Maureen Locke and Secretary, Department of Social Services
[2014] AATA 904
•5 December 2014
[2014] AATA 904
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/2456
Re
Maureen Locke
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Senior Member CR Walsh
Date 5 December 2014 Place Perth The Tribunal affirms the decision under review.
...(Sgd) CR Walsh.................................
Senior Member CR Walsh
CATCHWORDS
SOCIAL SECURITY - disability support pension – overpayment - debt due to the Commonwealth – applicant allegedly given incorrect information by Centrelink officer - whether recovery of debt should be written off or waived – debt not attributable solely to an administrative error made by Centrelink – no “special circumstances” - decision under review affirmed
LEGISLATION
Social Security Act 1991 - s 8(1) - s 117 – s 1064 – s 1072 – s 1184(1) – s 1223(1) – s 1236(1) – s 1236(1A) – s 1236(1B) – s 1236(1C) - s 1237(A)(1) – s 1237AAD
Social Security (Administration) Act 1999 - s 68 – s 74(1)
Administrative Decisions (Judicial Review) Act 1977 - s 5(1)
Financial Management and Accountability Act 1997
CASES
Beadle and Director General of Social Security (1985) 60 ALR 225
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Dranichnikov v Centrelink [2003] 75 ALD 134
Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs (2010) 185 FCR 52
Groth v Secretary, Department of Social Security [1995] FCA 989; (1995) 40 ALD 541
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Re Ivocic and Director General of Social Services [1981] AATA 57
Re Secretary, Department of Family and Community Services and Duzevich [1996] AATA 63; 41 ALD 461
Re Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72
Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126
SECONDARY MATERIALS
Guide to Social Security Law – 6.7.3.30
REASONS FOR DECISION
Senior Member CR Walsh
5 December 2014
INTRODUCTION
Ms Locke seeks review of a decision of the Social Security Appeals Tribunal (SSAT), dated 6 February 2014, which affirmed a decision by a Centrelink authorised review officer (ARO), dated 19 December 2013, that Ms Locke had a debt of $13,660.33, arising out of an overpayment of Disability Support Pension (DSP) during the period 8 July 2009 to 22 October 2013, and that this amount should be recovered from Ms Locke.
FACTUAL & PROCEDURAL BACKGROUND
During the period 8 July 2009 to 19 November 2013, Ms Locke was employed by the Department of Education and Training (WA) (DOEAT) as a cleaner at a school.
Also during the period 8 July 2009 to 19 November 2013, Ms Locke received DSP totalling $49,935.52.
On 22 November 2013, Centrelink advised Ms Locke that she had been overpaid $13,350.06 in DSP for the period from 8 July 2009 to 19 November 2013 as her “earnings from the [DOEAT] were not fully taken into account in the payments made” to her in that period. Centrelink decided that in the period from 8 July 2009 to 19 November 2013 Ms Locke received DSP totalling $49,935.52, when she was entitled to receive DSP totalling $36,585.06 (Original Decision).
On 22 November 2013, Ms Locke requested an internal review of the Original Decision.
On 19 December 2013, an ARO reviewed Centrelink’s decision and changed the debt period from 8 July 2009 to 19 November 2013 to 8 July 2009 to 22 October 2013 (Relevant Period). The ARO also calculated the new debt amount as $13,660.33 (ARO Decision).
On 2 January 2014, Ms Locke applied to the SSAT for review of the ARO Decision.
On 6 February 2014, the SSAT affirmed the ARO Decision, including that recovery of the debt should not be written off or waived (SSAT Decision).
On 14 May 2014, Ms Locke applied to the Tribunal for review of the SSAT Decision.
ISSUES
The relevant issues for consideration by the Tribunal are:
(i)whether Ms Locke was overpaid DSP during the Relevant Period;
(ii)if so, whether this overpayment is a debt due to the Commonwealth; and
(iii)if so, whether recovery of the debt should be written off or waived.
ANALYSIS
Whether Ms Locke was overpaid DSP during the Relevant Period
Section 117 of the Social Security Act 1991 (SSA) sets out how to work out a person’s DSP rate. If a person is, like Ms Locke, not permanently blind and is 21 years of age or older, the person’s DSP rate is worked out using “Pension Rate Calculator A” at the end of s 1064 of Pt 3.2 of the SSA.
“Pension Rate Calculator A” requires a person’s DSP rate to be calculated using the “income test” or the “assets test”, whichever gives the lower rate. It is not in dispute that the “income test” applies in Ms Locke’s case.
The “income test” definitions are contained in s 8(1) of the SSA. “Income” is defined in s 8(1) of the SSA as, among other things, “an income amount earned, derived or received by the person for the person’s own use or benefit”. “Income amount” is defined in s 8(1) of the SSA as valuable consideration, personal earnings, moneys or profits. “Ordinary income” is defined in s 8(1) of the SSA as “income that is not maintenance income or an exempt lump sum”.
Section 1072 of the SSA provides:
A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A. [Emphasis added]
When Ms Locke reported her “gross ordinary income” from her employment at the DOEAT during the Relevant Period to Centrelink, she did not include her split-shift and toilet allowances as she should have. Consequently, those allowances were not taken into account by Centrelink in calculating Ms Locke’s DSP rate for the Relevant Period. This resulted in an overpayment of DSP to Ms Locke for the Relevant Period of $13,660.33.
Ms Locke contends that she did not include her split shift and toilet allowances in the “gross ordinary income” she reported to Centrelink during the Relevant Period because she was advised by a Centrelink officer, by telephone, not to. This issue is discussed in further detail below under the heading “Whether Ms Locke’s debt should be written off or waived”.
Whether overpayment of DSP to Ms Locke is a debt due to the Commonwealth
Section 1223(1) of the SSA provides that if a social security payment is made and the person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit, then the amount of the payment is a debt due to the Commonwealth by the person and the debt arises when the person obtains the benefit of the payment.
The overpayment of DSP to Ms Locke for the Relevant Period of $13,660.33 is a debt due to the Commonwealth pursuant to s 1223(1) of the SSA.
Whether Ms Locke’s debt should be written off or waived
Section 1236(1A) of the SSA provides that the Secretary (and, in his shoes, the Tribunal) “may” write off a debt due to the Commonwealth under s 1236(1) of the SSA 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. [Emphasis added]
Section 1236(1A)(a), (c) and (d) of the SSA do not apply in this case since Ms Locke’s debt is not irrecoverable at law, Ms Locke’s whereabouts are not unknown and, according to the Secretary, it is cost effective for the Commonwealth to take action to recover the debt from Ms Locke.
Section 1236(1C) of the SSA provides that, where a debt is recoverable by means of deductions from a social security payment (like DSP), the debtor is taken to have “capacity to repay the debt” (i.e. for the purposes of s 1236(1A)(b) of the SSA) unless the recovery of the debt by deductions would cause the debtor “severe financial hardship”.
Ms Locke gave evidence that her DSP was cancelled about a year ago, on 26 November 2013. As such, Ms Locke’s debt is not recoverable by means of small regular (e.g. fortnightly) deductions from her DSP.
Ms Locke informed the Tribunal that she currently earns approximately $700 per week (or $1400 per fortnight), including split shift and toilet allowances, as a cleaner at a school and that this is presently her sole source of income. From that income, Ms Locke stated that she pays $50 to debt collectors, Dun & Bradstreet, in repayment of her debt to Centrelink, as well as the following expenses:
·Rent of approximately $180 per week on a Homes West Association Inc. home;
·Approximately $200 per fortnight on the repayment of a $4,000 loan she took out to cover the cost of her father’s funeral (and that the balance owing on that loan is currently approximately $1,200 to $1,500);
·Petrol;
·Household expenses and utilities;
·Medical expenses;
·Private health insurance (HBF) for dentures and physiotherapy; and
·$37 per fortnight on her own funeral fund.
Ms Locke stated that she did not own any major assets such as a home or a car. Ms Locke explained that she sold her car as it was too expensive to maintain the costs associated with owning it, such as registration and insurance, and that she borrowed her daughter’s car to get to and from work.
Based on Ms Locke’s evidence regarding her financial circumstances, it appears that Ms Locke has capacity to repay her Centrelink debt through small regular withholdings from her current income of approximately $700 per week (or $1,400 per fortnight).
Waiver – Centrelink administrative error
Section 1237A(1) of the SSA provides that the Secretary (and, in his shoes, the Tribunal) “must” waive the right to recover the proportion of a debt that is “attributable solely to an administrative error made by the Commonwealth (i.e. Centrelink) if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt”. The “Note” to s 1237A(1) of the SSA states that s 1237A(1) of the SSA “does not allow waiver of a part of a debt that was caused partly by an administrative error and partly by one or more other factors (such as error by the debtor)”.
In Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126, in considering the meaning of the phrase “attributable solely to an administrative error”, the Full Federal Court said at [35]:
The ordinary or usual interpretation of the phrase “attributable solely to” is that it refers to the single or sole cause of the relevant act or event. The word “attributable” means “capable of being attributed”. It involves an objective assessment of causation. The words “a debt attributable solely to an administrative error” can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error. [Emphasis added]
In relation to when a debt is attributable solely to administrative error, the “Guide to Social Security Law” (Guide)[1] states (at 6.7.3.30):
In general, wherever a mistake has been made in administering a payment, the debt will arise ‘solely to an administrative error’ providing the recipient’s conduct has not contributed to the debt in any way.
Examples of administrative error include mistakes in:
·Calculating the amount of a payment,
·Determining which social security payment/s a person is entitled to be paid, and
·Correctly actioning information provided by the recipient.
The requirement that part of the debt must have arisen ‘solely’ from administrative error means that there must have been no other factors that caused the debt to arise or contributed to the debt arising. The part of the debt must have arisen as a result of administrative error alone. [Emphasis added]
[1] The Tribunal should apply lawful ministerial policy unless there are cogent reasons not to: Re Drake and minister for immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 644-5 per Brennan J.
Ms Locke gave evidence that she had been working as a single shift cleaner with the DOEAT when, in mid-2009, she was offered the opportunity of working a split shift which would result in her receiving split shift and toilet allowances in addition to her normal pay rate. Ms Locke stated that after receiving this offer she telephoned Centrelink to find out whether it was financially viable for her to take on the extra shift. Ms Locke said that she wanted to know, before accepting the additional shift, how much DSP she would lose if she agreed to the additional shift. According to Ms Locke, a Centrelink officer advised her (by telephone) that she was not required to include her split-shift and toilet allowances, when declaring her “gross income” to Centrelink, as those allowances did not constitute “income”. This telephone call was not recorded by Centrelink and there is no other evidence of it.
Ms Locke said that in 2010 she telephoned Centrelink to report a pay rise. In the course of that telephone conversation, Ms Locke stated that she again raised with the Centrelink officer, who answered her call, the issue whether her split shift and toilet allowances should be included in the “gross income” she reported to Centrelink from her employment at the DOEAT. Ms Locke contends that the Centrelink officer told her not to include the allowances as income. This telephone call was not recorded by Centrelink and there is no other evidence of it.
Ms Locke described to the Tribunal one of the pay slips she received from DOEAT during the Relevant Period, as she had previously described it to Centrelink. Ms Locke said that her “pay rate” was recorded in the top right hand corner of the pay slip (which was, for example, $700 per week), her hours and public holidays were recorded in the middle of the pay slip and her split shift and toilet allowances were recorded at the bottom of the pay slip. According to Ms Locke, the Centrelink officer she had spoken to on the phone told her that she only needed to report the “pay rate” amount as income and not the allowances.
Ms Locke explained that on 21 November 2013 she again telephoned Centrelink and asked the Centrelink officer who answered her call whether her split shift and toilet allowances should be included in the gross income she reported to Centrelink. According to Ms Locke, the Centrelink officer concerned told Ms Locke that she did not know the answer to Ms Locke’s question and that she would have to check with a supervisor. Ms Locke said that the supervisor’s response was that the split shift allowance should be reported as income but that the toilet allowance should not. Ms Locke said that the next day she received a telephone call from a different Centrelink officer who told her that she should not have been told what she had the day before, by the other Centrelink officer, as the relevant officer was not qualified to provide such advice. These telephone calls were not recorded by Centrelink and there is no other evidence of them.
During the Relevant Period, Ms Locke received numerous letters from Centrelink advising her, inter alia, that “income” meant her “gross income before tax” and that she should advise Centrelink of her “earnings before tax and other deductions” and of any “changes” in her circumstances, including any “changes” in her income. These letters from Centrelink constitute “notices” for the purposes of s 68 of the Social Security (Administration) Act 1999 (SSAA).
Ms Locke told the Tribunal that she did not comply with the letters (or “notices”) sent to her during the Relevant Period as she did not consider that she had any “change” in income to report. Ms Locke stated that since 2009 she had acted in reliance of the advice provided by a Centrelink officer over the telephone, namely that she should not include her split shift and toilet allowances in her reported gross income as those allowances were not income. Ms Locke explained that she was not a well-educated person, having left school at the age of 14, and that she did not believe she had done anything wrong as she had reported her income to Centrelink in accordance with its officer’s advice.
Section 74(1) of the SSAA makes failure to comply with a “notice” provided under s 68 of the SSAA an “offence”, with a penalty of imprisonment for six months. Ms Locke’s representative made much of the fact that the Secretary failed to address 74(1) of the SSAA in his “Statement of Facts, Issues and Contentions”, dated 21 August 2014. However, no suggestion was made by the Secretary that he intended to take action against Ms Locke under s 74 of the SSAA in relation to her failure to comply with the “notices” sent to her by Centrelink under s 68 of the SSAA during the Relevant Period. Rather, the Secretary pointed to Ms Locke’s non-compliance with the s 68 notices which were sent to her in the Relevant Period in support of his contention that Ms Locke’s debt was not attributable “solely” to an administrative error made by Centrelink, such that Ms Locke’s debt should not be waived under s 1237A of the SSA.
The Tribunal agrees with the Secretary’s contention on this issue. Although Ms Locke may have been told many years ago by a Centrelink officer about what should or should not be included in her gross income for DSP purposes, she was still responsible for checking the accuracy of the information contained in the letters, (i.e. s 68 “notices”) sent to her by Centrelink throughout the Relevant Period and for notifying Centrelink of the correct amount of her “gross income”. In such circumstances, it cannot be said that Ms Locke’s debt is attributable “solely” to an administrative error by Centrelink: Sekhon v Secretary and the Guide (at 6.7.3.30). Consequently, Ms Locke’s debt must not be waived under s 1237A of the SSA.
Waiver – special circumstances
Section 1237AAD of the Act provides that the Secretary (and, in his shoes, the Tribunal) “may” waive the right to recover all or part of a debt if he 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 [the SSA], the [ SSAA] or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it more appropriate to waive than to write off the debt or part of the debt. [Emphasis added]
It is not in dispute that Ms Locke did not “knowingly” make any false statement or representation or “knowingly” fail or omit to comply with a provisions of the SSA or the SSAA for the purposes of s 1237AAD(a) of the SSA.
The question is, rather, whether there are “special circumstances” (other than financial hardship alone) that make it desirable to waive the right to recover all or part of Ms Locke’s debt to Centrelink.
The expression “special circumstances” is not defined in the SSA or SSAA, but has been considered on a number of occasions by the Federal Court and Tribunal. The Tribunal has said that the expression “special circumstances’ in s 1237AAD(b) of the SSA should be interpreted and applied in the same way as the identical expression in s 1184(1) of the SSA is interpreted and applied: Re Secretary, Department of Social Security and Duzevich [1996] AATA 63; 41 ALD 461 at [32] per DP Hotop.
In summary, it has been held for circumstances to constitute “special circumstances” (for the purposes of s 1184(1) of the SSA and, it follows, s 1237AAD(b) of the SSA), they must be circumstances which are “unusual, uncommon or exceptional”, be “markedly different from the usual run of cases”, “special” or “out of the ordinary” and they include “events which would render the (strict application of the rule in question) unfair or inappropriate”: see for example, Re Ivocic and Director General of Social Services [1981] AATA 57 at [45]; Re Beadle and Director-General of Social Security (1984) 6 ALD at 3 per Toohey J; Beadle and Director General of Social Security (1985) 60 ALR 225 at 228 as per Bowen CJ, Fisher and Lockhart JJ; Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at [545] per Kiefel J and Dranichnikov v Centrelink [2003] 75 ALD 134 at [66] per Hill J. Circumstances might be “special” although they apply to more than one person or class of persons, provided they are not of universal application (for example, they are a common or universal characteristic of social security recipients): see Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs (2010) 185 FCR 52 at [65].
Ms Locke’s contention that she acted in reliance of incorrect advice provided by a Centrelink officer over the telephone is not an uncommon compliant or circumstance of socials security recipients. This circumstance is not so unusual, uncommon, exceptional, markedly different from the usual run of cases or out of the ordinary so as to render it a “special circumstance” for the purpose of s 1237AAD(b) of the SSA.
Ms Locke also gave evidence that during the Relevant Period she was under considerable stress at work, her mother was terminally ill and she was involved in a motor vehicle accident. Ms Locke’s particular circumstances are not so unusual, uncommon, exceptional, markedly different, special or out of the ordinary that they represent “special circumstances” as that expression is understood to mean: refer to paragraph 41 above. Accordingly, Ms Locke’s debt to Centrelink should not be waived under s 1237AAD of the SSA.
Incorrect advice by Centrelink
As discussed above, Ms Locke stated that she was incorrectly advised by a Centrelink officer not to include her split shift and toilet allowance in the gross income she reported to Centrelink for DSP purposes during the Relevant Period and that she acted on that advice, resulting in an overpayment of DSP during the Relevant Period and a debt to Centrelink.
The Tribunal’s power to stand in the shoes of the decision-maker, in this case the Secretary, is exercisable only in relation to the decision under review, in this case the SSAT Decision. The Tribunal has no general review or decision-making power and it cannot substitute for the decision-maker generally. As Brennan J said in Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167 at 175: “The AAT is not the primary administrator. It is not the original repository of powers and discretions under an enactment”. The Tribunal’s inability to exercise powers other than those available to the decision-maker can lead to injustice in some cases. For example, where a strict application of the law results in unfairness to an applicant.
A person, like Ms Locke, who is dissatisfied with a departmental decision may have other courses of action open to him or her, including lodging a complaint with the Commonwealth Ombudsman or applying to the Federal Court of Australia under the Administrative Decisions (Judicial Review) Act 1977 (ADJRA) for a review of the decision concerned on grounds which include breach of natural justice, improper exercise of power and no evidence to justify the making of the decision: see s 5(1) of the ADJRA.
Further, the Commonwealth has two schemes in place whereby persons adversely affected by the actions of Commonwealth officers (such as Centrelink officers) may receive compensation. One of these schemes, the Compensation for Detriment caused by Defective Administration scheme (CDDA Scheme), was referred to on the last page of the SSAT Decision under the heading “Suggestion”. The SSAT suggested the CDDA Scheme as a possible course of action for Ms Locke. Ms Locke told this Tribunal that she applied for compensation under the CDDA Scheme and that her application was rejected on 27 March 2014. The other Commonwealth scheme is the “act of grace” scheme. The “act of grace” scheme is statutory. The Financial Management and Accountability Act 1997 determines the circumstances in which a payment can be made under this scheme which is administered by the Department of Finance and Deregulation.
DECISION
For the above reasons, the Tribunal affirms the SSAT Decision.
I certify that the preceding 48 (forty eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh
....(Sgd) T Freeman.................
Associate
Dated 5 December 2014
Date of hearing 28 November 2014 Representative for the Applicant Mr R Medlicott Representative for the Respondent Ms S Yik Long Solicitors for the Respondent Australian Government Solicitor
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