Mala and Secretary, Department of Social Services (Social services second review)
[2016] AATA 464
•20 May 2016
Mala and Secretary, Department of Social Services (Social services second review) [2016] AATA 464 (20 May 2016)
Division
GENERAL DIVISION
File Number
2015/4630
Re
Madhu Mala
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Deputy President Dr P McDermott RFD
Date of decision 20 May 2016
Date of written reasons
Place
1 July 2016
Brisbane
I affirm the decision under review.
..............................[sgd]..........................................
Deputy President Dr P McDermott RFD
CATCHWORDS
SOCIAL SECURITY – parenting payment – debt due to the Commonwealth – whether recovery of debt should be written off or waived – debt not attributable solely to error made by Centrelink – no finding of special circumstances – decision affirmed under review
LEGISLATION
Social Security Act 1991 (Cth) ss 1068B, 1223, 1236, 1237, 1237AAD
Social Security (Administration) Act 1999 (Cth) ss 63, 68
CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Haggerty v SDETYA (2000) 31 AAR 529
Secretary, Department of Social Services v Hales (1998) 82 FCR 154REASONS FOR DECISION
Deputy President Dr P McDermott RFD
1 July 2016
BACKGROUND
Ms Madhu Mala (“the applicant”) seeks review of a decision made on 19 August 2015 by the Social Services and Child Support Division of the Administrative Appeals Tribunal (“the SSCSD”) affirming a decision made on 27 April 2015 by the Department of Social Services (“the respondent”) to raise and recover a parenting payment debt in the amount of $11,570.82.
INTRODUCTION
On 17 April 2014 the applicant began receiving a parenting payment at the single rate.
On 14 May 2014 Centrelink sent the applicant a letter requesting that she contact Centrelink before 6 June 2014 to discuss her entitlement to a parenting payment at the single rate.[1]
[1] Exhibit B, Respondent’s Statement of facts, issues and contentions at attachment A.
On 23 May 2014 the applicant completed a ‘Becoming partnered’ form. The form disclosed that on 13 May 2014 the applicant had reconciled with her partner, Mr Avenish Sen (“the partner”). The applicant also completed a ‘Partner’s details’ form. The form disclosed that the partner received an income of $2,255 per fortnight but that this was not his usual wage.[2] The respondent has properly conceded that the income details had not been recorded.
[2] Exhibit A, T-Documents, T9, pp. 94-112.
On 23 May 2014 the applicant was granted a parenting payment at the partnered rate and was advised about her notification obligations. The applicant was advised about the general notification provisions by a Centrelink staff member.[3]
[3] Exhibit B, Respondent’s Statement of facts, issues and contentions at attachment B.
Also on 23 May 2014 a letter was sent to the applicant which stated that the partnered rate payment was calculated using both her and her partner’s income. The letter stated her partner’s income was $0.00.[4] Another letter sent also on that date advised her how income affected the parenting payment.[5]
[4] Exhibit A, T-Documents, T5, pp. 58-60.
[5] Ibid at pp. 61-63.
On 30 May 2014 the applicant updated her estimated income online for the family tax benefit purposes.[6]
[6] Exhibit B, Respondent’s Statement of facts, issues and contentions at attachment D.
On 7 June 2014 a letter was sent to the applicant which advised her that her rate of payment was being calculated on the basis her partner had $0.00 income. The letter also stated that her payment had been suspended because she had not responded to the letter sent to her on 14 May 2015.[7]
[7] Ibid at attachment E.
On 4 July 2014 the applicant contacted Centrelink and stated that she and her partner were trialling a reconciliation.[8]
[8] Ibid at attachment H.
On 5 July 2014 a letter was sent to the applicant advising that her parenting payment at the partnered rate had been restored and that it was based on her partner’s fortnightly income being $0.00.[9] The applicant acknowledged having received that letter at the hearing. The letter makes it clear that according to Centrelink’s records the partner’s income was $0.00.
[9] Ibid at attachment J.
On 9 July 2014, a Centrelink staff member contacted the applicant for a phone appointment. The staff member created a file note which stated that the applicant and her husband were separated but remaining sharing the same residence.[10]
[10] Ibid at attachment K.
On 7 January 2015 a letter was sent to the applicant requesting that she contact Centrelink in relation to employment with Bremer Cleaning Service Pty Ltd (“Bremer”).[11] The applicant confirmed that she was employed with Bremer on a casual basis between 7 June 2014 and 16 June 2014 and that she earned $130.00. There was no debt raised.
[11] Ibid at attachment L.
On 20 April 2015 the applicant advised that her estimated taxable income was $1,000.00 and her partner’s was $81,000.00.[12]
[12] Ibid at attachment O.
On 22 April 2015 the applicant contacted the Centrelink call centre and advised that her partner was working although the earnings were not updated since June 2014.[13]
[13] Ibid at attachment P.
On 27 April 2015 a Centrelink officer contacted the applicant and the applicant advised that her partner had been employed for the previous five years and that he earned $2,600.00 per fortnight. On that day a debt of $11,570.82 was raised for the period 13 May 2014 to 20 April 2015.[14]
[14] Ibid at attachment Q.
The applicant requested a review of the decision. On 25 May 2015 an authorised review officer affirmed the decision.[15]
[15] Exhibit A, T-Documents, T8 at pp. 84-87.
On 1 June 2015 the applicant requested a further review. On 19 August 2015 the SSCSD affirmed the decision under review.[16]
[16] Exhibit A, T-Documents, T2 at pp. 5-10.
On 3 September 2015 the applicant applied to the General Division of the Administrative Appeals Tribunal for a review of the decision.[17] The basis for the request for a review primarily concerned the applicant’s view that Centrelink is responsible for the debt arising.
[17] Exhibit A, T-Documents, T1 at pp. 1-4.
ISSUES
The first issue that I am required to determine is whether the applicant has been paid an amount of parenting payment that is greater than her correct entitlement. The second issue is whether the excess payment is recoverable in part or full.
CONSIDERATION
Overpayment
The first issue for consideration is whether the applicant has been paid an amount of parenting payment for the period 13 May 2014 to 20 April 2015 that is greater than her correct entitlement. The calculation of the maximum rate of parenting payment is set out under module D of the s 1068B of Social Security Act 1991 (Cth) (“the Act”). The module incorporates the partner’s income in multiple steps of the calculation process.
Centrelink had calculated the applicant’s parenting payment entitlement on the basis that her partner earned $0.00 between 13 May 2014 and 20 April 2015. However, the applicant’s partner earned $2,255.00 per fortnight during this period. Therefore, I am satisfied that the applicant has been paid an amount of parenting payment for the period 13 May 2014 to 20 April 2015 that is greater than her correct entitlement.
Section 1223(1) of the Act provides that 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.
The effect of s 1223(1) of the Act is that a debt of $11,570.82 is presently due to the Commonwealth by the applicant. The applicant did not contend that the calculation of the debt was incorrect.
Section 1223(1AB) of the Act provides a non-exhaustive list of reasons that a person who obtained the benefit of a social security payment is taken not to have been entitled to obtain the benefit if the payment should not have been made. Paragraph (b) states that a person is taken not to have been entitled to obtain the benefit if they were not qualified to receive the payment. The applicant was not qualified to receive the parenting payment she received because of the amount of her partner’s income.
Write off of debt
The second issue for consideration is whether the discretion to write off the debt should be exercised. Section 1236(1A) of the Act provides a discretion to write off a debt where:
(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.
Section 1236(1B) of the Act provides that a debt is taken to be irrecoverable at law for the purposes of sub-section (1A) 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.
I am not satisfied that a write off under s 1236(1A) of the Act is appropriate in these circumstances. The applicant is currently repaying the debt at a rate of $100.00 per fortnight. The debt is recoverable and is currently being recovered.
Waiver – administrative error
The third issue for consideration is whether the debt should be waived. Section 1237A(1) of the Act compels the Secretary to:
… 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.
There are two requirements that much be satisfied for the application of s 1237A(1). First, the debt must be attributable solely to an error made by the Commonwealth. Sub-section (1) does not apply where the debt was caused only partly by administrative error. Second, the debtor must have received the payments that gave rise to the debt in good faith.
Before the SSCSD, in particular paragraph [13], it was found that the debt arose solely as a result of administrative error.[18] The respondent does not accept that the debt is solely attributable to administrative error.[19]
[18] Exhibit A, T-Documents, T2 at p. 7 [13].
[19] Exhibit B, Respondent’s statement of facts, issues and contentions at p. 5 [35].
I am not satisfied that the debt is attributable solely to administrative error. I find that fair notice was given to the applicant. Certainly the respondent was in error in not recording the information that was in the ‘Becoming Partnered’ form that was lodged on 23 May 2014. However, several information notices were posted to the applicant’s nominated address. They advised the applicant that her parenting payment was based on her partner’s income being $0.00. She was advised to contact Centrelink within 14 days if the notices were incorrect.
It was not until 27 April 2015 that Centrelink received notification from a third party that the details of the applicant’s partner’s income were incorrect. The applicant stated at the hearing that she had orally informed Centrelink via telephone and at the registry that that the details of the applicant’s partner’s income were incorrect. However, there was no evidence before the Tribunal to support this assertion. Certainly there were no file notes recorded by Centrelink to this effect.
During the hearing the applicant was taken to [17] of the reasons of the SSCSD decision in which a summary of the evidence appears. The applicant did not take any issue with what is recorded on [17]. There are statements in there that make it clear that the applicant was not expecting to receive parenting payments. If she was entitled to any parenting payment, she expected to receive a maximum of $200.00 per fortnight. Therefore, when the applicant began to receive $460.00 per fortnight she was confused about what Centrelink was doing. That in my view is evidence that the applicant has not received the payment in “good faith” within the meaning of s 1237A(1) of the Act.
For these reasons I do not consider that the debt should be waived under s 1237A(1) of the Act.
Waiver – special circumstances
Section 1237AAD of the Act empowers the Secretary to:
… 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.
In Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 the Tribunal held at 445 that “knowingly” means:
actual knowledge, rather than constructive knowledge… to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time to events surrounding the false statement or the act or omission.
Section 1237AAD(a)(i) is satisfied as the applicant did not make a false statement in regards to her partner’s income. As previously stated, the applicant disclosed her partner’s income on 23 May 2016 when she completed a ‘Partner’s Details’ form.
In relation to s 1237AAD(a)(ii), the applicant was informed of her obligation to report her partner’s income and changes in income in the numerous information notices issued pursuant to s 68(2) of the Social Security (Administration) Act 1999 (Cth) (“the Administration Act”). These notices were issued on 23 May 2014, 7 June 2014 and 5 July 2014.
Actual knowledge can be inferred in this case because the applicant had stated that she had received and read at least one notice from Centrelink. In Re Callaghan and Secretary, Department of Social Security it was held at 445:
Taking into account Mr Callaghan’s knowledge of the notice and of his having read at least one of them, I find that he had an obligation to advise of a change in Mrs Callaghan’s income. Therefore, when he failed to advise of the change he knowingly omitted to comply with a provision of the Act.
A notice will be deemed ineffective if it requires the recipient to advise if income or assets exceed a specified threshold and that threshold has been exceed prior to the issue of the notice.[20] The applicant disclosed her partner’s income on 23 May 2016 when she completed a ‘Partner’s Details’ form. Therefore, I agree with the decision of the SSCD that the notice did not impose an obligation on the applicant to report her partner’s earnings as she had already done so. I am satisfied that s 1237AAD(a) of the Act has been satisfied.
[20] See, Haggerty v SDETYA (2000) 31 AAR 529 at [33]-[34].
For the sake of completeness I should note that the applicant advanced an argument based on her not receiving notices that were posted to a former address. There is no substance in this contention as the notices were duly sent to the postal address last known to the Secretary in accordance with s 63(5) of the Administration Act.
In relation to s 1237AAD(b), I am required to determine if there are special circumstances (other than financial hardship alone) that make it desirable to waive.
In Beadle and Director-General of Social Security (1984) 6 ALD 1 it was held at 3 that there is no precise or exhaustive definition for “special circumstances”.
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 it was held at 545 that “special circumstances” requires:
something to distinguish [the] case from others, to take it out of the usual or ordinary case.
I am not satisfied on the evidence before the Tribunal that there are any aspects of the present matter which distinguish it from others or take it out of the ordinary case. Therefore, I cannot make a finding of special circumstances.
In relation to s 1237AAD(c), I am required to determine whether it is more appropriate to write off the debt than to waive it. In William David & Ann Dora Moore, Secretary, Department of Social Security [1998] AATA 626 the Tribunal remarked at [21] that the determination of whether it is desirable to waive the debt requires the Tribunal to consider:
whether [the applicant’s] character is such that it would be unjust, unreasonable or otherwise inappropriate on the part of the Commonwealth to recover the debt.
I have determined that it is inappropriate to write off the debt because the applicant has demonstrated the capacity to make repayments for the debt at a rate of $100 per fortnight. Moreover, the partner of the applicant has a substantial income.
CONCLUSION
I am satisfied that the applicant has been paid an amount of parenting payment for the period 13 May 2014 to 20 April 2015 that is greater than her correct entitlement. A debt of $11,570.82 is presently due to the Commonwealth by the applicant pursuant to s 1223(1) of the Act.
French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 explained at 155 that taxpayers are entitled to expect that money paid to people which they are not entitled to receive will be recovered in the ordinary course in a manner appropriate to the circumstances.
I am not satisfied that a write off under s 1236(1A) is appropriate in these circumstances. Nor am I satisfied that a waiver is appropriate pursuant to either ss 1237A or 1237AAD of the Act. I appreciate that the respondent failed to record the income details of the applicant’s partner provided by her on 23 May 2014. However, the applicant was sent multiple notices to her nominated address that explained how her parenting payment entitlement was calculated and requested her to notify Centrelink if their records were incorrect. I cannot find that the debt arose as a result of sole administrative error.
There are no special circumstances applicable to the application. For these reasons, I affirm the decision under review.
DECISION
I affirm the decision under review.
I certify that the preceding 52 (fifty -two) paragraphs are a true copy of the reasons for the decision herein of Deputy President McDermott ...........................[sgd].............................................
Associate
Dated 1 July 2016
Date(s) of hearing 20 May 2016
Applicant In person Solicitors for the Respondent Mr Robert Hamilton, Department of Human Services
Key Legal Topics
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Judicial Review
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Statutory Construction
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Remedies
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