Kusuma and Secretary, Department of Social Services (Social services second review)
[2016] AATA 868
•2 November 2016
Kusuma and Secretary, Department of Social Services (Social services second review) [2016] AATA 868 (2 November 2016)
Division
GENERAL DIVISION
File Number(s)
2015/5119
Re
Ika Kusuma
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Professor R McCallum AO, Member
Date 2 November 2016 Place Sydney The Tribunal decides that the reviewable decision is varied so that the amount of the debt the applicant owes to the Commonwealth is the Parenting Payment (Partnered) payments which were made to her between 10 November 2014 and 21 January 2015.
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Professor R McCallum AO, Member
CATCHWORDS
SOCIAL SECURITY – parenting payment (partnered) – over-payment – change in circumstances – whether a debt is owed to the Commonweath – whether Centrelink was informed of partners continual earnings – not unreasonable for partner to act as agent of the applicant – whether Centrelink made an administrative error continuing payments after being informed of partners earnings – meaning of attributable “solely to an administrative error” – no special circumstances exist to waive all or part of the debt – decision varied
LEGISLATION
Social Security Act 1991, s 1068B, s 1223, s 1237A, s 1237AAD
Social Security (Administration) Act 1999, s 68
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76
REASONS FOR DECISION
Professor R McCallum AO, Member
2 November 2016
INTRODUCTION
The Applicant, Mrs Ika Kusuma was receiving Parenting Payment (Partnered) (PPP) in 2014. From 27 September 2014 she received an amount of $473.40 each fortnight. On 1 October 2014, Mrs Kusuma's husband, Mr Oral Ibrahim commenced full-time employment with Millennium Hi Tech Group Pty Ltd. Mr Ibrahim's usual gross pay per fortnight was $2,631.58.
As he had been previously receiving NewStart allowance payments, Mr Ibrahim went to the the Department of Human Services which is known as Centrelink. From the documents before this Tribunal, Mr Ibrahim attended the Centrelink office on two occasions, first, on 3 October 2014, and second, on 13 October 2014. On 10 October 2014, it appears that Mr Ibrahim coded on his Centrelink computer record, one fortnightly payment of $1,875.00 for a single fortnight. Mr Ibrahim recorded no continuing earnings.
Section 1068B of the Social Security Act 1991 (Cth) (the SS Act) is important. It provides in part as follows:
(1) If a person is a member of a couple, the person's rate of parenting payment is the benefit PP (partnered) rate.
(2) The benefit PP (partnered) rate is worked out in accordance with the rate calculator at the end of this section.
Put simply, as Mrs Kusuma and Mr Ibrahim are a couple, if Mr Ibrahim earns income, and this income exceeds specified limits, the fortnightly rate of PPP is reduced in accordance with the formula set out in Module D in section 1068B of the SS Act. If Mr Ibrahim's fortnightly income had been recorded by Centrelink, Mrs Kusuma should have not received any PPP moneys because the formula set out in Module D in section 1068B of the SS Act reduced her PPP payments to nil.
Centrelink wrote letters to Mrs Kusuma dated 9 October 2014 and 10 November 2014, advising that her husband's fortnightly income was recorded as nil. These letters required Mrs Kusuma to notify Centrelink if her partner, Mr Ibrahim, commenced employment. Mrs Kusuma continued to be paid PPP without Mr Ibrahim's earnings being taken into account in determining the rate of payment.
On 21 January 2015, Mr Ibrahim contacted Centrelink by telephone and his annual adjusted taxable income for family tax benefit was updated to $65,000. In a letter from Centrelink dated 19 March 2015, it was stated that Mrs Kusuma had received $5,207.39 and was entitled to $0.01 therefore owed $5,207.38.
On 19 March 2015, Centrelink decided to raise and recover a debt of $5,207.38 overpaid to Mrs Kusuma. Subsection 1223(1) of the SS Act gives power to Centrelink to recover over-payments which are debts owed to the Commonwealth of Australia. Subsection 1223(1) provides as follows:
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.
The Centrelink notice to Mrs Kusuma dated 19 March 2015 provided in part as follows:
As advised by your partner during a telephone conversation on 19 MAR 2015, the correct amount of your partner's earnings from Millennium Hi-Tech was not taken into account in the payments made to you. The declared income was $0.00 however the actual income was $28947.38. This means you have been overpaid $5207.38. We are, therefore, required to recover this amount.
Mrs Kusuma sought review of the decision to recover moneys from her, by an Authorised Review Officer (ARO), however, on 24 April 2015 the ARO affirmed the initial decision.
Mrs Kusuma appealed to the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT) which commenced operation on 1 July 2015. This is known as an AAT first review. On 4 September 2015, the AAT first review affirmed the decision under review, and this decision of the AAT was posted on 14 September 2015.
Mrs Kusuma now appeals to the General Division of the AAT which is known as an AAT second review.
THE ISSUES BEFORE THE TRIBUNAL
There are two issues before me as I stand in the shoes of the Secretary. The first issue is whether Mrs Kusuma owes a debt to the Commonwealth when she was paid PPP between 11 October 2014 and 13 March 2015. If a debt has been incurred, the second issue is whether grounds exist for not recovering all or part of the debt.
THE HEARING
Mrs Kusuma and Mr Ibrahim attended the hearing, together with their small son.
The Evidence of Mr Oral Ibrahim
Mr Oral Ibrahim gave evidence by affirmation. I found him to be an honest witness who answered the questions put to him to the best of his recollections. He said that he is the husband of Mrs Kusuma.
Mr Ibrahim said that he was made redundant after ten years’ service. He was unemployed for about nine months. He did not immediately receive NewStart payments because he had a redundancy payment.
Mr Ibrahim said that he commenced employment on 1 October 2014 as a manager of Millennium Hi Tech Group's maintenance department. He said that he became unemployed in 2015, but that he was still employed by Millennium Hi Tech Group on 13 March 2015.
Mr Ibrahim said that he attended Centrelink before he commenced his job on 1 October 2014 and that he was told to submit this information online.
It was explained to Mr Ibrahim that Centrelink's records show that he visited Centrelink on 3 October 2014 and on 13 October 2014. Mr Ibrahim agreed that he did attend on those dates.
It was explained to Mr Ibrahim that Centrelink records show that on 10 October 2014, he coded on his Centrelink computer record, one fortnightly payment of $1,875.00 for a single fortnight. The records further show that Mr Ibrahim recorded no continuing earnings.
Mr Ibrahim explained that he was not able to record all of the information online because it does not allow all relevant information to be coded. Mr Ibrahim stated that on 21 January 2015, he telephoned Centrelink to update family tax benefit. He said that he rang them up because he noticed in his bank statement that he had extra pay. He said he did not know where it was from. Mr Ibrahim said that he was told it was PPP payments and that everything was okay.
Mr Ibrahim obviously gave Centrelink information over the telephone of his current income because the records show that his annual adjusted taxable income for family tax benefit was updated to $65,000.
Mr Ibrahim was asked about the two letters which Centrelink sent to Mrs Kusuma dated 9 October 2014 and 10 November 2014. He said that he did take the 9 October letter with him to Centrelink when he went there on 13 October.
Mr Ibrahim said that he did take the 10 November letter to Centrelink. It was put to him in cross-examination that there was no record of his attendance after 10 November. He said that he cannot recall the date of this visit, but he did attend the Centrelink office with both of the letters.
Mr Ibrahim was asked were there any special circumstances in their situation why any debt should be waived. Mr Ibrahim said that there were no special circumstances. They were up to date with their rental and electricity bills.
The Evidence of Mrs Ika Kusuma
Mrs Ika Kusuma gave evidence by affirmation. Mrs Kusuma found it difficult to give her evidence in English.
Mrs Kusuma said that she did receive the letters from Centrelink dated 9 October 2014 and 10 November 2014. She said that she handed them to Mr Ibrahim, her husband. She explained that as her English is not very good her husband takes care of the correspondence and contact with Centrelink.
Mrs Kusuma was asked in cross-examination if she had contacted Centrelink. She said "no" and that her husband does it all.
CONSIDERATION
There are two issues before me. The first issue is whether Mrs Kusuma owes a debt to the Commonwealth when she was paid PPP between 11 October 2014 and 13 March 2015. If a debt has been incurred, the second issue is whether grounds exist for not recovering all or part of the debt.
Does Mrs Kusuma owe a debt to the Commonwealth when she was paid PPP between 11 October 2014 and 13 March 2015?
Between 11 October 2014 and 13 March 2015, Mrs Kusuma received PPP payments totalling $5,207.38. If Mr Ibrahim's fortnightly income had been recorded by Centrelink, Mrs Kusuma should have not received any PPP moneys because the formula set out in Module D in section 1068B of the SS Act reduced her PPP payments to nil.
However, Subsection 1237A of the SS Act provides as follows:
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.
Paragraph 5.4 of the Respondent's statement of facts, issues and contentions is as follows:
At the hearing before the AAT1, the applicant's husband gave evidence that he twice attended Centrelink in person and advised of his return to work. In the application for review, the applicant contends that "...on 9 Oct[ober] 2014 [Mrs Kusuma] received letter from Centrelink to update husband's earnings. 13 Oct[ober] 2014 husband went and updated." Centrelink records confirm that the applicant's husband attended Centrelink in person on 3 October 2014 and 13 October 2014, but are silent as to whether he advised of continuing earnings. Given the paucity of evidence, the Secretary is prepared to concede that the debt for the period from 11 October 2014 to 10 November 2014 is attributable solely to an administrative error made by Centrelink, and may be waived under s 1237A of the Act.
At the commencement of the hearing, I asked Ms Musgrove who appeared for the Respondent, whether this paragraph was a concession by the Respondent.
Ms Musgrove replied that at this point, the Secretary would like to keep the question of the debt during the period of 11 October 2014 to 10 November 2014 open until the evidence is heard.
After the evidence of Mr Ibrahim and Mrs Kusuma had been given, Ms Musgrove said that the Secretary will not press any argument in relation to the period identified in para 5.4 of the Respondent's statement of facts, issues and contentions which I have set out above.
Therefore, I am required to decide whether Mrs Kusuma incurred a debt to the Commonwealth between 10 November 2014 and 13 March 2015.
In her evidence, Mrs Kusuma said that she did receive two letters from Centrelink dated 9 October 2014 and 10 November 2014. These letters requested her to notify Centrelink if there were any changes in her circumstances. The earning of a salary by Mr Ibrahim was a change in her circumstances.
In her evidence, Mrs Kusuma said that she handed these letters over to Mr Ibrahim as he handles these things for her.
After hearing Mrs Kusuma give her evidence, I find that her English is poor. The two letters from Centrelink are relatively complex documents. I further find that in these circumstances it was appropriate for Mrs Kusuma to hand over these letters to her husband who was able to act as her agent.
In his evidence, Mr Ibrahim said that he did take the letter of 10 November 2014 to Centrelink, but he could not recall the date of this visit. No visit by Mr Ibrahim to Centrelink is recorded at this time. Having regard to these circumstances, I find that Mr Ibrahim was mistaken when he said that he took the letter to Centrelink. I further find that Mr Ibrahim did not contact Centrelink from 10 November 2014 until his telephone call of 21 January 2015.
I find that Mrs Kusuma does owe a debt to the Commonwealth comprising the PPP paid to her from 10 November 2014 to 21 January 2015.
Whether Mrs Kusuma owes a debt to the Commonwealth for the PPP paid to her from 21 January 2015 to 13 March 2015 is a more difficult issue. Mr Ibrahim did telephone Centrelink on 21 January 2015, and he did update his annual adjusted taxable income for family tax benefit to $65,000. The ARO wrote the following in the decision letter which was addressed to Mrs Kusuma and was dated 24 April 2015:
In respect of your partners [Mr Ibrahim] contact with the department on the 21 January 2015, where he updated his Family Tax Benefit income estimate, I acknowledge that the department, being aware your partner was working, made an error in not adjusting your reporting obligations such that you were required to report his income prior to you receiving payments. I am not however satisfied that your partner advised the department at this time of a regular wage earned each fortnight and as you also did not advise of this I am not satisfied that the debt after this date can be considered to be solely attributable to departmental error.
I agree with the ARO that Centrelink made an administrative error on or just after 21 January 2015. The document recording Mr Ibrahim's telephone call to Centrelink on 21 January is brief. The document shows that Mr Ibrahim did give Centrelink details of his income. The document does not disclose what other information, if any, Mr Ibrahim may have given to Centrelink. Centrelink did not immediately stop the PPP payments to Mrs Kusuma.
Are the PPP payments which were made to Mrs Kusuma between 21 January 2015 and 13 March 2015 attributable "solely to an administrative error" within the meaning of Subsection 1237A of the SS Act which I have reproduced above?
In the first instance decision in the Federal Court of Australia in Secretary, Dept. Family and Community Services vSekhon [2003] FCA 76, Wilcox J Stated at [41] as follows:
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.
Under section 68 of the Social Security (Administration) Act 1999 (Cth), Mrs Ibrahim was required to respond to the letters dated 9 October 2014 and 10 November 2014 and to inform Centrelink of any changes in her family's income. As I have found that Mrs Kusuma's English is poor, it was not unreasonable for her to pass the letters to her husband, Mr Ibrahim, to act as her Agent.
Mr Ibrahim did not inform Centrelink of his income until 21 January 2015. As I have found above, Mrs Kusuma has incurred a debt to the Commonwealth for PPP payments received between 10 November 2014 and 21 January 2015.
However, having regard to all of the circumstances, I find that the payments of PPP which were made between 21 January 2015 and 13 March 2015 were solely due to an administrative error of Centrelink.
Conclusion as to debt
For the reasons set out above, I find that Mrs Kusuma does owe a debt to the Commonwealth in the amount of the PPP payments which were made to her between 10 November 2014 and 21 January 2015.
Do grounds exist for not recovering all or part of the debt?
Section 1237AAD of the SS Act empowers the Secretary to waive all or part of the debt incurred by Mrs Kusuma, if special circumstances exist. Section 1237AAD provides as follows:
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.
The words "special circumstances" appear in several provisions of the SS Act.
In AngelakosvSecretary, Department of Employment and Workplace Relations [2007] FCA 25, Besanko J examined the relevant case law in some detail. He then stated as follows:
33. ... I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word 'exceptional' is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words 'unusual' or 'uncommon' are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
I agree with this summation of the authorities.
In his evidence, Mr Ibrahim said that he could think of no special circumstances as they were up to date with their rental and electricity payments. There is nothing in Mrs Kusuma's circumstances which would enliven this special circumstances discretion to waive all or any of this debt.
DECISION
The decision under review is varied. Mrs Kusuma does owe a debt to the Commonwealth. The amount of the debt is the Parenting Payment (Partnered) payments which were made to her between 10 November 2014 and 21 January 2015.
I certify that the preceding 54 (fifty -four) paragraphs are a true copy of the reasons for the decision herein of Professor R McCallum AO, Member
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Associate
Dated 2 November 2016
Date(s) of hearing 7 October 2016 Advocate for the Applicant Mr O Ibrahim Solicitors for the Respondent Ms H Musgrove, Department of Human Services
Key Legal Topics
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Administrative Law
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Statutory Interpretation
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Procedural Fairness
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