Luff and Secretary, Department of Social Services (Social services second review)

[2021] AATA 85

Luff and Secretary, Department of Social Services (Social services second review) [2021] AATA 85 (3 February 2021)

Division:GENERAL DIVISION

File Number:          2019/8302

Re:Lerlene Luff

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member Dr M Evans-Bonner

Date:3 February 2021

Place:Perth

1. The Reviewable Decision of the authorised review officer dated 19 August 2019, as varied by the AAT1 on 5 November 2019, is set aside.

2. The Tribunal substitutes a new decision that the whole of the debt for the period 29 July 2017 to 21 September 2018 should be waived under s 1237A(1) of the Act because it was attributable to a sole administrative error of the Commonwealth.

   .........................[Sgd]...............................................

   Senior Member Dr M Evans-Bonner

   CATCHWORDS

   SOCIAL SECURITY – pensions, allowances, benefits – whether Applicant overpaid age pension – whether debt due to Commonwealth – whether debt should be recovered – unrealisable asset – whether a loan is an assessable asset – write off – sole administrative error established – whether a change in circumstances – whether obligation to notify – draft financial statement provided to Centrelink – special circumstances – debt waived in full – decision of authorised review officer, as varied by the AAT1 set aside and substituted

   LEGISLATION

   Social Security Act 1991 (Cth) – ss 11, 11(12), 11(13), 55, 1064, 1122, 1129, 1130, 1130(1), 1223(1), 1236(1), 1236(1A)(c), 1236(1A)(d), 1237A(1), 1237AAD

   Social Security (Administration) Act 1999 (Cth) – ss 66A, 68(2)

   CASES

   Angelakos v Secretary, Dept of Employment and Workplace Relations (2007) 100 ALD 9

   Beadle and Director-General of Social Security (1984) 6 ALD 1
   Esber v Commonwealth (1992) 174 CLR 430
   Federal Commissioner of Taxation v Salenger (1988) 19 FCR 378
   Groth v Secretary, Department of Social Security (1995) 40 ALD 541
   Re Azizi and Minister for Home Affairs (2018) 162 ALD 422
   Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693
   Re Faulkner and Comcare (2007) 45 AAR 467
   Re Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173
   Re Perks and Australian National Railways Commission (1987) 13 ALD 133
   Re Scott and Commissioner for Superannuation (1986) 9 ALD 491
   Secretary, Department of Family & Community Services v Sekhon (2003) 73 ALD 41
   Secretary, Department of Social Security v Hales (1998) 82 FCR 154

   Stafford and Secretary, Department of Social Services [2018] AATA 2746

   SECONDARY MATERIALS

   Social Security Guide version 1.277 – paras 4.6.7.10, 4.6.7.50

   REASONS FOR DECISION

   Senior Member Dr M Evans-Bonner

   3 February 2021

   THE APPLICATION

3. The Applicant is seeking review of a decision of the Social Services and Child Support Division (AAT1) in the General Division (AAT2) of the Administrative Appeals Tribunal (Tribunal).

4. By way of background, on 12 June 2019, a decision was made by an officer of the Department of Human Services which is now called Services Australia (Centrelink) to raise and recover an age pension debt from the Applicant for $22,358.21 for the period 29 July 2017 to 21 September 2018 (T15/193; T16/215-217) (Original Decision).

5. As will be explained in more detail below, the Applicant’s age pension debt arose after she became partnered on 29 July 2017. She advised Centrelink of this on 22 August 2017, as well as providing them with financial information on the same date (T6). This information showed that the Applicant had loaned a company, which her partner was the sole director of, $14,700, and that her partner had loaned the company “$780,000”. In short, the loan of approximately $780,000 placed the Applicant’s assets over the assets test for the age pension.  

6. The Applicant requested an internal Centrelink review of the Original Decision. However, on 19 August 2019, an Authorised Review Officer (ARO) of Centrelink affirmed the decision (T18/248-252) (ARO Decision).

7. The Applicant sought review of the ARO Decision in the AAT1. On 5 November 2019, the AAT1 varied the ARO Decision (T2) by waiving the debt for the period 22 August 2017 to 30 September 2017 on the basis that there was sole administrative error and that the payments were received by the Applicant in good faith. It is the ARO Decision, as varied by the AAT1 on 5 November 2019, that is the Reviewable Decision currently before the Tribunal.

8. Specifically, the AAT1 found that on 22 August 2017 the Applicant provided Centrelink with enough information for the year ending 30 June 2016 to have determined that age pension was payable to her at a reduced rate (T2/8). This information comprised the company’s financial statement for the 2015/2016 financial year, and the draft financial statement for the 2016/2017 financial year.

9. However, the AAT1 found that although this latter financial statement was finalised on

   
   

   30 September 2017, the Applicant did not provide it to Centrelink until approximately

   
   

   10 months later, on 13 August 2018, and therefore not within 14 days of 30 September 2017 (T2/8). This was, the AAT1 found, an error by the Applicant because the company’s 2016/2017 financial statement supposedly reflected a change in asset value of more than $1,000 from the previous year, and she was required to advise of such a change within

   
   

   14 days from 30 September 2017.  

10. On 12 December 2019, the Applicant lodged an application seeking review of the AAT1 Decision in the AAT2 (T1).   

    BACKGROUND

11. The Applicant is a non-homeowner. She was in receipt of the age pension during the Relevant Period, being 29 July 2017 to 21 September 2018. 

12. The Applicant lodged a partner details form with Centrelink on 22 August 2017
    (T7/147-149). A Centrelink electronic file note dated 22 August 2017 confirmed the lodgement of this form and that the Applicant had become partnered on 29 July 2017 (T23/275).

13. On 22 August 2017, the Applicant lodged a private company form with Centrelink (T6/79). In this form the Applicant stated that she had loaned the company $14,700 and that her partner had loaned the company $780,000 (T6/86). However, she also provided a draft financial statement for the 2016/2017 financial year which showed the particularised value of the “$780,000” loan to actually be $778,122 (T6/133-146, 141). In addition, the Applicant provided the company’s tax return and financial report (including profit and loss statement and schedule of assets) for the 2015/2016 financial year (T6/95-132) to Centrelink which showed her partner’s loan to the company to be $795,175 at that time (T6/123).

14. On 18 October 2017, Centrelink wrote to the Applicant advising her that from when she became partnered on 29 July 2017 she was entitled to the partnered rate of age pension, and therefore had accrued a debt of $233.06 between 29 July 2017 to 11 August 2017 (T8/150-151). This debt was recovered by Centrelink.

15. On 17 November 2017 and 21 November 2017, Centrelink sent letters to the Applicant which both stated the combined income used to calculate her regular payments (T9 and T10). 

16. A Centrelink file note dated 13 August 2018 recorded that Centrelink wrote to the Applicant’s partner to request the company’s 2016/2017 financial statements. The note further recorded that the couple’s accountant stated that he had given the documents to the Applicant to pass onto Centrelink (T24/296).

17. The Applicant lodged the company’s financial statement for the 2016/2017 financial year (T11/158; and T11/159-182) on the same day as the Centrelink file note, being 13 August 2018. This statement showed the Applicant’s loan to the company to be $14,700 and her partner’s loan to the company to be $777,877 (T11/167). A Centrelink file note dated
    14 August 2018 noted that the “2017 Company Tax Return and Financials” had been provided (T24/296).

18. Another Centrelink file note dated 14 August 2018 shows that a complex assessment officer assessed the company financial information. The following notes were recorded (T24/278):

    Reduction in rate and overpayment due to income from, and loan to partner’s company … Cust became partnered 290717. Attributed income from the company begins affecting the AGE rate from 290717. Company made a loss in 2017 and that has been backdated as early as possible, to 220817. But the partner also has a large loan to the company which is a financial asset for him, and is subject to deeming. …

    The real impact on the AGE rate is the Assets Test. The partner’s loan to the company, plus other Savings and Shares makes for a very high Affecting Assets amount. It will be up to Debt Management to decide whether the debt is recoverable, as company documents were first provided 220817 and it has taken us a year for an assessment of the company to be done.

    (Emphasis added.)

19. On 5 October 2018, Centrelink decided to cancel the Applicant’s age pension because her partner’s loan to the company exceeded the assets test (T24/278).

20. As outlined above, there were subsequent unsuccessful appeals by the Applicant to an ARO of Centrelink and to the AAT1 which led to the current application.

    ISSUES

21. The issues requiring determination by this Tribunal are:

    (a)whether the Applicant was overpaid age pension in the amount of $22,358.21 for the Relevant Period (29 July 2017 to 21 September 2018);

    (b)if so, whether the amount overpaid is a debt to the Commonwealth; and

    (c)if so, whether the debt should be recovered. This requires a consideration of whether the debt can be written-off or waived.

22. At the hearing of this application on 2 October 2020, the Secretary did not seek to vary the AAT1 decision, despite the AAT1 varying the ARO Decision to waive the debt for the period 22 August 2017 to 30 September 2017. The Secretary’s position at the hearing was that the AAT1 Decision should be affirmed.

23. The Applicant did not dispute that she was overpaid the age pension which resulted in the debt. Her position was, however, that the debt should be waived in full because she received her age pension payments in good faith. The Applicant argued that she did not do anything wrong, and that it was Centrelink’s fault that she was overpaid (transcript/12). She argued that she had provided Centrelink with final company financial statements for the 2015/2016 financial year and draft statements for the 2016/2017 financial year which should have been enough for Centrelink to determine that the age pension was not payable to her. She submitted that when the final 2016/2017 financial statement was provided, it was for a similar amount to the draft financial statement. Her position was that Centrelink had the information they required to determine that the age pension was not payable to her, and that there had not been a change in circumstances that she needed to advise Centrelink about (transcript 15-17). The Applicant submitted that if she had not provided the required financial information to Centrelink on time, that Centrelink should have stopped her payments instead of continuing to pay her. She is therefore seeking to have the entire debt waived due to sole administrative error.  

24. At the conclusion of the hearing, the Tribunal requested additional written submissions from the parties, as set out in a Direction dated 2 October 2020. The relevant part of this Direction stated that the written closing submissions should address:

    a.    The relevance of Centrelink being provided with the 2016 company financial statement showing the loan of $795,175 (T6/123); 

    b.    The legislative or policy basis for the Secretary’s contention that the financial statements filed on 13 August 2017 were ‘“draft” and could not be accepted by the Agency’ (Exhibit 3, para [58]) and whether they should have been accepted; 

    c.     The Tribunal notes that on 29 July 2017 the Applicant became partnered. Also, the amount of the loan shown in documents provided to Centrelink in 2016, 2017 and 2018 ($795,175 at T6/123; $778,122 at T6/141; and $777,877 at T11/167) was similar each year. In light of these, the Tribunal seeks submissions regarding the meaning of a “change in circumstances” in ss 66A and 68, and the meaning of “specified event” in s 68 of the Social Security (Administration) Act 1999 (Cth) (see T3, pages 63 and 66), and whether there was a change of circumstances or a specified event; and

    d.    Any other matters the party considers to be relevant to the Tribunal reaching the correct or preferable decision. 

25. These written submissions were received from the Secretary on 30 October 2020, from the Applicant on 11 November 2020, and in reply from the Secretary on 25 November 2020. The Applicant was self-represented at the hearing, but her written submissions of

    
    

    11 November 2020 were prepared by the Welfare Rights and Advocacy Service.

    RELEVANT LEGISLATION AND PRINCIPLES

    Issue 1: Was the Applicant overpaid an age pension?

26. Section 55 of the Social Security Act 1991 (Cth) (the Act), provides that the rate of age pension is worked out using the Pension Rate Calculator A (Rate Calculator). This Rate Calculator is contained in s 1064 of the Act. In summary, the rate of age pension will be calculated by using either the total value of the person’s assets or their total income, whichever produces a lower rate of pension.

27. An “asset” is defined by s 11 of the Act to mean “property or money (including property or money outside Australia)”.

28. A loan can be an asset. Section 1122 of the Act provides, “[i]f a person lends an amount after 27 October 1986, the value of the assets of the person for the purposes of this Act includes so much of that amount as remains unpaid but does not include any amount payable by way of interest under the loan” (original emphasis). Therefore, the loans of $14,700 and $777,877 are assets. Including these loans as assets, at 29 July 2017, the Applicant’s combined assessable assets were valued at $1,180,876 (see calculations at paragraph [11] of E3) which exceeded the combined assets limit for a couple who are not homeowners of $1,030,000. The Applicant was therefore not qualified to receive the age pension during the Relevant Period.

29. However, “unrealisable assets” of a person or a person’s partner may be disregarded for the purpose of calculating a pension or benefit under financial hardship rules (s 1130 of the Act; Social Security Guide, 4.6.7.10 and 4.6.7.50).

30. An “unrealisable asset” is defined in ss 11(12) and 11(13) of the Act as follows:

    (12)An asset of a person is an unrealisable asset if:

    (a)  the person cannot sell or realise the asset; and

    (b)  the person cannot use the asset as a security for borrowing.

    (13)For the purposes of the application of this Act to a social security pension (other than a pension PP (single)), an asset of a person is also an unrealisable asset if:

    (a)  the person could not reasonably be expected to sell or realise the asset; and

    (b)  the person could not reasonably be expected to use the asset as a security for borrowing.

    (Original emphasis.)

31. Section 1129 of the Act provides:

    (1)  If:

    (a) either:

    (i)     a social security pension is not payable to a person because of the application of an assets test; or

    (ii)     a person's social security pension rate is determined by the application of an assets test; and

    (b)either:

    (i)     sections 1108 and 1109 (disposal of income) and 1124A, 1125, 1125A, 1126, 1126AA, 1126AB, 1126AC, 1126AD and 1126E (so far as section 1126E relates to sections 1126AA, 1126AB, 1126AC and 1126AD) (disposal of assets) do not apply to the person; or

    (ii)     the Secretary determines that the application of those sections to the person should, for the purposes of this section, be disregarded; and

    (c)the person, or the person's partner, has an unrealisable asset; and

    (d)the person lodges with the Department, in a form approved by the Secretary, a request that this section apply to the person; and

    (e)the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;

    the Secretary must determine that this section applies to the person.

32. Section 1130(1) of the Act provides that if s 1129 of the Act applies, the value of the unrealisable asset is to be disregarded:

    Value of unrealisable asset to be disregarded

    (1)  If section 1129 applies to a person, the value of:

    (a)  any unrealisable asset of the person; and

    (b)  any unrealisable asset of the person's partner;

    is to be disregarded in working out the person's social security pension rate.

33. Unfortunately for the Applicant, the loan from her partner is not unrealisable. A letter dated 26 February 2020 (E3/Annexure B) from the Applicant’s accountant confirms that the loan monies were “effectively held at call”. This was because the loan came about through the Applicant’s partner contributing stock and plant equipment to the company. Consequently, the stock, plant and equipment could be sold and, the Tribunal infers, could be used as security for borrowing. The letter confirmed that:

    … it is the company’s intent to sell stock on hand over time with the objective of generating a profit, however a fire sale of stock or the sale of P&E [plant and equipment] to facilitate clearing of the loan accounts could jeopardise the company’s ability to continue as a going concern. For this reason, whilst the loans are effectively held at call, it is not necessarily possible for the company to pay them out in full in the short to medium term. Potentially it may not be possible to pay them in full indefinitely if the company is not able to trade and sell its inventory on a profitable basis.

34. In her evidence at the hearing the Applicant confirmed that in 1999 she gave a personal loan to her partner of $14,700 for a hay baler which did not relate to the company but ended up on the company’s books as a loan (transcript/29). Her evidence was that she could not call on the money now because “I never have given [the company] a cent. And I can’t borrow against it because it’s not there” (transcript/27). The Tribunal’s view is that, despite the Applicant’s explanation, the $14,700 is shown in the company’s 2015/2016 and 2016/2017 financial statements and could be called upon. However, practically speaking, even if the $14,700 loan is not considered, the assets limit is still exceeded due to the $777,877 loan from the Applicant’s partner.

35. In summary, the Tribunal finds that both loans are assets and that the Applicant was overpaid an age pension during the Relevant Period in the sum of $22,358.21.

    Issue 2: Is there a legally recoverable debt?

36. Section 1223(1) of the Act effectively provides that if a social security payment is made, and the person who obtains the benefit was not entitled to receive it, the amount of the payment is a debt due to the Commonwealth.

37. As the Applicant received an overpayment of age pension during the Relevant Period that she was not entitled to receive because she exceeded the assets limit, the Tribunal finds that the amount of the overpayment ($22,358.21) is a legally recoverable debt due to the Commonwealth.

    Issue 3: Should the debt or part of the debt be waived or written off?

38. In Secretary, Department of Social Security v Hales (1998) 82 FCR 154, 155, (Hales) Justice French (as he then was) noted that the taxpayer expects the repayment of social security benefits received by a person if they were not entitled to them:

    From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.

1. However, as his Honour identified in the above passage, to prevent hardship the Act balances the requirement to repay an overpayment debt with the possibility that the debt may be waived or written off in certain circumstances. The Tribunal will now consider whether any of these circumstances apply to the Applicant.

   Write off under s 1236(1) of the Act

2. Section 1236(1) of the Act provides:

   (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.

3. Section 1236(1A) sets out the circumstances where the Secretary may decide to write off the debt under s 1236(1) of the Act. It provides:

   (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.

4. The Tribunal finds that the debt is recoverable at law because, as stated above, the overpayment is a legally recoverable debt to the Commonwealth. Further, the Applicant has the capacity to repay the debt and there is no evidence of financial hardship. The Applicant is currently in receipt of the age pension and was making repayments on the debt as withholdings from her fortnightly payments (but arranged with Centrelink to stop doing so until these proceedings are finalised) (transcript/30). The remaining subsections

   
   

   (ss 1236(1A)(c) and (d) of the Act) are not relevant to this application.

5. Accordingly, the Tribunal finds that the debt cannot be written off under s 1236(1) of the Act.

   Waiver for sole administrative error

6. Section 1237A(1) of the Act provides that the Secretary must waive a debt if the debt is attributable to the “sole administrative error” of the Commonwealth (in this case Centrelink):

   (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).

7. In Re Gerhardt and Secretary, Department of Employment, Education and Training [1996] AATA 173 [39]–[40], Deputy President Forgie stated that “solely” in the context of a debt being attributable solely to the Commonwealth’s administrative error should be given its “ordinary meaning”. Deputy President Forgie stated, at [40]:

   Applying those ordinary meanings to the sub-section mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth’s administrative error. The Secretary’s duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth’s administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth’s administrative error (i.e. they are incidental to the Commonwealth’s error), then it may be that the debt is attributable solely to the Commonwealth’s administrative error. Whether it is or is not attributable in that situation to the Commonwealth’s administrative error will be a question of fact.

8. In Secretary, Department of Family & Community Services v Sekhon (2003) 73 ALD 41, 47 [41], Wilcox J explained that:

   However, it seems to me, the tribunal failed to consider the significance of the inclusion, in s 1237A(1), of the word “solely”. For the subsection to have effect, the “proportion” of the debt — in this case, it is common ground, that would be the whole of it — must be “attributable solely” to administrative error. 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.

9. Section 66A of the Social Security (Administration) Act 1999 (Cth) (Administration Act) effectively provides that if there is an event or change of circumstances that might affect the payment of a social security payment, the person must inform Centrelink within 14 days.

10. Under s 68(2) of the Administration Act, the Secretary can issue a notice to a person to whom a social security payment is being paid requiring the person to inform the Department if there is a change in circumstances that may affect their social security payment. Notices were issued to the Applicant on 11 December 2012 (T4/74), 17 November 2017 (T9/152) and 21 November 2017 (T10/155). These letters stated that the Applicant must advise Centrelink if there were any changes to her or her partner’s income, financial investments (by $2000 or more) or assets (by $1000 or more).

11. The Secretary claims that any error was not solely attributable to Centrelink because there were two changes of circumstances, and that for both, the Applicant did not inform the Department of the change within 14 days. Therefore, the Secretary submitted, that some of the fault was on the part of the Applicant (transcript/32). 

12. The first change in circumstance was the Applicant becoming partnered on 29 July 2017. She advised Centrelink on 22 August 2017, approximately 10 days late (T6). However, as noted at paragraph [11] of the Applicant’s closing submissions dated 11 November 2020, this was addressed by the Department on 18 October 2017 (incorrectly stated in the submissions as 18 November 2017) when the Department raised and recovered the debt of $233.06.

13. The Secretary submitted that the second change that the Applicant was required to notify Centrelink of within 14 days was a change to “financial investments” following the completion of the final 2016/2017 company statement on 30 September 2017 because there was a difference of more than $2,000 from the amount of the loan she disclosed on 22 August 2017. Specifically, the amount of the loan decreased slightly. The Secretary submitted that when the Applicant provided the finalised 30 September 2017 statement on 13 August 2018 it was approximately 10 months late.

14. The Secretary referred to the notices sent to the Applicant (which were discussed above at paragraph [46]). These notices stated that the Applicant must advise Centrelink of a change to “financial investments” of the Applicant and her partner of $2,000 or more. The explanation for this category refers to “changes to details of loans made” (see, for example, T10/156) as an example of a change to financial investments. Another category specified in the notices is “assets”. That is, the notice stated that the Applicant must advise of any changes in “assets” of the Applicant and her partner by $1,000 or more, with the explanation referring to “money/loans owed” as an example of an asset. The Tribunal is of the opinion that the loan is best characterised as an “asset” rather than a “financial investment” as this characterisation is consistent with s 1122 of the Act which provides that a loan can be an asset. However, as will be explained, this distinction between “asset” and “financial investment” makes little difference when the documentation given to Centrelink regarding the specific loan amounts is examined. This is because, in the Tribunal’s opinion, the change in the amount of the loan disclosed to Centrelink was only $245, which is below the amounts of $1,000 and $2,000. The Tribunal will now explain how this calculation was reached.

15. Specifically, the form the Applicant submitted on 22 August 2017 showed the debt to the company to be $780,000. However, with that form the Applicant submitted a draft 2016/2017 financial statement which particularised the debt as being $778,122. The final 2016/2017 financial statement, finalised on 30 September 2017 and which the Applicant submitted to Centrelink on 13 August 2018, stated the loan to be $777,877. Thus, instead of there being a difference of $2,123 (based on the $780,000 estimate and the final financial statement amount of $777,877), the actual amount of change should be calculated using the $778,122 in the 2016/2017 draft financial statement and the amount of $777,877 from the 2016/2017 final financial statement. The difference between the particularised amount in the draft statement and the final statement shows that the loan amount decreased by $245. Consequently, there was no change in assets of $1,000 or more that the Applicant was required to notify Centrelink about which contributed to the overpayment.

16. Additionally, it was conceded by the Secretary that there is no legislative or policy basis for Centrelink not accepting draft financial statements (paragraph [18], written closing submissions dated 30 October 2020). The Tribunal notes the Secretary’s submission that draft documents are “not a full and final reflection of the Applicant’s true financial circumstances” (paragraph [19], written closing submissions dated 30 October 2020). They are, however, provisional and in the Tribunal’s opinion, do give an indication of the likely financial position.

17. In the written closing submissions dated 30 October 2020 (paragraph [37]-[38]), the Secretary stated her reliance on Stafford and Secretary, Department of Social Services [2018] AATA 2746 (Stafford), which contained similar facts to the current application.

18. Before considering Stafford, this Tribunal observes that it is not a judicial body, but rather an executive body standing in the shoes of the original decision maker and conducting a “de novo” review on the merits (Re Faulkner and Comcare (2007) 45 AAR 467 at [27]; Esber v Commonwealth (1992) 174 CLR 430 at 440). As part of the constitutional division between executive and judicial power, the Tribunal is bound to follow judicial precedent (see French J in Federal Commissioner of Taxation v Salenger (1988) 19 FCR 378 at 387).

19. Strictly speaking, the Tribunal is not bound to follow previous Tribunal decisions. However, the Tribunal will often do so to ensure consistency in Tribunal and government decision making (Re Azizi and Minister for Home Affairs (2018) 162 ALD 422 at 424). To quote the Tribunal in Re Scott and Commissioner for Superannuation (1986)

    
    

    9 ALD 491 at 499) “[o]ne effect of the Tribunal’s decisions is to establish administrative norms; they enable legislation to be administered consistently”. Relevantly, regarding whether the Tribunal should follow previous Tribunal decisions involving similar facts, in Re Perks and Australian National Railways Commission (1987) 13 ALD 133 at 135 the Tribunal stated that, “[a] decision purely of fact is not a precedent but the perusal of such a decision may assist to clarify the factual issue which the tribunal has to resolve”.

20. Stafford concerned an overpayment of disability support pension. There are some similarities between Stafford and the current application. In Stafford the Applicant regularly reported his earnings to Centrelink, but there was a slight variation between the actual earnings and those declared, and he did not provide the Department with updated financial information because the Department ceased requesting that information (Stafford at [77]). Curiously, in finding that the debt could not be waived based on sole administrative error, the Tribunal simply accepted the Department’s submissions and the findings of the AAT1 and provided little reasoning as to why it reached the conclusion it did. The Tribunal stated (at [78]):

    This Tribunal agrees with these findings. It is at least arguable that, had the Applicant fully complied with the reporting requirements imposed on him, the debt for which he now finds himself liable might not have accrued. Without further evidence it is ultimately impossible to determine if this would have been the case. However, it is certainly not the case that, given his failure to comply with the reporting requirements made clear in the notices sent to them, the debt in question can be blamed solely on an administrative error on the part of the Commonwealth.

21. In this passage from Stafford, the Tribunal stated that it was “impossible to determine” if the debt would not have accrued if the Applicant met his reporting requirements without further evidence. The current case is different. This Tribunal has determined on the evidence that there was no change in circumstances that the Applicant was required to notify Centrelink about which contributed to the overpayment (paragraphs [50]-[51] above). As was identified by the complex assessment officer, the Applicant provided the company financial statement showing the loan after she was partnered on 22 August 2017 and it took Centrelink over a year to action it (T24/278). This resulted in an overpayment to the Applicant which the Tribunal finds she accepted in good faith.

22. The Tribunal finds that the whole of the debt (being $22,358.21) for the Relevant Period should be waived because it was attributable to a sole administrative error of the Commonwealth.

    Special circumstances

23. For the sake of completeness, the Tribunal will now consider whether the debt should be waived in whole or part due to the existence of special circumstances.

24. Section 1237AAD of the Act provides that a debt can be waived by the Secretary if there are special circumstances. The 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.

    (Notes omitted.)

25. In summary, s 1237AAD of the Act gives the Secretary the discretion to waive a debt if there are special circumstances, other than financial hardship alone, which make it appropriate to do so. Additionally, the person must not have contributed to the debt by making a false statement, representation or by otherwise failing to comply with the Act or the Administration Act.

26. No submissions were made by the Applicant of any unusual, uncommon or exceptional circumstances that would constitute special circumstances (Beadle and Director-General of Social Security (1984) 6 ALD 1, 3; Groth v Secretary, Department of Social Security (1995) 40 ALD 541, 545; Angelakos v Secretary, Dept of Employment and Workplace Relations (2007) 100 ALD 9, 17–18 [33]; Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693, 715–716 [80]; and Hales 162). Additionally, there was no evidence arising from the materials before the Tribunal of any special circumstances which would justify the exercise of discretion to waive the debt under s 1237AAD of the Act.

27. In conclusion, the Tribunal finds that the absence of evidence of any special circumstances means that the Tribunal cannot waive the debt under s 1237AAD of the Act.

    CONCLUSION

28. In summary, and for the reasons outlined above, the Tribunal finds that:

    (a)the Applicant was overpaid age pension payments in the amount of $22,358.21 during the Relevant Period due to exceeding the assets value limit;

    (b)accordingly, the overpayment constitutes a legally recoverable debt; and

    (c)the Applicant acted in good faith, and the debt was attributable to the “sole administrative error” of the Commonwealth. Therefore the whole of the debt should be waived pursuant to 1237A(1) of the Act.

    DECISION

29. The Reviewable Decision of the ARO dated 19 August 2019, as varied by the AAT1 on 5 November 2019, is set aside.

30. The Tribunal substitutes a new decision that the whole of the debt for the Relevant Period (29 July 2017 to 21 September 2018) should be waived under s 1237A(1) of the Act because it was attributable to a sole administrative error of the Commonwealth.

I certify that the preceding 66 (sixty-six) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr M Evans-Bonner

...........[Sgd]............................................................

Dated: 3 February 2020

Date of hearing:	2 October 2020
Applicant:	In person
Counsel for the Respondent:	Ms J Forsyth
Solicitors for the Respondent:	Mills Oakley Lawyers