Henley and Secretary, Department of Employment and Workplace Relations

[2006] AATA 115

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 115

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2005/189

GENERAL ADMINISTRATIVE DIVISION		)
Re		ATHLEY BETTY HENLEY

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr J G Short (Member)

Date9 February 2006

PlaceAdelaide

Decision The Tribunal sets aside the decision under review and in substitution therefore decides that pursuant to s 1237A(1) of the Social Security Act 1991, recovery of that portion of the debt which accrued between 3 December 2003 and 5 January 2005 be waived.

..............................................

J G SHORT
  (Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – overpayment of Parenting Payment – debt due to the Commonwealth – waiver – whether debt solely due to  administrative error – whether special circumstances exist – decision set aside

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

Re Klaverstyn and Secretary, Department of Family and Community Services [2003] AATA 71
Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212
Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113
Re Backhouse and Secretary, Department of Family and Community Services [2000] AATA 139

REASONS FOR DECISION

9 February 2006   Mr J G Short (Member)

background

1.      Ms Henley lodged a claim for Widow Allowance on 7 August 2002 and on that same day provided a Module R statement of her real estate holdings.  Ms Henley’s marriage broke down and pursuant to a property settlement, she became the sole registered proprietor of a property located at Lot 74 Slade Road, Port Augusta (the Slade Road property).  In early November 2002 Ms Henley rented that property to a Commonwealth Department for $370 a fortnight.  She then purchased another property at 19 Finch Close, Andrews Farm in Adelaide (the Finch Close property) which became her principal place of residence.

2.      On 29 November 2002 Ms Henley lodged a claim for Parenting Payment Single.  The information provided in that document, along with previously provided information, was not appropriately used by Centrelink in order to calculate Ms Henley’s entitlement to Parenting Payment.  The respondent (the Department) contends that administrative error resulted in the value of the Slade Road property being recorded at its site value only of $23,500.00.  It was also wrongly considered that the applicant only owned one half of the property.  As a consequence of Centrelink’s administrative error, Ms Henley began to receive Parenting Payment from 29 November 2002.

3. It is common ground that Ms Henley did not have an entitlement to Parenting Payment and that she was consequently overpaid $24,958.60 between 10 December 2002 and 5 January 2005. Noting the common ground between the parties and based on the evidence before me, I find that Ms Henley was overpaid $24,958.60 in Parenting Payment between 10 December 2002 and 5 January 2005. I further find that this sum is the debt recoverable by the Commonwealth pursuant to s 1223(1) of the Social Security Act 1991 (the Act), commonly known as the no fault debt provision.

4.      On 30 March 2005 an Authorised Review Officer affirmed the decision to raise the debt, but made a decision to waive recovery of that portion of the debt which accrued during the period 10 December 2002 to 2 December 2003 on the basis that this portion of the debt had arisen solely as a result of administrative error and that Ms Henley had acted in good faith in receiving the money.  On 14 June 2005 the decision, as varied by the Authorised Review Officer, was affirmed by the Social Security Appeals Tribunal (SSAT).  On 7 July 2005 Ms Henley lodged an appeal to this Tribunal.

issues

5.      The issues for the Tribunal in this case are:

(a)whether Ms Henley was overpaid Parenting Payment in the sum of $24, 958.60; and

(b)if yes, is the abovementioned debt recoverable by the Commonwealth; and

(c)if yes, are there any grounds to waive or write-off recovery of all or part of the debt?

ms henley’s case

6.      Ms Henley said that in a Parenting Payment claim form dated 29 November 2002 (T12/49-51) she advised the Department of the fact that she owned real estate other than her residence and that she received rental income from this property.  It was submitted that as the value of Ms Henley’s Slade Road property was sufficient to preclude payment of Parenting Payment, the debt which accrued from the payment of Parenting Payment in these circumstances, was solely a result of administrative error.

7.      Ms Henley further suggested that a notice she received on 3 December 2002 (T14) did not alert her to the fact that Centrelink had based its assessment of her entitlement to Parenting Payment on a mistaken understanding of the value of her rental property.  Her counsel said that this letter contained a bold heading “WHAT YOU MUST TELL US” and went on to indicate that a recipient must provide advice within 14 days “if any of these things happen, or may happen”.  Ms Henley’s counsel suggested that the purpose of this letter was to require a recipient to advise of any changes in circumstances.  He said that none of Ms Henley’s circumstances had changed since she last provided advice to Centrelink.  Ms Henley’s counsel maintained this submission in respect of all recorded examples of instances which required notification including one which stated “if your assets other than financial investments are more than $108,431.00”.  Ms Henley’s contention therefore was that as she had provided advice in respect of the ownership of the property on 29 November 2002, just 4 to 6 days before the receipt of the letter dated 3 December 2002, she considered that the letter may have been issued prior to action being taken in respect of her earlier advice or, in the alternative, this letter did not require any action of Ms Henley as it only required notification of any changes which had occurred (emphasis mine).

8.      In respect of a letter sent to Ms Henley on 3 December 2003 stating that Centrelink was basing her entitlement to Parenting Payment on an understanding that her gross income was zero and that the value of the Slade Road property was $23,500.00, and that she owned 50 percent of that property, it was submitted that this letter was different to the letter received on 3 December 2002 in that the 2003 letter was a review of Ms Henley’s circumstances and consequently required action of Ms Henley if the recorded information was incorrect.  Ms Henley said however that she attended an office of Centrelink on 3 December 2003 and again provided accurate advice concerning the value of, and income received from, the Slade Road property.  Ms Henley’s counsel pointed to a Customer Record Access Monitor (CRAM) Report dated 3 December 2003 (Exhibit R3).  This report indicated that a Mr Tony Gurlack interviewed Ms Henley at about 10:30 on 3 December 2003, and that within 20 seconds of logging on to Ms Henley’s records on his computer he accessed the real estate business summary screen between 10:28:11 and 10:28:18 seconds.  Ms Henley said that this was because she had pointed out to Mr Gurlack that Centrelink’s record of the value of her interest in and income from, the Slade Road property was wrong.  She said that she has no knowledge of the information Centrelink uses in order to assess her Parenting Payment entitlement and that after she advised Mr Gurlack of the correct information he checked something on his computer and said words to the effect that “all’s okay”.  She said that she consequently considered that Centrelink were aware of her financial position and paying her correct entitlement.

9.      Ms Henley said that she next received a letter dated 9 February 2004.  Her counsel again asserted that this was a letter requiring notification of changes only.  This letter advised an understanding of gross annual income of $626.72.  It also stated that advice was required if the value of assets exceeded $124,681.  Again, Ms Henley’s counsel suggested that this letter only required notification of any changes to the value of Ms Henley’s assets and income and as no changes had occurred since Ms Henley last provided Centrelink with accurate advice, Ms Henley was not required to take any action in respect of this document.  Counsel suggested that even if this document did require action of Ms Henley, she took appropriate action by advising Centrelink at an interview conducted on 25 February 2004 of the correct value of, and income received from, the Slade Road property.  Ms Henley’s counsel referred to another CRAM Report (Exhibit R2).  This document indicates that Ms Henley had an interview with Mr Gurlack on 25 February 2004 at about 2:45 pm.  The CRAM report indicates that within 30 seconds of opening his computer screen, Mr Gurlack accessed the real estate business summary screen for 11 seconds between 14:45:36 and 14:45:47.  Ms Henley’s evidence is that Mr Gurlack did this in response to her advice to him that the Slade Rod property was worth more than the $124,681 recorded in Centrelink’s letter.  She said that after Mr Gurlack consulted his computer he said words to the effect that everything was alright.  Ms Henley said that she understood from this that the value of, and the income she received from, the Slade Road property was correctly understood and used by Centrelink.

10.     Ms Henley’s counsel summarised his case by saying that Ms Henley had provided accurate information at the time she claimed Parenting Payment Single and that whenever she was required to provide further advice to Centrelink in respect of her assets and income, she did so.

11.     Ms Henley’s counsel submitted that in these circumstances, although a debt existed in the sum of $24,958.60, recovery of that debt ought to be waived as the monies were paid solely as a result of administrative error and were received in good faith.  In the alternative, Mr Pickhaver suggested that it would be appropriate to waive recovery of the debt in the light of special circumstances which could be found in Centrelink’s contribution to the debt and Ms Henley’s modest financial position.

department’s case

12.     The Department’s case is that Ms Henley contributed to the overpayment through failing to appropriately respond to the letter dated 3 December 2002 or to other letters dated 3 December 2003 and 9 February 2004.

13.     The Department contended that although it could not explain why Mr Gurlack had accessed Ms Henley’s real estate business summary screen on 3 December 2003 and 25 February 2004, it is unlikely that such access was in response to advice from Ms Henley that the two last mentioned letters contained inaccurate information.  The Department suggested that if this were the case then it would be very unusual for the Department’s computer records not to have been amended and an overpayment raised.  The Department also contended that Ms Henley’s evidence in relation to her attendance at a Centrelink office on 3 December 2003 was unlikely to be accurate as the interview had been arranged in late November 2002, that is prior to receipt of the letter dated 3 December 2003, and consequently could not have been arranged in response to that letter.

14.     The Department said that special circumstances did not exist in this case as Ms Henley was in a reasonable financial position and in good health and that there were no special or unusual circumstances pertaining to herself or the genesis of the debt.

consideration of the evidence

15.     I note that the debt was not raised until November 2004 following further information provided by Ms Henley on 16 November 2004 (T19 and T20).  In these circumstances it is understandable if Ms Henley’s recollection of her actions in December 2002, December 2003 and February 2004 is in some respects unclear.  Ms Henley’s recollection of events was challenged, but her honesty was not.  I have noted that the CRAM records of 3 December 2003 and 26 February 2004 are consistent with the thrust of Ms Henley’s evidence in that one of the first documents opened by Mr Gurlack during these interviews with Ms Henley was her real estate business summary screen.  I have also noted that Ms Henley did provide an accurate Module R – Real Estate Details form (T6) in August 2002 in relation to a claim form for Widow Allowance.  She clearly did not attempt to hide her income or assets from Centrelink.  Although some doubt will remain, I find it likely that Ms Henley did advise Mr Gurlack of the errors contained in Centrelink letters dated 3 December 2003 and 9 February 2004 and that in respect of these letters Ms Henley did all that was reasonably required of her to appraise Centrelink of the correct position in relation to the Slade Road property.  I consider it probable that Ms Henley made an appointment to speak with Mr Gurlack on 3 December 2003 in relation to other matters but took the opportunity to correct the record in respect of her financial position.

16.     In respect of the letter dated 3 December 2002 however I find that Ms Henley should have advised Centrelink of the inaccuracies contained in that letter and particularly that she did hold property, other than her residential property, valued in excess of $108,431.  I make this finding notwithstanding Ms Henley’s suggestion that as she had provided accurate information on 29 November 2002 she considered that the information contained in the letter had either not caught up with that notification or that Centrelink were aware of the correct situation.

17.     I have considered the arguments raised by Mr Pickhaver in respect of the letters dated 3 December 2002 and 9 February 2004 to the effect that those letters did not require notification by Ms Henley of any circumstances other than changes to her financial situation.  I consider that those letters did require notification, amongst other things, if Ms Henley’s assets, other than her financial investments were more than $108,431.00 (the 3 December 2002 letter) and $124,681.00 (the 9 February 2004 letter).

findings

18.     I have considered all of the submissions and evidence provided at hearing and based upon that evidence make the following findings:

·Ms Henley was paid Parenting Payment in the sum of $24,958.60 between 10 December 2002 and 5 January 2005.

·On 29 November 2002 Ms Henley lodged a Parenting Payment claim form in which she advised that she received rental income from the Slade Road property.

·On 3 December 2002 Ms Henley received a letter from Centrelink requiring advice if she held assets other than financial investments, worth more than $108,431.00.  It also recorded annual income of $966.76.

·Ms Henley took no action in response to this letter.

·On 3 December 2003 Ms Henley discussed a letter, also bearing this date, with an officer of the Department (Mr Gurlack) during which she advised that the Slade Road property was indeed valued in excess of $23,500.00 and that she was receiving rental income from a Commonwealth Department at a rate of $370 a fortnight.

·On 9 February 2004 Centrelink sent a letter to Ms Henley advising, amongst other things, that she should advise Centrelink if the value of her assets, other than financial assets and her residential property, exceeded $124,681.00.  It also included reference to Ms Henley’s annual income at $626.72.

·Soon after receipt of the letter dated 9 February 2004 Ms Henley made an appointment to again speak with Mr Gurlack on 25 February 2004.  On this date Ms Henley again advised Mr Gurlack of the correct value of, and income received from, the Slade Road property.

·Notwithstanding the advice provided by Ms Henley on 29 November 2002, on 3 December 2003 and on 25 February 2004 (advice which suggested that Ms Henley may not be entitled to receive Parenting Payment), Centrelink continued to pay Ms Henley until 5 January 2005.

·Ms Henley receives between $250 and $300 gross each week from employment.  She continues to receive about $19,000 gross rental income from the Slade Road property and receives $125 a week in child support for one child.  The Slade Road property is valued at about $188,000 and is unencumbered.  Ms Henley owns property in Adelaide in which she resides with equity of about $30,000.

applicaton of the law

19. As mentioned, it was agreed between the parties that Ms Henley was overpaid an amount of $24,958.60 between 10 December 2002 and 5 January 2005 and that as she was not entitled to receive this money, this sum comprises a debt recoverable by the Commonwealth. I note the common ground between the parties and have considered s 1223(1) of the Act which reads as follows:

“(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.”

In the light of my findings, I have formed the view that Ms Henley does owe a debt to the Commonwealth in the sum of $24,958.60.

20. The applicant urged me to waive recovery of all of the debt pursuant to s 1237A(1) of the Act. This sub-section reads as follows:

“(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).”

21.     I consider that it was unreasonable for Ms Henley to assume that Centrelink was aware that the information contained in its letter of 3 December 2002 was inaccurate notwithstanding that Centrelink had been provided with accurate information a few days earlier. 

22.     I have had regard to Re Klaverstyn and Secretary, Department of Family and Community Services [2003] AATA 71 which approved a decision of Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212 where Deputy President Forgie made the following comment:

“This means that the Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error.  It makes no difference that those other errors or factors are minor. …

The question of whether there is an administrative error and whether the debt is solely attributable to that error are two different things.”

23.     Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113 is also to the effect that if a recipient contributed in some way to a debt then it could not be said that the debt arose solely as a result of administrative error. See also Re Backhouse and Secretary, Department of Family and Community Services [2000] AATA 139.

24.     I find that Ms Henley should have, but did not, correct the information contained in Centrelink’s letter dated 3 December 2002 and that she has contributed to that part of the debt which accrued from 3 December 2002 until 2 December 2003. 

25.     Having accepted the accuracy of the evidence provided by Ms Henley in relation to the information she gave Mr Gurlack on 3 December 2003 and 25 February 2004, I find that that portion of the debt which accrued between 3 December 2003 and 5 January 2005 accrued solely due to administrative error.  I further find that these monies were received by Ms Henley in good faith.  I accept that having provided the appropriate advice on 3 December 2003 and subsequently, Ms Henley held a reasonable belief that she was entitled to receive the income provided by Centrelink.  In these circumstances I must waive recovery of that portion of the debt which accrued during this last mentioned period.

26. I was also asked to consider waiver based on s 1237AAD of the Act, that is waiver in special circumstances. This section reads as follows:

“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.

Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt.”

27. In the circumstances of this case and in relation to that portion of the debt which I consider does not warrant waiver of recovery, that is the portion of the debt which accrued between 3 December 2002 and 2 December 2003, I am satisfied that s 1237AAD(a) of the Act is established, in that Ms Henley did not knowingly make a false statement or false representation or fail or omit to comply with a provision of the Act. However I am not satisfied that the circumstances of this case are such as to warrant the favourable exercise of the discretion contained in this sub-section. In reaching this view I have noted that Ms Henley is in a reasonable financial position and has received significant monies from the Commonwealth to which she was not entitled.

28. The Tribunal sets aside the decision under review and in substitution therefore decides that pursuant to s 1237A(1) of the Social Security Act 1991 the amount of the debt which accrued between 3 December 2003 and 5 January 2005 be waived.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short (Member)

Signed:         ............J Coulthard.........................................
  Associate

Date of Hearing  14 December 2005
Date of Decision  9 February 2006
Counsel for the Applicant         Mr M Pickhaver
Solicitor for the Applicant          Gladys Lewis & Co
Counsel for the Respondent     Mr C Goldsworthy
Solicitor for the Respondent     Centrelink Legal Services Branch