Leonard and Secretary, Department of Employment and Workplace Relations

[2007] AATA 1774

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1774

ADMINISTRATIVE APPEALS TRIBUNAL      )

)           No 2007/0749

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CHARLES LEONARD

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Dr R. McRae, Member

Date18 September 2007

PlaceMelbourne

Decision The Tribunal affirms the decision under review.

(sgd) R. McRae

Member

SOCIAL SECURITY ‑ disability support pension ‑ overpayment ‑ notification of change of circumstances – whether special circumstances exist – in good faith ‑ debt recovery

Social Security Act 1991 ss 117, 1064, 1223(1), 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 ss 68(2), 100(2)

Angelakos v Secretary, Department of Employment & Workplace Relations [2007] FCA 25

Dranichnikov v Centrelink [2002] FCAFC 133

Groth v Secretary, Department of Social Security (1995) 40 ALD 41

Sekhon v Secretary of the Department of Family and Community Services (2003) 132 FCR 126

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

18 September 2007 Dr R. McRae, Member       

1.       Mr Charles Leonard (the Applicant) receives disability support pension (DSP) under the Social Security Act 1991 (the Act) from Centrelink.  Centrelink acts as the service delivery agency for the Secretary to the Department of Employment and Workplace Relations (the Respondent). 

2.       On 28 September 2006 Centrelink decided that the Applicant had been overpaid $410.37 in DSP between 26 July 2006 and 22 August 2006 and it raised a debt against him for that amount.  Centrelink sent a letter dated 28 September 2006 to the Applicant, advising him of the decision to raise and recover a DSP debt of $410.37.  On 1 November 2006 a Centrelink authorised review officer (ARO) varied the applicable dates to 9 August 2006 to 22 August 2006, and recalculated the debt at $198.05.  The Applicant then sought review of the decision by the Social Security Appeals Tribunal (SSAT).  On 13 February 2007 the SSAT affirmed the decision.  The Applicant now seeks a review of the SSAT decision by the Tribunal. 

3.       The issue for the Tribunal is whether the Applicant owes a debt to the Commonwealth; and if so, whether there are grounds for it to be waived.  The Tribunal’s decision is that the Applicant owes a debt to the Commonwealth, and there are no grounds for it to be waived.  

4. The Applicant was self-represented. The Respondent was represented by Mr T. Noonan, a Centrelink advocate. The Tribunal had before it documents lodged by the Respondent pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents).  The Tribunal received two additional documents tendered into evidence by the Applicant (Exhibits A1 and A2).  The Applicant’s wife was not available to provide evidence. 

BACKGROUND

5.       The Applicant is a 66-year old married man, who lives with his wife and children.  He has been in receipt of DSP since 1992.There is no suggestion of intellectual or psychiatric impairment.  The Applicant’s wife receives a wife pension.   She undertakes communication with Centrelink on her own and the Applicant’s behalf. 

6.       Centrelink sent a letter dated 24 July 2006 to the Applicant, advising him he was no longer required to report every two weeks in order to be paid; and that you must tell us within 14 days about events or changes in circumstances affecting your payment.  The stated events were Employment start, stop, recommence or change work in any form of profession, trade business or self-employment income from employment changes (the amount earned goes up or down).  The letter also stated If you don’t tell Centrelink about changes you could have a debt.

APPLICANT’S EVIDENCE

7.       The Applicant stated that he turned 65 years of age on 23 July 2006.  He had received DSP from 1992, and had earlier nominated the option of receiving continued DSP and not changing to the age pension.  The Applicant’s wife’s income fluctuated each fortnight, and the level of her income affected his DSP entitlement.  Both pensions were deposited into a joint account, and total receipts looked the same.  The Applicant submitted the SSAT had glossed over rapidly the circumstances of the development of the debt, and he had inadvertently received the additional payments.

8.       The Applicant asserted that his wife had faithfully reported to Centrelink, on his and her own behalf, every fortnight by using online communication, for over five years.  The Applicant submitted he had received no notification of a change in reporting procedure.  On 25 July 2006 the Applicant’s wife was unable to access the Centrelink computer system by online communication as she was no longer eligible to do so.  She therefore telephoned her advice to Centrelink.  This comprised two telephone calls: the first was a lengthy conversation of some seven to nine minutes; the second was some two minutes.  The Applicant said that on 25 July 2006 his wife was told during a telephone communication with Centrelink that she would be contacted by Centrelink officers.  He said that his wife had told him the person was reluctant to take income details.  Neither the Applicant nor the Applicant’s wife provided further earnings advice to Centrelink as they were expecting something back from Centrelink.  The Applicant said that the letter dated 24 July 2006 arrived after 25 July 2006.  The Tribunal notes that the majority of this evidence is hearsay.  As the Tribunal is not bound by the rules of evidence it is acceptable evidence, although of less probative value because it is hearsay.

9.       The Applicant was concerned about the concept of lack of good faith.  He stated that he was not aware he had received [the over-payments].  He was not concerned about the amount of money involved. 

10.     The Applicant tendered two additional documents: a document headed Your Account Statement for Wife Pension dated 27 June 2006 and addressed to the Applicant’s wife (Exhibit A1), and a document headed Your Account Statement for Disability Support Pension dated 11 July 2006 addressed to the Applicant (Exhibit A2). 

11.     Under cross-examination the Applicant agreed he received the letter dated 24 July 2006 from Centrelink.  He assumed the stated sum related to the full [DSP] entitlement, [which would be] adjusted for [his] wife’s income.  The Applicant stated that he tends not to look at letters and statements from Centrelink.  The Applicant did not dispute any of his wife’s payroll records which demonstrated a fluctuation in the amount she earned.  He was crystal clear about comprehending a change in his DSP with a change in his wife’s income.  He agreed that he would not have expected to receive a full DSP payment in his own right in August 2006, as his wife had received some earnings, and he never got it.  He was not aware [he] had got [full DSP].  He was not certain of the date he became aware of the [raised] rate of his Centrelink payments: it was about 9 August 2006, but unsure if aware then. 

12.     The Applicant said he was aware of the obligation to notify Centrelink of changes in circumstances.  He stated that Centrelink were aware he was approaching 65 years of age.  The Applicant said he took no action (none) following the alleged communication between his wife and Centrelink related to any ineligibility to report earnings on-line or a reference to any proposed future communication from Centrelink.  The Applicant said his wife also took no action (none) following the alleged communication between her and Centrelink related to any ineligibility to report earnings on-line or a reference to any proposed future communication from Centrelink.  He stated he would not notice a windfall payment into the account.  This was predominantly because his wife did the banking.  He did not know how frequently bank statements arrived.  He conceded he could have known of a difference in the account, but submitted he did not know: he was upset [about the allegation] that he should have known about a difference in the account.  He acknowledged that with hindsight he should have gone back to [Centrelink]. 

APPLICANT’S SUBMISSIONS

13.     The Applicant submitted it was up to them [Centrelink] to tell me of a change in procedure [related to notification of changes in circumstances]. 

14.     He submitted he had not been aware he had received any DSP overpayment. 

15. The Applicant submitted the ARO and the SSAT had not fully applied s 1237AAD of the Act in that it had not considered all of the circumstances which caused the overpayment, such that his circumstances were special circumstances as contemplated in s 1237AAD(b) the Act. He relied on [67] of Dranichnikov v Centrelink [2002] FCAFC 133 such that the debt should be waived.

16.     The Applicant further submitted that the matter should be remitted to the Respondent for debt waiver. 

RESPONDENT’S SUBMISSIONS

17.     The Respondent submitted that Centrelink updated the Applicant’s wife’s earnings on 25 July 2006.  However, there was no record of a 25 July 2006 telephone conversation related to any ineligibility to report earnings on-line or a reference to any proposed future communication from Centrelink.  The Applicant’s gross DSP for the fortnight ending 11 July 2006 was $222.77; for the fortnight ending 25 July 2006 was $377.51; for the fortnight ending 8 August 2006 was $420.10; and for the fortnight ending 22 August 2006 was $420.10.  The Respondent submitted that the letter of 24 July 2006 refers to the rate of payment as $420.10 per fortnight, so the Applicant must have known the payment rate. 

18.     The Respondent submitted that there had been no change in the Applicant’s wife’s employment circumstances in that there remained a regular alteration in fortnightly payment received due to alterations in the hours she worked.  The Applicant’s wife acted immediately by telephone after receiving notification on 23 August 2006 of the cancellation of her wife pension DSP due to failure to report employment earnings and telephoned the required advice on 25 August 2006.  The Applicant’s circumstances therefore could not be considered to be special circumstances as provided for in the Act. 

LEGISLATION

19.     The relevant sections in the Act are as follows:

117  A person’s disability support pension rate is worked out:

(a)if the person is not permanently blind and paragraph (b) does not apply to the person—using Pension Rate Calculator A at the end of section 1064 (see Part 3.2); or

(b)if the person is not permanently blind and has not turned 21—using Pension Rate Calculator D at the end of section 1066A (see Part 3.4A); or

(c)if the person is permanently blind and paragraph (d) does not apply to the person—using Pension Rate Calculator B at the end of section 1065 (see Part 3.3); or

(d)if the person is permanently blind and has not turned 21—using Pension Rate Calculator E at the end of section 1066B (see Part 3.4B).

…

1064(1)The rate of:

(a)age pension; and

(b)disability support pension or disability wage supplement of a person who has turned 21; and

(c)wife pension; and

(d)carer payment; and

(f)mature age allowance under Part 2.12A; and

(g)mature age partner allowance;

is, subject to subsection (2), to be calculated in accordance with the Rate Calculator at the end of this section.

Note 1: Module A of the Rate Calculator establishes the overall rate calculation process and the remaining Modules provide for the calculation of the component amounts used in the overall rate calculation.

Note 2:the rate obtained by applying the Rate Calculator may be reduced because of:

·the receipt of compensation (see Part 3.14); or

·overseas portability (see Part 4.2—Division 3); or

·the receipt of payments under the New Enterprise Incentive Scheme (see Part 3.15).

1064(2)  Subsection (1) does not apply to a person’s age or disability support pension or to a person’s disability wage supplement if the person is permanently blind.

Note:     the rate for an age pension or disability support pension payable to a person who is permanently blind is dealt with in section 1065.

1064(4)If:

(a)a person has a relationship with a person of the opposite sex (other person); and

(b)the relationship between them is a marriage-like relationship in the Secretary’s opinion (formed after the Secretary has had regard to all the circumstances of the relationship, including, in particular, the matters referred to in paragraphs 4(3)(a) to (e) and subsection 4(3A));

(c)either or both of them are under the age of consent applicable in the State or Territory in which they are living;

the person’s pension rate is not to exceed the rate at which it would be payable to the person if the other person were the person’s partner.

Note:    this provision has the effect of taking into account the ordinary income, maintenance income and assets of the partner in applying the ordinary income test, maintenance income test and assets test respectively.

…

1223(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 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.

…

1236(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.

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(1B)        For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or

(aa)the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or

(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or

(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or

(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay 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.

1236(2)           A decision made under subsection (1) takes effect:

(a)if no day is specified in the decision—on the day on which the decision is made; or

(b)if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).

1236(3)  Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.

…

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.

Note:    Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

1237A(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.

…

1237A(3)  For the purposes of this section, a proportion of a debt may be 100% 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 a 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.

Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt.

CONSIDERATIONS

20.     The letter dated [Monday] 24 July 2006 would have been received by the Applicant shortly after this date.  It specifically, referred to you are no longer required …, You must tell us…  The effect of this in view of the regular pattern of minor alterations in the Applicant’s wife’s income is that the reporting would necessarily have to continue fortnightly, with the onus on the Applicant to ensure such reporting occurred.  This letter did not contain the statement If you choose, your partner can report earnings and changes in circumstances for both of you.  The letter stated that through non-advisement about changes you could have a debt.  There is no evidence the Applicant contacted or attempted to contact Centrelink at any time. 

21. Section 1236 of the Act provides for the circumstances under which the Secretary may write off a debt. At least one of the specific prerequisites provided for in s 1236(1A) of the Act must exist. None of the prerequisite conditions in s 1236(1A) exists. Thus s 1236 does not apply.

22.     There is evidence of two telephone calls by the Applicant’s wife on 25 July 2006.  The entries are identical, including the receipt number, except for the time of the call.  The first states 16:40, the second states 16:49.  This is consistent with the Applicant’s reporting of what he said his wife had said to him about what had occurred.  There is no evidence of a discussion about on-line access difficulties or their remedy, or of Centrelink undertaking to return telephone calls related to advice on how to submit earnings information.  The evidence is consistent with the provision of change of earnings details by the Applicant’s wife related to the Wife Pension DSP.  There is no evidence as to why there were two telephone calls.  There is no evidence of any attempt of a follow-up communication by Centrelink that may support the contention that such a conversation occurred. 

23. Section 1237A(1) of the Act provides that the Secretary must waive debt recovery where the debt is solely attributable to an administrative error by the Commonwealth. The Applicant was paid $420.10 for the fortnight ending 8 August 2006. On 28 September 2006 a Centrelink officer decided to recover a DSP debt related to the period 26 July 2006 to 22 August 2006. The debt was not raised within a period of six weeks from the first payment that caused the debt, so s 1237A(1) may apply.

24.     There is no evidence of sole Centrelink administrative error.  Selway J in Sekhon v Secretary of the Department of Family and Community Services (2003) 132 FCR 126 stated at [35]:

The words ‘a debt attributed solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error … (emphasis added)

25. The Tribunal notes the very circumstances outlined in a letter dated 24 July 2006 addressed to the Applicant have occurred. The Applicant’s evidence indicated and he conceded he contributed to the development of the debt through poor attention to the contents of correspondence and by not complying with the requirements of notifying Centrelink of a variation in his wife’s earnings within 14 days. Section 1237A(1) of the Act therefore does not apply. The Tribunal notes that consideration of received in good faith is consequently not necessary. 

26.     Section 1237AAA of the Act which provides for waiver of a small debt does not apply through operation of s 1237AAA(2).  The debt is greater than $50.00 and can be recovered by deductions from DSP. 

27. With respect to the debt waiver provisions of s 1237AAD of the Act, the Respondent accepts the Applicant did not knowingly fail to comply with a provision of the Act (s 1237AAD(a)).  This is through the Applicant’s habit of not regularly or reliably reading material sent by Centrelink upon its arrival. 

28. Section 1237AAD(b) of the Act provides for debt waiver if there are special circumstances … that make it desirable to waive [the debt].  The Administrative Appeals Tribunal stated in Re Beadle v Director-General of Social Security (1984) 6 ALD 1 at [12], …an expression such as ‘special circumstances’ is by its very nature incapable of precise of exhaustive definition.  The circumstances would need to be unusual, uncommon or exceptional.  The Tribunal highlighted the context in which [the circumstances] occur.  The Full Federal Court considered Beadle and did not subsequently affirm the words unusual, uncommon or exceptional. 

29.     Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 41 considered:

…special circumstances would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. … It would … follow that if … something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. 

Besanko J in Angelakos v Secretary, Department of Employment & Workplace Relations [2007] FCA 25 [33] stated that:

… the test will be overstated if the word ‘exceptional’ is emphasised… less risk of overstatement if the words ‘unusual’ or ‘uncommon are emphasised…there must be something that distinguishes the case from the ordinary or usual case…close attention must be given to the …context. 

Hill J in Dranichnikov [66] stated that …To some extent the question whether there were special circumstances must depend on how it came about that the error occurred. 

30.     It is plausible that every Applicant would consider their circumstances to fall within the boundary of being special.  There is no evidence supporting the Applicant’s contention that he was awaiting communication from Centrelink after a telephone discussion between Centrelink and his wife in which she was advised of such future communication.  This alleged conversation is the basis of his submission in support of the existence of special circumstances.  

FINDINGS

31.     The Applicant received DSP at the relevant time.  The Applicant’s wife received a wife pension at the relevant time.  The Applicant’s wife undertook earnings reporting for both the Applicant and herself using the Centrelink Self Service on-line facility.  The Applicant was familiar with the idea of fortnightly alterations in his DSP due to variations in his wife’s earnings.  The Applicant was familiar with the requirement to report earnings changes each fortnight. 

32.     The Applicant’s wife was unable to access the on-line facility on 25 July 2006, and made telephone contact with Centrelink.  At all times telephone reporting to Centrelink was available.  There is no evidence that the Applicant or the Applicant’s wife were directed to stop reporting earnings information. 

33.     The Applicant was paid DSP of $420.10 on 24 August 2006.  This is the full amount of DSP, and an amount he would not have expected to receive, as his wife’s employment circumstances involving alterations in the fortnightly income she received had not substantially altered since the previous DSP payment he had received. The Applicant was entitled to be paid DSP of $222.05. 

34.     The Applicant received a letter dated 24 July 2006 from Centrelink.  This letter was an Information Notice as prescribed by s 68 of the Social Security (Administration) Act 1999.  The letter advised him that he no longer had to report earnings every two weeks, but also stated the requirement to notify Centrelink within 14 days of specified events, which included if any of the following happens to you/ your partner … income from employment changes (the amount goes up or down). This letter was addressed to the Applicant, and written in the second person.

35.     The Applicant’s wife’s income varied, and Centrelink was not notified of such variation within the required 14 days.  The Applicant has been paid DSP of $198.05 more than that to which he is entitled.  In accordance with s1223 of the Act, this constitutes a debt to the Commonwealth. 

36.     The Applicant failed to comply with the notification requirement of changes in his wife’s income.  This omission contributed to the development of the debt to the Commonwealth.  Additionally the Applicant conceded he was not as attentive to matters related to Centrelink as he ought to have been.  Consequently it is not possible to conclude that special circumstances are present such that they override his requirement to notify Centrelink of alterations in his wife’s income. 

CONCLUSION

37.     The Tribunal is satisfied that the Applicant owes a recoverable debt to the Commonwealth. 

38.     The Applicant was in a position to know he would receive the full DSP payment, and that he had to report the changes in his wife’s earnings within 14 days.  The Applicant did not report the changes which occurred within the required14 days. 

39.     There is no evidence of the Applicant’s inability to report earnings changes by telephone. 

40.     There is no evidence to support the presence of special circumstances as contended by the Applicant. 

41.     The Tribunal concludes that the Applicant did not satisfy the requirements necessary to allow for writing off or waiver of the debt. 

DECISION

42.     Accordingly, the decision of the Respondent to recover the Applicant’s overpayment of DSP was the correct decision.  The Tribunal affirms the decision under review.

I certify that the forty‑two [42] preceding paragraphs are a true copy of the reasons for the decision of:

Dr R. McRae, Member

(sgd):      .Olympia Sarrinikolaou

Clerk

Date of Hearing:  18 June 2007

Date of Decision:  18 September 2007

Advocate for the Applicant:                Self‑represented

Advocate for the Respondent:            Mr T. Noonan, Centrelink Legal Services Branch