Katte; Secretary, Department of Social Services and (Social services second review)
[2016] AATA 860
•31 October 2016
Katte; Secretary, Department of Social Services and (Social services second review) [2016] AATA 860 (31 October 2016)
Division
GENERAL DIVISION
File Number
2016/2775
Re
Secretary, Department of Social Services
APPLICANT
And
Lorraine Katte
RESPONDENT
DECISION
Tribunal Dr L Bygrave, Member
Date 31 October 2016 Place Sydney The decision of the Social Security and Child Support Division of the Tribunal made on 26 April 2016 is set aside and in substitution, the Tribunal decides that Lorraine Katte incurred a debt for overpayment of aged pension for the period of 20 January 2012 to 20 November 2015 in the amount of $32,978.75.
..................[sgd]......................................................
Dr L Bygrave, Member
CATCHWORDS
SOCIAL SECURITY - aged pension - overpayment of aged pension - rate of pension - where change in assets and income not declared - whether debt should be written off - whether debt should be waived due administrative error - whether debt should be waived due to special circumstances - decision set aside and substituted
LEGISLATION
Social Security Act 1991 (Cth) ss 8(1), 9, 1064, 1223(1), 1236, 1237A, 1237AAD
Social Security (Administration) Act 1999 (Cth) ss 68, 72
CASES
Brian Murphy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 115
Ivor Biddlecombe and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 451
Groth v Secretary Department of Social Security [1995] FCA 1708
Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76REASONS FOR DECISION
Dr L Bygrave, Member
31 October 2016
INTRODUCTION
The respondent, Ms Lorraine Katte, was granted the aged pension from 20 January 2012 pursuant to the provisions of the Social Security Act 1991 (Cth) (the Act).
Between 12 August 2015 and 2 December 2015, Ms Katte provided Centrelink with updated information about the value of her financial investments and income stream. Based on this information, Centrelink affirmed an internal decision on 4 December 2015 to raise and recover a debt in the amount of $32,978.75 due to the overpayment of the aged pension to Ms Katte in the period 20 January 2012 to 20 November 2015.
On 12 February 2016, Ms Katte applied to the Social Services and Child Support Division (SSCSD) of the Administrative Appeals Tribunal for a review of Centrelink’s decision.
The SSCSD set aside the decision made by Centrelink on 26 April 2016 and substituted its decision that Ms Katte did not have a debt due to the overpayment of aged pension in the period 20 January 2012 to 20 November 2015 because the debt was attributable solely to an administrative error made by the Commonwealth.
The Secretary applied to the General Division of the Administrative Appeals Tribunal on 24 May 2016 for a review of the SSCSD decision.
The matter was heard in Sydney on 19 October 2016. Ms Katte attended the hearing in person and was self-represented.
ISSUES
The determinative issues before the Tribunal are whether:
(a)Ms Katte was overpaid the aged pension in the amount of $32,978.75 in the period 20 January 2012 to 20 November 2015;
(b)there are any grounds for writing off or waiving all or part of the debt.
RELEVANT LEGISLATION AND CONSIDERATION
The rate of a person’s age pension is calculated in accordance with s 1064 of the Act and is affected by factors including a person’s income and assets. The age pension consists of payments such as a pension supplement, telephone allowance, pharmaceutical allowance and rent assistance.
An income test and assets test determines a person’s rate of payment. ‘Income’ is defined in s 8(1) of the Act as an amount ‘earned, derived or received’ by a person for their ‘own use or benefit’. ‘Financial asset’ is defined in s 9 of the Act as including available money, or money that is deposited in a financial institution account or a managed investment.
Pursuant to s 72 of the Social Security (Administration) Act 1999 (Cth) (Administration Act), Ms Katte periodically received notices from Centrelink that set out her requirement under ss 68(1) and (2) of the Administration Act to advise Centrelink of any changes to her circumstances within 14 days of the change occurring. For example, on 13 February 2012, Centrelink sent a notice to Ms Katte that stated:
WHAT YOU HAVE TO TELL US ABOUT You must tell us within 14 days ... if any of the things listed below happen, or may happen. ... This is an information notice given under social security law. If your income changes ... you receive a lump sum amount of money or one-off payment from any source ... if your assets change ... if your assets change substantially...[1]
... This request is an information notice given under social security law... RATE OF PAYMENT – your future rate of payment may change depending on the amount of your ... other income or assets ... Note: Your Age Pension is currently paid under the income test ... You must tell Centrelink within 14 days ... if any of the things listed below happen or are likely to happen to you ... changes in superannuation pensions ... manage investments ... get any money from any other source...[2]
[1] Exhibit T1-T6, p 93.
[2] Exhibit T1-T7, p 96.
At the Tribunal hearing, Ms Katte accepted that she received these notices and said that she informed Centrelink about her income and assets between 2012 and 2015. She stated that, when she received notices from Centrelink, she would immediately phone and then meet with Mr Ken Jones (her financial adviser) to obtain a report that set out her financial assets, a ‘Portfolio Watch Report’, which she would then take to the Baulkham Hills Centrelink office. Ms Katte told the Tribunal she would provide the report to the Centrelink staff in person, who would then photocopy the report and return it to her. She was not given any receipt or document from Centrelink to verify this transaction. Unfortunately for Ms Katte, these transactions do not appear to have been recorded by Centrelink.
Ms Katte also told the Tribunal that she attended a Centrelink office on two occasions to inform Centrelink that she had inherited her mother’s home; the first occasion was about two days after her mother passed away on 20 September 2013 and the second occasion was several weeks later to confirm Centrelink had recorded this information. On the second occasion, Ms Katte said that she was told by the Centrelink staff that this information was on her file. Ms Katte was not provided with a document to verify these transactions and again, this information does not appear to have been recorded by Centrelink.
In particular, until 28 September 2015, Centrelink appears to have had no record that Ms Katte purchased an investment portfolio in the amount of $490,716.57 on 8 March 2012 and inherited her mother’s home in December 2013.
In a letter to Centrelink dated 28 September 2015, Ms Katte stated that she:
physically notified Centrelink at/around March/April 2012 of the commencement of the income stream … shortly after “rolling-over” my Superannuation monies … [and] made a further 2-3 visits to the Baulkham Hills office of Centrelink and provided the Income Stream Schedules … that ‘The Portfolio Service’ sent to me’.[3]
[3] Exhibit T1-T11, p 108.
There was extensive evidence taken at the Tribunal hearing in relation to a Centrelink notice sent to Ms Katte on 6 July 2012. This notice was sent to Ms Katte pursuant to s 72 of the Act and stated:
Please check the information on this statement carefully. If the details on this statement are correct there is no need for you to contact Centrelink. If your circumstances have changed please contact us within 14 days. This request is an information notice given under social security law. [emphasis in original] [4]
[4] Exhibit R1.
Ms Katte told the Tribunal that she would have received this notice within about two days of 6 July 2012 and taken it immediately to Mr Jones. He would then have provided her with an updated report for her to take to Centrelink.
At the Tribunal hearing, Mr Jones confirmed he did not personally deal with Centrelink on Ms Katte’s behalf until 29 December 2015 when Ms Katte lodged an authority for him to enquire or act on her behalf.[5]
[5] Exhibit T1-T17, pp 170-171.
Mr Jones gave evidence to the Tribunal that his office received the Centrelink notice dated 6 July 2012 in September 2012 because his copy of the notice was stamped ‘COPY’ with the date received ‘14 September 2012’. Mr Jones also told the Tribunal that the Centrelink notice dated 6 July 2012 contained errors in relation to Ms Katte’s financial assets and that he therefore would have provided an updated report for Ms Katte to take to Centrelink.
In a letter addressed to Ms Katte dated 13 July 2016, Mr Jones confirmed:
… that following a meeting with yourself at [my] office on 12/10/2012 I provided to you an updated Portfolio Watch Report showing the total of your Allocated Pension with ‘The Portfolio Service’. I advised you to personally take the report … to Centrelink in order that your investments be correctly reconciled with the Department’s records – you shortly after telephoned our office and advised that this had been done.
The information in this letter indicates that the Centrelink notice dated 6 July 2012 was not responded to by either Ms Katte or Mr Jones until 12 October 2012, more than three months after Ms Katte received the notice.
The records of the Department of Human Services that list all contacts Ms Katte had with Centrelink from January 2012 to April 2016 do not show Ms Katte attended any Centrelink office at or around the period of July to October 2012.[6]
[6] Exhibit T1-T19.
On the basis of the evidence before me, I find that Ms Katte did not comply with the requirements of the Centrelink notice dated 6 July 2012 because this notice contained incorrect details and Centrelink was not informed about these errors within 14 days of the notice.
Is there a debt for the period 20 January 2012 to 20 November 2015?
Subsection 1223(1) of the Act provides:
Debts arising from lack of qualification, overpayment etc.
(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 the 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.
Based on the evidence before the Tribunal, I am satisfied that Ms Katte received income from her financial assets for the period of 20 January 2012 to 20 November 2015. I am also satisfied that Centrelink was not aware of the updated details of Ms Katte’s income and financial assets, and consequently, Ms Katte was paid the age pension at a higher rate than she was eligible to receive.
I find that Ms Katte was overpaid the age pension in the amount of $32,978.75 for the period 20 January 2012 to 20 November 2015.[7] The decision of the Authorised Review Officer found that $2,019.93 of this debt should be waived as that amount arose solely due to administrative error, thus reducing the debt to $32,978.75. Noting that this reduction is not contested by the Secretary, I find that waiving $2,019.93 of the debt is appropriate.
Are there any grounds for writing off or waiving all or part of the debt?
[7] Exhibit T1-T14, p 122 and T1-T15, p 160.
Should the debt be written off?
Section 1236 of the Act provides, in part:
Secretary may write off debt
(1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(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
(a)the debtor has no capacity to repay the debt; or
(b)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(c)it is not cost effective for the Commonwealth to take action to recover the debt.
There is no evidence to suggest that any of the conditions set out in s 1236(1A) are met. I am not satisfied that the debt should be written off.
Should the debt be waived by reason of ‘administrative error’?
Pursuant to s 1237A of the Act, a debt arising from error may be waived:
Waiver of debt arising from error
Administrative error
(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. [emphasis added]
The Secretary submits that Ms Katte’s ‘debt for age pension was not attributable solely to an administrative error but was caused by other factors, namely [her] failure to report “things that happen or may happen” in accordance with her social security obligations’. [emphasis in original][8]
[8] Secretary’s Statement of Facts, Issues and Contentions, dated 27 September 2016, para 5.10.
In Secretary, Department of Family and Community Services v Sekhon, Wilcox J stated:
However, it seems to me, the Tribunal failed to consider the significance of the inclusion, in s 1237A(1), of the word “solely”. For the subsection to have effect, the “proportion” of the debt – in this case, it is common ground, that would be the whole of it – must be “attributable solely” to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes. [emphasis added] [9]
[9] [2003] FCA 76, at [41].
I also have regard to previous decisions of this Tribunal[10] which said that ‘Centrelink is not required to advise claimants about their legal rights to any particular social security payment or the rate of payment’.[11]
[10] Brian Murphy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 115; Ivor Biddlecombe and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 451.
[11] Brian Murphy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 115 at [9].
Ms Katte’s evidence to the Tribunal indicates that Centrelink has made administrative errors in relation to accurately recording her financial assets and income. However, as set out in paragraphs 15 to 22 of these reasons, there is no evidence of sole administrative error by the Commonwealth in relation to this debt because when Ms Katte received the notice from Centrelink dated 6 July 2012, she did not inform Centrelink about errors in the notice within 14 days.
I therefore cannot be satisfied the debt should be waived as the debt was not attributable solely to administrative error by the Commonwealth.
Should the debt be waived by reason of ‘special circumstances’?
Subsection 1237AAD of the Act provides:
Waiver 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.
In Groth v Secretary Department of Social Security, the Federal Court said:
… The phrase ‘special circumstances’, it has been said, although imprecise is sufficiently understood not to require judicial gloss… it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied... [emphasis added] [12]
[12] [1995] FCA 1708.
At the Tribunal hearing, Ms Katte provided medical reports from Dr Ofo Niumeitolu dated 30 May 2016 and Dr Kevin Trac dated 18 July 2016 about recent eye operations that are currently affecting her vision.[13]
[13] Exhibit R2.
Ms Katte did not tell the Tribunal that she is in financial hardship. She lives in an unencumbered home and has financial assets that generated an annual income of approximately $22,570 in 2015-2016.[14] She also accepted that she would continue to repay the debt if that was the decision of the Tribunal.
[14] Exhibit T1-T11, p 109.
Unfortunately for Ms Katte, there is nothing which takes her situation out of the ‘usual or ordinary case’ and no occurrence that is ‘unfair, unintended or unjust’ that would support her experiencing ‘special circumstances’. I am not satisfied that any or all of Ms Katte’s debt, other than the $2,019.93 waived by the Authorised Review Officer, should be waived.
CONCLUSION
The decision of the SSCSD made on 26 April 2016 is set aside and in substitution, the Tribunal decides that Ms Katte incurred a debt for overpayment of aged pension for the period of 20 January 2012 to 20 November 2015 in the amount of $32,978.75.
I certify that the preceding 39 (thirty -nine) paragraphs are a true copy of the reasons for the decision herein of Dr L Bygrave, Member. .................[sgd].......................................................
Associate
Dated 31 October 2016
Date of hearing 19 October 2016 Date final submissions received 19 October 2016 Applicant In person Solicitors for the Respondent Dr S Thompson; Department of Human Services
Key Legal Topics
Areas of Law
-
Administrative Law
-
Statutory Interpretation
Legal Concepts
-
Judicial Review
-
Procedural Fairness
-
Statutory Construction
-
Remedies
-
Appeal
-
Jurisdiction
0
3
0