Jordan and Secretary, Department of Family and Community Services

[2004] AATA 473

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 473

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2003/202

GENERAL ADMINISTRATIVE DIVISION		)
Re		NEVILLE JORDAN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Senior Member WJF Purcell

Date13 May 2004

PlaceAdelaide

Decision The Tribunal affirms the decision under review.

(Signed)

WJF PURCELL
  (Senior Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Newstart Allowance – overpayment – applicant also receiving NEIS payments – grounds to waive all or part of the debt – good faith – special circumstances – decision affirmed

Social Security Act 1991 ss 1187, 1188, 1223, 1237A, 1237AAD

Secretary, Department of Education, Employment, Training v Youth Affairs and Prince 152 ALR 127

REASONS FOR DECISION

13 May 2004   Senior Member WJF Purcell

1.      This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 14 April 2003, which affirmed the decision of an Authorised Review Officer of 15 February 2003, to raise and recover a Newstart Allowance debt of $4,095.60.

2. The evidence before the Tribunal comprised the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act1975 (the T documents), together with the exhibits tendered by the respondent (the Department). The applicant appeared on his own behalf and gave oral evidence.  Mr Goldsworthy represented the Department, and called Ms Beylara Ra, a Centrelink officer, as a witness.  Ms Ra gave evidence by way of telephone link-up.

3.      The applicant, who had been a lawyer for 20 years with a civil litigation practice, was in receipt of Newstart Allowance throughout the majority of 2001.  From 20 December 2001 to 14 February 2002 he received fortnightly payments under the New Enterprise Incentive Scheme (NEIS), but no Newstart Allowance payments.  On 15 February 2002 he commenced to receive Newstart Allowance payments; and he applied subsequently for payment under NEIS.  NEIS payments commenced on 13 May 2002.

4.      The applicant lodged “Application for Payment of Newstart Allowance” forms on 22 May 2002 [Exhibit R3], 28 August 2002 [T13], 11 September 2002 [T14], 29 September 2002 [T15], 9 October 2002 [T16], 23 October 2002 [T17], and 6 November 2002 [T18].  The form lodged on 22 May 2002 does not contain any disclosure of his receipt of NEIS payments.  A Centrelink online document however, for 22 May 2002, records that the applicant had rejoined the NEIS program, but it appears that the NEIS payment was not correctly coded within Centrelink.

5.      Centrelink forwarded letters to the applicant on 23 May 2002 [T10], 7 June 2002, 14 August 2002, 29 August 2002, 11 September 2002, 25 September 2002, 9 October 2002, and 23 October 2002 [Exhibit R4] advising him that payments of Newstart Allowance were continuing, and the amount of the fortnightly payment.

6. On 22 November 2002 a debt of $4,549.20 was raised against the applicant for the period from 13 May 2002 to 6 November 2002, pursuant to s 1223(1) of the Social Security Act 1991 (the Act), which provides:

“(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.”

7.        On 15 February 2003 an Authorised Review Officer varied the quantum of the debt from $4,549.20 to $4,095.60; on the basis of allowance for the notification period of 14 days.  The Authorised Review Officer calculated that Newstart Allowance was not payable to the applicant from 28 May 2002 until 6 November 2002 inclusive.  On 14 April 2003, the SSAT affirmed the decision.  The applicant has applied to this Tribunal for review of the decision.

8.      NEIS payments are of a different nature from Newstart Allowance payments.  NEIS is a Department of Employment and Workplace Relations self-employment program for unemployed people who wish to start their own independent businesses.  NEIS is a comprehensive package of assistance which includes training in small business management, business skills and business plan development, and income maintenance.  NEIS Allowance, the equivalent of Newstart Allowance, is payable for up to 52 weeks.  Business advice and mentor support is provided during the first year of business operation.  NEIS providers are contracted by the Department of Employment and Workplace Relations to assess the viability of potential business owners’ projects, and offer training and support.  Centrelink refers people to NEIS providers, but does not make NEIS payments.

9. In accordance with the legislation, a person is not entitled to receive Newstart Allowance whilst in receipt of NEIS payments. Newstart Allowance is reduced dollar for dollar by the rate of NEIS payable. As NEIS is paid at the same rate as Newstart Allowance, this means, generally, that no Newstart Allowance is made. The reduction of Newstart Allowance is set out in ss 1187(1A) and 1188(1) of the Act, which provide:

“1187(1A)       If:

(a)       a payment of:

(ia)      widow allowance; or

(ii)       newstart allowance; or

(iii)      sickness allowance; or

(iv)      special benefit; or

(iva)     partner allowance; or

(va)     mature age allowance under Part 2.12B; or

(vi)      rehabilitation allowance;

is payable to a person during a pension period; and

(b)NEIS is payable to the person, or in respect of the person, during that pension period;

the rate of the payment referred to in paragraph (a) is to be reduced under this Part.

…

1188  Rate reduction under this Part

(1)Subject to subsection (2), if a person’s rate of payment under this Act is to be reduced under this Part because of a NEIS payment, the amount of rate reduction is to be equal to the amount of the NEIS payment.

…”

10. The applicant maintains that he was experiencing serious health and business pressures at the time. There were some things to which he did not give sufficient attention, but this does not qualify as “bad faith”. He did not know that he was receiving the Newstart Allowance payments. He did not read some of the correspondence, which in hindsight he should have read. He should have been more careful. He notified Centrelink staff on 22 May 2002, and in August 2002, that he was receiving NEIS payments; and consequently, if a payment arrived he thought he was entitled to it. Centrelink failed to process the information, and Centrelink’s negligence has led to this situation where payments have been made in error, despite the applicant’s advice that he was in receipt of NEIS payments. Centrelink continued to forward forms, which he filled in, and regarded the letters forwarded by Centrelink to be “just the fine print”. He threw the letters in the bin without reading them. He maintains that any money he received was because of Centrelink’s administrative error. He received the moneys in good faith, and the debt should be waived in accordance with s 1237A(1) of the Act; or alternatively the discretion available to the decision maker pursuant to s 1237AAD of the Act should be exercised in his favour.

11. Section 1237A(1) of the Act provides:

“(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.”

12. Section 1237AAD of the Act provides:

“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.”

13. The Department concedes that because of Centrelink’s administrative error (ie failure to accurately code the NEIS payments in May 2002) the applicant continued to receive “Application for Payment of Newstart Allowance” forms; but it maintains that by submitting these forms, the applicant was claiming payment of Newstart Allowance, and not disclosing when completing these forms, that he was in receipt of NEIS payments. Each time he completed an application he was informed immediately thereafter, by letter, of the amount he would be receiving in Newstart Allowance. The debt cannot be said to have arisen “solely” due to the administrative error of the Department, and cannot be waived pursuant to s 1237A of the Act.

14.     The applicant’s income from these two sources would be approximately double his entitlement.  The Department contends that the applicant was aware that he was being paid Newstart Allowance and of the amount being paid, and his lodgement of the forms caused the Newstart Allowance payments to continue.  It is the Department’s contention that the applicant knew, or at least held some suspicion or doubt, that he was incorrectly receiving both NEIS payments and Newstart Allowance payments.  His disclosure to Centrelink officers that he was in receipt of NEIS did not make apparent to the officer the whole situation.  He did not reveal that he was receiving both NEIS and Newstart Allowance payments simultaneously, nor did he at any stage raise with Centrelink his suspicion that he was incorrectly receiving more payment than his entitlement.

15.     The Department submits finally, that the applicant did not receive the overpayment of $4,095.60 in good faith, as he held some doubt or suspicion as to the existence of an overpayment. The debt cannot be waived pursuant to s 1237A(1) of the Act. In addition, it is not appropriate that the debt be waived in accordance with s 1237AAD of the Act, as the applicant’s circumstances were not sufficiently “special” to warrant waiver of the whole or part of the debt.

16.     The SSAT noted in the course of its Reasons for Decision that the applicant said that he was not prepared to accept the fact that he had acted in this matter in bad faith.  He indicated that after resumption of NEIS payments, he received another Newstart Allowance questionnaire form.  He had taken the form into Centrelink.  He was taken behind the counter, and had informed the Centrelink officer that NEIS payments had resumed.  The officer said words to the effect “Leave it to me and I will fix it”.  On the other occasions he had asked a Centrelink officer “Do you realise I am on NEIS?”.  He believed that he had raised this issue with Centrelink at least two, and as many as four, times in all.  On those occasions, the officer looked up his computer file, and confirmed that the applicant was on NEIS payments. 

17.     The applicant told the SSAT that at his initial training for NEIS he had been told not to write anything about NEIS on his Newstart Allowance form, or he would be cut off Centrelink benefits immediately.  He finished his course and started receiving NEIS payments in about October 2001.  There were difficulties involving his business premises, and therefore in about January 2002, his NEIS payments were suspended, and he went onto Newstart Allowance.  By about April 2002, it was clear that he would not be able to work out all of his business problems, including those with the premises.  He therefore resumed NEIS.  He said that he did this even though he was not ready, because he believed he could only get a 3 month “deferral” of NEIS payments.  He completed his move into new premises in about mid June 2002.  He said that at the time he was exhausted, and he also had other money coming into his account.  For those reasons he did not notice the extra money, and did not receive a bank statement during the period.  He made withdrawals from an ATM.  In June or July 2002, he “turned his mind” to the fact that extra money was coming in.

18.     The SSAT noted also that the applicant confirmed that when he informed Centrelink he was on NEIS, he did not say that he was receiving Newstart Allowance payments as well,  He thought that what he said was sufficient to convey the fact that he was receiving both payments.  The applicant acknowledged that, when he had first been on NEIS, his Newstart Allowance payments (and the forms) had ceased.  He also confirmed that he had expected the Newstart Allowance forms to stop on the second occasion that he went onto NEIS payments, ie after 13 May 2002.  When he had first gone into Centrelink in May 2002 and asked about the situation, the Centrelink officer had indicated that the Newstart forms would stop.  The applicant told the SSAT that he was not certain, in his mind, that he could not receive Newstart Allowance and NEIS payments at the same time.  He explained this by saying that it might have been possible because his business was not earning anything.

19.     The SSAT said at T2/6, in part:

“While Mr Jordan said that he had confirmed with Centrelink officers on at least two occasions the fact that he was on NEIS payments, the Tribunal was left with the impression that Mr Jordan did not explain his concerns or suspicions in a clear or open way.

It also seemed likely to the Tribunal that Mr Jordan was aware that he did not have a dual entitlement to NEIS and newstart allowance payments.  After all, he had been on NEIS payments on a previous occasion, a short time before the period giving rise to this debt.”  [T2/6]

20.     The applicant’s oral evidence was in terms similar to that outlined in the SSAT decision.  He is particularly adamant in relation to the matter of “good faith”.  Although his evidence and submissions were lengthy, convoluted and rambling, his umbrage at the Department’s assertion that he did not act in good faith was abundantly clear.  He asserted in his evidence that he did not know he was receiving the payments; he did not seek the payments; the Department kept sending the forms, and there was no evidence that he knew he was receiving the money.  It was his actual state of mind, he said, that countered the assertion of bad faith; and in this regard he relied on Finn J’s judgment in Secretary, Department of Education, Employment, Training v Youth Affairs and Prince 152 ALR 127 where His Honour said at p130:

“…

For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough.  Its concern is 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 – ie 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.

…”

In relation to the period before Mr Prince became aware of the payments, Finn J said at p131:

“… It is clear in the present case that at all relevant times after 22 December 1993 Mr Prince actually knew that he had no entitlement to receive Austudy payments.  Is the consequence of this that he could never claim that any of the payments he received from DEETYA as Austudy payments in 1994 were received in good faith even though at the time of receipt of the first three he was unaware that he had received the payment?  In other words, can a receipt be otherwise than in good faith when the recipient is unaware that the payment has been received?  The short answer to that in my view is “yes”.  Knowing that, in the relevant period, he had no entitlement to receive an Austudy payment, he was never in a position to be able to assert that any mistaken payment made to him was one to which he had an entitlement.  Thus while he may have received a payment of which he was ignorant, he could not, in the sense that I have explained, have received it in good faith.

…”

21.     In this matter, the applicant received, in error, the first of the “Application for Payment of Newstart Allowance” forms, with the notation “You must return your Jobseeker Diary with this form or your payments may be stopped”.  He completed the form, and on 23 May 2002 Centrelink forwarded a letter advising him that from payday 6 June 2002, he would receive Newstart Allowance in the amount of $369.00 per fortnight. On 21 May 2002 the NEIS payments unit, at the Department of Employment and Workplace Relations, wrote to the applicant in relation to the reinstatement of the NEIS payments, stating, in part, as follows:

“Please note that it is your responsibility to advise CENTRELINK of the recommencement of NEIS Allowance to avoid overpayment of a Centrelink Allowance.”  [Exhibit R2]

22.     It is clear on the evidence that payments of Newstart Allowance would not have continued until 6 November 2002, had the applicant not completed each of the “Application for Payment of Newstart Allowance” forms on a regular basis.

23.     The applicant maintains that he did not realise that he was applying for Newstart Allowance, in addition to his NEIS payments; that he did not read the letters of advice which followed upon each application as he considered them the “fine print” and confined them to the rubbish bin.  In the light of his 20 years experience as a legal practitioner, this assertion is unconvincing.  I do not accept his evidence that he did not understand that the “Application for Payment of Newstart Allowance” forms he received between May and November 2002 were exactly that – applications for a benefit – a benefit which he received, and continued to receive, over a period of more than 5 months, until 6 November 2002.

24. I am satisfied on the evidence that an overpayment has arisen because the applicant failed to disclose that he was in receipt of NEIS payments; and that the overpayment is a debt due and payable to the Commonwealth. On 22 May 2002 the Department failed to code correctly the NEIS payments, and that administrative error led to the Department forwarding further “Application for Payment of Newstart Allowance” forms; but had the applicant not completed the application forms, without disclosing the NEIS payments, Newstart Allowance would not have been paid to him, and the overpayment would not have arisen. It is clear in my view, therefore, that no proportion of the debt is attributable solely to an administrative error made by the Commonwealth, and that s 1237A(1) of the Act does not apply.

25. As I am satisfied on the evidence that there is no proportion of the debt that is attributable solely to administrative error made by the Commonwealth, it is not necessary to turn to the balance of the terms of s 1237A(1) of the Act; but had I been satisfied that a proportion of the debt was attributable solely to administrative error made by the Commonwealth, I would not have been satisfied on the whole of the evidence that the applicant received the payment in good faith.

26.     Ms Ra, who has been a Centrelink officer for 28 years, gave evidence that she spoke to the applicant on 21 November 2002 and informed him that his receipt of NEIS payments precluded him from Newstart Allowance, and that he would have to repay any payments made to him from the date when NEIS was granted.  He replied, to the effect, that it was not a lot of money, and given that the aim was to get him into self employment and that all the money had gone towards that end, it was not a problem.  Ms Ra stated:

“The reason I recorded this was because from the tone of his voice and our conversation he seemed to have been aware that he was receiving more than his legal entitlement or at least there was little or no surprise in his voice.” [Exhibit R1]

27.     I accept Ms Ra’s evidence.  I consider that the applicant either knew that he was not entitled to both payments, or was suspicious of the payments.  He did not, in my view, receive those payments in good faith.

28. In relation to s 1237AAD of the Act. I am satisfied on the evidence that the debt resulted from the applicant failing to comply with the legislation by not disclosing his receipt of NEIS payments. Section 1237AAD(a)(ii) of the Act does not apply. I am of the view that the applicant’s circumstances are not so exceptional, unusual or out of the ordinary as to be regarded as special circumstances; and it is not appropriate that the discretion provided in s 1237AAD(b) of the Act should be exercised in his favour.

29.     For these reasons the Tribunal affirms the decision under review.

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member WJF Purcell

Signed:         .....................................................................................
  Associate

Date of Hearing  12 February 2004
Date of Decision  13 May 2004
Counsel for the Applicant         In person
Solicitor for the Applicant          -
Counsel for the Respondent     Mr C Goldsworthy
Solicitor for the Respondent     Centrelink Service Recovery Team