McLean and Secretary, Department of Family and Community Services

[2005] AATA 373

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 373

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/1039

GENERAL  ADMINISTRATIVE DIVISION

Re:         KATHLEEN McLEAN

Applicant

And:       SECRETARY,
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Miss E.A. Shanahan, Member

Date:             28 April 2005

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) E.A. Shanahan

Member

SOCIAL SECURITY – widow allowance – failure to advise of income from earnings – knowingly failing to advise of change in circumstances – overpayment of widow allowance – debt owing to the Commonwealth

Social Security Act 1991 

Social Security (Administration) Act 1999  

Re Beadle and Director‑General of Social Security (1985) 7 ALD 670

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

28 April 2005  Miss E.A. Shanahan, Member

1.      This is an application by Kathleen McLean (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 28 July 2004.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 23 March 2004 to raise an overpayment of $1759.08, as a result of the applicant's derivation of income from employment between 6 March 2003 and 23 May 2003.

2.      At the hearing on 29 March 2005 the applicant represented herself and Mr M. Todd, an advocate with Centrelink, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T15) (the T‑documents).

4.      Mrs McLean gave evidence by telephone as she was unwell and unable to attend the hearing.

BACKGROUND TO THE APPLICATION

5.      Mrs McLean applied for a widow allowance on 28 May 2001.  She was granted the widow allowance from 17 May 2001.  Centrelink regularly advised Mrs McLean of her obligations to notify it, including the requirement to tell Centrelink if she started paid work, from 2 December 1991 until late December 2002.

6.       On 8 April 2003 an income data‑matching exercise with the Australian Taxation Office (ATO) revealed a discrepancy between the information provided by Mrs McLean to Centrelink and the information provided by Mrs McLean to the ATO.  The ATO records revealed that she had been employed for a period of 11 weeks by the Douglas Trust between 6 March 2003 and 23 May 2003, for which she was paid $4155.  Based on the ATO advice and given that Mrs McLean had continued to receive a widow allowance throughout her employment, Centrelink calculated that she had been overpaid $1759.08.  Mrs McLean only informed Centrelink of her earnings after her employment ceased.

7.      In her evidence before the SSAT, Mrs McLean stated that she had undertaken employment in order to pay her share of her mother's funeral expenses, her mother having died on 17 December 2002.  She said she had also incurred medical costs when she underwent day surgery at the Geelong Hospital on 23 April 2003.  She advised that, despite being a public patient, she had, in fact, been charged $300.  Mrs McLean had justified her failure to inform Centrelink of her changed financial circumstances on the basis that she had not benefited from the money earned. 

8. The SSAT found that Mrs McLean's overpayment between 6 March 2003 and 23 May 2003 constituted a debt owed to the Commonwealth, as provided for in s 1223 of the Social Security Act 1991 (the Act).  The SSAT also found that s 1236 of the Act did not apply to Mrs McLean; and s 1237A(1) of the Act, which allowed waiver of a debt when it was caused solely by administrative error and was received in good faith, did not, on the evidence, apply to Mrs McLean either.  The SSAT also considered the application of s 1237AAD (waiver), but only addressed s 1237AAD(b), finding that there were no special circumstances which would permit waiver. The SSAT did not consider s 1237AAD(a)(ii) (see below).

9.      On 10 September 2004 Mrs McLean sought review of the SSAT decision by the Tribunal.

EVIDENCE BEFORE THE TRIBUNAL

10.     Mrs McLean gave evidence by telephone as she had recently fractured her leg and at the time of the hearing was suffering from an acute bout of bronchitis.  Her evidence before the SSAT had already been admitted into evidence.

11.     Mr Todd contended that the SSAT's decision was correct in law and on the facts.  On the day of the hearing Mr Todd had received information that Mrs McLean had been a Centrelink officer for a period of 12 months, in 2000 and 2001.  Mr Todd said that, in addition, investigations had revealed that, prior to her employment with Centrelink, Mrs McLean had been on newstart allowance in 2001 and, as a result of her employment for remuneration, had a debt of $800 owing to the Commonwealth.  He told the Tribunal that this was apparently being deducted from her widow allowance.  Mrs McLean confirmed that she had worked for Centrelink for a period of 12 months, in 2000 and 2001.  She also confirmed her debt to the Commonwealth relating to the period when she was on newstart allowance, although she was unable to remember the exact amount owed or the rate of repayment.  Mrs McLean agreed that she had not advised Centrelink of her employment from March to May 2003 until after her employment was terminated and she stated that her failure to report to Centrelink resulted from her distress of her mother's death and her need to have surgery.  However, she did admit that she was fully cognisant of the requirements to notify Centrelink of any changes in income and other matters. 

DOCUMENTARY EVIDENCE BEFORE THE TRIBUNAL

12.     All the documentary evidence is contained in the T‑documents and includes various notices to Mrs McLean, of her obligations to report to Centrelink any changes in financial circumstances, including employment.  The T‑documents also contain a record of the data‑matching exercise with the ATO and copies of Mrs McLean's payslips while she worked for Douglas Trust between March and May 2003. 

THE RELEVANT LEGISLATION

13.     The Act provides for the entitlement of a widow allowance.  The income test to be used in calculating the rate of payment of this allowance is set out in Module G of s 1068 of the Act.  Section 8 defines ordinary income as "income that is not maintenance income or an exempt lump sum".  Income is also defined in s 8 as "an income amount that is earned, derived or received".  Section 1072 provides further definitions of the general meaning of ordinary income.  Section 1072 states:

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 2 or 3.

14. Section 68 of the Social Security (Administration) Act 1999 (the Administration Act) allows for notices to be issued requiring a person to advise Centrelink of certain events. These were issued to Mrs McLean in accordance with the Administration Act. Mrs McLean did not comply with such notices. Automatic cancellation of payment or reduction of payment is provided for by s 94 and s 100 of the Administration Act.

15. Section 1223 of the Act states:

1223.(1)   Subject to this section, if:

(a)a social security payment is made; and

(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.

The widow allowance paid to Mrs McLean during the period of her employment constitutes a debt to the Commonwealth. 

16.     The Act provides several provisions to waive a debt or reduce a debt.  These provisions are included in s 1237(1), (2), (3) and (7)(a), which permit waiver of a debt caused solely by an administrative error.  There is no evidence of administrative error by Centrelink in this matter; therefore, s 1237A(1) does not apply. 

17.     Section 1237AAD of the Act provides:

1237AAD     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.

SUBMISSIONS

18.     The respondent submitted that the decision of the SSAT should be affirmed on the basis that the applicant had knowingly failed or omitted to comply with the provisions of the Act.

APPLICATION OF LEGISLATION TO THE FACTS BEFORE THE TRIBUNAL

19.     The issue before the Tribunal is whether Mrs McLean owes a debt of $1759.08 to the Commonwealth, arising from her employment between 6 March 2003 and 23 May 2003; and if so, is this debt recoverable by the Commonwealth.

20. There is no dispute that Mrs McLean was employed during the stated period and derived an income which affected her widow allowance payment, giving rise to the debt delineated above. Centrelink has complied with s 11 of the Data‑Matching Program (Assistance and Tax) Act 1990 and the ATO has confirmed Mrs McLean's income. Accordingly, the debt has been properly raised under s 1223(1) of the Act.

21.     The Act provides for non‑recovery of debts.  Section 1236 provides for the write‑off of the debt; s 1237A(1) allows waiver of a debt caused solely by an administrative error; and s 1237AAD allows debts to be waived due to special circumstances.  The Tribunal agrees with the finding of the SSAT that s 1236 of the Act does not apply to Mrs McLean.  There is no evidence that the debt raised was caused solely by an administrative error.  With respect to s 1237AAD, the SSAT only considered s 1237AAD(b) regarding special circumstances.  Mrs McLean stated in her evidence that she did not derive benefit from the income earned as much of this money had been used to pay for her mother's funeral and also to meet her own medical costs.  The phrase special circumstances has been considered by the Tribunal on many occasions (Re Beadle and Director‑General of Social Security (1985) 7 ALD 670; Groth v Secretary, Department of Social Security (1995) 40 ALD 541) and has been said to require circumstances that are unusual, uncommon or exceptional.  The requirement by Mrs McLean to contribute to the cost of her mother's funeral and to pay part of her medical costs, although treated in a public hospital, are not sufficiently unusual or uncommon to meet the requirements and therefore do not constitute special circumstances.

22.     The SSAT did not consider s 1237AAD(a)(ii) of the Act, which states:

1237AAD     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)…

(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b)…

(c)…

23.     In her evidence before the Tribunal Mrs McLean acknowledged that she had been employed by Centrelink for a period of 12 months in 2000 and 2001, and was fully acquainted with the requirements for a recipient of a widow allowance to notify Centrelink of any change in their financial circumstances.  She agreed she had not done so.  She said that, at the time, she had been mourning her mother and was concerned with her own issues.  She also admitted that she had incurred overpayment of a newstart allowance in 2000, prior to her employment with Centrelink and was continuing to repay this debt.  Accordingly, the debt resulted wholly from Mrs McLean knowingly failing to comply with a provision of the Act and s 1237AAD(a)(ii) does not apply.

24.     For the reasons given above, the decision under review should be affirmed.

DECISION

25.     The Tribunal affirms the decision under review.

I certify that the twenty‑five [25] preceding paragraphs are a true copy of the reasons for the decision herein of

Miss E.A. Shanahan, Member

(sgd)     Catherine Thomas
            Clerk

Date of Hearing:  29 March 2005

Date of Decision:  28 April 2005
Solicitor for the applicant:            Self‑represented

Advocate for the respondent:       Mr M. Todd