LAURELEA HENDERSON and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
[2010] AATA 550
•23 July 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 550
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/0556
GENERAL ADMINISTRATIVE DIVISION ) Re LAURELEA HENDERSON Applicant
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Dr K S Levy RFD, Senior Member Date23 July 2010
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
...................[Sgd].....................
Senior Member
CATCHWORDS
SOCIAL SECURITY – Newstart allowance – Payment of the correct rate – Did overpayment occur – Debt due to the Commonwealth – Debt should not be waived or written off – Decision affirmed.
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth) ss 1068, 1223, 1236, 1237A, 1237AAD
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9
Beadle and Director General of Social Security (1984) 6 ALD 1
Beadle v Director General of Social Security (1985) 7 ALD 670
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
McDonald v Direction-General of Social Security (1984) 6 ALD 6
Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729
Department of Social Security v Hales (1998) 51 ALD 695
REASONS FOR DECISION
23 July 2010 Dr K S Levy RFD, Senior Member INTRODUCTION
1. The applicant, Laurelea Henderson, is in receipt of newstart allowance. She is also self-employed in a cleaning business on the Gold Coast. Based on her rate of income in the 2008-2009 financial year, Centrelink determined that she was overpaid newstart allowance and on 30 November 2009, a debt of $2759.25 was raised against her for the period 4 September 2008 to 24 June 2009. That determination required the debt to be repaid by Ms Henderson.
2. The decision was further reviewed by the Social Security Appeals Tribunal (SSAT) which, after reconsidering the evidence, affirmed the decision (see decision of 25 January 2010). The applicant now seeks review by this Tribunal.
ISSUES
3. The issues to be determined by this Tribunal are:
(1)Whether Ms Henderson was paid newstart allowance at the correct rate? More specifically, should the rate of newstart allowance be calculated on the annual income reported on her 2008/2009 income tax return for the financial year 2008/2009?
(2) Whether Ms Henderson was overpaid newstart allowance?
(3) If she was overpaid, whether there a debt due to the Commonwealth?
And;
(4) Should the debt be waived or written off?
EVIDENCE
4. The applicant’s case is that Centrelink has used incorrect figures even though she provided Centrelink with all of her profit and loss accounts for her business. Centrelink’s case is that Ms Henderson incorrectly informed Centrelink of her net income figures and that the correct figures are those which were produced by her tax agent. Centrelink submitted that the figures prepared by her tax agent clearly indicate that the applicant’s income was higher in the 2008/2009 financial year then the level of newstart allowance to which she was entitled.
5. The evidence shows that –
· The applicant has some health problems but does some cleaning work on a part-time basis.
· The applicant provided income figures to Centrelink every three months.
· The applicant provided tax returns for the 2007/2008 and 2008/2009 financial years to Centrelink on 2 September 2009.
· The net income of these tax returns were inconsistent with the figures that Ms Henderson had supplied to Centrelink and on which the social security payments for the 2008/2009 year were calculated.
6. I note in the ARO decision that after taking account of the adjusted deductions (i.e. allowable for taxation purposes only) for the period 27 April 2009 to 17 July 2009 only, the net profit was adjusted from $1,010.00 to $2,364.28. That produced a projected annual income of $10,523.93 per annum. At that time, the net profit (taxable income) for the 2008/2009 financial year was determined to be $10,074.00. The ARO determined that income was the basis on which newstart allowance should have been calculated. The SSAT noted that Ms Henderson accepted that amount as her annual income for that year; and, accepted that she had been paid $13,568.89 newstart allowance for that year. She also accepted that she had been overpaid $2,824.30 for the period 4 September 2008 to 30 June 2009.
7. Centrelink then recalculated the newstart allowance entitlements for 2008/2009 for Ms Henderson. The net income for that year was $10,074.00 per annum. This resulted in the determination that there was a social security debt of $2,759.25. The applicant is repaying that debt at the rate of $15.00 per week.
8. The applicant has since been placed on disability support pension rather than newstart allowance since the above events occurred.
9. The applicant provided a letter from Dr Mark Whittington, Psychiatrist, who stated that as a result of prior relationships, Ms Henderson suffers depression which “has affected her concentration and memory as well as judgement … she is likely to get extremely anxious and in that state her memory and recall is likely to be poor”.
CONSIDERATION
10. The appeal against the previous decision is to be considered by way of “merits review”. This is provided for in s 2A of the Administrative Appeals Tribunal Act 1975 (Cth).
11. The law relating to the decision which is being reviewed in this case refers to the social security entitlement contained in s 1068 of the Social Security Act 1991 (Cth) (the Act). This assessment of income is not detailed in the Act but is explained in chapter 4.7.120 of the Guide to Social Security Law, which at Annexure A of that chapter states:
For assessment purposes the current annual rate of income is used, generally based on the most recent income tax return. To calculate the effect of income on fortnightly payments, the annual rate should be divided into 26 equal instalments and then treated as ordinary income of each fortnight.
If the income tax return does not represent a reasonable indication of current income, an estimate may be made on available evidence, such as the business profit and loss statement. Estimates made in this manner should generally be maintained for a period of 3 months and then reassessed.
12. The secretary submitted that the applicant’s 2008/2009 income tax return is the most authoritative source of the applicant’s annual income. Mr Nolan, in cross- examination highlighted various items in the applicant’s profit and loss accounts. It is clear that some items claimed by the applicant as expenditure against her income were items of private expenditure and are therefore not available to reduce her business income.
13. I make the following findings of fact:
(1) Ms Henderson kept reasonably accurate records.
(2)The records of her profit and loss accounts were forwarded to Centrelink regularly.
(3)The difference in accuracy may be attributed to Ms Henderson’s mental health problem and her inclusion of personal expenses with business expenses.
(4) The applicant’s accounting records which were the basis of her income tax returns and also the figures used by Centrelink were prepared professionally by the applicant’s tax agent.
(5)The annual individual tax return prepared by the applicant’s tax agent is regarded as the most accurate reflection of her 2008/2009 net income for that financial year. That income is $10,074.00.
14. While it appears that Ms Henderson seems to have accepted that she had been overpaid in the SSAT, she left me with the distinct impression that she disputed that overpayment. In any event, she certainly disputed any culpability for it and said she had supplied all information to Centrelink and it must therefore be that organisation that is responsible for the debt and that she should not be compelled to repay it.
15. As I have found that the amount upon which newstart allowance should have been calculated is correct, I find that the difference between what was paid and the entitlement is an overpayment. The SSAT found that the overpayment was $2,824.30. The respondent in this case calculated that using the amount of $10,074.00 as the annual income for the 2008/2009 financial year (slightly less than the calculated figure of net income base at the time of the original determination) then there is an overpayment of $2,759.25. This overpayment relates to the period 4 September 2008 to 24 June 2009.
is the overpayment a debt due to the commonwealth?
16. Section 1223 of the Act provides that where a person obtains a social security benefit and “was not entitled for any reason to obtain that benefit”, then the amount “that is the overpayment … is a debt to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment” (s 1223(1)). The language of that section is clear. Therefore, the amount of $2,759.25 is a debt due to the Commonwealth by the applicant. The net debt due will be that amount less any contributions Ms Henderson has made towards repayment since that date.
should the debt be recovered by way of write off?
17. Section 1236 of the Act provides the Secretary with a discretion to write off a debt for a stated period (s 1236(1)). But there are some limitations to that discretion. For example, the Secretary may only write off a debt in the circumstances outlined in s 1236(1A) which relevantly provides that an applicant must have no capacity to repay a debt or that a debt would not be recoverable at law. Neither of those circumstances apply in this case unless it can be shown that Ms Henderson would then be in “severe financial hardship” as provided for in s 1236(1C) of the Act.
18. The respondent submitted that if there is some uncertainty about the applicant’s position then the claim for write off must fail (McDonald v Direction General Social Security (1984) 6 ALD 6). But in this case, even though the applicant has had some unfortunate experiences and there is no indication that any error in the provision of information has been intentional, there is not, in my view, incapacity to repay the debt. As s 1236(1C)(a) provides, deduction from social security payments can be taken to indicate a capacity to repay the debt. That could be overridden in the case of severe financial hardship which, while not requiring a person to be absolutely destitute, it certainly goes beyond “straitened financial circumstances” and the circumstances must be of an extreme nature (Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729 at [20]). I note that the applicant has since been granted disability support pension and as I understand it, that would put her in at least the same position as she was previously, if not a better one. In any event, if her circumstances change, the rate of reduction of the debt can be negotiated with Centrelink. Write off therefore, is not appropriate in this case.
should the debt be waived because of administrative error of the commonwealth?
19. Section 1237A(1) provides that the Secretary must waive the right to recover the debt or a proportion of the debt in cases where the debt is due “solely to an administrative error made by the Commonwealth …”. In this case, there can be no argument that the error was due solely to an administrative error of the Commonwealth. Indeed, the evidence indicates that the error was due solely to an error of the applicant. I therefore find that s 1237A(1) cannot apply in favour of the applicant.
should the debt be waived due to “special circumstances”?
20. This provision is contained in s 1237AAD of the Act. Section 1237AAD(b) provides a discretion for the Secretary to waive all or part of a debt if there are “special circumstances (other than financial hardship alone) that make it desirable to waive …”. A Full Tribunal of the Administrative Appeals Tribunal has noted that a person’s financial position, of itself, will not amount to “special circumstances” as many applicants will be in “straitened financial circumstances”. It also interpreted the term “special circumstances” to mean that circumstances must be “… unusual, uncommon or exceptional” (Re Beadle and Director General of Social Security (1984) 6 ALD 1 at 4). That approach was upheld by the Full Court of the Federal Court (Beadle v Director General of Social Security (1985) 7ALD 670 at 675).
21. The Federal Court has also considered “special circumstances” and said that if a decision maker was “to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary” (Groth and Secretary Department of Social Security (1995) 40 ALD 541). While it is unfortunate that the applicant’s circumstances have resulted in her suffering from either a lack of understanding or some personal attribute referred to by Dr Whittington which prevents her from providing accurate information to the social security system managed by Centrelink, that does not show that something unfair, unintended or unjust had occurred. In any event, it does not reveal some feature out of the ordinary or which has not commonly occurred in other cases and for which relief has been provided. As the respondent also submitted, the Federal Court recently emphasised “that there must be something that distinguishes the case from the ordinary or usual case …” (Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9).
22. My findings of fact in relation to the origin of the error referred to in this case shows Ms Henderson has been overpaid public moneys and had the benefit of those moneys. In the ordinary course, both the government and the public at large have an expectation that overpayments will generally be recovered. There are no special circumstances in this case even taking into account the psychiatric condition which may affect Ms Henderson’s concentration and memory (Department of Social Security v Hales (1998) 51 ALD 695 at [702] to [704]). Ms Henderson appeared for herself at the Tribunal and appeared relatively competent and robust in her presentation. She has also made a number of post hearing written submissions, which I have read and taken into account. However, I am not persuaded that any of that information establishes “special circumstances” as envisaged by the Act.
23. I answer the issues put to this Tribunal as follows:
(1)The applicant’s income tax return prepared by her tax agents provides the most accurate assessment of her net income for the 2008/2009 financial year and therefore she has been paid newstart allowance at the correct rate.
(2) There has been an overpayment of $2,759.25 of newstart allowance.
(3)There is a debt due to the Commonwealth of $2,759.15 (less any deductions which have been made from her newstart allowance since the date of the debt).
(4)Any balance of the debt owing should be recovered as there are no legal grounds for writing off or waiving the debt.
24. The decision under review is therefore affirmed.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K S Levy RFD, Senior Member
Signed: ....................[Sgd]..................................................
Kate Slack, Research AssociateDate/s of Hearing 1 June 2010
Date of Decision 23 July 2010
Applicant was self-represented
Solicitor for the Respondent Mr Phil Nolan, Sparke Helmore Lawyers
0