Lewis and Secretary, Department of Family and Community Services

[2003] AATA 1214

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1214

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2002/1528

GENERAL ADMINISTRATIVE  DIVISION		)
Re		KIM LEWIS

Applicant

And SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms N Bell, Member

Date3 December 2003

PlaceSydney

Decision

1.      The decision under review is set aside and in substitution therefor the Tribunal decides:

a)        to raise debts of sole parent pension of $6169.90 and parenting payment of $6442.80 and $609.30, being a total of $13,222.00; and

b)        to waive recovery of $2,000 of that total amount.

[Sgd] Ms N Bell

Member

CATCHWORDS

SOCIAL SECURITY – sole parenting overpayment – workers compensation payments – undeclared earnings – special circumstances – meaning of “knowingly” - debt not solely due to administrative error of Centrelink - obtaining the benefit of the payment – decision set aside

Social Security Act 1991 sections 1223(1), 1237A(1), 1237AAD

Department of Social Security v Danielson (1996) 44 ALD 19

Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553

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

Re Ivovic and Director General of Social Services (1981) 3 ALN 95

Department of Social Security v Thompson (1994) 53 FCR 580

REASONS FOR DECISION

3 December 2003 Ms N Bell, Member

2.      This is an application by Ms Kim Lewis ("the Applicant") for review of the decision of the Social Security Appeals Tribunal ("the SSAT") on 11 September 2002 to affirm the decision made by an authorised review officer on 21 May 2002 to raise and recover debts of sole parent pension of $6169.90 and parenting payment of $6442.80 and $609.30.

3.      At the hearing before the Tribunal the Applicant appeared on her own behalf and the Secretary, Department of Family and Community Services (“the Respondent”) was represented by Ms Jane Green. The Applicant gave oral evidence to the Tribunal and the Tribunal had before it the following documentary evidence:

Exhibit No	Description	Date
T1-T57 pp1-255	Documents pursuant to section 37 of the Administrative Appeals Tribunal Act 1975
A1	Financial Information provided by Applicant	9 September 2003
R1	Respondent's Statement of Facts and Contentions	10 September 2003
R2	Respondent's Computer print out of customer record for Applicant
R3	Copy of envelope of a letter sent by Applicant to Respondent

background

4.      It is not in dispute that the Applicant was granted sole parent pension in 1989 whilst working at Plumrose. She was injured at work in 1990 and received a lump sum payment of workers compensation which was declared by her to Centrelink and then received fortnightly workers compensation payments during the 1996/1997 financial year.  Those payments were not declared to Centrelink by the Applicant and the question of the advice received by her from a Centrelink officer in relation to those continuing payments is in dispute.

5.      In 1994 the Applicant commenced work with Mattel Pty Ltd and continued to work there until 1997 when she was injured at work. The Respondent contends that earnings from this employment, including workers compensation payments, were under-declared by the Applicant and relies, in relation to these earnings and those at Plumrose, on its record of social security payments made to the Applicant and the employers' advice of earnings in support of this contention. The review forms lodged by the Applicant in the relevant period have been destroyed in accordance with Centrelink's archives policy.

6.      The Applicant received workers compensation payments on a continuing basis in respect of her employment at Mattel until 2001.

7.      It is also not in dispute that in 1996 the Applicant worked for a short period with First National Real Estate in Yamba, earning $1029. The Applicant concedes that these earnings were not declared by her to Centrelink as she thought them to be below the threshold amount above which she must declare earnings.

8.      On 17 January 2001 three debts were raised by the Respondent, totalling $8085 and later revised to $13,222.

issues and legislation

9.      The issues to be considered by the Tribunal in this application are whether the Applicant owes a debt of overpayment to the Commonwealth, and, if so, whether the debt should be recovered.

10. The relevant legislation is sections 1223(1), 1237A (1) and 1237AAD of the Social Security Act 1991 ("the Act").

Applicant's evidence

11.     The Applicant confirmed the evidence she had given to the SSAT and agreed with its summary of her evidence as follows:

"4. Ms Lewis told the tribunal that she concedes any debt caused by income received from Mike MacQueen real estate agency. She accepts that she did not inform the then Department of Social Security of her income at that point because she did not believe she had earned over the limit.

5. In regard to compensation from the GIO, Ms Lewis initially was adamant that she fully declared her compensation on her sole parent review forms. She stated that she would have declared the amount of $112 per fortnight on each of her forms. Ms Lewis later told the tribunal that she had been previously been told by an officer in the Department of Social Security that the compensation was not income. She was led to believe that she did not have to declare her compensation income. The tribunal located a statement she made to the Department of Social Security on 31 January 1992 concerning receipt of a small lump sum of compensation. Ms Lewis confirmed that this was the incident she has been talking about. She recalled the name of the officer she dealt with and stated that as result of this statement she did not think compensation would have been assessed against her pension.

6. The tribunal asked Ms Lewis about her employment with Mattel. She told the tribunal that she suffered an injury at work on 11 November 1997 and has not worked at Mattel since that date. She was paid compensation via CGU and later NZI. She told the tribunal that she would have declared all her income from Mattel on her sole parent review forms.

7. In December 2001 CGU stopped payments. The tribunal asked Ms Lewis whether she thought she was getting the correct pension throughout the period. Ms Lewis told the tribunal that her pension would vary for various reasons, for example the amount of child support she received varied. She never really thought about the rate of the pension. The tribunal asked Ms Lewis about letters she received from Centrelink. Ms Lewis told the tribunal that she received letters all time however she did not read them carefully. Ms Lewis advised that the GIO payments finished last year and she no longer received any compensation.

8. The tribunal asked Ms Lewis about her current circumstances. She is paying off a mortgage at about $400 per fortnight. She has an outstanding credit card bill of $2,000 and has normal household bills. Ms Lewis is currently working casually on-call and is studying. Her eldest son is now 19 years old and lives at home. He is working and helps out occasionally. Ms Lewis also receives about $800 per month child support.

9. Throughout the hearing Ms Lewis expressed dissatisfaction with the way Centrelink had acted. She noted that it is now 2002 and she is being asked questions about what happened in 1995. Furthermore, Centrelink had been unable to provide any of the sole parent review forms that she lodged in that period. She indicated that if it could be demonstrated that she had made a mistake she is prepared to pay the consequences. However, she has not been given any proof in spite of repeatedly asking for evidence that she has failed to tell Centrelink/Department of Social Security the correct details. Ms Lewis believes that she has fully informed Centrelink of her income and does not believe that she has to pay any debt back."

12.     In addition the Applicant, at the hearing before the Tribunal, expressed her concern that the three monthly review forms that she had completed during the relevant period were unavailable to her. She was therefore unable to examine the amounts of income she had declared to the Respondent over the relevant period.

13.     The Applicant also described some efforts she had made, including writing to the Respondent in 1995, to advise them that she considered that she was being overpaid. In this respect the Applicant referred to an empty envelope which is held on her Centrelink file and which contains no letter. The date stamp on the envelope is illegible but the return address noted on it is for Nora Head. After some consideration the Applicant recalled that she had moved from Nora Head some ten years ago and so the letter must have been written prior to 1993 and may have related to an earlier over-payment in 1989.

14.     The Applicant also expressed her concern about some of her more recent dealings with Centrelink, which gave her no confidence as to the care taken by Centrelink in its dealings with customers.

15.     In relation the Applicant's workers compensation payments from the GIO in respect of her employment at Plumrose, the Applicant said she is not sure whether she declared those continuing workers compensation payments because she was confused about whether she was required to do so. She said that this confusion stemmed from her discussion with a Centrelink officer who, when the Applicant asked whether she had to declare her continuing payments, advised her “no”. The Applicant said that this officer, a Mr Connelly, was an acquaintance.

16.     In relation to her continuing workers compensation payments in respect of her employment at Mattel, the Applicant said that the payments she received were irregular, with some large payments and some small payments and that she declared payments as she received them.

17.     The Applicant said that she is currently not working and that the child support payments that she had been receiving in the sum of approximately $800 per month have now decreased to approximately $20 per month because her former husband has become unemployed. Her children are aged 9, 14 and 20 years and her oldest child has recently commenced to receive youth allowance. The Applicant said that her only income is her pension and family payments together with the small amount of child support she now receives.

18.     The Applicant said that her youngest children have attention deficit disorder (the 14-year-old) and attention deficit hyperactivity disorder (the 9-year-old). She said that her 14-year-old son has substantial learning difficulties and she expects that he will remain living with her well into his adulthood.

19.     The Applicant explained that in her first injury whilst working with Plumrose, she injured her cervical spine and her pain remains and she must take Celebrex and Panadol regularly. She said that she also has migraines from her neck pain and experiences those on average for two days every fortnight. In her second accident whilst at Mattel, the Applicant fell off a ladder and suffered a compression of her spine. She said that her injuries limit her work opportunities but that if casual work were available to her she would do it.

20.     The Applicant also said that she suffers from depression and has been prescribed Prozac.

21.     The Applicant said that when the debt was raised she had contact with a Centrelink officer who said that he would consider "selling her house" and he placed a stop on her bank account. She said that she contacted her local Member who made some representations on her behalf.

22.     Finally the Applicant told the Tribunal that she had lost her mother six weeks ago and that, apart from a sister from who she is estranged, she has no family left.

Other Evidence

23.     Exhibit TD1 contains a number of letters to the Applicant setting out the amount of income understood by Centrelink to be received by her at various times.  Document T26 shows the amounts recorded by the Respondent as having been reported as earnings from 5 October 1995 to 23 June 2000 by the Applicant.  Exhibit TD1 also contains the results of a data matching exercise between the Respondent and the Australian Taxation Office showing the amounts of income earned by the Applicant in the relevant period together with information from employers and insurers as to that income.  Document T42 is an assessment of that income for the 1995/96, 1996/97, 1997/98, 1998/99 and 1999/2000 financial years.  Document T43 is the Respondent’s calculation of the overpayment.

consideration

24.     While I am mindful of the absence of the review forms on which the Applicant declared her income in the relevant period, I consider there is ample evidence of the Applicant’s earnings in the period and the payments made to her by Centrelink.  I have reviewed the overpayment calculations made by the Respondent and I am satisfied that they need not be disturbed.

25. Section 1223(1) of the Act provides:

“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.”

26. The calculations made by the Respondent show that the Applicant was paid in excess of her entitlement, given her income from other sources. The overpayment made to her is, in accordance with section 1223(1), a debt due to the Commonwealth.

27. There is provision in the Act for debts to be waived in some circumstances. The first provision of possible relevance to this application is section 1237A (1) which provides for waiver of debts where the debt is attributable solely to the administrative error of the Commonwealth. The Applicant has submitted that, given the absence of her review forms on which she declared her income to Centrelink, that there is no evidence of her having failed to properly declare her income. That is not the case. There is sufficient evidence, including computer screen records, advice from employers and records of payments made to enable an inference to be drawn that the Applicant failed to accurately advise her income. In this respect I had regard to the decision of the Federal Court in Department of Social Security v Danielson (1996) 44 ALD 19. This is all the more persuasive given the length of time over which the overpayments were made and the Applicant’s stated confusion as to whether she was required to declare weekly compensation payments.

28.     The Applicant also submitted that she had been poorly advised by Mr Connelly of Centrelink.  However, the Applicant’s statement dated 31 January 1992 (Attachment B to Exhibit R1)  says:

“I wish to advise that I have received $5126.58 from GIO being for a workers comp. Claim.  This was paid in a lump sum and I will not receive any further payments at this stage.  The money has been spent on various items as per attached, mainly bills.  I will advise the Department if I am receive to (sic) any future payments.”

29.     In addition, the Respondent gave numerous notices to the Applicant during the relevant period setting out its understanding of the amount of income she was receiving and asking her to advise if her income exceeded that or those amounts (Exhibit TD1).

30.     For these reasons, it could not be argued that the debt arose solely due to administrative error by the Commonwealth.

31. The other provision of the Act that is relevant to the question of waiver in the circumstances of this application is section 1237AAD which provides:

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

32.     The meaning of the word “knowingly” was considered by Deputy President Forgie in the Tribunal’s decision in Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553. Deputy President Forgie said:

“67.    Mr Walsh drew my attention to the Tribunal’s decision in Re Saunders and Secretary, Department of Family and Community Services (unreported, [1999] AATA 952, 15 December, 1999, per Senior Member Kiosoglous).  After reviewing other authorities in the Tribunal (Re Callaghan and Secretary, Department of Social Security (1996-97) 45 ALD 435, Deputy President Forgie; Re Morgan and Secretary, Department of Family and Community Services, unreported, [1999] AATA 390, 8 June, 1999, Associate Professor Hotop, then Senior Member; and Re Armitage and Secretary, Department of Family and Community Services [1999] AATA 700, 17 September, 1999, Dr Christie (Member)), Senior Member Kiosoglous concluded:

“Following these decisions, in this Tribunal’s opinion, the interpretation to be given the phrase ‘knowingly failing’ requires a standard of conscious, deliberate failure to comply with a provision of the Act. Inadvertent or unintentional failure does not constitute ‘knowingly’, even when an applicant knows he needs to notify. It is a civil standard of proof where ‘knowingly’ is a conscious and deliberate choice (Re Morgan) and also can include recklessness to the consequence of failing to comply with a provision of the Act.” (paragraph 22)

68.      Although I am reluctant to disagree with a colleague and have only respect for Senior Member Kiosoglous, I must do so on this occasion and maintain the position I adopted in Re Callaghan when I said:

“(48) There is nothing in s 1237AAD which suggests that the word ‘knowingly’ should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.” (page 445)

69.      I reached that conclusion after considering the discussion of “knowledge” by Matheson J in Hooi v Brophy (1984) 52 ALR 710; 3 IPR 16.  He referred at pp. 712-713, to a discussion of “knowledge” by Devlin J (as he then was) in Taylor’s Central Garages (Extra) Ltd v Roper [1951] WN (Eng) 383 at 385:

“…‘There are, I think, three degrees of knowledge which it may be relevant to consider in cases of this sort.  The first is actual knowledge, and, of course, the justices may find it because they infer from it the nature of the act that was done, for no man can prove the state of another man’s mind; and they may find it, of course, even if the defendant gives evidence to the contrary.  They may disbelieve him, and think that that was his state of mind..  They may feel that the evidence falls short of that, and, if they do, they have then to consider what might be described as knowledge of the second degree: they have to consider then whether what the defendant was doing was, as it has been called, shutting his eyes to an obvious means of knowledge.  Various expressions have been used to describe that state of mind.  I do not think it necessary to look further, certainly not in cases of this type, than the expression used by Lord Hewart CJ, in a case under this section.  Evans v Dell (1937) 53 TLR 310 at 313: “… the respondent deliberately refrained ‘from making inquiries’, the results of which he might not ‘care to have’.”

‘The third sort of knowledge is what is generally known in the law as constructive knowledge.  It is what is encompassed by the words ‘ought to have known’ in the phrase ‘know or ought to have known’.  It does not mean actual knowledge at all: it means that the defendant had in effect the means of knowledge. (my emphasis)” (page 385).”

33.     The Tribunal adopts, with respect, the reasoning of Deputy President Forgie and her conclusion that the word “knowingly”, as it appears in section 1237AAD, refers to “actual knowledge”.

34.     While I have concluded that the Applicant failed to advise Centrelink of her income, I accept her evidence that she misunderstood her obligations with respect to her periodic compensation payments and incorrectly made a distinction between earnings from employment and periodic compensation payments.   I also accept the Applicant’s evidence that she thought her earnings from First National Real Estate were below the amount required to be declared.  There has been no suggestion that any under declaration by the Applicant of earnings from any other source was advertent.

35. On this basis I conclude that the Applicant did not have actual knowledge that she was making a false statement of her income or that she was failing to comply with a provision of the Act and so did not knowingly do so.

36.     It is not appropriate or possible to write off the debt because it has been discharged in full by the Applicant.  The question remains whether the Applicant’s circumstances are “special” so as to make it desirable to waive recovery of all or any part of the debt.  I accept the Applicant’s evidence as to her current circumstances.  They include a number of new developments including her mother’s recent death, her sons’ conditions of attention deficit disorder and one son’s learning disability and a decrease in child support payments from $800 per month to $20 per month.  In addition, the Applicant suffers from depression for which she is treated with the medication Prozac and from neck pain and migraines for which she takes Celebrex and Panadol.  While no one of these circumstances could be described as “exceptional” or “unusual” (see Re Beadle and Director General of Social Security (1984) 6 ALD 1), together they form a conglomerate of events and circumstances that I consider to be sufficiently unusual in its difficulty as to be “special”.

37.     Against this is the “principle of liability which the Act otherwise establishes” (see Re Ivovic and Director General of Social Services (1981) 3 ALN 95) and the fact that the Applicant had the benefit, for a substantial period, of overpayments.  With these matters in mind, I consider that it would be inappropriate to waive recovery of the whole of the debt.

38.     In Department of Social Security v Thompson (1994) 53 FCR 580, the Federal Court said, in relation to the discretion to reduce the length of a preclusion period under the Act:

“But when a special circumstance relates not to a specific element of the compensation award, but to the general circumstances of the recipient, the decision-maker (in this case the Tribunal) would rather direct its mind to the effect on the recipient of any reduction in the preclusion period.  It may be that after such consideration the Tribunal decides on some time by which the period should be reduced.  If so, and having determined on a time, accepting the Department's argument would mean that the Tribunal must then go through the mechanical process of justifying the reduction by working back to or from a decrease in the compensation sum.  According to this argument the Tribunal must at least include in any reasons for judgment a formula to the effect that, for example, "the compensation payment be reduced by such an amount as will have the effect of reducing the preclusion period by" whatever time has been decided.

To invalidate a decision of the Tribunal for failure to engage in this process would in my opinion take legalism and bureaucratic pedantry too far, especially in a socially beneficial legislative framework where intuitive justice will often be as fair a criterion and as faithful to the legislative intention as any other approach.  In this case there was no suggestion that the Tribunal was guided by improper considerations, or arrived at other than a fair and proper result.  The only criticism is that in failing to address the formula to arrive at a deemed reduction in the compensation payment, the Tribunal erred in law.  That proposition I entirely reject.  A Tribunal might err if its reduction is so inconsistent with its findings of fact or other determinations as to be unable to stand consistently with them, or is so gross as to be absurd.  But, in the absence of such an occurrence, a Tribunal that decides that it is appropriate in light of accepted and acceptable "special circumstances" to reduce the length of the preclusion period, may express that opinion in terms of the length by which the period should be reduced, without specifying the corresponding reduction in the compensation sum.”

39.     In my view these comments are equally applicable to the process by which a partial waiver of a debt may be determined by the Tribunal.  Having regard to the amount of the debt, the fact that it has already been discharged in full by the Applicant and the nature of her current and special circumstances, I consider that recovery of a portion of the debt in the amount of $2,000 should be waived.

Decision

40.     The decision under review is set aside and in substitution therefor the Tribunal decides:

a)        to raise debts of sole parent pension of $6169.90 and parenting payment of $6442.80 and $609.30, being a total of $13,222.00; and

b)        to waive recovery of $2,000 of that total amount.

I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Member

Signed:         L Bonouvrie
  Associate

Date/s of Hearing  12 September 2003
Date of Decision  3 December 2003
Advocate for the Applicant            Self-represented
Advocate for the Respondent       Jane Green