Hans Machielse and Secretary, Department of Social Services
[2013] AATA 752
[2013] AATA 752
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/4944
Re
Hans Machielse
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Ms K Hogan, Member
Date 21 October 2013 Place Perth The Tribunal varies the decision under review and refers the matter back to Centrelink to recalculate the amount of the debt in accordance with the findings of the Tribunal.
…(sgd) K Hogan…...........…
Ms K Hogan, MemberCATCHWORDS
Social Security - Overpayment of Age Pension - Debt owed to the Commonwealth – Whether Debt Arose Solely due to an Administrative Error of the Commonwealth – Whether part of the Debt Attributable to an Administrative Error may be Written off - Whether Special Circumstances Exist - Whether Debt could be Waived or Written off
LEGISLATION
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Dranichnikov v Centrelink [2003] FCAFC 133
Jordan v Secretary, Department of Family and Community Services (2004) 86 ALD 256
Riddell v Secretary, Department of Social Security (1993) 42 FCR 443
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Secretary, Department of Social Security v Hulls (1991) 13 AAR 414Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126
REASONS FOR DECISION
Ms K Hogan, Member
21 October 2013
Mr. Machielse has been in receipt of age pension since 28 July 2008.
On 23 May 2012, a Centrelink officer decided to raise and recover a debt of $18,485.46 in respect of alleged overpaid age pension during the period 11 March 2010 to 2 May 2012 (Relevant Period) (Original Decision).
The Original Decision was affirmed on internal review by an Authorised Review Officer (ARO) and again affirmed by the Social Security Appeals Tribunal (SSAT).
Mr Machielse applied for review to this Tribunal on 30 October 2012.
ISSUES
The issues for consideration by this Tribunal are:
(a)whether Mr Machielse was overpaid age pension and if so, whether recovery of the debt, or any part of the debt, should be waived or written off; and
(b)whether, when considering whether a debt or any part thereof was solely attributable to an error made by the Commonwealth for the purposes of s 1237A of the Social Security Act 1991 (Cth) (the Act), the Tribunal may have regard to whether the extent of a debt is attributable solely to an error of the Commonwealth; and
(c)whether, when considering whether special circumstances exist for the purpose of s 1237AAD of the Act, the Tribunal is confined to consideration of circumstances at the time the decision is to be made, or whether the Tribunal may have regard to past circumstances of the applicant.
EVIDENCE
The Tribunal was provided with a number of documents including:
(a)the section 37 documents; and
(b)written submissions from Mr Machielse and the respondent, prior to and subsequent to the hearing.
The Tribunal heard oral submissions on behalf of the parties.
THE LEGISLATIVE FRAMEWORK
The legislation relevant to this decision is contained in the Act and the Social Security Administration Act 1999 (the Administration Act).
Section 55 of the Act provides that the rate of age pension is calculated in accordance with the rate calculator contained in s 1064 of the Act. In general terms, a person's and their partner’s income(s) will reduce the rate of disability support pension and age pension payable to a person. Income is defined in s 8 of the Act and is taken to mean, among other things, gross income from employment (s 1072 of the Act).
Section 66A(1) of the Administration Act prescribes a general requirement that a claimant or recipient of a social security payment notify Centrelink within 14 days of any event or change in circumstances that may affect the payment.
Section 68 of the Administration Act provides that a person can be given a notice requiring them to provide information about an event or change in their circumstances that might affect the payment of a social security payment.
Subsection 1223(1) of the Act states:
(1) Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
Subsection 1236(1A) of the Act provides that Centrelink may decide to write-off recovery of a debt for a stated period or otherwise, 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)it is not cost effective for the Commonwealth to take action to recover the debt.
Section 1237A of the Act deals with waiver of debt arising from an error. Subsection 1237A(1) of the Act provides that subject to ss 1237A(1A) Centrelink 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.
Section 1237AAD of the Act provides that Centrelink may waive the right to recover all or part of a debt if 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, the Administration 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.
APPLICANT
Mr Machielse contended that the debt arose because of errors made by Centrelink and had the overpayment been detected sooner the debt would be for a lesser amount.
Mr Machielse contended that Centrelink should have taken steps to ascertain the correct amount of Mrs Machielse’s income.
The letter dated 26 April 2010, that he did not have to report every 2 weeks, indicated to him that his pension affairs were conducted appropriately by him.
He had confidence that the Centrelink computer systems were sophisticated enough to pay him correctly.
Mr Machielse's pension payments increased in March 2010 after he travelled to the Netherlands to attend the 100th birthday of his step-mother. Shortly after his return to Australia she fell and broke her hip and he rushed back to attend to her. Whilst he expected to return to Australia in May 2010 the ill-health of his step-mother delayed his return until 25 June 2010. During his time out of the country he had no suspicion that his payments had changed. He did not access his bank accounts and did not use them as he paid his bills with a credit card.
When he returned to Australia in June 2010 he developed deep vein thrombosis.
Though unwell, he continued to be in contact with his step-mother by phone and attended to her affairs until her passing in January 2011.
Correspondence from Centrelink went to his post office box which he did not check much during 2010 and 2011 as he returned to the Netherlands on several occasions attending to his step-mother’s needs and to matters subsequent to her passing.
There was no correspondence from Centrelink to alert him to any discrepancy. Fortnightly pension payments though recorded on his bank statements were not questioned by him.
Following a request in April 2011 from Centrelink to provide income details, he forwarded a letter with his wife’s tax returns, prepared by his accountant, to the Centrelink office in Spearwood. The letter was returned as he had not addressed it to a particular street or post office address. The letter was then forwarded (on 21 April 2011) to Canberra.
He did not hear from Centrelink until he was notified in May 2012 that he had a debt in excess of $18,000.00.
Mr Machielse was advised of the debt and though he has disputed his liability to pay he has entered into a repayment schedule.
Mr Machielse attributed the error to the fact that the people in charge of his file at Centrelink were simply either incompetent, sloppy or could not "care less".
RESPONDENT
The respondent contended that the applicant had a general requirement, and by reason of numerous notices [for example see T3:p9; T4:p12; T11:p38; T20:p60] an explicit requirement, to provide Centrelink with information that might affect the payment to him of a social security benefit and that he had failed to so do.
The respondent contended:
(a)that Mrs Machielse’s income was not taken into account when assessing the applicant's rate of age pension in the relevant period;
(b)that the debt was not caused by the administrative error of the Commonwealth and recovery could not be waived under the terms of s 1237A of the Act;
(c)that the applicant had actual knowledge of the requirement to notify Centrelink of changes to his circumstances and knowingly failed to do so;
(d)the applicant had no circumstance that might be considered unusual or uncommon so as to be considered special in the context of other social security recipients.
The respondent submitted that there is no scope under s 1237A to consider whether the extent of a debt might be solely attributable to the Commonwealth, as opposed to whether any part of the debt itself is attributable solely to an error of the Commonwealth.
The respondent was unable to identify any cases in which a Court had expressly considered whether the extent of a debt or part thereof might be attributable solely to an error of the Commonwealth. However, both the consideration by the courts of the application of s 1237A and a consideration of the statutory construction of the section tell against the section being applied to require the respondent to waive the right to recover the extent of a debt that is attributable to an error of the Commonwealth, where the error of the Commonwealth is not the sole cause of the debt.
The respondent noted the following application of s 1237A in cases that have come before the courts about whether a debt is attributable solely to an administrative error of the Commonwealth:
In Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126, the applicant received a lump sum compensation payment from an insurer in relation to a motor vehicle accident. Centrelink had incorrectly notified the insurer that there was no social security charge over the lump sum payment, which was disbursed by the insurer to the applicant, who spent the money. A majority of the Full Court of the Federal Court (RD Nicholson and Selway JJ, Heerey J dissenting) held that the error of Centrelink in providing the notice was not the sole cause of the debt, as there were also policy considerations.
The respondent relied upon the extract from Sekhon, cited at paragraph 28 of the respondent's Statement of Facts, Issues and Contentions dated 14 March 2013, in relation to the meaning of the phrase "solely attributable to".
In Jordan v Secretary, Department of Family and Community Services (2004) 86 ALD 256, the applicant had a debt raised after he completed and submitted a number of applications for newstart allowance forms sent by Centrelink when he was already receiving New Enterprise Initiative Scheme (NEIS) payments. He received newstart allowance in circumstances in which it was not permissible for him to receive both payments. The Court accepted the Tribunal's finding that by lodging the newstart allowance application forms, which did not disclose the NEIS payments, the applicant contributed to the overpayment. The Court noted at [21] that "when one has regard to the 'attribution' question posed by s 1237A(1), all the Tribunal needed to find was that the applicant bore a responsibility for the overpayment."
In the present case, at the start of the debt period, the applicant's wife's income was recorded by Centrelink as $1,208 per fortnight, but she was in fact receiving a higher income than this, a fact which had led to an earlier debt being raised. Centrelink removed the amount of $1,208 per fortnight that it had recorded, and required the applicant to report income fortnightly. But on 26 April 2010, the requirement to report fortnightly was removed from the system, and no amount was recorded as an ongoing amount of the applicant's wife's income. However, the applicant was issued a number of s 68(2) notices throughout the debt period, requiring him to advise Centrelink of any change in his or his wife's income.
The decision to remove the previously recorded amount of earnings for the applicant's wife could be considered an error, although the respondent contended that it was not an error, as it was a necessary step to enable fortnightly reporting to commence. The decision to take the applicant off fortnightly reporting without reinstating an amount for the applicant's wife's earnings could be considered an error but this was not conceded by the respondent.
The respondent submitted that it was not open to the Tribunal to find that a part of the debt was attributable solely to an administrative error made by the Commonwealth and that, if the overpayment was received in good faith, the Commonwealth is required to waive the debt to the extent that it is attributable to the alleged error. In other words, it is not open to the Tribunal to find that the applicant should only have to repay that part of the debt that arose from overpayment of the applicant's age pension based on the difference between his wife's actual fortnightly income and her previously recorded income of $1,208 per fortnight.
The respondent submitted that s 1237A should to be read in such a way that references the part of the debt being attributable solely to an error of the Commonwealth, within a time dimension. In the present case in the ARO decision, set out at T39, p168, the ARO notes that for the first payment period the subject of the debt period, the applicant's wife's earnings exceeded the $1,208 per fortnight that Centrelink had previously recorded. Because of the s 68(2) notices that had been issued to the applicant, the applicant had an obligation to notify Centrelink within 14 days of any changes to his income or his wife's income. The applicant did not do this and, therefore, the debt cannot be said to be solely attributable to the Commonwealth. The respondent argued that s1237A, therefore, has no application.
To find otherwise would be to give s 1237A a construction which does not seem
appropriate having regard to the words of that section. If the Tribunal were to find that it
can have regard to the extent of the debt that is solely attributable to an error of the Commonwealth, it would render the word "solely" in s 1237A obsolete. Such a
construction would permit a consideration in each case of the extent to which the debt
is attributable to the Commonwealth and the extent to which a debt is attributable to
other factors and would allow an apportionment of responsibility of the debt. This wasclearly not Parliament's intention when enacting s 1237A in the form that it has.
A decision-maker making decisions under the Act is required to have regard to any policy that is relevant. The policy in relation to waiver for administrative error debt is set out in part 6.7.3.30 of the Guide to Social Security Law.
The respondent noted that the applicant criticised Centrelink for the delay in realising that the applicant had been overpaid and subsequently raising a debt against him. The applicant stated that when he was required to provide specific information to Centrelink he did so. For example by letter dated 7 April 2011 (T23, p65) he provided documentation of his financial affairs for the financial year ended 30 June 2010. This included information about his wife's income. However, the respondent submitted that the provision of information for a previous financial year did not provide information that could have avoided further debt accruing from that point forward. This is because his wife's income changed on a fortnightly or weekly basis and providing information for a previous financial year did not prevent the applicant being overpaid on an ongoing basis.
Therefore, the respondent contended that there was no basis on which the Tribunal could find that the debt or any part thereof was attributable solely to an administrative error of the Commonwealth and, accordingly, it was not open to the Tribunal to waive any part of the debt pursuant to s 1237A.
Before any consideration, pursuant to s 1237AAD of the Act, of special circumstances, the Tribunal should consider whether the debt of the applicant arose wholly or partly from the debtor knowingly making a false statement or false misrepresentation or knowingly failing to comply with a provision of the social security legislation. The respondent relied on its Statement of Facts, Issues and Contentions at paragraphs 34 to 39 and submitted that it was not necessary for the Tribunal to consider special circumstances.
In relation to the question of whether it is open to the Tribunal to take into account past as well as present circumstances when considering the application of s 1237AAD, the respondent relied upon its Statement of Facts, Issues and Contentions dated 14 March 2013 and the cases cited therein.
The respondent submitted that the discretion conferred on the decision-maker pursuant to s 1237AAD is very broad. The decision-maker may have regard to special circumstances that existed at the time the debt was created, during the debt period and all current circumstances. It was further submitted that the Tribunal has the option of waiving part of the debt (as opposed to waiving the whole debt) if it considers it appropriate to do so.
The broad discretion conferred by s 1237AAD is reinforced by the case law. In addition to the cases cited in paragraph 40 of its Statement of Facts, Issues and Contentions, the respondent referred to the following cases:
·In Secretary,Department of Social Security v Hales (1998) 82 FCR 154 the Federal Court considered special circumstances and said, at 162;
The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. ... But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
·In Secretary, Department of Social Security v Hulls (1991) 13 AAR 414 the Federal Court held that in determining whether special circumstances exist, it is not possible to set out a complete list of relevant factors to be taken into account and rather each case needs to be considered on its own merits.
·In Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 the Full Federal Court at 450, held:
Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardships, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make the decision one way or the other.
The respondent submitted that it is open to the Tribunal to have regard to a number of factors in determining whether special circumstances exist. These factors include but are not limited to the following:
(a)the applicant's financial circumstances, although financial hardship alone is not a basis for waiving the debt under the special circumstances provision;
(b)that the applicant spent considerable time in Holland during the early stages of the debt period to visit his mother who was ill and then responding to issues after she passed away;
(c)that, to date, the applicant has had the benefit of social security payments to which he is not entitled and that there would be no injustice in requiring the applicant to repay the money of which he has had the benefit without entitlement; and
(d)if the Tribunal finds that Centrelink has made errors in this case, it is open to the Tribunal to consider any errors under the special circumstances provision.
The respondent submitted that taking into account all of the above considerations there is no basis in this case to find that special circumstances exist that warrant the waiver of the debt or any part thereof pursuant to s 1237AAD.
CONSIDERATION OF THE ISSUES
The following facts were not in dispute and the Tribunal finds, in the relevant period:
(a)the applicant was in receipt of age pension;
(b)the applicant did not advise Centrelink of Mrs Machielse’s earnings;
(c)Centrelink did not take into account Mrs Machielse’s income when calculating the applicant’s rate of age pension.
There is no discretion in s 1064 of the Act to permit a person’s partner’s income to be disregarded when calculating their rate of payment.
The Tribunal finds that, as Mrs Machielse’s income from employment was not taken into account when calculating the applicant’s rate of age pension in the relevant period, the applicant has been overpaid age pension.
With regard to Mrs Machielse’s employment income Centrelink determined that the applicant had been overpaid pension of $18,485.46 in respect of overpaid age pension during the period 11 March 2010 to 2 May 2012. The Tribunal is satisfied that the applicant therefore had debts due to the Commonwealth totalling $18,485.46.
Based on the evidence the Tribunal found that the applicant has the capacity to repay his debt and therefore it was not appropriate to write off the recovery of the applicant’s debt under s 1236 of the Act.
The Tribunal is satisfied that the applicant’s debts arose because he failed to advise Centrelink of Mrs Machielse’s income as required, and not as a result of "sole administrative error". Whilst the Tribunal finds that Centrelink also contributed to the error, the Tribunal is bound to find that the recovery of the applicant’s debt could not be waived in accordance with s 1237A of the Act.
The Tribunal also considered whether it was appropriate to waive the debt under s 1237AAD of the Act which allows for a debt to be waived if there are special circumstances (Dranichnikov v Centrelink [2003] FCAFC 133) and other criteria are met.
The Tribunal appreciates the applicant’s arguments and particularly his circumstances in the period between 9 March 2010 and 25 June 2010. The Tribunal accepts the evidence of the applicant and finds that at the time the applicant received the increased rate of payment he was overseas and was neither aware of the increase nor any correspondence from Centrelink which would have given him actual or constructive knowledge of the requirement to notify them specifically of his wife's income. The Tribunal accepts that he relied upon the letter of 26 April 2010 that his affairs in relation to Centrelink were in order.
The Tribunal accepts that in the period between 9 March 2010 and 25 June 2010 the applicant was not aware of the level of his payments or of correspondence from Centrelink.
The Tribunal finds that in the period 9 March 2010 and 25 June 2010 the applicant did not knowingly fail to comply with a provision of the Act and that in the particular circumstances of this case it would be appropriate to waive the applicant's debts in the period between 11 March 2010 and 25 June 2010.
Whilst the Tribunal accepts the evidence of the applicant that he was not well for an extended period thereafter, the Tribunal also accepts that he was able to attend to his step-mother's affairs. Therefore the Tribunal is unable to find that the applicant was not in a position to have dealt with the various notices and correspondence issued to him by Centrelink after 25 June 2010. Consequently, the Tribunal is unable to find that the applicant did not knowingly fail to comply with a provision of the Act in the period following 25 June 2010 and therefore must and does find that the recovery of the applicant’s further debts could not be waived under s 1237AAD of the Act.
The Tribunal finds that the applicant has had the benefit of social security payments to which he was not entitled and that there is no injustice in requiring him to repay the money of which he has had the benefit without entitlement.
DECISION
The Tribunal varies the decision under review and refers the matter back to Centrelink to recalculate the amount of the debt in accordance with the findings of the Tribunal.
I certify that the preceding 62 (sixty-two) paragraphs are a true copy of the reasons for the decision herein of Ms K Hogan, Member.
...(Sgd) T Freeman.............
Associate
Dated 21 October 2013
Date of hearing 7 June 2013 Applicant In Person
Representative for the Respondent Ms Ladhams Solicitor for the respondent Australian Government Solicitor
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