Harrison and Secretary, Department of Education, Employment and Workplace Relations

[2008] AATA 978

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 978

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/2627

GENERAL ADMINISTRATIVE DIVISION		)
Re		SUE HARRISON

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr S E Frost, Member

Date5 November 2008 

PlaceSydney

Decision The decision of the Social Security Appeals Tribunal dated 15 May 2008 is varied. In accordance with s 1237A of the Social Security Act 1991 the Tribunal waives the Commonwealth’s right to recover any part of the Applicant’s debt that exceeds $955.58.

..................[Sgd].......................

Mr S E Frost
  Member

CATCHWORDS

SOCIAL SECURITY – newstart allowance – overpayment – Centrelink error the sole cause of part of the overpayment – waiver not possible in relation to the remaining part where Applicant’s failure to provide information contributed to the overpayment – whether Applicant received in good faith the part of the overpayment caused solely by Centrelink error – partial waiver – decision under review varied

Social Security Act 1991 – ss 1223, 1237A, 1237AAD

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186

REASONS FOR DECISION

5 November 2008 Mr S E Frost, Member        

Introduction

1.      Sue Harrison had never sought welfare assistance until she applied for newstart allowance in 2007.

2.      Shortly after her claim was granted, she obtained a new job.  She received three payments of newstart allowance, which the Secretary says she was not entitled to.  The Secretary seeks recovery of those payments.

Issues

3.      The issues are, first, whether Ms Harrison owes a debt to the Commonwealth; and second, if she does, whether there are any grounds not to recover the debt.

Does Ms Harrison owe a debt?

4. Ms Harrison will owe a debt to the Commonwealth if she has received a social security payment and she was not entitled to it for any reason: s 1223 of the Social Security Act 1991 (“the Act”).

5.      Ms Harrison concedes that she has a debt, and as I understand her position, she is prepared to accept that the amount claimed to have been overpaid ($1,060.16) is correct.  Her contention, however, is that the payments that she received were caused by Centrelink error, and, therefore, she should not have to repay them.  That leads to consideration of the second issue.

Are there any grounds not to recover the debt?

6. Whether the debt should be recovered turns on s 1237A and s 1237AAD of the Act. However, since one of the essential elements of s 1237AAD is “special circumstances” (of which Ms Harrison claims none), the matter will be determined by considering s 1237A(1) of the Act:

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).

7.      In the circumstances of this case, subsection (1A) has no impact.

The background to the payments

8.      Ms Harrison made a claim for newstart allowance on 26 September 2007.  Centrelink notified her that she would need to lodge certain forms and documents by 10 October 2007.  She attended an interview on 3 October 2007 and provided most of the information Centrelink required, although Centrelink was not fully satisfied with the documentation until some weeks later, towards the end of October. 

9.      While these preliminaries were being sorted out, Centrelink sent Ms Harrison letters dated 2 October 2007 and 17 October 2007.  Both letters contained a statement requiring her to notify Centrelink within 14 days if (among other things) she started or stopped working.

10.     She soon found herself a new job.  It is not clear when she was offered this position, but her first day at work was 25 October.  She phoned to notify Centrelink on 30 October 2007.  She says that the Centrelink record of the conversation is correct as far as it goes, but is incomplete.  The record of conversation says:

Customer contacted CC HOBART on 30 OCT 2007 regarding General Enquiry, Requesting Information or Form from Customer, for Newstart Allowance.  Information was obtained via Phone Call.

…

SU19 Continued lodgement encouraged

Advised CUS they could continue to lodge SU19 for six continuous fortnights and maintain other benefits despite nil rate before auto cancellation occurs.

Reporting obligations have been advised: YES

cus NSA granted 21/10/07, cus advised has started full-time employment, encouraged cus to lodge form due 26/10/07 with employment details so it can be processed as she maybe entitled to a payment

11.     The form “SU19” is an “Application for Payment Form” which newstart recipients lodge on a regular basis to ensure ongoing payment of the allowance.

12.     One important piece of information that Ms Harrison says is missing from the record of conversation is her own statement to the enquiry officer that because she had a new job she was no longer entitled to newstart payments.  Nevertheless, the officer “encouraged” Ms Harrison to continue to lodge the SU19 form, and noted that “she maybe (sic) entitled to a payment”.

13.     On 31 October 2007, she handed in, at the Bondi Junction Centrelink office, a form SU19 (T23) which has printed on it “DUE DATE: Monday 22 October 2007”.  It asked her whether she had done any work in the period 26 September to 22 October.  She checked the box “No”.  This is the form that seems to have created all the problems.  The Secretary contends that the employment period that should have been queried is the period from 21 October to 26 October.  (It was not explained to me how that alternative period could have been specified on a form that was due to be lodged by 22 October, or how a customer could accurately answer the alternative question by that due date.)  In any event, the form did not ask her about that alternative period.  It asked her about the period 26 September to 22 October.  That was the period that she focused on, and it was in relation to that period that she gave her answer.  Her answer is quite clearly correct.

14.     On the same date that she lodged that form, 31 October 2007, Centrelink sent Ms Harrison a letter indicating that a newstart payment, covering the period 21 to 26 October 2007 and for the amount of $205.25, was due to her on 1 November 2007.  The Secretary accepts that Ms Harrison would not have received that letter until after the payment of $205.25 was deposited to her bank account.  The letter also said that she would receive subsequent “regular” fortnightly payments of $477.79 from 12 November 2007.  All of these calculations of her entitlements were based on a stated “Total Fortnightly Income” figure of $176.81. 

15.     It is the first two “regular” amounts of $477.79 each, which were paid on 12 November and 26 November 2007, and part of the first amount of $205.25 which was paid on 1 November 2007, that make up the claimed overpayment of $1,060.16.

16.     Critically, the letter dated 31 October 2007 stated:

If you have income/have a change in circumstance in the period:	Return your Application for Payment form on this date
27 October 2007       to   09 November 2007	09 November 2007
10 November 2007    to    23 November 2007	23 November 2007
24 November 2007    to    07 December 2007	07 December 2007

17.     Ms Harrison did not provide the Application for Payment forms to Centrelink in relation to the periods 27 October to 9 November and 10 November to 23 November.  Therefore, the payments on 12 November and 26 November were based on the incorrect income figure of $176.81 per fortnight.

Is any proportion of the debt “attributable solely to an administrative error made by the Commonwealth”?

18. The proportion of the debt that arose from the payment of the two “regular” amounts of $477.79 is not attributable solely to an administrative error made by the Commonwealth. This is because Ms Harrison’s failure to provide accurate income information to Centrelink contributed to the payment of the allowance at that level. That proportion, therefore, cannot be waived under s 1237A of the Act.

19.     The remaining proportion, however, is attributable solely to the Centrelink error of asking for Ms Harrison’s employment details for the wrong period. 

20.     That proportion must be waived if she received the payment of $205.25 on 1 November 2007 in good faith.

Did Ms Harrison receive the payment of $205.25 in good faith? 

21.     As Finn J emphasised in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186, the question, in what is now s 1237A of the Act, is not whether Ms Harrison acted in good faith, but whether she received the payment in good faith.  His Honour said at 189 that the waiver provision is concerned with:

…the state of mind of a person concerning his or her receipt of the payment: 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.

22.     When Ms Harrison placed the phone call to Centrelink on 30 October 2007, her understanding was that she was no longer entitled to newstart because she was now in full-time employment.  However, the officer encouraged her to continue to lodge forms because “she maybe (sic) entitled to a payment”: see [12] above.  Whether or not the officer was right is not to the point.  Ms Harrison was entitled to assume that the information the officer was giving her was correct – namely, that at the very least, she may have been entitled to a payment. 

23.     The entitlement, initially only a possibility, was confirmed in the letter dated 31 October 2007 – which Ms Harrison would have received a day or two after the amount was deposited into her bank account on 1 November 2007.  Events ultimately turned out as she was entitled to expect they would – first, the officer had told her that she may be entitled to a payment; second, she was asked about her employment status during a period when she was not working; third, an amount was deposited into her bank account; and, fourth, the letter dated 31 October 2007 explained what the amount represented. 

24.     On the basis of the rule in Prince, Ms Harrison received the amount of $205.25 in good faith. It follows that any part of the $205.25 that is included in the debt of $1,060.16 must be waived under s 1237A of the Act.

Decision

25. The decision of the Social Security Appeals Tribunal dated 15 May 2008 is varied. In accordance with s 1237A of the Act the Tribunal waives the Commonwealth’s right to recover any part of Ms Harrison’s debt that exceeds $955.58.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S E Frost, Member

Signed:          ....................[Sgd]......................
  Ms Radhika Prasad, Associate

Date of Hearing  16 October 2008
Date of Decision  5 November 2008
Appearance for the Applicant   Self-represented
Solicitor for the Respondent     Mr Anthony Cox, Centrelink Legal Services