KEITH RIPPS and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS

[2009] AATA 300

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 300

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/6152

GENERAL ADMINISTRATIVE DIVISION		)
Re		KEITH RIPPS

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date30 April 2009

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

....................[Sgd].................

Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – age pension – failure to give notification of income – overpayment of age pension a debt due to the Commonwealth – no basis for writing off debt – no basis for waiver of debt – decision affirmed

Social Security Act 1991 (Cth), ss 43, 55, 1064, 1236, 1237A, 1237AAD
Social Security Act (Administration) 1999 (Cth), s 68

Director‑General of Social Services v Hangan (1982) 70 FLR 212
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Re Haggerty and Secretary, Department of Education, Training and Youth Affairs (2001) 67 ALD 129

REASONS FOR DECISION

30 April 2009 Mr R G Kenny, Member     

BACKGROUND

1.      From 1994, Keith Ripps was in receipt of the age pension, which is a form of income support payable in accordance with the terms of the Social Security Act 1991 (“the Act”).  On 7 April 2008, a Centrelink officer determined that Mr Ripps had been overpaid in relation to his age pension entitlements in the amount of $49,667.76 during the period from 22 December 1999 until 18 April 2006 (“the overpayment period”).  It was also determined that this was a debt owed by Mr Ripps to the Commonwealth.  The decision was affirmed by an authorised review officer with Centrelink on 20 May 2008 and, in turn, by the Social Security Appeals Tribunal (“the SSAT”) on 25 November 2008.  The matter now comes before the Tribunal. 

ISSUES AND LEGISLATION

2. The qualifications for and the rate of age pension is determined in accordance with ss 43, 55 and 1064 of the Act. It is common ground that, at all material times, Mr Ripps was qualified for the age pension and that, at all material times, the rate of those payments was dependent on his income. Mr Ripps conceded that his income during the overpayment period, that the level of age pension to which he was entitled during the overpayment period and that the amount of the overpayment to him and consequential debt to the Commonwealth of $49,667.76 had been correctly calculated.

3. Mr Ripps contended that the debt should be waived on the basis that it had arisen solely through error on the part of the Commonwealth. That is the issue to be determined by the Tribunal. Consideration will also be given to whether the debt should be written off. Relevant provisions are ss 1236, 1237A and 1237AAD of the Act.

EVIDENCE

Mr Ripps and Mark Ripps

4.      Mr Ripps and his son, Mark, attended the hearing and gave evidence.  Shortly after the age pension was granted, Mr Ripps received a letter from Centrelink which advised that his age pension was calculated on the basis of his income.  It nominated his income level as being $21 per year and the letter required Mr Ripps to advise Centrelink if his income exceeded $47 per week.  Mr Ripps discussed the letter with Mark and he concluded that the reference to $21 per year was a joke.  He did not contact Centrelink for any clarification. 

5.      Mr Ripps and Mark have owned a boat for over 30 years and they had attempted to use it in the tourist industry to earn income.  Until 2000, almost no income was generated.  However, they formally became business partners in 2000.  On the advice of his accountant, Mr Ripps advised Centrelink of this but, at that stage, he was advised that the then level of his income was below that which would impact upon his age pension payments.  Thereafter, the partnership became reasonably successful from 2000 until 2006.  No income has been earned since then but Mr Ripps’ taxable income for the interim years was: 1999-2000 ($5,871); 2000‑2001 ($7,862); 2001-2002 ($24,583); 2002-2003 ($27,842); 2003-2004 ($32,443); 2004-2005 ($39,321); and 2005-2006 ($14,690).  Mr Ripps gave Centrelink no information about his income until 2005.  He was aware of the level of his income over those years because he maintained a record of income and expenses which he forwarded monthly to his accountant. 

6.      Mr Ripps spoke by telephone to Centrelink in September 2004 and an interview was arranged for 9 September 2004 between him and a Centrelink officer.  Mr Ripps attended the Centrelink premises at the appointed time but was kept waiting in a queue for a period long enough for him to be concerned that he needed to attend to business with the boat.  Mr Ripps left the office without taking part in the interview.  Mr Ripps was in contact with Centrelink again on 31 October 2005.  He provided his 2004-2005 tax return and was requested to supply all tax returns from the commencement of his partnership with Mark.  He and Mark searched their partnership records and located some of the returns.  They contacted the Australian Taxation Office to obtain copies of the missing returns.  The full set of returns was eventually provided to Centrelink in April 2006.

7.      Mr Ripps believed that he did not have to provide details about the ownership of the boat or the boating business because he had provided relevant information about these in the years before he began to receive the age pension.  In those years, he had been in receipt of the newstart allowance.  He also believed that Centrelink would gain access to his annual tax returns and that, if there were any discrepancies in his income amounts, Centrelink would be able to reconcile these at the end of each financial year. 

8.      Mr Ripps said that he was not aware that the level of his age pension payment was dependent on his income levels. 

9.      In relation to his present circumstances, Mr Ripps confirmed that he has been repaying the debt from his current age pension payments in the amount of $35 per fortnight.  He lives with Mark in their own home and they are largely self-sufficient in relation to their food needs because of their concentration on gardening pursuits.  Mark is not employed and Mr Ripps’ only income is his age pension.  They live a simple life and are able to cope “quite well” on their present income.  Neither Mr Ripps nor Mark have any serious health concerns. 

Other evidence

10.     Material in evidence included copies of Centrelink documentation.  These included a letter, dated 10 November 1995, to Mr Ripps.  This advised him that his age pension was being paid to him on the basis of annual earnings of $21.  It included a range of matters about which Mr Ripps was to advise Centrelink.  One of these was if his income exceeded $47 per week.

11.     Copies of tax returns were also in evidence.  They show Mr Ripps’ taxable income for the years 1999-2000 to 2005-2006 in the same terms as set out above.

12.     In evidence was a Centrelink file note relating to the arrangements for 9 September 2004.  The note confirms that Mr Ripps attended but was unable to remain for the interview.  Centrelink file notes also record the interchange between Centrelink and Mr Ripps on 31 October 2005.  It records the receipt of the 2005 tax return and a request to Mr Ripps to provide copies of the other tax returns from 2000 onwards.

SUBMISSIONS 

13.     Mr Hamilton submitted that the debt to the Commonwealth of $49,667.76 was established on the materials in evidence.  He submitted that there was no basis for either writing off or waiving the debt.  Mr Ripps submitted that the overpayments were made solely through the fault of Centrelink in that they had information of his boat business from before 1994, that he advised them of the partnership with Mark in 2000 and that Centrelink should have been able to check income levels through obtaining information from the Australian Taxation Office each year. 

CONSIDERATION

14.     Mr Ripps conceded the existence of the debt of $49,667.76.  Having considered the material relating to the calculation of the amount of that debt, I am satisfied that this concession was properly made.  The issue for determination is whether the debt should be written off or waived.

Writing off debt

15. Provision is made for a debt to be written off under s 1236 of the Act. This is the case if the debt is irrecoverable at law; or the debtor has no capacity to repay the debt; or the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or it is not cost effective for the Commonwealth to take action to recover the debt. The only component of that provision of potential relevance on this matter is that relating to lack of capacity to repay the debt. Mr Ripps is now repaying the debt to the respondent through deductions from his current age pension payments and I am reasonably satisfied that there is no lack of capacity for the debt to be repaid on that continuing basis. In that situation, the debt should not be written off.

Waiver of debt: s 1237A of the Act

16.A debt may be waived under s 1237A of the Act, which reads:

“1237A 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.

…

(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”.

17. The first element to be satisfied under s 1237A(1) of the Act is that the debt must be attributable solely to an administrative error made by the Commonwealth. I have noted Mr Ripps’ contention about information provided to Centrelink about the boat before he began to receive the age pension. That does not amount to error by the Commonwealth. His circumstances had changed. He was no longer receiving newstart allowance but the age pension. The nature of the use of the boat had changed in that, from 2000, he was in a formal business partnership with his son.

18.     There is prospect of error by Centrelink from 31 October 2005.  On that date, Centrelink had Mr Ripps’ 2005 tax return in its possession.  This indicated a level of income in excess of the $21 per year on which Mr Ripps’ age pension payments had been based since they commenced.  It also indicated a level higher than the $47 per week of which Mr Ripps had been requested to advise Centrelink.  However, I am satisfied that Centrelink did not ignore that information.  Rather, it requested further details.  For reasons not fully explained by Mr Ripps, the additional documents were not received by Centrelink for almost six months.  At that time, when all relevant information was before it, Mr Ripps’ age pension was suspended. 

19. It was also the case that Mr Ripps was under an obligation to provide Centrelink with the information requested in the letter of 10 November 1995. This letter was a notice, as provided for in s 68 of the Social Security (Administration) Act 1999, as it read at that time, which obliged a recipient to provide requested information. This included the requirement to advise Centrelink if income exceeded $47 per week. This threshold was exceeded by Mr Ripps in each year from 1999‑2000 onwards but no income advices were provided to Centrelink before October 2005. That failure continued in effect throughout the overpayment period and, therefore, contributed to the overpayment of Mr Ripps’ age pension. In its terms, s 1237A(1) of the Act requires that the overpayment arose solely by reason of Commonwealth error. This will not be satisfied if there has been some contribution to the causing of the debt by the recipient[1].  I am satisfied that Mr Ripps contributed to the overpayment through his failure to provide relevant information to Centrelink about his income.

[1] Director‑General of Social Services v Hangan (1982) 70 FLR 212 at 215, 225 and 235.

20. Even if it were the case that the debt arose through sole Commonwealth error, a futher requirement of s 1237A(1) of the Act is that the payments must have been received by Mr Ripps in good faith. This requires a consideration of Mr Ripps’ state of mind and his knowledge of the circumstances in which he received the age pension[2].  In that regard, I do not accept his evidence that he was not aware that the level of his age pension payment was dependent on his income levels.  Centrelink advised him by letter at the time of the commencement of his age pension that the level of payments was related to his income.  It gave the relevant annual income figure as $21 and Centrelink required him to advise if his income exceeded $47 per week.  Mr Ripps’ evidence was that the references to the amounts of income were not taken seriously by him and he chose to ignore the information.  In 2000, he reported the commencement of a business partnership with Mark.  His income at that time was below the level which would affect his age pension and Mr Ripps was so advised.  Yet, he continued to ignore the relevance of income until 2005 while the partnership with his son was profitable.  The extent of that profitability was well known to him because he completed monthly records of the dealings of the business and forwarded these to his accountant. 

[2] See Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424 and Re Haggerty and Secretary, Department of Education, Training and Youth Affairs (2001) 67 ALD 129.

21.     I am satisfied that Mr Ripps turned “a blind eye” to the information given to him by Centrelink about the relevance of his income to the level of his age pension.  His conduct, in that sense, demonstrates an absence of good faith on his part in continuing to receive the maximim level of age pension through the overpayment period[3]. 

[3] See Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424 at 436 [41].

22. The debt may not be waived under s 1237A of the Act.

Waiver of debt: s 1237AAD of the Act

23. A debt may also be waived under s 1237AAD of the Act which reads:

“s1237AAD 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 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”.

24. The Act provides no guidance as to the meaning of the term “special circumstances” in s 1237AAD of the Act. In Groth v Secretary, Department of Social Security[4], Kieifel J observed that special circumstances:

“would require something to distinguish ... [the] ... case from others, to take it out of the usual or ordinary 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”.

[4] (1995) 40 ALD 541at 545.

25. No submissions were made on Mr Ripps’ behalf for waiver on this basis. Mr Ripps and his son own their own home, are in reasonable health and are able to meet their financial obligations on their current income. I am satisfied that Mr Ripps’ situation is not one which falls below the standard applicable to the usual or ordinary case of a social security recipient. In that situation, the debt may not be waived under s 1237AAD of the Act.

DECISION

26.     The decision under review is affirmed.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member

Signed:  .......................[Sgd]....................................................

Mátyás Kochárdy, Research Associate

Date of Hearing  15 April 2009
Date of Decision  30 April 2009
Applicant was assisted by his son, Mr Mark Ripps          
Solicitor for the Respondent     Mr R Hamilton, Departmental Advocate