Hughan and Secretary, Department of Education, Employment and Workplace Relations and Anor
[2008] AATA 65
•24 January 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 65
ADMINISTRATIVE APPEALS TRIBUNAL ) No 2007/0865
) No 2007/0866
GENERAL ADMINISTRATIVE DIVISION ) Re
And
OWEN HUGHAN
MARGARET HUGHAN
Applicants
And
And
SECRETARY,
DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
SECRETARY,
DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondents
DECISION
Tribunal Regina Perton Date24 January 2008
PlaceMelbourne
Decision The Tribunal affirms that Mr and Mrs Hughan have debts to the Commonwealth but varies the amounts of the debts to $17,265.56 for Mr Hughan and $9,900.55 for Mrs Hughan. (sgd) Regina Perton
Member
SOCIAL SECURITY – age pension – partner allowance - overpayment ‑ debt to Commonwealth ‑ waiver – whether sole administrative error - whether special circumstances exist – decision affirmed
Social Security Act 1991 ss 8, 1223, 1236, 1237A, 1237AAD
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
REASONS FOR DECISION
24 January 2008 Regina Perton, Member 1. Margaret Hughan was paid age pension by Centrelink, which delivers services for the Department of Education, Employment and Workplace Relations (the Department), with effect from 8 August 2001. Centrelink paid her husband, Owen Hughan, partner allowance from the same date. On 18 July 2006, Centrelink determined that both Mr and Mrs Hughan were overpaid their social security benefits. Mr Hughan had been overpaid $19, 818.06 in partner allowance and Mrs Hughan $11,320.65 in age pension. Centrelink raised debts to the Commonwealth in those amounts.
2. Like others who receive a social security benefit for income support, Mr and Mrs Hughan are allowed a limited amount of income from other sources before it affects their rate of payment. Once earnings exceed the specified amount, the rates of the pensions are reduced. From time to time, Centrelink informs recipients that they are required to advise the agency within 14 days when there are specified changes of circumstances or if the figures they are using to calculate entitlements are wrong. These specified changes include increases or decreases in income.
3. As a retired teacher, Mr Hughan received superannuation payments during the period of the debt. When Mr and Mrs Hughan lodged the claims for their benefits, they declared that Mr Hughan was receiving superannuation. They believed they had been receiving the correct amount of pension payments. Mr and Mrs Hughan are of the view that the debt has arisen due to Centrelink’s administrative error rather than actions or inactions on their part. Centrelink disagrees.
4. Mr and Mrs Hughan sought internal review of the decisions to raise the debts by an authorised review officer (ARO) of Centrelink. The ARO affirmed the Centrelink delegate’s decisions. Mr and Mrs Hughan sought review of the ARO’s decision by the Social Security Appeals Tribunal (SSAT). On 13 February 2007, the SSAT also affirmed the decisions. On 16 March 2007, Mr and Mrs Hughan lodged applications for review of the SSAT decision with the Tribunal.
5. On 24 October 2007, Centrelink’s legal advocate informed the Hughans' solicitor that the amount of the debts had been recalculated. Mr Hughan’s debt was reduced to $17,265.56 and Mrs Hughan’s revised debt was $9,900.55.
6. The issues before the Tribunal are:
·Do Mr and Mrs Hughan owe debts to the Commonwealth?
·Should the debts be waived on the ground that they arose as the result of Centrelink’s administrative error?
·Should the debts be waived due to special circumstances?
Do Mr & Mrs Hughan have debts to the Commonwealth?
7. Mr and Mrs Hughan do not dispute that they were both paid a higher rate of pension than they were entitled to, given the income they were receiving from other sources. The primary source of the income, which Centrelink did not take into account, was Mr Hughan’s superannuation.
8. Centrelink originally calculated that between 8 August 2001 and 8 May 2006, Mr Hughan was overpaid by $19,818.56 and Mrs Hughan $11,310.75. The figures were recalculated in October 2007 with Mr Hughan’s debt being $17,265.56 and Mrs Hughan’s $9,900.55. There is no evidence before the Tribunal indicating that the latest calculations are flawed. Mr and Mrs Hughan do not believe that they should have to repay the full amounts owing, given that they had provided information to Centrelink about sources of income that Centrelink failed to take into account in the initial setting of their pension rates.
9. Section 1223(1) of the Social Security Act 1991 (the Act) allows the Commonwealth to raise a debt against a person if that person is paid a social security payment to which he or she is not entitled. The Tribunal is satisfied that Mr Hughan was overpaid partner allowance and Mrs Hughan was overpaid age pension for 4 years and 9 months.
10. Mr Hughan, who in the past coached basketball teams in the national competition, has voluntarily given of his time to coach local basketballers and to participate in administration of the local competition. The Hughans submitted that the $50.00 received fortnightly from Horsham Secondary College for coaching basketball should not be considered as income as it was to provide for his petrol and the like. Income is defined in s8(1) of the Act. The Tribunal is satisfied that it includes payments such as those received by Mr Hughan for expenses in relation to his basketball coaching.
11. The Tribunal is satisfied that Mr Hughan thereby accrued a debt of $17,265.56 and Mrs Hughan a debt of $9,900.55, which are debts owed to the Commonwealth.
Should the Debts be Waived due to Administrative Error?
12. Section 1237A(1) of the Act provides for waiver of a debt arising solely from administrative error:
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).
13. Mr and Mrs Hughan lodged their claims for partner allowance and age pension respectively with the assistance of a financial advisor, Wayne Simmons. Mr Simmons gave evidence that the handwriting on the form is his and that of his personal assistant. He said that he had lodged many pension claims for clients. He said that his personal assistant usually filled in the basic details and he then filled out the remaining responses with the client. Mr Simmons said that the usual practice was to put the completed claim forms in an envelope with the relevant ancillary documents. He added that Centrelink’s Horsham office was over the road from his company’s office and if documentation was defective, the Centrelink staff would generally let him know and the problem would quickly be rectified. He said it was his belief that Mr and Mrs Hughan’s claim forms were lodged together in the one envelope.
14. Mr Hughan’s response to the question Do you have money in superannuation or rollover funds on the partner allowance claim form was yes. A notation of as attached was handwritten near that answer. The boxes directly below that response which asked for details of the institution etc were not completed.
15. The copy of Mrs Hughan’s claim form for age pension provided to the Tribunal has a copy of a bank statement in Mr Hughan’s name attached. The statement end date is 17 July 2001 and it covers a three month period. It was stamped by Centrelink on 8 August 2001. The entries on the bank statement include fortnightly deposits by the VSB-SS Fund and quarterly deposits by MLC Life Limited. Other documents on Mrs Hughan’s Centrelink file, received by Centrelink on 8 August 2001, include a copy of Mrs Hughan’s bank statement, details of a payment made to Mr Hughan by Horsham College (where he coached basketball at the community’s request and was provided with token reimbursement) and a rate notice for their property.
16. As Mrs Hughan was still working part-time and had other financial assets, she completed a Mod iA Additional Income and Assets form which was lodged with her claim form. In response to the question 10 on that form, Do you (and/or your partner) receive income from income streams?, she answered no. There are several boxes below that question, setting out what that question covers, including Superannuation pension (defined benefit), Allocated pension and various other categories.
17. On 23 August 2001, Centrelink received a copy of Mr Hughan’s tax return for the financial year 1999/2000. It included group certificates from Horsham College Council, and pension payments from MLC Limited and Vic Super Board.
18. Further documents were provided to Centrelink on 31 August 2001 in relation to the claims, before Centrelink made its decision to grant their pensions. These were provided as part of Mrs Hughan’s file. They include a Norwich Union Superannuation Trust statement concerning a Superannuation Bond in Mr Hughan’s name covering the period 1 January 2001 to 30 June 2001 and an annual statement concerning a Citicorp Guaranteed Rollover Account for the financial year 1 July 2000 to 30 June 2001 in Mr Hughan’s name
19. On 12 September 2001, Centrelink wrote to Mrs Hughan informing her that she had been granted age pension as from 8 August 2001 and providing details of her payments. She was informed that the combined annual income for her and her husband on which the calculations were based was $16,548.30. In that letter and subsequent letters Centrelink sent to her and to her husband, they were informed of the need to tell the agency within 14 days, if their combined income increased above the level specified. Centrelink wrote to Mr Hughan on 13 September 2001 advising him of the grant of partner allowance stating that his payment was based on a fortnightly income of $101.37. The letter contained an instruction that he was required to inform Centrelink within 14 days if:
… you or your partner start to receive or stop receiving income, your or your partner’s income changes from the rate last notified or the income shown above is incorrect;
…
WHAT IS INCOME
Income includes personal earnings, sick or holiday pay, sick or accident insurance, compensation, bank interest … superannuation, retiring allowance or similar payments … and profit on withdrawal from some managed investments or rollover/superannuation funds in some situations.
…
20. Centrelink sent a number of letters to Mr and Mrs Hughan which contained the notice of the obligation to notify Centrelink within 14 days of changes in income or if the income cited at the beginning of the letter was wrong. The fortnightly combined income cited in a letter to Mr Hughan dated 21 February 2002 was $103.83; on 8 May 2002, it was $103.53; on 18 February 2003 it was $103.62; on 19 August 2003 it was $103.05. There were other letters to Mr Hughan on 11 November 2003, 29 July 2004, 24 March 2005, 18 August 2005 and 21 and 28 November 2005 which indicated a fortnightly income at around the same level.
21. Centrelink’s notices to Mrs Hughan concerning her payments included a gross annual combined income. On 21 February 2002 it was $15,724.86 and on 10 September 2002 it was $15,683.92. Centrelink sent several more letters to Mrs Hughan between 18 February 2003 and 28 November 2005.
22. At the SSAT hearing, a number of documents were tendered. They include part of a document completed in relation to Mr and Mrs Hughan’s son’s youth allowance claim for the 2000/2001 financial year. It reveals that both Mr and Mrs Hughan held health care cards; gave their Centrelink reference numbers and showed that Mr Hughan declared his pension from the Vic Super Board and Mrs Hughan her income. However, the youth allowance claim for their son was not administered in conjunction with that of his parents and Centrelink do not appear to have cross-checked the figures.
23. Mr Hughan was required to lodge six monthly entitlement reviews in relation to partner allowance and did so. Copies provided to the SSAT show that he notified Centrelink of changes to his wife’s employment status, changes of amounts in savings accounts, withdrawal of money from rollover investments. He told the Tribunal that he did not mention his superannuation payments as he believed that Centrelink already had the information so he did not need to advise of any changes. He said that he thought that Centrelink would have been provided with updates of the amounts he received and was not aware that he needed to provide information about CPI rises in his periodic superannuation payments.
24. It was not until Mr Hughan applied to transfer from partner allowance to age pension that Centrelink discovered the overpayments. Mr and Mrs Hughan submit that they provided information to Centrelink about Mr Hughan’s superannuation at the time of the claims and should not be penalised because Centrelink failed to read the form properly. There was no evidence of when or why Mr Hughan’s bank statements were put on Mrs Hughan’s file. The Hughans say that they relied on the expertise of their financial advisor when they signed the forms.
25. The Tribunal accepts that when Mr and Mrs Hughan signed the claim forms for their pensions, they believed that they had provided the necessary information to Centrelink about their combined income. Centrelink’s processing of their initial claims seems somewhat sloppy in not following up the comment in Mr Hughan’s claim form which referred to an attached document as providing details of his superannuation income. It would have been sensible to look at the documents that accompanied the claim and if it was not clear from those, to follow up that aspect, as was done with other matters relating to their claims. However, it did not happen. It is also understandable that they expected that the information provided about their income in relation to their son’s youth allowance had been cross-matched with the information they had provided to Centrelink.
26. Nonetheless, Centrelink sent out several letters to Mr and Mrs Hughan over the period during which the debt accumulated, setting out the income on which their pension payments were based. They were instructed, in the first letter each was sent in September 2001 and then in subsequent letters, of the requirement to let Centrelink know within 14 days if the income figures were incorrect or if there were changes in income. They did not advise Centrelink that the figures were wrong. Like many other social security recipients, they did not pay much attention to the small print and presumed that Centrelink knew better than they what their entitlements were. Notwithstanding errors on the part of Centrelink, there were also errors on the part of Mr and Mrs Hughan. Therefore, the Tribunal finds that the debts were not attributable solely to administrative error by the Commonwealth, and the debts cannot be waived on this ground.
Should the debts be written off?
27. Section 1236(1A) of the Act allows for a debt to be written off. This may occur where the debt is irrecoverable at law, or the debtor has no capacity to pay, or their whereabouts are unknown, or if it would not be cost-effective to take action to recover a small debt. However, none of the provisions apply to the circumstances in this matter.
Should the Debt be Waived due to Special Circumstances?
28. Section 1237AAD of the Act provides for waiver of the debt 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 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.
29. Centrelink accepted, and the Tribunal agrees, that Mr and Mrs Hughan and their financial advisor did not knowingly or deliberately fail to inform Centrelink of the actual amount of income they earned. Therefore, they meet the requirements of s 1237AAD(a) of the Act.
30. The term special circumstances is not defined in the legislation. For the Tribunal to exercise its discretion to determine that Mr and Mrs Hughan’s situation constitutes special circumstances, it must be satisfied that there is something to make the case stand out from the usual or the ordinary (Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases. Branson J stated that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case.
31. Mr and Mrs Hughan live on a rural property which they own outright. They receive income from of their pensions, Mr Hughan’s superannuation and some investments. The Tribunal accepts that because of the long time it has taken to discover the overpayments, it is much more difficult to deal with the situation than if it had been discovered in a more timely fashion. The Tribunal can appreciate their frustration and sense of being let down by the system particularly when they believed they had provided all the necessary information and had relied on the expertise of their financial advisor. Even Mr Hughan’s token petrol money, for basketball coaching on a voluntary basis, has ended up being income for the purposes of his pension entitlements.
32. However, the Tribunal is not satisfied that the situation that they find themselves is vastly different from the situation of other social security recipients who have incurred debts due to overpayments. In the Tribunal’s experience, it is, unfortunately, not unusual for debts to arise in circumstances such as those in this case. Mr and Mrs Hughan remain on social security benefit and are able to repay the debt in instalments taken out of their fortnightly payments. The amount to be withheld per fortnight is negotiable.
33. The Tribunal is not satisfied that the circumstances in these cases constitute special circumstances (other than financial hardship alone). Hence, the Tribunal finds that the waiver provisions of s 1237AAD of the Act should not be invoked.
34. The Tribunal finds that Mr Hughan owes a debt of $17,265.56 to the Commonwealth for the overpayment of partner allowance. Mrs Hughan owes a debt to the Commonwealth of $9,900.55 for overpayment of age pension. The Tribunal notes that part of the debts has been repaid.
DECISION
35. The Tribunal affirms that Mr and Mrs Hughan have debts to the Commonwealth but varies the amounts of the debts to $17,265.56 for Mr Hughan and $9,900.55 for Mrs Hughan.
I certify that the thirty-five [35] preceding paragraphs are a true copy of the reasons for the decision of:
Regina Perton, Member
(sgd) Lauren Spragg
Clerk
Date of hearing: 27 November 2007
Date of decision: 24 January 2007
Counsel for the applicants: Mr J Fitzgerald
Solicitor for the applicants: Brown & Proudfoot
Advocate for the respondents: Mr T Noonan, Centrelink Legal Services
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