - and so placed in a position of estimating income in advance.

24.     For all of the above reasons, the decision under review is affirmed.  Mr and Mrs Ham have each incurred an age pension debt of $1542.43 accrued over the period 2 December 2002 to 6 June 2006 and the debt must be recovered by the Commonwealth.

25.     The Tribunal makes the observation that the complex predicament Mr and Mrs Ham have found themselves in, may have arisen because of difficulty in understanding the content of the notification notices.  This is an issue that other social security recipients have made before this Tribunal. The question for Centrelink to consider is whether the language used in notification notices is consistent with the requirements for a “plain, English” meaning when read by the average social security recipient.  It would be unfortunate if a communication expert, on reading a notification notice, were to arrive at the same conclusion of Skoien SJ of the District Court of Queensland:

“I understand that the Act [Environmental Protection Act 1994 (Qld)] is an Act written in ‘plain’ English.” “My reading of the Act …convinces me the language used is not plain and whether it is entirely in English could be debated”: Richards and Sons v Ipswich City Council [1998] QPELR 303”

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed:         …………….
  Legal Research Officer

Date/s of Hearing  30 January 2007 
Date of Decision  30 January 2007

Written reasons  14 February 2007

The Applicant represented himself
Respondent  Mr R McQuinlan, departmental advocate