McKenzie; Secretary, Department of Family and Community Services
[2003] AATA 267
•21 March 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 267
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2001/1621
GENERAL ADMINISTRATIVE DIVISION ) Re Secretary, Department of Family and Community Services Applicant
And
Mandy Joy McKenzie
Respondent
DECISION
Tribunal Ms S M Bullock, Senior Member Date21 March 2003
PlaceNewcastle
Decision The Tribunal decides that pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the decision under review is set aside. In substitution therefor, the Tribunal decides that the debt of $3063.00 owed by Mrs McKenzie to the Commonwealth should be waived pursuant to section 1237AAD of the Act due to Mrs McKenzie’s special circumstances. ..............................................
Ms SM Bullock
Senior Member
CATCHWORDS
SOCIAL SECURITY – Overpayment of Parenting Payment – Debt – Whether Debt Should be Waived – Whether Debt Attributable Solely to Administrative Error – Special Circumstances
LEGISLATION
Social Security Act 1991 (Cth) ss 1223, 1236, 1237A, 1237AAD
Social Security (Administration) Act (Cth) 1999 s 237
Acts Interpretation Act 1901 (Cth) ss 28A, 29
Australian Postal Corporation Act 1989 (Cth) ss 13
Commonwealth Authorities and Companies Act 1997 (Cth) ss 5, 7
AUTHORITIES
Re Hart and Secretary, Department of Family and Community Services [2001] AATA 210
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186
Re Bestel and Secretary, Department of Family and Community Services [1999] AATA 867
Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690
Re McDonald and Secretary to the Department of Family and Community Services [2001] AATA 589
Re Van Brummelen and Secretary, Department of Social Security (1995) 37 ALD 729
Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553
Re Brittain and Secretary, Department of Family and Community Services [2000] AATA 161 Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113
Secretary, Department of Social Security v Thompson (1994) 53 FCR 580
REASONS FOR DECISION
21 March 2003 Ms S M Bullock, Senior Member 1. This is an application for review to the Administrative Appeals Tribunal (“the Tribunal”) by the Applicant, the Secretary, Department of Family and Community Services (“the Department”) of a decision of the Social Security Appeals Tribunal (“the SSAT”) dated 11 September 2001. The SSAT’s decision set aside a decision of an Authorised Review Officer (“ARO”) made on 13 June 2001 (T28) to raise and recover a debt of parenting payment of $3,063.00 for the period 15 June 2000 to 31 January 2001, and determined that the Commonwealth’s right to recover the whole of the overpayment is waived. The ARO’s decision affirmed a decision of a Delegate of the Department dated 1 May 2001 (T19).
2. A Hearing was held before the Tribunal on 10 September 2002. The Applicant, the Department, was represented by Ms C Collis, Departmental Advocate. The Respondent, Mandy Joy McKenzie, was represented by Mr J McClintock, Solicitor for the Legal Aid Commission of New South Wales. Mrs McKenzie gave oral evidence at the Hearing. The Tribunal took into evidence documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“T Documents”, T1-T31) and the following exhibits:
Exhibit Number
Description
Date
A1
Applicant’s Amended Statement of Facts and Contentions
21 June 2002
A2
Computer Print-Out-FAO Income Summary Details
1 July 2000
R1
Respondent’s Statement of Facts and Contentions
17 June 2002
R2
Statement of Mandy Joy McKenzie
14 June 2002
R3
Statement of Mr Angelo Morello
14 June 2002
ISSUES
3. It is not in dispute that there is a legally recoverable debt pursuant to section 1223(5) of the Social Security Act 1991.
4. The issues in this matter are:
· Whether the Applicant’s debt or a proportion of the debt should be waived due to the debt being attributable solely to an administrative error made by the Commonwealth and the payments that gave rise to the debt were received in good faith pursuant to section 1237A of the Social Security Act 1991; or
· Whether there are special circumstances to permit waiver of the debt pursuant to section 1237AAD of the Social Security Act 1991
5. It is conceded by both parties that section 1236 of the Social Security Act 1991 relating to write-off of the debt does not apply (Exhibit A1; Exhibit R1). The Tribunal agrees with this concession and finds that section 1236 of the Act does not apply in this case.
LEGISLATION
6. A decision in this matter requires consideration of the Social Security Act 1991 (Cth) (“the Act”).
7. Section 1223 of the Act deals with debts arising from overpayment. Specifically, subsection 1223(5) of the Act deals with situations where there has been an incorrectly paid amount of social security payment/s, and states:
“Incorrectly paid amount
1223(5) If:
(a)an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997 or by way of fares allowance; and
(b)because the received amount had not been correctly calculated using the relevant rate calculator or other provision for calculating the amount, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment or fares allowance that should have been paid to the person;
the difference between the received amount and the correct amount is a debt due to the Commonwealth.”
8. Part 5.4 of the Act deals with the non-recovery of debts. Under section 1236 of the Act, the Secretary may write off a debt in certain circumstances. Section 1236 of the Act states, as relevant:
“1236 Secretary may write off debt
1236(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.
1236(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)the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt.
…”
9. Section 1237A of the Act deals with waiver of debt arising from sole administrative error made by the Commonwealth. Specifically, subsections 1237A(1) and 1237A(1A) state, as relevant:
“1237A Waiver of debt arising from error
Administrative error
1237A(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).
1237A(1A) Subsection (1) only applies if:
(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
…”
10. Section 1237AAD of the Act deals with waiver of a debt in special circumstances and as relevant states:
“1237AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
Note:Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.”
11. Sections 28A and 29 of the Acts Interpretations Act 1901 deals with the giving of notice by post in the following manner:
“28A Service of documents
(1)For the purposes of any Act that requires or permits a document to be served on a person, whether the expression "serve", "give" or "send" or any other expression is used, then, unless the contrary intention appears, the document may be served:
(a) on a natural person:
(i) by delivering it to the person personally; or
(ii)by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document; or
(b)on a body corporate—by leaving it at, or sending it by pre-paid post to, the head office, a registered office or a principal office of the body corporate.
(2) Nothing in subsection (1):
(a)affects the operation of any other law of the Commonwealth, or any law of a State or Territory, that authorizes the service of a document otherwise than as provided in that subsection; or
(b)affects the power of a court to authorize service of a document otherwise than as provided in that subsection.
29 Meaning of service by post
(1)Where an Act authorizes or requires any document to be served by post, whether the expression "serve" or the expression "give" or "send" or any other expression is used, then unless the contrary intention appears the service shall be deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post.
(2)This section does not affect the operation of section 160 of the Evidence Act 1995.
…”
BACKGROUND
12. The following information is provided by way of background:
· Centrelink’s computer records indicate that Centrelink was informed that Mrs McKenzie’s husband, Mr Brett McKenzie’s income was $18,158.40 per annum or $349.20 per week from 8 April 1999 (Exhibit R1, Attachment A).
· On 23 May 2000, a completed “Family Assistance Office” (“FAO”) form was received by the Family Assistance Office, signed by Mrs McKenzie and her husband, Mr McKenzie, which included information under “Section B-income details” that Mrs McKenzie’s income was $4364.00 and Mr McKenzie’s income was $24,876.00. (Exhibit A1, Attachment A; T2A, p10A; T4, p12).
· In June 2000, Mrs McKenzie’s husband commenced work with Crystal Soft Drinks, at a wage of $506.00 per week.
· Centrelink continued to base Mrs McKenzie’s rate of Parenting Payment on an amount of wages for her husband of $349.24 per week.
· Centrelink records include two letters dated 21 June 2000 (T2B, p10B-D) and 3 July 2000 (T2C, p10E-G) addressed to Mrs McKenzie at “1 Ida St, Charlestown NSW 2290”, advising that her Parenting Payment was based on an income of $18,160.22 per annum for her husband.
· On 9 December 2000, a Parenting Payment review was conducted of Mrs McKenzie’s financial circumstances (T13, p25). Mrs McKenzie informed Centrelink as part of this review that her husband’s income was $506.00 per week.
· On 31 January 2001, Mrs McKenzie was notified that her Parenting Payment had been cancelled as she and her husband’s income was above the allowable limit (T3, T4).
· On 1 May 2001, a Centrelink Officer determined that Mrs McKenzie had failed to declare her husband’s income correctly for the period 15 June 2000 to 23 January 2001 as required under section 68 of the Act and therefore there was a recoverable debt under section 1224 of the Act in the amount of $3,063.00 (T12, p24; T19, pp43-45).
· On 10 May 2001, K Bird, Customer Service Officer of the Family Assistance Office, provided a review of the decision in relation to overpayment of Parenting Payment and decided that the decision was correct, noting that there “is no record of you notifying of wages within 14 days of your partner starting work” (T23, p52).
· On 13 June 2001, an ARO affirmed the decision to raise and recover the overpayment of Parenting Payment (T28). In the ARO’s decision it was determined that the debt could not be waived pursuant to section 1237AD of the Act [the ARO then applied section 1237A of the Act] because the ARO could not determine “ that you could not reasonably have known that you were being paid incorrectly” and hence received the payments in good faith. The ARO noted the Centrelink letters sent to Mrs McKenzie dated 21 June 2000 and 3 July 2000 which the ARO deemed to be delivered under sections 28A and 29 of the Acts Interpretations Act 1901 as they were addressed to the correct address. In relation to Mrs McKenzie going into the local Centrelink Office in June 2000 and informing an officer of her husband’s change in employment, the ARO also noted:
“There is no trace of this form having been received or processed at any time. However I have no reason to doubt what you say. I consulted the FAO in Gosford Centrelink. It is possible, because it was second half of June 2000 and a whole new Family payment system came into being on 1 July 2000, that the form you completed and lodged prior to 1 July 2000 was taken as being for the 1999/2000 financial year, not the 2000/2001 financial year.” (T28, p65)
· On 11 September 2001, the SSAT decided to set aside the decision and sent the matter back for reconsideration in accordance with directions that the Commonwealth's right to recover the whole of the overpayment is to be waived (T2) because of sole administrative error by the Commonwealth.
· On 19 October 2001 the Department appealed to the Tribunal (T1).
EVIDENCE OF MANDY JOY MCKENZIE
13. Mrs McKenzie stated that her husband, Brett McKenzie, commenced full-time work at Crystal Soft Drinks on approximately 7 or 8 June 2000. Mrs McKenzie stated that she was in receipt of Parenting Payment at this time. Mrs McKenzie stated that she does not know the exact amount that her husband was earning at Crystal Soft Drinks, but recalled that he said to his employer that he wanted to bring home $400.00 after tax. In her statement, Mrs McKenzie noted that prior to this employment her husband was working casually and earning approximately $360.00 per week (Exhibit R2).
14. Mrs McKenzie was shown a form completed on 21 May 2000 (Exhibit A1, Attachment A) entitled “Family Assistance Office-Answer Sheet”.. Mrs McKenzie stated that she does not specifically recall completing this form on 21 May 2000. However, she did recall that the form completed on 21 May 2000 was different to the form she completed in June 2000. In relation to the form of 21 May 2000, Mrs McKenzie stated that she gave the taxable income of herself and her husband.
15. Mrs McKenzie told the Tribunal she attended the Charlestown Office of Centrelink in June 2000. In her statement, Mrs McKenzie reported that this was approximately 15 June 2000 (Exhibit R2). Mrs McKenzie stated that she had attended Centrelink’s Charlestown Office because letters she had previously received from Centrelink advised that she must notify Centrelink of any change of circumstances within 14 days. Mrs McKenzie stated that she did not recall the name of the Officer at Centrelink she spoke to. Mrs McKenzie recalled that she filled out a form, which was a one page form, and she thought was entitled “Change of Financial Circumstances”, but was not sure because she only took notice of the questions, she stated. Mrs McKenzie recalled that the form she completed in June 2000, she completed at the desk and it took ten to 15 minutes to complete. She stated that she only had to provide amounts her husband would be receiving from employment, which she roughly calculated. In her statement (Exhibit R2), Mrs McKenzie reported that she had a conversation with a Centrelink officer at the counter in words to the effect:
Me: “I have filled in this form. Now what happens”.
Centrelink Officer: “If there are any changes to be made we will send you a letter.”
Me: “How long?”
Centrelink Officer: “Maybe a week.”
16. Mrs McKenzie stated that she did not receive mail from Centrelink in June or July 2000. In her statement, she noted that she did not receive any notice from Centrelink indicating the income on which they were basing her Parenting Payment from 15 June 2000 until December 2000 (Exhibit R2). In her statement, Mrs McKenzie stated that in mid December 2000, she received a review of financial details form, which was due at the end of December. She stated that just before or just after Christmas 2000 she telephoned Centrelink to inform she could not return the form in to the Office on time (Exhibit R2).
17. Mrs McKenzie stated that before, during and after the period June 2000 until December 2000, she did not receive mail addressed to herself on several occasions. She stated that she did not receive a Lake Macquarie Council notification of a Development Application for a major commercial development, “Video Ezy”, next door to her home. She was told by a Council officer that a Development Notice was sent to her and her neighbours (Exhibit R2). Mrs McKenzie stated that she had received a final notice for her telephone bill, before she had received any other notices. In her statement, Mrs McKenzie also reported that she had not received several telephone accounts and only became aware of her debts when she received notices that her telephone would be disconnected (Exhibit R2). Mrs McKenzie further stated that on several occasions she has found mail addressed to herself and people at other addresses lying in the street and she has found a letter from Centrelink addressed to her mother who lives with her (Exhibit R2).
18. Mrs McKenzie stated that she made one or two complaints to the Post Office because the motorcyclist used to ride past and not put the mail in the box properly. In her statement, Mrs McKenzie noted that during 2000 she saw the postman riding his motorcycle very fast past letterboxes and delivering mail without stopping (Exhibit R2). Mrs McKenzie stated that she was currently having problems with the delivery of her mail and in the last couple of months she has spoken to Post Office staff again and she has been sent a complaint form, which she intends to complete. Mrs McKenzie stated that she did not inquire about a Post Office Box because of the added cost, which she could not afford.
19. Mrs McKenzie also noted that her address in Charlestown used to be “5 Ida Street”, and then changed to “361 Ida Street”, and finally “1 Ida Street”. She also stated that about two or three years ago, a motor mechanics business in her area thought that their address was “1 Ida Street”, Charlestown. However, she noted that her address has been “1 Ida Street” now for 11 years.
20. Mrs McKenzie stated that the mail delivery difficulties probably existed from 1999 onwards, but have not been continuous. She stated that she rang Charlestown Post Office, she thought in the middle of the year 2000, and she was told to ring Gateshead Mail Exchange. She was advised by an employee of Australia Post at the Gateshead Mail Exchange that the problems would be fixed (Exhibit R2). In the second half of 2000 and after she complained, Australia Post changed its mail delivery system to a walking postman, but the delivery later returned to motorbike deliveries. Mrs McKenzie stated that she only knows of other neighbours having problems because of the Video Ezy development, including her neighbour Mr Angelo Morello who provided a statement to the Tribunal (Exhibit R3).
21. In relation to mail received currently from Centrelink, Mrs McKenzie stated that she has been receiving all Centrelink mail as far as she is aware over the past six months. Also she now has to contact Centrelink once a fortnight and give the Office her details. Over the last six months she has received about four letters.
22. In her statement, Mrs McKenzie stated that due to the fact that she did not receive any notices from Centrelink after her completing the “Change of Financial Circumstances” form in June 2000, she believed there was nothing wrong with her Parenting Payment. She stated that she had not known what her entitlements should be other than to rely on the information provided by Centrelink (Exhibit R2).
23. Mrs McKenzie was shown the SSAT decision (T2, p6, paragraph 11) where it states:
“Mrs McKenzie said that she received no letter about the new family assistance system. She did not worry about the lack of mail from Centrelink, as she felt that now her husband was employed full-time they had less reason to be involved with Centrelink. Mrs McKenzie said she did not take notice of how much parenting payment and family assistance she was getting.”
24. Ms Collis put to Mrs McKenzie that this suggested that she did expect her Parenting Payment to reduce when her husband was employed full-time. Mrs McKenzie stated that she had spoken to Centrelink about this. Her understanding was that if it was within a “group” of income it would not change, and because her husband was only effectively receiving $40.00 extra per week, this may be the case. Mrs McKenzie stated that Centrelink informed her that if there were any changes she would be notified. Mrs McKenzie acknowledged that she is not fully aware of the income test. She stated that she is aware that there are different tests for different payments. Mrs McKenzie told the Tribunal that she is not aware of the “ordinary income test” versus the “taxable income test”.
25. Mrs McKenzie was shown Exhibit A1, Attachment B, which Ms Collis described as a Centrelink computer print-out of Parenting and Family Payments made to her family bank account, dating from 15 June 2000 to 24 August 2000. Ms Collis pointed out that Mrs McKenzie received $167.87 on 15 June 2000 and the same amount again on 29 June 2000, and that from 13 July 2000 to 24 August 2000 the payments were increasing. Ms Collis put it to Mrs McKenzie that she would have been expecting payments to decrease after 15 June 2000, not to increase. Mrs McKenzie stated that she did not know the difference between the different types of payments. She stated that she did know that around August and September each year Centrelink recalculated payments and she usually received a “pay-rise” at this time.
26. Ms Collis pointed out that the different payments were in fact paid in on alternate fortnights. Mrs McKenzie stated that her family payments and her parenting payment went into a joint bank account with Newcastle Permanent Building Society. She stated that both payments were paid in on the same day, because it currently and always has been that way. She stated that it was only when her son turned 16 years old and started getting Youth Allowance that it changed, in July 2002. Mrs McKenzie told the Tribunal that she did not notice that there had been an increase in her payments. Mrs McKenzie stated that she took it for granted that Centrelink were paying the correct amount and thought Centrelink would pay the correct amount on the information she provided.
27. Mrs McKenzie stated that although her husband changed from three days casual work per week to full-time work, he did this because of job security and that his actual wage did not change substantially, only an amount of approximately $40.00 per week. Mrs McKenzie stated that she had absolutely no idea that the information she gave Centrelink had not been acted upon.
28. Mrs McKenzie stated that she had been in receipt of Parenting Payment on and off from the date she stopped working in 1991, the year she gave birth to her second son. In relation to whether she had had any other problems with overpayments, Mrs McKenzie stated that she recalled a problem requiring repayment, but she did not recall when this occurred. She recalled that this was something to do with her husband’s Unemployment Benefit. She stated that after that initial incident, she always verified information by ringing Centrelink or going into the Centrelink Office.
29. Mrs McKenzie told the Tribunal that she separated from her husband on 8 May 2001. She stated that her husband now lives in Queensland (Exhibit R2). Mrs McKenzie stated that she is currently living in her mother’s home and was also living in this home with her husband when they were together. Mrs McKenzie stated that she does not pay rent, but contributes to the expenses of various utilities. Mrs McKenzie stated that she lives at home with her mother and her 11 year old son who attends school. Her 17 year old son lives with his father in Queensland and Mrs McKenzie stated that she drove him up there.
30. In relation to her present working arrangements, Mrs McKenzie stated that on 24 June 2002, she started training with the Qantas Call Centre. She stated that her roster covers an eight week period, and the roster changes are based on “incentive”.
31. In relation to her health problems, Mrs McKenzie stated that she was diagnosed with diabetes in September 2001 and this is controlled by diet. She must eat foods without sugar and she should not have fast food. She stated that she also has high blood pressure and high cholesterol, for which she is prescribed medication. Mrs McKenzie told the Tribunal she also suffers from migraines at least once per month and is prescribed “Solprin”. She stated that she experiences migraines whenever she speaks to her lawyer, and she believes this is stress- related. She stated that she had a migraine at the Hearing which had been present for some time prior to the Hearing.
32. Mrs McKenzie stated that she suffered from depression before her separation from her husband and from approximately 1995. Since her marriage breakdown her depression has “deteriorated”. Mrs McKenzie stated that she is taking antidepressants and receiving counselling. She stated that the onset of her depression did not arise out of Centrelink matters, but that her condition has worsened since the Centrelink debt matter arose. She stated that she is still working, and that she will not let her depression stop her from working.
33. Mrs McKenzie stated that her 11 year old son is receiving counselling at Eastlakes Family Support Service. She stated that she feels he is also suffering from depression and that he goes from being fine and happy to being upset, for example, if he cannot find a shoe. He has also gained a considerable amount of weight. She stated that she does shout at him sometimes, because she does not have full control of her emotions. Mrs McKenzie stated that he stopped counselling about one month ago, because the counsellor said that he was responding well and may not need to go anymore. Mrs McKenzie told the Tribunal that she also receives individual counselling at Eastlakes Support Service. She was seeing her counsellor every two to three weeks, but she has not been recently because of work. She has been told by her employer that she can have free counselling so she is going to go back. She stated that Dr S Ruba, General Practitioner, prescribes antidepressants, which the Tribunal noted from Dr Ruba’s report dated 23 April 2002, to be “Cipramil” (Exhibit R1, Attachment B).
34. In relation to repaying the debt, Mrs McKenzie stated that she did pay back $500.00. Mrs McKenzie stated that through the SSAT, arrangements were made to have the payments “frozen”. She stated that if she had to repay the debt, she would do it, although it would be tough. Mrs McKenzie says she knows she did the right thing by giving the information to Centrelink. Mrs McKenzie stated that she also feels that there are ramifications for her of people thinking that she defrauded Centrelink.
STATEMENT OF MR ANGELO MORELLO
35. Mr Angelo Morello provided a statement dated 14 June 2002 (Exhibit R3). Mr Morello stated that he lives at 21 Dickenson Street, Charlestown on the corner of Ida Street, and is a close neighbour of Mrs McKenzie. Mr Morello recalled that some time ago he obtained a Post Office Box at Charlestown Post Office. He stated that he obtained the Post Office Box in part because he found that he did not receive all the mail addressed to him at his street address.
36. Mr Morello recalled that some time ago a major development commenced for a Video Ezy store and Salvation Army headquarters at the end of Ida Street. Mr Morello spoke to an officer of Lake Macquarie Council who informed him that the Council had mailed a Notice of Development to all affected residents. Mr Morello stated that he had not received any such notice. Mr Morello received telephone calls from about five people in the area, who told him they had not received Notices of Development either.
EVIDENCE OF DR S RUBA, GENERAL PRACTITIONER
37. Dr Ruba provided a report dated 23 April 2002 (Exhibit R1, Attachment B). Dr Ruba noted that Mrs McKenzie has been under her care since 21 September 1993. Dr Ruba noted that Mrs McKenzie attended the surgery on 17 July 2001 and reported that she had been trying hard to resolve some difficult issues with her husband, but they were unable to communicate and she separated from her husband on 8 May 2001. Dr Ruba reported that Mrs McKenzie was very depressed, constantly crying and that Mrs McKenzie found it extremely difficult to cope with her husband’s behaviour, the overall attitude of her children and “to top it off the problems with Centrelink”.. Dr Ruba noted that Mrs McKenzie was counselled in depth and commenced on “Cipramil” 20 milligrams daily.
38. Dr Ruba noted that Mrs McKenzie has been suffering attacks of migraine after talking to her lawyer and to the Centrelink Officer and Dr Ruba felt that stress was the cause of her migraine. Dr Ruba also noted that Mrs McKenzie feels helpless and uncertain of the future. Dr Ruba reported that Mrs McKenzie has additional health problems of hypertension and diabetes. She feels unable to buy the appropriate meals due to lack of money. Dr Ruba noted that Mrs McKenzie has been unable to sleep or concentrate in her daily household duties. Dr Ruba further noted that Mrs McKenzie remains very depressed and angry and has been taking her children to counselling sessions.
39. Dr Ruba concluded in her report that she believes Mrs McKenzie’s “overall state of health is not going to improve unless some major problems with Centrelink, her husband and her children are resolved.”
DOCUMENTARY EVIDENCE FROM EASTLAKES SUPPORT SERVICE INC.
40. A report was provided by Eastlakes Family Support Service Inc (“the Service”), signed by Johanne Kenning, Social Welfare Worker and Rosemary Heppell, Coordinator, dated 2 May 2002 (Exhibit R1, Attachment C).
41. The report noted that Mrs McKenzie has been a client of the Service since May 2001. It was noted that Mrs McKenzie sought the support of the Service for counselling in relation to the breakdown of her marriage. It was noted that the counselling sessions focussed on grief and loss issues as a result of her marriage breakdown, and strategies to assist Mrs McKenzie to cope with her depression and parenting issues. It was noted that it was envisaged that Mrs McKenzie would remain a client of the Service on an ongoing basis in relation to these issues.
APPLICANT’S SUBMISSIONS
42. Ms Collis noted that there was a debt pursuant to subsection 1223(5) of the Act and that the debt could not be written off pursuant to section 1236 of the Act (Exhibit A1).
43. Turning to the issue of waiver of the debt under section 1237A of the Act, Ms Collis submitted that it was the Applicant’s position that there was no administrative error in the formation of the debt. However, in the event that some administrative error was found, Ms Collis contended that this “error was not sole” and further that the Respondent, Mrs McKenzie, did not receive the payments in “good faith” (Exhibit A1).
44. Ms Collis contended that Mrs McKenzie has contributed to the debt by failing to take reasonable steps to secure her mail. Mrs McKenzie knew that there were problems with her mail but did nothing to fix this other than to lodge a complaint with the Post Office (Exhibit A1).
45. Ms Collis submitted that Centrelink advice letters were sent on 21 June 2000 and 3 July 2000, which quoted an income figure of $18,160.22 for the purposes of calculating Parenting Payment and required the Respondent to inform Centrelink if the income was incorrect. In relation to Mrs McKenzie’s claims that she did not receive this mail from Centrelink, Ms Collis referred to the Tribunal decision in Re Hart and Secretary, Department of Family and Community Services [2001] AATA 210. Ms Collis submitted that this was a case where income was correctly declared by the customer, but Centrelink failed to code the income. The Tribunal found in this case, that despite denying the receipt of the relevant notice, Mr Hart failed to comply with his obligations, thus the debt was not solely due to an administrative error and waiver was not available under section 1237A of the Act.
46. The SSAT accepted that Mrs McKenzie notified Centrelink in June 2000, but Ms Collis contended there are no records of that contact with Centrelink. There are no documents or file papers, nor any Call Centre receipts recorded between 5 May 2000 and 5 February 2001. The SSAT also referred to the information received by Centrelink from Mrs McKenzie on 23 May 2000, by way of an FAO review form dated 21 May 2000, however this was received prior to Mrs McKenzie’s husband’s change in employment. Ms Collis further submitted that there is no other evidence that Mrs McKenzie went to Centrelink on 15 June 2000 to notify of her husband’s change of employment. Ms Collis contended that the information provided by Mrs McKenzie in May 2000 was for taxable income and it was not acceptable to record this figure as ordinary income. Ms Collis further submitted that notification for Family Assistance Payment purposes does not constitute notification for other payments. Ms Collis submitted that the CRAM Report (T31, p77) confirms no contact with Mrs McKenzie in June 2000.
47. Ms Collis noted the ARO’s decision, where the ARO stated:
“It is possible, because it was second half of June 2000 and a whole new Family payment system came into being on 1 July 2000, that the form you completed and lodged prior to 1 July 2000 was taken as being for the 1999/2000 financial year, not the 2000/2001 financial year.” (T28, p65)
Ms Collis submitted that this was not the case, and referred the Tribunal to Exhibit A2, a computer print-out of Mrs McKenzie’s FAO Income Summary Details for the income year 2000/2001, where the information provided in May 2000 had been recorded on the system. Ms Collis submitted that when making the comments above, the ARO did not have the information about the FAO form or the details recorded on the computer regarding this form. Ms Collis contended this is the only form lodged with Centrelink at this time. The Centrelink system confirms the information on this form was taken to be for the 2000-2001 financial year for FAO purposes only, due to the different treatment of “taxable income” compared to “ordinary income” (Exhibit A1).
48. Ms Collis submitted that the social security legislation requires customers to take some responsibility for payments they receive. The FAO review form is only used for Family Assistance Payments, and notification for Family Allowance Purposes does not constitute notification for other payments streams, as evidenced by the myriad of different forms and advice letters for the different payments that customers receive (Exhibit A1).
49. Ms Collis submitted that Mrs McKenzie would have been aware, if she had advised of her husband’s income on 15 June 2000 as she claimed, that this would result in a reduction or cancellation of her Parenting Payment. Yet her payments increased, and this would have been apparent from either checking her bank statements or when she withdrew money from her account. In fact, Mrs McKenzie’s payments increased from $167.87 to $193.17, Ms Collis submitted, and this would have alerted Mrs McKenzie to the fact she was being paid incorrectly (Exhibit A1, Attachment B).
50. Ms Collis contended that Mrs McKenzie was put on notice of the receipt of increased but incorrect Parenting Payment and therefore the payments were not received in good faith. Ms Collis opined that Mrs McKenzie received the payments without further inquiry, and that Mrs McKenzie has exercised control over the payments. Ms Collis referred to the Federal Court decision Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186 in which Finn J stated at 189:
“For my own part, I consider the burden of the formula in the s289 [of the Student and Youth Assistance Act 1973] setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received-ie is not entitled to use the moneys received as his or her own-that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.”
Ms Collis submitted that Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra) has been followed and applied in many later cases, for example, Re Bestel and Secretary, Department of Family and Community Services [1999] AATA 867.
51. Applying Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra), it must be shown that a person has actual knowledge or reason to know there is no entitlement to the payment, Ms Collis contended. In Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529 this applied Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra) with the refinement that “having reason to know” is not merely an objective analysis but subjective. The person themselves must have reason to doubt or suspect that there was no entitlement, Ms Collis contended, and therefore the actual state of mind and knowledge of the receipt is of paramount importance to determining good faith. In Haggerty v Department of Education, Training and Youth Affairs (supra) French J stated at 534:
“Consistently with what his Honour said in the Prince case, want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient.”
52. Ms Collis also referred the Tribunal to the more recent Federal Court decision in Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424 in which Cooper J stated:
“…The issue of good faith is, for the purpose of the section, to be determined when the debtor commences to exercise control over the payment by retaining it. It is at this time that the recipient must act with the requisite good faith. A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when he or she receives the payment and decides to exercise control over it by retaining it.
A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists.”
53. Ms Collis contended that by continuing to receive Parenting Payments, Mrs McKenzie exercised control over them. Ms Collis contended that the test merely requires a retention of the payment without an honest belief as to its entitlement, and does not require that Mrs McKenzie deliberately set out to defraud the Department. Ms Collis contended that Mrs McKenzie turned a blind eye to the receipt of the payments, and that the payments should have raised doubt in her mind to query her right to the payments. The fact that Mrs McKenzie chose to do nothing is the reason for the overpayment, Ms Collis opined.
54. In relation to special circumstances, Ms Collis referred to Re Beadle and Director-General of Social Security (1984) 6 ALD 1 in which Toohey J stated:
“An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to the circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on the context in which they occur.”
55. Ms Collis also referred to Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690 which identified some of the following factors as relevant to the exercise of the discretion: financial hardship, error by the Department and ill health (Exhibit A1).
56. In relation to Mrs McKenzie’s circumstances, Ms Collis submitted that Mrs McKenzie has had setbacks with marital breakdown with associated grief and depression. However, this is not sufficient to allow the discretion under section 1237AAD of the Act to be exercised, she contended. Mrs McKenzie is receiving counselling and has medication for her depression to control her symptoms. Moreover, Mrs McKenzie’s marital breakdown did not occur during the debt period, as the separation occurred on 8 May 2001. Ms Collis contended that there is nothing about Mrs McKenzie’s financial circumstances which can be regarded as special. Furthermore, all recipients of payments are in similarly financially constrained circumstances, Ms Collis contended. Ms Collis submitted that Mrs McKenzie’s financial circumstances have also improved somewhat. Ms Collis noted that Mrs McKenzie does not have the burden of paying rent. Ms Collis submitted that if a reasonable rate of recovery of the debt was negotiated, there is no reason why Mrs McKenzie could not repay the debt.
57. Ms Collis requested the Tribunal set aside the decision of the SSAT.
RESPONDENT’S SUBMISSIONS
58. Mr McClintock contended that the payment from Centrelink to Mrs McKenzie was wholly due to an administrative error and that consequently subsection 1237A(1) of the Act applies. Mr McClintock noted Mrs McKenzie’s evidence that she notified Centrelink of the change to her husband’s income in June 2000. Mr McClintock submitted that the administrative error occurred as the result of Centrelink not taking into account the notification which Mrs McKenzie provided on or about 15 June 2000. Consequently, Centrelink did not recalculate Mrs McKenzie’s entitlement to Parenting Payment on the basis of that information, Mr McClintock submitted and she was paid an incorrect rate of Parenting Payment. Mr McClintock referred to Jazazaievska v Secretary, Department of Family and Community Services (supra) paragraphs 24 and 27, dealing with Mrs Jazazievska’s claim of providing information and documents to Centrelink concerning receipt of a redundancy package.
59. Mr McClintock submitted that this is a case where Mrs McKenzie has gone into a Centrelink Office and relied on the information the Centrelink Officer gave to her. Mr McClintock noted that it is difficult to obtain corroborative evidence that Mrs McKenzie attended the Centrelink Office, given the absence of records. Mr McClintock asked the Tribunal, however, to accept the testimony given by Mrs McKenzie under cross-examination. Mrs McKenzie’s evidence is that she did attend the Centrelink Office in June 2000 and handed in the relevant form. Mr McClintock noted that the Department has asked the Tribunal to rely on a Customer Record Access Monitor (“CRAM”) Report which did not record any attendance or notification by Mrs McKenzie in June 2000 (T31, p77). Mr McClintock contended that the fact that the CRAM was not accessed by Centrelink staff is part of the issue, however, and that the absence of a record of her notification is not proof that she did not attend the Centrelink Office.
60. Mr McClintock furthermore submitted that the ARO conceded in her decision that the record of Mrs McKenzie attending the Centrelink Office in June 2000 might have become lost in the changeover to the Family payment system (T28, p65). Mr McClintock contended in relation to this that whether or not the notice of 21 May 2000 was available to the ARO is not relevant to that concession.
61. In relation to the FAO form, which was signed by Mr and Mrs McKenzie on 21 May 2000 and lodged on 23 May 2000, Mr McClintock submitted that this occurred three weeks before Mrs McKenzie completed the Parenting Payment form. Mr McClintock submitted that there could not have been any confusion by Mrs McKenzie as to these different forms, as they were for different payments and were completed at different times. Mrs McKenzie’s evidence is that she completed the Parenting Payment form herself in June 2000 when she attended the Centrelink Office, whereas both her and her husband’s signatures are on the FAO form and it was completed in May 2000.
62. Moreover, in relation to the FAO form, Mr McClintock submitted that this information was recorded on the Centrelink computer system (CRAM) and that as such the Department was put on notice that there was some discrepancy between the income amounts on record for Mrs McKenzie’s husband. Mr McClintock submitted that no further inquiry was made by Centrelink as to the appropriate income for Mr McKenzie on which to base Mrs McKenzie’s Parenting Payment.
63. Mr McClintock submitted that the Department is relying on the fact that two letters from Centrelink were served on Mrs McKenzie purportedly setting out the rate of assessment. Mr McClintock contended that the failure of Mrs McKenzie’s part to receive them would mean that the original administrative error continued. Mr McClintock contended that Mrs McKenzie did not contribute to the administrative error, because her action in complaining to Australia Post about the non-delivery of mail was reasonable. In the alternative, Mr McClintock contended that the failure of Australia Post to deliver mail properly was an error by the Commonwealth.
64. Relevant to this issue are sections 28A and 29 of the Acts Interpretations Act 1901. Mr McClintock submitted in this regard that section 29 of the Acts Interpretation Act 1901 contains a presumption that service is effected by properly addressing, prepaying and posting the letter, unless the contrary is proven to have been effected at the time at which the letter would be delivered in the ordinary course of post. Subsections 237(1)(c), (2) and (3) of the Social Security (Administration) Act 1999 contain a similar presumption, Mr McClintock submitted (Exhibit R1). These presumptions can be rebutted by evidence to the contrary, Mr McClintock contended. Mrs McKenzie’s evidence puts service at issue, Mr McClintock submitted, and raises some doubt about the presumption. It is incumbent on the Department to put forward some evidence in rebuttal, Mr McClintock submitted. There is no evidence to show that the Commonwealth actually properly posted the letters, and the computer records only show that these documents were generated, Mr McClintock submitted. There has been a history of non-delivery in the area, as shown by the statement of Mrs McKenzie’s neighbour, Angelo Morello (Exhibit R3). Mr McClintock opined that the evidence rebuts the presumption contained in section 29(1) of the Acts Interpretation Act 1901 and section 237 of the Social Security (Administration) Act 1999. The Tribunal was referred to ReMcDonald and Secretary, Department of Family and Community Services [2001] AATA 589 para 56 in this regard. Mr McClintock further referred the Tribunal to the decision of Re Hart and Secretary, Department of Family and Community Services (supra) which dealt with section 163 of the Evidence Act 1995 and the presumption that a letter from a Commonwealth Department or Agency was sent to a prepaid postal address.
65. Mr McClintock submitted that there is an alternative contention in relation to the issue of service, that there was a failure to deliver the letters by the Commonwealth, Australia Post being a Commonwealth Authority. Therefore, there was an administrative error by the Commonwealth under section 1237A of the Act, which can include error by another Commonwealth agency. The case of Van Brummelen and Secretary, Department of Social Security (1995) 37 ALD 729 was cited as authority for this principle in which that Tribunal considered the Commonwealth administrative error lay in the failure of a Commonwealth Employment Service Officer to notify the Department that a Disability Support Pension recipient’s employment circumstances had changed.
66. Mrs McKenzie disputes that she has contributed at all to this administrative error by the Commonwealth. She called Australia Post twice and it was not her fault that they did not take action, Mr McClintock submitted. The failure of Australia Post to deliver is supported by the statement by Mr Angelo Morello (Exhibit R3) and the testimony of Mrs McKenzie. The evidence confirmed the haphazard nature of the postal delivery, and that some items were delivered and some were not delivered, Mr McClintock submitted. Additionally, Mrs McKenzie could not afford a PO Box. Mr McClintock contended therefore that the error was solely the Commonwealth’s due to failure to register notification by Mrs McKenzie and the failure to secure delivery of mail addressed to her.
67. Mr McClintock submitted that the issue of “exercising control” referred to in the case of Jazazievska v Secretary, Department of Family and Community Services (supra), was not in dispute as there was no dispute that she had received the money. The issue, Mr McClintock contended, is that of “good faith”.. Mr McClintock contended that Mrs McKenzie did not lack good faith in receiving the erroneous payments from Centrelink. In Mrs McKenzie’s case, she had good reason to believe that the payments were correct, Mr McClintock submitted. The test of good faith is the state of mind of that person. To find that the person did not receive the payments in good faith requires some knowledge by the person. Mr McClintock submitted that in the Federal Court decision of Haggerty v Department of Education, Training and Youth Affairs (supra), which provided an interpretation of Secretary, Department of Education, Employment, Training and Youth Affairs vPrince (supra), the actual state of mind of the recipient is a necessary consideration of the element of good faith. Mr McClintock opined that even if the letters were deemed to have been served, that is not sufficient to establish lack of good faith on the part of Mrs McKenzie. Mr McClintock further contended that Mrs McKenzie did not turn a blind eye to the payments. She had a genuine belief that the payments would be correct, based on the information she had provided to Centrelink, Mr McClintock submitted.
68. In relation to the change in payments and whether or not Mrs McKenzie checked her bank statements, Mr McClintock submitted that Newcastle Permanent Building Society provided statements every six months, which would make it difficult for Mrs McKenzie to have checked her statements relevant to the period under review. Mr McClintock submitted that Mrs McKenzie was at the relevant time in receipt of both Parenting Payment and a FAO payment (Exhibit R1). In the relevant period after 15 June 2000, Mrs McKenzie received payments of varying amounts from both sources, Mr McClintock contended (Exhibit R1). Mrs McKenzie contended that Attachments B and E of the Applicant’s Amended Statement of Facts and Contentions (Exhibit A1) show that the Parenting Payment [represented as “PGA”) and the Family Assistance Office payments [represented as “FAO”] were made on the same day. Based on these facts, and with the changes in the systems applying to Family Support Payments at that time, Mrs McKenzie could not have been expected to know whether she had received the correct payments by inspecting her bank accounts, Mr McClintock submitted (Exhibit R1).
69. In relation to waiver of the debt in the special circumstances of Mrs McKenzie’s case, pursuant to section 1237AAD of the Act, Mr McClintock submitted that the Tribunal had evidence as to Mrs McKenzie’s health problems, including depression and referred to her treating doctor’s report (Exhibit R1, Attachment B) and the report from her counsellor (Exhibit R1, Attachment C). Mrs McKenzie has suffered a marriage breakdown. Her financial circumstances have changed and, while they have improved slightly, Mrs McKenzie has one dependent child and receives minimal Child Support payments due to her husband being unemployed. The fact that she has to repay the debt to the Commonwealth weighs heavily on her mind and she worries about what people will think of her.
70. Mr McClintock contended that although Mrs McKenzie’s family breakdown and ill health post date erroneous payments to Mrs McKenzie, it is contended that they are relevant in that any requirement to repay the debt will affect the Respondent in her present condition (Exhibit R1).
71. Mr McClintock contended that relevant to special circumstances is that Mrs McKenzie acted and believed herself to be acting in accordance with the legislative requirements to keep Centrelink informed of her and her husband’s income. Further relevant factors are the error of Centrelink in not processing Mrs McKenzie’s information in June 2000; the actual non-delivery of the letters of 21 June 2000 and 3 July 2000; and, the failure of Centrelink to make adequate inquiry about the level of family income given the notice of income from 21 May 2000.
72. Accordingly, Mr McClintock submitted that the decision of the SSAT should be affirmed.
FINDINGS
73. The Tribunal has reached its findings, taking into account the evidence, submissions, legislation and case law.
74. There is no dispute in this matter as to there being a debt due to the Commonwealth and the Tribunal so finds that the overpayment of Parenting Payment to Mrs McKenzie constitutes a debt pursuant to section 1223 of the Act in the amount of $3,063.00. The next issue for consideration is whether or not the debt should be recovered. The Tribunal notes that both parties agreed that this is not a matter where section 1236 of the Act should apply to write off the debt. Central to a decision to write off a debt under section 1236 of the Act is consideration of the circumstances of the debtor, including whether, in this case, her whereabouts are known and whether she has any capacity to repay the debt, whether the debt is recoverable at law and the cost effectiveness for the Commonwealth in recovering the debt at this time. Write off of the debt under section 1236 of the Act leaves the Commonwealth with the right to recommence recovery action for the debt at a later stage. Taking into account the evidence as to Mrs McKenzie’s circumstances, including her financial circumstances, the Tribunal finds that it would not be appropriate to write off the debt under section 1236 of the Act.
75. The Tribunal turns to consider the application of section 1237AAD of the Act. The Tribunal has already determined that it is not appropriate to write off the debt and therefore the requirement pursuant to subsection 1237AAD(c) of the Act is met. Considering subsection 1237AAD(a) of the Act, the Tribunal found Mrs McKenzie to be honest and truthful in providing her evidence to the Tribunal and did not find any inconsistencies in her evidence that would point to a challenge to her credibility. The Tribunal notes that the SSAT found Mrs McKenzie to be a credible witness and accepted her version of events in relation to attending the Centrelink Office in June 2000. The ARO also saw no reason to doubt Mrs McKenzie. The Tribunal is also prepared to accept Mrs McKenzie ‘s evidence in relation to attending the Centrelink Office and completing the form in relation to her husband’s change in employment. Mrs McKenzie was specific in her evidence to the Tribunal about the nature of the form and the differences between that form and the form provided in relation to FAO payments in May 2000. The Tribunal does not believe that Mrs McKenzie was confused between these two forms. The Tribunal further finds that the CRAM report is only useful to the extent that it shows that Mrs McKenzie’s attendance was not recorded by Centrelink and this is not sufficient, given the force of other evidence, to contradict Mrs McKenzie’s account. The Tribunal also considers that if Mrs McKenzie was aware of her responsibilities in relation to FAO payments and informed of a change in her husband’s circumstances, she was just as likely to have been aware of her Parenting Payment reporting requirements and to have followed this up by informing of her husband’s changed circumstances as she states she did.
76. As to the information provided by the ARO about the changes to the family payments system, the Tribunal finds that although it is not possible to be absolutely sure as to whether or not these changes impacted upon Mrs McKenzie’s provision of information to Centrelink in June 2000, the ARO’s opinion about this does lend some further support, beyond mere speculation, to Mrs McKenzie’s version of events. A reasonable doubt is raised as to whether the information was properly dealt with by Centrelink. The Tribunal does not find it relevant to this issue that the form of May 2000 for FAO purposes was correctly processed, given that this was dealt with at a different time and in relation to a different payment.
77. No suggestion was made that Mrs McKenzie knowingly made a false representation or knowingly failed to comply with any section of the Act. As was discussed in Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553, “knowingly” in the context of section 1237AAD “is a deliberate choice and means actual knowledge”. In the Tribunal’s view, Mrs McKenzie knew of her responsibilities under the Act and duly informed the Department, in relation to her Parenting Payment, of her husband’s changed circumstances in June 2000. Mrs McKenzie held, in the Tribunal’s view, a perfectly reasonable belief that she had fulfilled her obligations. Furthermore, the Tribunal accepts Mrs McKenzie’s evidence that she was advised by a Departmental Officer that she would receive written advice within one week if there was to be a change in the Parenting Payment. No such advice was received. Mrs McKenzie also knew that her husband’s increased earnings were modest and this fitted in with her belief that there might not necessarily be any change to the Parenting Payment as the increase in income probably fell, on Mrs McKenzie’s understanding, within the income limit. The Tribunal cannot find any evidence to suggest that Mrs McKenzie had actual knowledge of or exercised choice in relation to any non-compliance with the Act or of any omission. Nor is there any evidence that she made a false statement or representation. Accordingly, subsection 1237AAD(a) of the Act, is satisfied.
78. Having accepted Mrs McKenzie’s credibility and that she did attend Centrelink in June 2000 to provide information about her husband’s changed circumstances, the Tribunal finds that the administrative error made by Centrelink in failing to record the information provided by Mrs McKenzie about her husband’s income in June 2000, is relevant to a consideration of special circumstances under section 1237AAD of the Act. This error was crucial, as Mrs McKenzie believed from this point onwards that Centrelink had the correct information on which to assess her entitlement to Parenting Payment and from this point onwards, Centrelink was relying on incorrect information which it used to assess the quantum of Mrs McKenzie’s entitlement to Parenting Payment.
79. The Tribunal finds that another special circumstance emanates from the problems with the delivery of Mrs McKenzie’s mail in the period June 2000 to December 2000 in which the Centrelink letters dated 21 June 2000 and 3 July 2000 were alleged to have been sent. Mrs McKenzie’s evidence was that she had problems with receiving mail before, during and after this period. She saw the Australia Post delivery officer on a motor bike riding very quickly past letterboxes and not delivering the letters properly. Mrs McKenzie failed to receive telephone bills up to the final notification and found letters addressed to herself, her mother and other neighbours lying in the street. Further evidence was provided by a neighbour of Mrs McKenzie’s, Mr Angelo Morello, in a statement dated 14 June 2002, that he had also had problems with the delivery of his mail leading to him securing a Post Office Box. He noted that himself and other people he had spoken to in the area, had not received notification of a commercial development of a Video Ezy store in their street, which the Local Council told him they had sent. Mrs McKenzie provided evidence that she also did not receive notification of that commercial development. Mrs McKenzie provided evidence that she contacted Australia Post on more than one occasion about the problems with her mail. She gave evidence that she contacted the Australia Post Charlestown Post Office in mid 2000 who subsequently referred her to the Gateshead Mail Exchange. Mrs McKenzie was advised by an officer at the Gateshead Mail Exchange that the mail delivery problem would be rectified. Mrs McKenzie’s evidence was that she did not organise to change to a Post Office Box because she could not afford it.
80. The Tribunal agrees with the Respondent’s submissions that the failure on Mrs McKenzie’s part to receive the letters from Centrelink meant that the original error by Centrelink continued. The Tribunal accepts Mrs McKenzie’s evidence regarding her difficulties with Australia Post, noting that the veracity of her evidence is strengthened by the corroborating and unchallenged evidence of her neighbour Mr Angelo Morello. The Tribunal finds that Mrs McKenzie took reasonable efforts to rectify the problem, by contacting Australia Post on a number of occasions. The Tribunal also finds that it was a reasonable decision by Mrs McKenzie not to obtain a Post Office Box based on her financial constraints. Considering section 29 of the Acts Interpretations Act 1901, the Tribunal notes that service is deemed to be effected by properly addressing, prepaying and posting the document as a letter unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of the mail. The Tribunal finds that there is evidence which proves to the contrary that the Centrelink letters of 21 June 2000 and 3 July 2000 were served on Mrs McKenzie. The Respondent submitted that section 29 of the Acts Interpretations Act 1901, which is similar to section 237 of the Social Security (Administration) Act 1999 in relation to notices of decision, prescribes a presumption of service which can be rebutted by evidence to the contrary. As the letters were not received by Mrs McKenzie due to failure by Australia Post to deliver the letters, then the Respondent submitted that such the letters were not served pursuant to section 29 of the Acts Interpretation Act 1901. The Tribunal agrees with this submission. Such administrative errors as the failure to deliver mail and Centrelink’s failure to record and act upon Mrs McKenzie’s advice of a change of circumstances are relevant to how the debt arose. The Tribunal notes that in Re Brittain and Secretary, Department of Family and Community Services [2000] AATA 161 and Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113, those Tribunals considered a combination of circumstances including administrative error as special circumstances.
81. The Tribunal considers it is also relevant to a determination of special circumstances under section 1237AAD of the Act to examine Mrs McKenzie’s physical and psychological health problems. It is clear from Mrs McKenzie’s evidence to the Tribunal, as well as documentary evidence from Dr Ruba and the Eastlakes Counselling Service, that Mrs McKenzie is suffering from depression, which appears to have worsened as a result of her marital breakdown and the raising of a debt owed to the Commonwealth. Mrs McKenzie is receiving treatment for her depression by way of counselling and antidepressant medication. The Tribunal accepts Mrs McKenzie’s evidence that the Centrelink debt did not cause her depression, but that her depression has worsened since the debt to the Commonwealth issue arose. Dr Ruba expressed this opinion in her report (Exhibit R1, Attachment B). Mrs McKenzie is also suffering from high blood pressure, high cholesterol, diabetes and migraine headaches. Dr Ruba’s evidence was that stress, particularly in relation to the Centrelink debt, was the cause of her migraines. Furthermore, Dr Ruba concluded that Mrs McKenzie’s overall state of health would not improve until the major problems including the Centrelink debt and family problems were resolved.
82. While the Tribunal acknowledges the significance of Mrs McKenzie’s marital problems and the impact on her psychological health, the Tribunal finds that also contributing to the poor state of her mental health is the occurrence of the debt to the Commonwealth. The Tribunal finds that the stress occasioned by the debt both from its financial impact and the shame of having a debt raised against her, is magnified in an already vulnerable individual.
83. In terms of Mrs McKenzie’s financial circumstances, the Tribunal acknowledges that these have somewhat improved for Mrs McKenzie, in that Mrs McKenzie has gained employment. The Tribunal also notes that Mrs McKenzie is fortunate enough at this time not to have to pay rent. However, the Tribunal also notes the additional costs for maintaining Mrs McKenzie’s health, including special dietary requirements, counselling and medication. Furthermore, the Tribunal notes that Mrs McKenzie has a dependent child living with her, for whom she does not receive child support, due to her husband being unemployed at this time. Mrs McKenzie also has additional concerns for her child, whom has also undergone counselling.
84. The Tribunal finds that there are factors in Mrs McKenzie’s life which in combination are special circumstances in the legislative sense. Thus, the Department’s failure to act on information provided to it by Mrs McKenzie notifying of her husband’s changed circumstances, the administrative error of crucial Centrelink letters not being served on Mrs McKenzie, her psychological and physical health and her limited financial means make it desirable pursuant to section 1237AAD of the Act to waive a part or whole of the debt. The Tribunal is of the view that Mrs McKenzie’s particular circumstances are precisely those envisaged by the legislators when framing the discretionary provision of section 1237AAD of the Act. It is a discretion which must be carefully applied with decision-makers not being swayed by subjective or emotive reasoning but on an objective analysis of all of the evidence. In the Tribunal’s view, a finding of special circumstances must establish some unique or special circumstance(s) which if ignored, would produce an unfair or unjust result. The Tribunal finds that in this case, such special circumstances do exist which if not considered, would produce an unfair and unjust result.
85. In determining whether a part or whole of the debt should be waived, the Tribunal notes the relevance of the Federal Court decision in Secretary, Department of Social Security v Thompson (1994) 53 FCR 580, which while dealing with special circumstances in the context of compensation preclusion periods and section 1184 of the Act, still provides guidance in this case as to the decision about what proportion of the debt should be waived. Considering all of the evidence, the Tribunal considers it appropriate to waive the entire debt owed by Mrs McKenzie to the Commonwealth, pursuant to section 1237AAD.
86. As the Tribunal has found that there are special circumstances in this case pursuant to section 1237AAD of the Act to warrant waiver of the entire debt, the Tribunal makes no finding in relation to the contention by the Respondent that because of sole administrative error, the debt can be waived pursuant to section 1237A of the Act. The Tribunal does note however that section 1237A of the Act involves consideration of two main issues; firstly, whether the debt or a proportion of the debt is attributable solely to administrative error by the Commonwealth, and secondly whether the payments that gave rise to the debt were received in good faith by the debtor, Mrs McKenzie. While not making any findings in relation to sole administrative error, it is arguable that sole administrative error encompasses the failure of Centrelink to record and act upon Mrs McKenzie’s advice to it of her husband’s changed circumstances. Furthermore, as the Respondent submitted, it could be argued that because the letters of 21 June 2000 and 3 July 2000 were not served on Mrs McKenzie the administrative error continued. The Tribunal is of the view that any determination of sole administrative error would have to encompass an examination of the failure of Australia Post to serve letters on Mrs McKenzie and whether or not Australia Post is “the Commonwealth“ for the purposes of section 1237A of the Act. Australia Post is a self-funding Government Business Enterprise (GBE) which operates under subsection 13(a) of the Australian Postal Corporation Act 1989 as a body corporate and meets the definition of a Commonwealth authority under section 7 of the Commonwealth Authorities and Companies Act 1997. Of course, there would have also to be a determination as to whether or not, considering the evidence and the case law, Mrs McKenzie received the payments in good faith. The Respondent’s submissions on this point have some merit.
87. In conclusion, in all of the circumstances of this matter and for the reasons expressed above, the Tribunal decides that pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the decision under review is set aside. In substitution therefor, the Tribunal decides that the debt of $3063.00 owed by Mrs McKenzie to the Commonwealth should be waived pursuant to section 1237AAD of the Act due to Mrs McKenzie’s special circumstances.
I certify that the 87 preceding paragraphs are a true copy of the reasons for the decision herein of Ms S M Bullock, Senior Member.
Signed:........................................................................
Associate
Date of Hearing 10 September 2002
Date of Decision 21 March 2003
Representative for the Applicant Ms C Collis, Departmental Advocate
Representative for the Respondent Mr J McClintock, Solicitor, Legal Aid Commission of New South Wales
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