KamYuen and Secretary, Department of Employment and Workplace Relations
[2006] AATA 1068
•12 December 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 1068
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2006/368
GENERAL ADMINISTRATIVEDIVISION ) Re FELICIA KAMYUEN Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Dr KS Levy, Senior Member Date12 December 2006
PlaceBrisbane
Decision The Tribunal decides that :
a. that the decision under review should be set aside; and
b. the following decision be substituted
i. that the overpayment for the period 8 October 2004 to 25 August 2005 is due to the sole administrative error of the Commonwealth and was received by the applicant in good faith;
ii. that the overpayment in respect of that period is waived; and
iii. that any adjustment or refund due to the applicant be recalculated accordingly.
...................[Sgd]................
Dr KS Levy
Senior Member
CATCHWORDS
SOCIAL SECURITY – overpayment of Parenting Payment (single) – debt owed to Commonwealth – waiver or write-off of debt – no special circumstances – debt waived as a result of administrative error – decision set aside
Social Security Act 1991 (Cth) ss1068A-EI, 1223, 1236, 1237A, 1237AAD
Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484; (2000) 65 ALD 424;
Secretary, Department of Education, Employment and Youth Affairs v Barry Prince (1997) 50 ALD 186; (1997) 152 ALR 127; (1997) 26 AAR 385; (1998) 3 SSR 37a
Beadle v Director-General of Social Security (1985) 60 ALR 225; (1985) 7 ALD 670
Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133; (2003) 53 ATR 270; (2003) 5(10) SSR 138
REASONS FOR DECISION
12 December 2006 Dr KS Levy, Senior Member Introduction
1. On 29 November 2005, Centrelink calculated that Ms KamYuen owed a debt in the amount of $5,083.65, which represented an excess of entitlements she had received for period 13 August 2004 to 25 August 2005 (T21, folios 100-113). That decision was reviewed by an Authorised Review Officer (ARO). The ARO determined that the original debt did not take account of Ms KamYuen’s child Ky and recalculated the debt. On 13 January 2006, the ARO determined that the debt amount should be $4,957.85 for the period 8 October 2004 to 25 August 2005.
2. That decision was appealed to the Social Security Appeals Tribunal which affirmed the ARO’s decision on 8 May 2006.
3. It is that decision that this Tribunal is now asked to review.
4. The applicant, Ms Felicia KamYuen, represented herself and was accompanied by a support person, Ms Rhonda Stankevicius. The respondent was represented by Ms Jasmine Forsyth, Advocate for the Department of Education and Workplace Relations.
Issues
5. The Tribunal must determine the following questions:
a.Has Ms KamYuen been overpaid Parenting Payment (single) for the relevant period?;
b.If the applicant has been overpaid, is the debt a debt due to the Commonwealth?; and
c.If there is an overpayment which is a debt due to the Commonwealth, should the debt be recovered, or are there grounds for write-off or waiver of the whole or part of the debt?
Legislation
6. The following statutory provisions of the Social Security Act 1991 (‘the Act’) are relevant to this application:
1068A‑E1 This is how to work out the effect of a person's ordinary income on the person's maximum payment rate:
Method statement
Step 1. Work out the amount of the person's ordinary income on a yearly basis.
Step 2. Work out the person's ordinary income free area (see points 1068A‑E14 to 1068A‑E18 below).
Note: A person's ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person's maximum payment rate.
Step 3. Work out whether the person's ordinary income exceeds the person's ordinary income free area.
Step 4. If the person's ordinary income does not exceed the person's ordinary income free area, the person's ordinary income excess is nil.
Step 5. If the person's ordinary income exceeds the person's ordinary income free area, the person's ordinary income excess is the person's ordinary income less the person's ordinary income free area.
Step 6. Use the person's ordinary income excess to work out the person's reduction for ordinary income using points 1068A‑E19 and 1068A‑E20 below.
Note 1: See point 1068A‑A1 (Steps 5 and 6) for the significance of the person's reduction for ordinary income.
Note 2: The application of the ordinary income test is affected by provisions concerning the following:
(a) the general concept of ordinary income (sections 1072 and 1073);
(b) business income (sections 1074 and 1075);
(c) deemed income from financial assets (sections 1076 to 1084);
(d) income from income streams (sections 1095 to 1099DAA);
(e) disposal of income (sections 1106 to 1112).
1223(1AB) Without limiting by implication the circumstances to which paragraph (1)(b) applies apart from this subsection, a person who obtained the benefit of a social security payment is taken not to have been entitled to obtain the benefit if the payment should not have been made for any one or more of the following reasons:
(a) the payment was made to the person by mistake as a result of a computer error or an administrative error;
(b) the person for whose benefit the payment was intended to be made was not qualified to receive the payment;
(c) the payment was not payable;
(d) the payment was made as a result of a contravention of the social security law, a false statement or a misrepresentation;
(e) the payment was made in purported compliance with a direction or authority given by the person who was entitled to obtain the benefit of the payment but the direction or authority had been revoked or withdrawn before the payment was made;
(f) the payment was intended to be made for the benefit of someone else who died before the payment was made.
1236(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
1236(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor's social security payment; or
(b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c) setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
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.
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.
Evidence
7. The following documents were admitted into evidence:
Exhibit 1 The T documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975
Exhibit 2 Secretary’s Statement of Facts and Contentions and attachments A-K
Exhibit 3 Submission by the applicant received in the Tribunal on 30 August 2003
Exhibit 4 A summary of payments made to the applicant in July – August 2006
Exhibit 5 Mancorp Development Group Pty Ltd payroll advice for 14 January 2005
Exhibit 6 Guide to Social Security Law in relation to leave loading
8. A summary of the factual evidence is as follows:
(a)25 June 2003 - the applicant’s parenting payment (single) was cancelled on 11 June 2003. It was subsequently reinstated and payments were made from the same day at $106.61 based on an annual income of $24,603.52.
(b)25 August 2003 – the applicant updated her income to be $514.90 per week.
(c)12 November 2003 – Centrelink records show a review form was lodged and payslips from Mancorp Development Group Pty Ltd were attached. These payslips revealed the applicant earned $473.10 for the weeks ending 8 August 2003, 15 August 2003, 22 August 2003; and that $514.90 was earned for the week ending 29 August 2003.
(d)17 November 2003 – the applicant updated her income to show she earned $1,064 per fortnight ($532 per week) effective from 14 November 2003 (T52, Folio 183).
(e)26 May 2004 – immediate rates notice was issued at the request of the applicant (see Attachment B to Exhibit 2).
(f)3 September 2003 and 3 June 2004 – letters from Centrelink were provided to the applicant which advised that she must inform them within 14 days of any changes and to contact them if she had any concerns about her personal information.
(g)12 August 2004 – a review commenced of the applicant’s circumstances and requested verification of earnings.
(h)24 August 2004 – the applicant provided a payslip for the week ending 13 August 2004 which showed she earned $532 per week (as per previous reports).
(i)27 October 2004 – Centrelink’s records showed the applicant earned $532 per fortnight (T52, folio 184). A letter in the same terms as those in (f) above was sent to the applicant informing her that she would get $331.98 based on a fortnightly income of $532. It contained the same disclaimers that she should provide advice of any change within 14 days and that she was invited to contact Centrelink if there were matters of concern about her personal details (See Attachment H).
(j)27 January 2005 – the applicant updated her income to $551 and a similar letter as per items (f) and (i) above was issued. The amount recorded in Centrelink’s records was $551 per fortnight. The applicant stated that there was no mention on whether the amount was per week or per fortnight.
(k)10 March 2005 – Immediate rates notice issued.
(l)2 September 2005 – applicant advised of increase in income to $568.10 per week. During that contact, it was established that her income had been coded incorrectly at $551 per fortnight when it should have been coded as per week (T16, folio 65). A letter was then sent to the applicant stating that she would be entitled to $68.86 based on the fortnightly income of $1,136.20.
(m)12 October 2005 – Centrelink dispatched a letter to Mancorp Development Group Pty Ltd seeking the applicant’s earnings for the period 1 August 2004 to 12 October 2005.
(n)25 October 2005 – Mancorp Development Group Pty Ltd responded with the applicant’s earnings for the period 6 August 2004 to 14 October 2005. Essentially, the earnings from 6 August 2004 to 16 December 2004 were $532 per week (as previously reported). For the Christmas/New Year period, earnings were:
· 19 December 2004 – 24 December 2004 $606.48 for 1 week
· 27 December 2004 – 31 December 2004 $569.24 for 1 week
· 3 January 2005 – 7 January 2005 $587.86 for 1 week
9. For the period 14 January 2005 to 11 March 2005, the applicant earned $551 per week. For the period to 18 March 2005, the applicant earned $589.57 per week; and for the period 23 March 2005 to 26 August 2005, the applicant reverted to the weekly income of $551 per week. The remaining information provided was outside the period of review of this Tribunal.
10. The evidence-in-chief by Ms KamYuen also informed the Tribunal that she was advised by a Centrelink officer of the Caboolture office that her file would not be changed unless she was notified. She maintained that the change of her record from weekly to fortnightly earnings was undertaken without her knowledge and that she was not notified of this change until she brought it to Centrelink’s attention in September 2005.
11. The applicant had been in an abusive marriage and when she separated, she obtained Centrelink benefits and then went to TAFE College to complete the equivalent of years 11 and 12 education so that she could become more employable. She then obtained employment with the Bribie Island Surf Club and subsequently with her current employer, Mancorp Development Group Pty Ltd. She has three children, one of whom is a 15 year old who has a serious drug problem. Ms KamYuen had experienced violence against her and her two older children by her former husband.
12. In relation to the overpayment which commenced in August, she claimed that she immediately rang Centrelink to make sure that she had not been overpaid. Her evidence was that she had tried to do everything possible to give Centrelink all the correct information that was required.
13. In cross-examination, she explained that in relation to the overpayment which commenced from October 2004, she did not immediately question the amount but did so in January 2005. Her practice was not to read bank statements, but use ATMs to withdraw money. She sometimes got receipts from those machines, but not always. She had a practice of withdrawing $600 per fortnight to cover the household expenses for herself and her children and noted at one time that she was saving very well. She had been consciously saving to have a holiday, and all her money went into the account in question including wages.
14. She stated that she contacted Centrelink about the increase in income for the holiday period but was told that she did not have to declare the holiday leave loading because the rate of pay did not change. She could not recall the names of those who provided that advice but she said that it was from the Caboolture office. When asked whether she may have misinterpreted the information she conceded that she may have misinterpreted some information given by Centrelink.
15. In cross examination, she also stated:
a.That expenses which included $40 per week for entertainment, related to renting DVDs for her daughter who she helps and is struggling with a drug problem.
b.That the overpayment from the original error amounted to $1,033 and this was an arrears payment. She stated that she did not spend it initially in case she was asked to pay it back.
c.She advised Centrelink about a marriage settlement and the purchase of a house.
consideration
16. The Tribunal has taken into account all of the written and oral evidence available as well as the relevant statutory and case law.
17. The Tribunal has made the following findings of fact:
a.The applicant received the amounts of parenting payment (single) as claimed by Centrelink;
b.The applicant had diligently reported income and was co-operative in providing pay slips and other information in the majority of incidences;
c.There were some variations to her standard weekly earnings over the Christmas/New Year leave period - including leave loading - which were not reported.
d.The applicant had a long term, stressful and violent relationship with her former husband. She also persevered in supporting her children, one of whom has had extensive problems with drug addiction;
e.The applicant had also put in significant effort to improve her educational level so she could be more self sufficient. Whilst noting these circumstances and her pattern of diligent reporting, the Tribunal finds that the applicant was a witness of truth.
18. The critical evidence in this case which reflects upon the payments received for the period 8 October 2004 to 25 August 2005, centres largely upon the relative merits of the errors which occurred on 27 October 2004 (and which incorrectly coded earnings of $532 as being a fortnightly income rather than a weekly income); and also, aberrations in income, and subsequent reporting and entitlements for the period January 2005 to August 2005.
19. In relation to the original error which is shown as being miscoded on 27 October 2004, the Tribunal notes that the applicant correctly advised Centrelink that she earned $532 per week on 24 August 2004. This information was to be effective from 13 August 2004. However, Centrelink did not record this information for two months, that is, on 27 October 2004, and then, incorrectly recorded the income as being for two weeks and not one week. As a result, the applicant received arrears of $1,033 and then an increase in parenting payments which increased from $119.18 net to $331.98 net per fortnight.
20. In addressing the relevant issues, this Tribunal finds as outlined below:
· Issue 1 – Has Ms KamYuen been overpaid parenting payment (single) for the relevant period?
21. Ms KamYuen has not disputed that she has been overpaid parenting payments. Therefore, the Tribunal finds that there has been an overpayment of parenting payment (single) under section 1068A of the Act.
· Issue 2 – Is the amount of overpayment a debt due to the Commonwealth?
22. Section 1223(1) of the Act provides that any overpayment will be a debt due to the Commonwealth when the person receiving the overpayment was not entitled to that payment “for any reason”.
23. The Secretary has submitted that the amount due as a debt due to the Commonwealth is $4,957.85 for the period 8 October 2004 to 25 August 2005. There is no evidence which points to this amount being an error. As a result, the Tribunal finds that the amount claimed is a debt due to the Commonwealth.
· Issue 3 - Should the overpayment be recovered?
24. Any overpayment under this Act must be recovered unless it can be demonstrated that the applicant is entitled to avail herself of the provisions for either “write-off” or “waiver”.
Write Off
25. Section 1236(1A)(b) provides that the applicant’s debt can be written off if the person has no capacity to repay the debt. That provision has no application where the debtor can repay the debt by means of deduction from Social Security payments, unless there would be severe financial hardship. (See section 1236 (1C).
26. The respondent submitted that the applicant is currently repaying the debt at $50 per fortnight by way of deductions from her parenting payments (single). The Secretary has submitted that it would not therefore be appropriate to write-off the debt. The Tribunal agrees with this submission.
Waiver
27. Section 1237A of the Act provides that the debt must be waived where whole or part of the debt was attributable solely to administrative error of the Commonwealth. It must also be shown that any such payments were received in good faith. The respondent submitted that the applicant did not receive the overpayments in good faith and therefore cannot satisfy section 1237A(1) of the Act. The respondent relied upon the following authorities in support of that submission. Firstly, in Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484 at 41, Cooper J said:
“A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt to the entitlement of the person to receive and retain the payment or refuses to make reasonable enquiries where doubt exists.”
28. The respondent also relied upon the judgment of Finn J in Secretary, Department of Education, Employment and Youth Affairs v Barry Prince (1997) 50 ALD 186 at 189, where he stated:
“For my own part, I consider the burden of the formula in the section 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 monies received as his or her own – that person does not receive the payment in good faith. Absence of such knowledge or reason to know, the receipt would be in good faith.”
29. The Tribunal notes that in the circumstances - involving the initial error of Centrelink, a back payment of arrears and subsequent payment until January 2005 - concern was expressed by the applicant as to whether she may have to repay the debt, but enquiries were not made. On the face of it, the applicant did not receive the overpayment from August 2004 to 27 January 2005, in good faith as she turned a “blind eye” at least temporarily, as she delayed making enquiries until 27 January 2005, either as a form of denial that she may have been paid in error or in anticipation of having to repay it.
30. The Tribunal has noted the applicant’s submissions and her difficult personal circumstances, both in relation to herself and her children. While that places the facts in a particular context, it is not exculpatory for the applicant. However, she did make enquiries with Centrelink, not initially in October 2004, but in January 2005. She stated that she did not spend any of the arrears initially, until she ascertained that she was not going to have to repay the amount. However, while this was a significant increase in payments, the applicant did receive a letter advising her to notify Centrelink of any change or any concern about her personal details. The question must then be whether such a letter and disclaimer can exonerate Centrelink when the error to that point has clearly been solely attributable to the Commonwealth (via Centrelink). The Tribunal has formed the view it cannot so exonerate the Commonwealth as that would be tantamount to placing the customer in a position of being responsible to undertake quality control of Centrelink’s records and therefore, its errors.
31. In this circumstance, this can exculpate the applicant only where it is received in good faith. Her evidence was that she did not spend the arrears in case she had to repay the amount. She was therefore on notice and should have made enquiries. But on 27 January 2005, the applicant advised Centrelink of an increase in income to $551 per week. While updating her income on 27 January 2005, she provided evidence that she sought verification that she had not been overpaid. She received that verification in the telephone call of 27 January 2005 when reporting revised income.
32. The applicant stated that there was no mention of whether the income amount being reported was per week or per fortnight, nor did she query the Centrelink officer any further about that fact. While ordinarily, one would expect an officer of Centrelink to confirm with the applicant when there was a significant increase or decrease in income, such would occur when the basis of income changed from weekly to fortnightly. If that occurred, one would expect that it could be intuitively obvious to the Centrelink officer that income would have halved (with consequential increase in social security payments) and some verification would ordinarily be expected with the customer. If no mention is made of either weekly or fortnightly as being the basis of reporting, then the customer should ordinarily be entitled to believe that the basis of recording of frequency of income has not changed. Indeed, no further mention was made until 2 September 2005 when, again reporting an increase in income, she discovered that she had been incorrectly paid since August of 2004.
33. The Tribunal finds that the applicant enquired on 27 January 2005 as to whether she had been overpaid and received verification that she had not been overpaid. While she was previously concerned about the efficacy of the arrears payment, she felt exonerated after her enquiry. She did not attempt to clarify whether the amount she was reporting as current income in January 2005 was per week or per fortnight. As found above, the applicant was entitled to believe her previous reports were faithfully recorded. In the circumstances, whatever human frailty existed concerning her suspicions about the arrears payment, this was overcome in that she did not refuse to make reasonable enquiries. This was consistent with her level of education and insight and consistent with the level of honest enquiry which would be expected by the community. The payments from 8 October 2004 to 25 August 2005 were therefore received in good faith as defined in law. Therefore, the Tribunal finds that the payments from 8 October 2004 to 25 August 2005 were due to the sole administrative error of the Commonwealth and were received by the applicant in good faith. Payments for that period must therefore be waived.
Special Circumstances
34. Section 1237AAD also provides for waiver in “special circumstances” but this requires there to be circumstances which are “unusual, uncommon or exceptional” or circumstances which make them markedly different from the “usual run of cases”. These “special circumstances” must be circumstances other than financial circumstances alone (see Beadle v Director-General of Social Security (1985) 60 ALR 225 at 228). Special circumstances can also occur where the facts “…distinguish the case in consideration from the usual case”. (Dranichnikov v Centrelink (2003) 75 ALD 134). In considering “special circumstances”, the Tribunal would also need to take account of the following in exercising its discretion:
a.An acceptable explanation of the circumstances to justify acceptance of the applicant’s version of the facts would need to be shown;
b.The applicant should not have taken any action that might be seen to disadvantage the respondent or to avoid compliance with the law;
c.The merits of the application must be properly weighted; and
d.The period of time during which the circumstances were in existence will be relevant.
35. Having taken account of all of the circumstances, the Tribunal is not satisfied that “special circumstances” exist, other than those which have been considered above and which are relevant to justify waiver of the debt, that is, for the period 8 October 2004 to 25 August 2005.
Conclusion
36. In light of the above, the Tribunal finds:
a. that the decision under review should be set aside; and
b. the following decision be substituted
i.that the overpayment for the period 8 October 2004 to 25 August 2005 is due to the sole administrative error of the Commonwealth and was received by the applicant in good faith;
ii.that the overpayment in respect of that period is waived; and
iii.that any adjustment or refund due to the applicant be recalculated accordingly.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K Levy, Senior Member
Signed: Michelle J Brazier
Legal Research OfficerDate/s of Hearing 29 September 2006
Date of Decision 12 December 2006
The Applicant was self represented
For the Respondent Ms J Forsyth, Departmental Advocate
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