Jordan and Secretary, Department of Family and Community Services

[2004] AATA 809

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 809

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2003/1191

GENERAL ADMINISTRATIVE DIVISION

Re:         THOMAS CHRISTOPHER JORDAN

Applicant

And:SECRETARY,

DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             4 August 2004

Place:            Melbourne

Decision:The Tribunal sets aside the decision under review and substitutes a decision that the applicant owes a debt to the Commonwealth of $24,202.92 due to the overpayment of disability support pension between 19 March 1999 and 28 July 2002, but that the debt is waived for the period 25 July 2001 to 10 January 2002.

The Tribunal remits the matter to the respondent for re-calculation of the debt.

(sgd) G.D. Friedman
  Member

SOCIAL SECURITY - disability support pension - failure to notify wife’s income - overpayment ‑ debt to Commonwealth ‑ waiver of debt ‑ write‑off of debt 

Social Security Act 1991 ss 8(1), 1064, 1223(5), 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 ss68(2), 98, 99, 100, 123(3)

Re Adams and Department of Family and Community Services [2001] AATA 479

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Gerhardt and Secretary, Department of Employment Education and Training

(AAT 10941, 17 May 1996)

Re Secretary, Department of Family and Community Services and Jonauskas

(2001) 65 ALD 553

Re Vitalone and Department of Social Security (1995) 38 ALD 169

Secretary, Department of Education, Employment, Education, Training and Youth Affairs v

Prince (1997) 50 ALD 186

REASONS FOR DECISION

4 August 2004  G.D. Friedman, Member

1.      This is an application by Thomas Christopher Jordan (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 10 September 2003.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 9 April 2003 to raise and recover a debt of $24,202.92, arising from an overpayment of disability support pension between 18 March 1999 and 30 July 2002. 

2.      At the hearing on 13 July 2004 Mr J. Catlin of counsel represented the applicant and Ms K. Paul, a Centrelink advocate, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T33), plus eight exhibits (Exhibits A1‑A8) lodged by the applicant and one exhibit (Exhibit R1) lodged by the respondent.

BACKGROUND

4.      On 26 October 1998 the applicant was granted disability support pension with effect from 20 August 1998.  In a letter dated 26 October 1998 Centrelink requested the applicant to notify Centrelink within 14 days if he or his wife, Ms S. Jordan, commenced employment or if other circumstances changed.  On 17 March 1999 Ms Jordan commenced work with Code Blue Specialist Nurses Agency as a Registered Nurse, and her income varied in accordance with the type and number of shifts she worked.  On 5 April 2000 Centrelink sent an accommodation form and an income and assets form to the applicant.  On 17 April 2000 the applicant supplied information to Centrelink about Ms Jordan’s earnings, and Centrelink calculated a combined annual income of $13,841.80.

5.      On 26 April 2000 Centrelink advised the applicant that his pension had been reduced because of Ms Jordan’s earnings.  The letter included details of his pension and his obligations to inform Centrelink of any change in circumstances.  In letters dated 31 January 2001 and 18 June 2001 Centrelink asked the applicant to provide information about any trusts and companies in which he and his wife had any interest.  On 16 July 2001 the applicant advised Centrelink that he was no longer involved with Ten Rose Pty Ltd, a trust in which he and Ms Jordan had been directors.

6.      On 4 November 2001 the applicant provided income tax returns for 1998/1999 and 1999/2000.  On 8 January 2002 Centrelink sent a recipient notification notice to the applicant in which his rate of pension was stated to be based on a combined annual income of $14,879.92.

7.      On 4 July 2002 Centrelink conducted a data matching review with the Australian Taxation Office, and on 16 August 2002 Centrelink cancelled the applicant’s disability support pension because of his wife’s earnings.  On 24 February 2003 Centrelink decided that the applicant had been overpaid $24,202.92 and raised a recoverable debt in that amount.

8.      On 9 April 2003 an authorised review officer affirmed the decision to raise the debt.  On 16 June 2003 the applicant applied to the SSAT for review of the decision.  On 10 September 2003 the SSAT affirmed the decision.  The applicant lodged an application with the Tribunal on 22 October 2003 for review of the SSAT decision.

9.      The issue before the Tribunal is whether the applicant owes a debt to the Commonwealth, and if so, whether the debt should be waived or written off. 

EVIDENCE

10.     The applicant gave oral evidence that he suffered a lower back injury and has not worked since 1991.  He stated that he was granted disability support pension in 1998, and spends most of his time at home on a rural property.  He acknowledged that he received mail from Centrelink concerning his continuing eligibility for the pension.  He said that when he received partner review forms he handed these to Ms Jordan and she completed them, which he then sent to Centrelink.

11.     The applicant told the Tribunal that he and Ms Jordan moved to a new address in August 1999, and that they arranged for mail to be re-directed, although mail continued to be delivered to the old address for several months after the move.  He said that he completed a partner review form dated 27 August 1999 and submitted it to Centrelink.  He stated that, in April 2000, he visited Centrelink and told the relevant officer that Ms Jordan was working two or three days per week, and that Centrelink used this information to derive a figure for combined annualised earnings.

12.     The applicant stated that after June 2000 he did not receive further partner review forms.  He referred to a letter from Centrelink (Exhibit A6) requesting financial information, and stated that he had already sent a number of documents to Centrelink at Morwell.  The applicant emphasised that he and Ms Jordan had responded to each request for information received from Centrelink, and believed that in doing so they had fulfilled their obligations.  He produced the home diary maintained by himself and Ms Jordan, and said that extracts from the diary (Exhibit A8) showed that they recorded relevant contacts with Centrelink and complied with their commitments.

13.     Under cross-examination, the applicant agreed that he could not remember each letter received from Centrelink, including recipient notices dated 26 April 2000 and 8 January 2002, but said he knew that he was required to notify Centrelink of changes to financial circumstances as specified in the Centrelink letters.  He said that he was aware from Ms Jordan’s payslips that her income varied, but told the Tribunal that he and Ms Jordan did not discuss her level of earnings.  The applicant said that he did not know that changes in his wife’s income would affect the amount of his pension.  He said he believed that any changes in his disability support pension would be calculated when Centrelink received the completed forms from him.

14.     Ms Jordan gave oral evidence that she is employed by a nursing agency for work in various hospitals.  She said that her duties involve responsibility for a number of staff and for patient care.  She told the Tribunal that record-keeping is of great importance in her work, and at home she is careful to maintain accurate financial information and records.

15.     In respect of the applicant’s disability support pension, Ms Jordan stated that he completed relevant Centrelink forms, and she completed the partner review forms that he handed to her, after which the applicant returned the documents to Centrelink.  She recalled that she completed six or seven partner review forms during the period 1999 to 2001, and noted that each took an hour to complete, as she was required to include details of her income, assets and liabilities.  She said that she included copies of her payslips because her income fluctuated due to the nature of her employment.

16.     Ms Jordan stated that she was aware that Centrelink had no record of receiving several documents that she and the applicant had forwarded.  She noted that a number of documents were lost when a filing cabinet fell from a vehicle during the change of residence in August 1999.  She stated that she was shocked when, in July 2002, Centrelink informed the applicant that his disability support pension should have been adjusted to reflect her earnings.  She explained that Centrelink had not told her or the applicant that a threshold level of her earnings was applicable to the applicant’s eligibility for the pension.  She produced a consolidated list of her net income from 28 March 1999 to 16 July 2000 (Exhibit A3), showing an average of about $1200 per fortnight.   

17.     Under cross-examination, Ms Jordan said that she did not read letters sent to the applicant by Centrelink, and that he gave her only the partner review forms to complete.  Ms Jordan emphasised that at all times she had given correct information for forwarding to Centrelink, and was careful to include fortnightly wage slips in the completed partner review forms.

18.     Mr K. O’Dea, chartered accountant, gave oral evidence that he has managed the financial affairs of the applicant and Ms Jordan for six years.  He said that Ms Jordan is competent in arranging her finances, and keeps accurate records.  He described Ms Jordan as honest and capable.  He referred to the trust operated by the applicant and said that, on his advice, the applicant’s name was removed as a shareholder/director in 2001.

19.     Mr O’Dea told the Tribunal that the applicant sent him a Centrelink declaration form which he forwarded to Centrelink on 23 July 2001 with the 1998/1999 and 1999/2000 tax returns.  Under cross-examination, Mr O’Dea stated that he was aware that Centrelink had no record of receiving certain financial documents from the applicant or Ms Jordan.  He said that financial statements were probably sent to Centrelink with copies of the tax returns, and he had no reason to doubt that Centrelink had received the documents, as Centrelink normally contacted him if there was a problem.

20.     Documents provided to the Tribunal show that Ms Jordan’s taxable income for 1998/1999 was $16,416; 1999/2000: $50,080; 2000/2001: $54,546 and 2001/2002: $84,356.

CONSIDERATION OF THE ISSUES

21. Section 1064 of the Social Security Act 1991 (the Act) sets out the rate calculator for disability support pension, and provides that the person’s income, and that of their partner, will affect the rate of pension. Under s 8(1) of the Act, income includes wages and funds generated from investments.

22. Section 68(2) of the Social Security (Administration) Act 1999 (the Administration Act) provides that Centrelink may give a person a notice requiring the person to inform Centrelink of any changes in circumstances. Section 123(3) of the Administration Act provides that a determination of a rate of payment continues until the payment become payable at a lower rate under s 98, s 99 or s 100 of the Administration Act.

23. Mr Catlin did not dispute that the income of the applicant and his wife exceeded the regulatory threshold, or that the formula by which Centrelink calculated the debt was correct. However, he submitted that the debt should be waived under s1237A(1) of the Act because the debt arose solely due to administrative error by Centrelink and the money was received in good faith by the applicant. He said that if the Tribunal finds that the applicant communicated his household income to Centrelink on a date prior to 28 July 2002, the debt is not recoverable from that date onwards and so a smaller debt or none at all would be the outcome. He said that the waiver should be from the date the household reasonably communicated to Centrelink the movement of its income above the relevant regulatory threshold, because at that point Centrelink made an administrative error in not promptly reducing the payments which the respondent now seeks to recover.

24.     Mr Catlin submitted that Centrelink files contain no records of any letters sent to the applicant between 26 October 1998 and 5 April 2000, and that there are no Centrelink records of any letters sent by the applicant or Ms Jordan prior to November 2001.  He said that Centrelink could have calculated the correct level of Ms Jordan’s income by examining the partner review forms that she completed and the applicant forwarded to Centrelink.  He added that Centrelink was at fault in not acting on tax returns submitted by the applicant and Ms Jordan in July 2001.

25.     In respect of communications between the Jordan household and Centrelink, Mr Catlin submitted that the Tribunal should accept the evidence that Mr O’Dea sent the 1998/1999 and 1999/2000 tax returns to Centrelink on 23 July 2001, and that the applicant and Ms Jordan sent income tax records to Centrelink on 4 November 2001.  He said that the failure by Centrelink to act properly in the treatment and recording of documents received from the Jordans was another example of error and sloppy administration by Centrelink.  He stated that the calculation by Centrelink of an annualised income for Ms Jordan of $14,879.92 was a gross error that bore no resemblance to the correct figure, given the information provided to Centrelink.

26.     Mr Catlin submitted that, for the respondent to succeed, the Tribunal would have to find that the applicant and Ms Jordan concocted a lie regarding their dealings with, and the provision of information to, Centrelink.  He said that until September 2001 Ms Jordan’s income was reasonably stable, and that there was no need for the applicant or Ms Jordan to have contacted Centrelink before that date.  He referred to the Jordan’s oral evidence and submitted that their recollections were supported by diary entries (Exhibit A8), and that Centrelink’s records and administrative practices at its Morwell and Warragul offices were unreliable and deficient.  He said that the applicant had discharged his onus to provide information by completing each partner review form when requested to do so by Centrelink, and had acted in good faith.

27.     In respect of the sole administrative error issue, Mr Catlin referred the Tribunal to Re Vitalone and Department of Social Security (1995) 38 ALD 169, in which he said Mathews J took into account the credibility of the applicants and their efforts to communicate their income, and found that no debt arose because they had complied with their obligations under the Act by responding to relevant notices sent to them and by visiting Centrelink. He said that, similarly, the applicant and Ms Jordan had made every effort to fulfil their obligations to Centrelink.

28.     Mr Catlin also said that in Re Adams and Department of Family and Community Services [2001] AATA 479 the Tribunal held that solely encompassed errors set in motion by Centrelink which the applicant failed to correct.  He said that the principles in Adams were applicable in the current application because the applicant’s error in failing to correct the incorrect calculation of Ms Jordan’s annualised income was incidental to the administrative error of the incorrect income figure being used by Centrelink.

29.     Ms Paul noted that the applicant was sent a recipient obligation notice at the time of his grant of disability support pension, requiring him to notify Centrelink of any changes in his circumstances, including his partner’s income.  She submitted that the applicant’s annual combined income increased from 18 March 1999, but the applicant did not advise Centrelink until 17 April 2000, when Centrelink reassessed his entitlement from 26 April 2000.  She said that, on this basis, the applicant was paid more than his entitlement from 18 March 1999 to 30 July 2002 in the amount of $24, 202.92, which was a debt to the Commonwealth.

30.     In respect of the administrative error issue, Ms Paul stated that in Re Gerhardt and  Secretary Department of Employment Education and Training AAT 10941, 17 May 1996, the Tribunal defined sole to include exclusive, alone, unaccompanied.  She submitted that the debt was not solely attributable to Centrelink’s administrative error and there had been no administrative error during the period of the debt.  She said that any administrative error found by the Tribunal after November 2001 was not the sole cause of the debt, as the applicant contributed to any such error by not providing correct and up-to-date details of Ms Jordan’s earnings.

31.     Ms Paul submitted that the applicant did not receive disability support pension payments in good faith, because he had reason to know that his payments would decrease due to the amount of Ms Jordan’s income he declared, particularly when her income increased significantly in 1999/2000 (Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186). Ms Paul noted that the applicant continued to receive the same amount of disability support pension, and should have been alerted to the fact that his entitlement was incorrect (Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553). She submitted that there were no special circumstances that would justify waiving the debt.

32.     In respect of the partner review form dated 27 August 1999, Ms Paul said that Centrelink has no record of receiving the document.  She also said that there is no record of Centrelink receiving the tax returns from the applicant and Ms Jordan in July 2001.

33.     In reaching its decision the Tribunal takes into account the oral and written evidence and submissions made at the hearing. 

34.     There is no dispute that the applicant was sent a recipient obligation notice when he was granted disability support pension in 1998, and that the notice set out his obligations to inform Centrelink of any changes in circumstances, including changes to his combined annualised income of $5188.98.  From 17 March 1999 Ms Jordan received income by way of wages and investments that must be taken into account in the calculation of the applicant’s disability support pension.

35.     The Tribunal notes that Centrelink has no record of contact with the applicant in 1999, and that Centrelink documents show that on 5 April 2000 the applicant notified Centrelink of a change of address and on 17 April 2000 he lodged an income and assets form.  The Tribunal accepts that the applicant knew of his obligations to keep Centrelink informed of his financial position, including his wife’s earnings.  It is possible that he and Ms Jordan did not discuss her exact level of income as recorded on the partner review forms, although he needed to be mindful that changes in her income would affect his eligibility for disability support pension.

36.     The Tribunal has examined the diary entries at Exhibit A8.  Although these include various references to Centrelink, forms and letters, they do not constitute conclusive evidence to support the applicant’s contention that he provided all relevant documents to Centrelink, as the entries might be reminders or references to documents received by the applicant rather than sent by him.  The Tribunal accepts that the applicant did his best to remember events that occurred several years ago, although it appears that his recollection was not entirely accurate.   

37.     In respect of information provided to Centrelink by the applicant in an assets and review form on 17 April 2000, Centrelink notified the applicant that the annualised figure for his combined income was $13,841.80, on 26 April 2000, together with a re‑statement of the applicant’s obligations to notify Centrelink of relevant changes in circumstances.  Following the receipt of tax returns for 1998/1999 and 1999/2000, Centrelink sent a further letter to the applicant on 8 January 2002, indicating that the annualised income was now $14,879.92.  The Tribunal finds that the applicant received these letters and had ample opportunity to comply with the obligations contained in the letters.

38. For these reasons, the Tribunal finds that, during the relevant period, the applicant received an amount of $24,202.92 in disability support pension to which he was not entitled, and that this amount is a debt owed to the Commonwealth under s 1223(5) of the Act (s 1223(1) from 1 July 2001).

39. Section 1236 of the Act provides for a write-off of the debt under certain circumstances. The Tribunal finds that the applicant has the capacity to repay the debt, and the debt is not irrecoverable at law. Therefore, there are no grounds to write‑off the debt.

40. Section 1237A of the Act provides for waiver of a debt arising from administrative 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

1237A.(1A)     Subsection (1) only applies if:

(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.

41. Although the applicant did not fulfil his obligations under s 68 of the Administration Act throughout the debt period in that he did not notify Centrelink of all relevant changes in his circumstances, particularly Ms Jordan’s income, the evidence is unclear as to the precise time that Centrelink became aware of the information contained in their 1998/1999 and 1999/2000 tax returns. However, the Tribunal accepts Mr O’Dea’s evidence that he sent taxation and financial information to Centrelink on 23 July 2001. Consequently, Centrelink’s failure to act on the information and re-calculate the applicant’s correct entitlement to disability support pension amounted to sole administrative error by Centrelink until such time as the applicant received a recipient obligation notice dated 8 January 2002.

42.      In all the circumstances, the Tribunal finds that the applicant received disability support pension payments in good faith during this period, and the Tribunal waives that proportion of the debt which consists of overpayments of disability support pension from 25 July 2001 to 10 January 2002, allowing two days each for delivery of documents by ordinary post.

43.      In respect of Mr Catlin’s submission that errors by Centrelink were the sole cause of the debt, the Tribunal notes that in Vitalone Mathews J concluded that the applicants had visited Centrelink to seek clarification of the obligation recipient notice, and that language difficulties prevented the Centrelink officer from gaining a complete understanding of the situation.  The Tribunal concluded that in those circumstances the situation was attributable to a lack of communication, mainly by Centrelink, and that Mr Vitalone had done his best to comply with his obligations contained in the notice.  In the current application there was no language difficulty, and the applicant and Ms Jordan had systems in place for adequate record-keeping.  Both were aware of the requirements set out in the letters from Centrelink and were in a position to provide the information.  Neither of them approached Centrelink for clarification of those requirements. 

44.      Similarly, in Adams the Tribunal found that the applicant’s error was incidental to the error by Centrelink, whereas in the current application any errors made by Centrelink are attributable to a large extent to inaccurate information provided by the applicant.

45. For these reasons the Tribunal finds that, other than during the period referred to above, the debt was not due solely to an administrative error by the Commonwealth. As a result, the remaining debt cannot be waived under s 1237A(1A) of the Act.

46. Section 1237AAD of the Act provides for waiver of the debt in certain circumstances:

1237AAD.  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.

47.      In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held that the special circumstances, referred to in s 1237AAD(b), must be unusual, uncommon or exceptional. The Tribunal accepts that the applicant has a back injury that prevents him from gaining employment, and that he has relied on disability support pension and Ms Jordan’s earnings since she commenced work in March 1999. The Tribunal notes the concern expressed by the applicant about the reliability of record-keeping practices by Centrelink, and the loss of documents by the applicant during the change of residence in 1999. However, the Tribunal is satisfied, on balance, that the circumstances in this case are not unusual, uncommon or exceptional, and do not constitute special circumstances (other than financial hardship alone). Therefore, the waiver provisions of s 1237AAD of the Act do not apply.

48.      Therefore, the applicant owes a debt to the respondent of $24,202.92, part of which should be waived in respect of the period 25 July 2001 to 10 January 2002. The respondent should recalculate the amount to be repaid accordingly.

DECISION

49.      The Tribunal sets aside the decision under review and substitutes a decision that the applicant owes a debt to the Commonwealth of $24,202.92 due to the overpayment of disability support pension between 19 March 1999 and 28 July 2002, but that the debt is waived for the period 25 July 2001 to 10 January 2002.  The Tribunal remits the matter to the respondent for re-calculation of the debt.

I certify that the forty-nine [49] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  13 July 2004

Date of decision:  4 August 2004
Counsel for applicant:                  Mr J. Catlin
Solicitor for applicant:                  Professor Phillip Hamilton
Advocate for respondent:            Ms K. Paul, Centrelink