Luckman; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and - [2010] AATA 423

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 423

ADMINISTRATIVE APPEALS TRIBUNAL )

) No: 2009/5040

GENERAL DIVISION ) No: 2009/5041
ReSecretary, Department of Families, Housing, Community Services and Indigenous Affairs

Applicant

AndClive Luckman
Doreen Luckman

Respondents

DECISION

TribunalMr R P Handley, Deputy President
Date9 June 2010
PlaceSydney
DecisionThe Tribunal sets aside the SSAT decision dated 23 September 2009 and substitutes a decision that Mr and Mrs Luckman owe debts to the Commonwealth in respect of overpayments of age pension in the period 19 June 2000 to 26 June 2007, such debts to be recoverable by withholdings. The amount of the debts is remitted to Centrelink for recalculation. While Mr and Mrs Luckman also received overpayments of age pension in the period 27 June 2007 to 7 April 2009, the debts attributable to that period are waived.
......................[sgd]....................
Mr R P Handley
Deputy President

CATCHWORDS

SOCIAL SECURITY – pensions – age pensions – overpayment – receiving UK pension - sole administrative error - special circumstances – decision under review set aside and varied

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RELEVANT ACT

Social Security Act 1991: ss1237A, 1237AAD

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CITATIONS

Beadle v Director-General of Social Security (1985) 7 ALD 670; (1985) 60 ALR 225

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

Groth v Department of Social Security (1995) 40 ALD 541; (1996) 2 SSR 10a

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REASONS FOR DECISION

9 June 2010

Mr R P Handley, Deputy President

The Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (the Department) seeks the review of a decision of the Social Security Appeals Tribunal (SSAT) that varied a decision made by Centrelink concerning the raising and recovery of debts from Clive and Doreen Luckman. The Department contends that the SSAT made significant errors in finding that a proportion of the debts was due solely to administrative error by Centrelink.

The Facts

Mr and Mrs Luckman, who are aged 74 and 73 respectively, migrated to Australia from the UK in 1967. Mr Luckman ceased work in 1996 due to medical problems and was initially paid a disability support pension and then, from October 2000, an age pension. He also became entitled to a part UK pension from June 2000. Mrs Luckman started to receive an age pension in June 1997 at the age of 61. She became entitled to a part UK pension in November 1996.
On a ‘Partner Details’ form signed by Mrs Luckman on 29 January 1997, she said she had applied for an overseas pension but her claim had not yet been decided. She was subsequently granted a UK pension of 8 pence per week that she was paid until June 2000 when she became entitled to £15.84 per week on Mr Luckman becoming eligible for a UK pension. Centrelink did not become aware of the amount of her UK pension until it conducted a data matching exercise in 2008.
Mr Luckman has received a UK pension of £27.12 since June 2000. Centrelink has always been aware of this and, indeed, assisted Mr Luckman in applying for the UK pension.
In 2007, Mr Luckman noticed that in the details of income and assets that Centrelink took into account in assessing the rate of age pension to which they were entitled, there was no reference to the UK pension Mrs Luckman was receiving. On 15 June 2007, he phoned Centrelink to enquire about this and, according to Centrelink records, was told he and his wife should bring in a statement showing the foreign income received. As a result, they went into the Centrelink Campbelltown office on 27 June 2007 and were served by a customer service officer, Mavon Vaughan.
Mr Vaughan has provided an affidavit dated 25 May 2010 in which he says he has no independent recollection of speaking with Mrs Luckman or of creating the Centrelink record regarding her attending the office. Mr Vaughan’s record states that Mrs Luckman was receiving an overseas pension and that he “asked cus [sic] to bring in document showing correct rate and ref number”.
Mrs Luckman said her memory of the occasion is “as clear as day”. They told the officer, who Mrs Luckman remembered had a beard, that her UK pension was not included in the details of their assets and income. The officer looked up her details on the Centrelink computer system and said he could not find her on the system. He said, “You’re in the system somewhere so don’t worry about it”. Mrs Luckman said she had taken her NAB passbook with her, which recorded her monthly UK pension payments, so that she could show this to Centrelink to confirm the payments she received.
Mr and Mrs Luckman said they are always attentive to completing any forms sent to them by Centrelink and try to do everything that is required of them. They were reassured by what the Centrelink officer told them and thought there was nothing further they needed to do. They were also under the impression that the UK pension authorities paid UK pensions to Centrelink who in turn paid those entitled in Australia. They therefore assumed that Centrelink would have all the required details of their UK pensions.
Mr and Mrs Luckman thought nothing more about the matter. By letter dated 24 April 2009, Centrelink notified them that their age pension payments were being reviewed following a “recent data match process with the United Kingdom” suggesting that Mrs Luckman was receiving a pension that Centrelink did not have recorded. They were asked to complete an ‘Income and Assets Update’ form and return this to Centrelink. This was completed by Mr and Mrs Luckman on 30 April 2009 and received by Centrelink on 4 May 2009. The SSAT thought this form was signed on 30 April 2000, by reason of Mr and Mrs Luckman mistakenly dating the form “30 April 9000”. However, this was not the case, since the form was sent to them under cover of the letter dated 24 April 2009 and the form’s code number shown on the top right‑hand corner of most pages was SA220.0809, indicating that the form was not issued until September 2008. To this extent, there was a clear error by the SSAT.
By letter dated 10 June 2009, Centrelink notified Mr and Mrs Luckman that they had received overpayments of age pension of $4,803.40 and $6,968.20 respectively, which Centrelink was required to recover. Mr and Mrs Luckman said they were “in complete shock” on receiving the letter which gave no details of why they owed a debt to Centrelink. Initially, they were told the debts would be recovered by withholdings of $100 per fortnight each from their pensions, which they said made a very large difference to their income. (This has since been negotiated down to $20 each per fortnight.) Mr and Mrs Luckman said that in the period since June 2009, this matter has caused them significant stress and ill health. They have always disclosed everything they thought they were required to disclose to Centrelink. Mr Luckman asked why Centrelink had not first discussed this with them in which case some of the misunderstandings could have been resolved.
Mr Luckman said he has had a significant number of health problems including four operations on his appendix as a result of errors in surgery, and the removal of a section of his bowel. On occasion, he has told his family, “I think I am on the way out”, because he remains very unwell. The problems with Centrelink have contributed to his ill health. Although he is unwell, his medication costs are not significant but his and his wife’s savings were depleted by the global financial crisis and their savings have now been reduced to about $50,000 as a result of recently needing to buy a new car, install a new hot water system and have a new fence erected.

Discussion

The SSAT set aside the Centrelink decisions to raise and recover debts from Mr and Mrs Luckman, waived the recovery of the whole of Mr Luckman’s debt and a significant proportion of Mrs Luckman’s debt in respect of the period after 30 April 2000 because of sole administrative error, and directed that the proportion of Mrs Luckman’s debt in respect of the period between 26 June 1997 and 29 April 2000 be recalculated and then recovered. As stated above, the SSAT mistakenly thought the ‘Income and Assets Update’ form completed by Mr and Mrs Luckman was signed on 30 April 2000 when in fact it was signed on 30 April 2009. This error by the SSAT resulted in it waiving recovery of the debts after 30 April 2000 because of sole administrative error, which was clearly incorrect.
Since the SSAT decision, the Department has reconsidered its decision and recalculated the overpayments of pension received by Mr and Mrs Luckman. It now contends that they each received an overpayment of pension for the period 19 June 2000 to 7 April 2009 of $3,554.06 and that these sums are debts due to the Commonwealth that should be recovered. Having received confirmation from the UK authorities that Mrs Luckman received a pension of only 8 pence per week for the period 11 November 1996 to 18 June 2000, the UK pension received by her during this period has been disregarded and the Department no longer seeks the recovery of any debt in respect of this period.
The Department contends that Mr and Mrs Luckman were informed by letter on a number of occasions of the notification requirements requiring them to tell Centrelink if, amongst other things, the income attributed to Mrs Luckman recorded in the letters sent to them was incorrect. However, they did not do so and by reason of this breached their obligations under the Act. The Department contends that Mr and Mrs Luckman did not tell Centrelink about the amount of Mrs Luckman’s UK pension until 4 May 2009 when Centrelink received the ‘Income and Assets Update’ form. It was this failure to notify that resulted in the overpayment of age pension to both Mr and Mrs Luckman.
Ms Harlock, for the Department, said there is no suggestion that the failure to notify was deliberate. Equally, she contended that there was no administrative error by Centrelink.
Mr and Mrs Luckman’s son, Barry Luckman, and their daughter-in-law, Nardia Burton, said that their parents had done everything they reasonably could to rectify the problem. As soon as they realised that “something wasn’t right”, they contacted Centrelink. The way in which this matter has been handled by Centrelink has caused Mr and Mrs Luckman significant anxiety and ill health. Moreover, the correspondence received from Centrelink includes numerous minor errors.
I agree that this matter was not well handled by Centrelink. The dispatch of a debt recovery letter (requiring the payment of nearly $12,000) to pensioners in their 70s without further explanation is likely to cause anxiety to many. Had there been a more caring approach and an opportunity for Mr and Mrs Luckman to discuss the matter with Centrelink officers, this matter might have been resolved without the need for external review.
Following Centrelink’s reconsideration of its decision on receiving the SSAT decision, it is not now seeking recovery of any overpayment in respect of the period before 18 June 2000. The overpayment sought to be recovered is for the period 19 June 2000 to 7 April 2009. The Department submits there was no administrative error and that Mr and Mrs Luckman’s circumstances are not special in the sense of ‘unusual, uncommon or exceptional’ such that there is a discretion to waive recovery of the debt.
Mr and Mrs Luckman do not dispute that they had an obligation under the Act to notify Centrelink of any relevant change of circumstances. I am satisfied that they are decent law abiding‑citizens who did their best to keep Centrelink informed of all relevant matters. It seems, however, that they may have been under a misunderstanding about the way in which UK pensions are paid in Australia and assumed a much greater level of knowledge by Centrelink of UK pensions than apparently is the case. They assumed that Centrelink had full knowledge of the UK pensions they received when, in fact, it did not.
It was only in 2007 that Mr Luckman realised that Centrelink did not appear to be taking into account his wife’s UK pension in calculating the rate of age pension to which they were entitled. He therefore contacted Centrelink by phone on 15 June 2007 to enquire about this, and he and his wife attended the Campbelltown office on 27 June 2007 to try and sort this out. Mrs Luckman took her NAB passbook with her so that she could show the record of UK pension payments contained therein to Centrelink.
I find that at that meeting with the customer service officer Mr Vaughan, they were reassured that they had nothing to worry about. While Mr Vaughan has no recollection of the occasion, Mr and Mrs Luckman clearly do, and I am satisfied from their account of what happened, set out above, that they did everything that could reasonably be expected of them in the circumstances. It appears that Mrs Luckman was not asked to provide details of the amount of the UK pension payments at the meeting because Mr Vaughan, having consulted the computer record, indicated that while he could not locate the relevant record: “You’re in there somewhere, so don’t worry about it”.
Mr and Mrs Luckman did not understand from the meeting that there was an expectation that they would provide further information about Mrs Luckman’s UK pension to Centrelink as Mr Vaughan’s computer record suggests. Had they understood this, I have no doubt that they would have complied. Centrelink, having been informed that Mrs Luckman was receiving a UK pension, did nothing further to follow up on this – by, for example, writing to Mrs Luckman to remind her to supply further details of her pension.
In my view, Mr and Mrs Luckman complied with their notification obligations on 27 June 2007, and the continuing overpayments after that date were solely attributable to administrative error by Centrelink. I also find that Mr and Mrs Luckman received their age pension payments after that date in good faith without knowledge of there being an element of overpayment. Indeed, they were shocked to receive notification of the debts by letter dated 10 June 2009.
Section 1237A(1) of the Social Security Act 1991 (the Act) provides that the Secretary must waive the right to recover the proportion of a debt that is attributable solely to administrative error made by the Commonwealth if the debtor received the payments that gave rise to that proportion of the debt in good faith. In my view, the proportion of the Mr and Mrs Luckman’s debts for the period after 27 June 2007 was attributable solely to administrative error by Centrelink and must be waived under this provision.
The remaining proportion of the debts sought to be recovered is that in respect of the period 19 June 2000 to 26 June 2007. In my view, there is no evidence of sole administrative error on the part of Centrelink in respect of this period and s 1237A is not therefore applicable. However, there is also a discretion in s 1237AAD to waive the right to recover all or part of a debt where there are special circumstances. This section states:
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.
I am satisfied that the overpayment of Mr and Mrs Luckman’s age pensions during the period 19 June 2000 to 26 June 2007 was as a result of a misunderstanding on their part of the extent of Centrelink’s knowledge of their UK pension payments. In my view, write-off – the suspension of recovery of a debt – is not appropriate given Mr and Mrs Luckman’s financial circumstances and their capacity, albeit limited, to make repayments by withholdings. With regard to waiver, although the Act provides no guidance as to the meaning of "special circumstances", this has been the subject of statutory interpretation by the Federal Court and the Tribunal. A leading case is Beadle v Director-General of Social Security (1985) 7 ALD 670; (1985) 60 ALR 225 (Beadle), a decision of the Full Federal Court. In Beadle, the Court did not think it possible to lay down precise limits or precise rules. It would depend on the circumstances of the particular case as to whether they constituted special circumstances. Moreover, even though the phrase "special circumstances" lacks precision, it "is sufficiently understood in our view not to require judicial gloss" (at ALD 674).
In Beadle, the Court affirmed the decision under review in that case, Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase "special circumstances" is "incapable of precise and exhaustive definition", said, nevertheless, that the circumstances "must have a particular quality of unusualness that permits them to be described as special" (at 3).
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541; (1996) 2 SSR 10a, at ALD 545, Kiefel J, after referring to the Federal Court’s decision in Beadle (supra 1985), observed that 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 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.

I have considered Mr and Mrs Luckman’s health and financial situation and the circumstances giving rise to the overpayments. While regrettably Mr Luckman’s health is not good, this is not sufficiently unusual to amount to special circumstances. Nor are their financial circumstances special in this sense. None of the other circumstances surrounding this matter are, in my view, in this special category and I therefore conclude that the discretion in s 1237AAD is not applicable in this case.

Decision

For the reasons set out above, the Tribunal sets aside the SSAT decision dated 23 September 2009 and substitutes a decision that Mr and Mrs Luckman owe debts to the Commonwealth in respect of overpayments of age pension in the period 19 June 2000 to 26 June 2007, such debts to be recoverable by withholdings. The amount of the debts is remitted to Centrelink for recalculation. While Mr and Mrs Luckman also received overpayments of age pension in the period 27 June 2007 to 7 April 2009, the debts attributable to that period are waived.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RP Handley, Deputy President.

Signed: .......[sgd]..................................................................
Associate

Date of Hearing:  31 May 2010
Date of Decision:  9 June 2010
Applicant representative:                   Ms R Harlock, Centrelink Advocacy Branch
Respondent representative:              Self-represented