McLeod and Secretary, Department of Family and Community Services - [2002] AATA 943

DECISION AND ORAL REASONS FOR DECISION [2002] AATA 943

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2001/171

GENERAL ADMINISTRATIVE DIVISION       )
           Re      CHRISTINE KAY MCLEOD
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Senior Member WJF Purcell

Date18 September 2002
PlaceAdelaide

Decision      For the reasons given orally at the Hearing of this matter, the Tribunal affirms the decision under review.
  (Signed)
  WJF PURCELL
  (Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Disability Support Pension – obligation to advise Department of change in income and circumstances – whether debt is due solely to administrative error – special circumstances – whether debt should be waived
Social Security Act 1991 sections 1224, 1237A, 1237AAD

ORAL REASONS FOR DECISION

18 September 2002 Senior Member WJF Purcell

This is an application for review of a decision of the Social Security Appeals Tribunal (the SSAT) of 11 April 2001, which affirmed the decision of an Authorised Review Officer of 12 January 2001, that there is a debt due to the Commonwealth, but varied the period of the debt from 9 July 1998 to 12 September 2000, in lieu of 10 December 1998 to 12 September 2000. The SSAT remitted the matter back to the respondent (the Department) to reassess combined income in the period from 9 July 1998 to 12 September 2000. The SSAT also affirmed the decision that any resulting overpayment that is calculated is a recoverable debt and must be recovered.
The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents), together with the exhibits tendered by the Department. The applicant's husband, Mr McLeod, assisted the applicant, and she gave oral evidence. Mr Underwood represented the Department.
The applicant is 51 years of age and has been in receipt of Disability Support Pension for some 10 years. She remarried in January 1998. Mr McLeod was a Bank Manager at that time, but on 10 March 1998, he received a severance package from his employer. On 11 March 1998, they both attended at the Centrelink office in Mount Gambier. He inquired of the availability of the NEAT Scheme, as he wanted to establish a farm consultancy business. He says that he was advised he was not eligible until he was in receipt of Newstart Allowance. He said in evidence that in light of his long service leave entitlement he was advised he would not be eligible for Newstart Allowance until October 1998, and that the lump sum was deemed income over that period. In August 1998, a delegate decided that Newstart Allowance was not payable, due to the level of Mr McLeod's assets.
On 17 March 1998, the applicant was issued with a notice which, among other things, explained that she needed to advise about combined yearly income for herself and her husband. The letter explained her legal obligations and advised that she was required to advise the Department within 14 days:
"if your combined income, not including financial investments or maintenance, increases;
if your combined income as shown above is incorrect;
if you or your partner start work or recommence work;
if you or your partner start any form of profession, trade, business or self-employment;
…"

Similar notices were sent to the applicant on 14 August 1998, and 21 September 1998 (T6).

The applicant gave evidence that she was told by the Centrelink officer on 11 March 1998 that she could earn $80 per week, and that anything her husband earned would not affect her pension. When she received the letter of 17 March 1998, she did not read it, but relied on what the Departmental Officer had told her on 11 March 1998. Mr McLeod said in evidence that he did not read these letters either. The applicant gave evidence also, that she had several telephone conversations over the ensuing months, and spoke about Mr McLeod's business and income from the rental property. She said that they were in dispute with the tenant and forced to take court proceedings, which resulted in the tenant's eviction in November 1998. There is no Departmental record of any of these alleged conversations.
There is a Departmental note of the applicant telephoning on 7 December 1998 to advise that she and her husband had moved home on 30 November 1998, and that their tenants had moved out. She was advised in writing on 7 December 1998 that her Disability Support Pension was to be increased with effect from 10 December 1998. Again, she was advised of her requirements to notify if there were changes in her combined yearly income, or income from financial investments. There is no record of any advice from the applicant within 14 days of this letter advising a change of circumstance; nor is there any Departmental record of any personal attendance, or telephone conversation prior to 11 September 2000 [T8/45].
A review of the applicant's entitlement was initiated by the Department on 5 September 2000. It was noted that there was "no income for partner on record". Subsequently, the applicant advised that her husband had been operating a business, "Alan McLeod Consulting", from which she had been receiving income from employment doing the bookkeeping.
On 29 September 2000 a delegate decided to raise and recover an overpayment of Disability Support Pension of $5,170.09 for the period 9 July 1998 to 12 September 2000. This decision was varied by an authorised review officer on 12 January 2000, to a debt of $5,852.74, for the period 10 December 1998 to 12 September 2000. The SSAT on 11 April 2001, made the decision under review, varying the period of the debt to the period 9 July 1998 to 12 September 2000.
Section 1224 of the Social Security Act 1991(the Act), as far as is relevant, provides:
"(1) If:
(a)an amount has been paid to a recipient by way of social security payment or fares allowance; and
(b)the amount was paid because the recipient or another person:
(i) made a false statement or a false representation; or
(ii)failed or omitted to comply with a provision of the social security law or this Act as in force immediately before 20 March 2000, the 1947 Act or the Social Security (Fares Allowance) Rules 1998;
the amount so paid is a debt due by the recipient to the Commonwealth."
Section 1237A(1) of the Act provides:
"(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."
Section 1237AAD of the Act provides:
"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."
I was informed at the Hearing, on 3 December 2001, that in accordance with the SSAT decision, the debt had been recalculated and amended to $6,038.76. In the course of the Hearing, Mr McLeod raised many arguments about the Department's procedures and the calculation of the debt. I informed the applicant and Mr McLeod that the investigation of Departmental procedures and perceived maladministration are matters for the Commonwealth Ombudsman, and not this Tribunal. I adjourned the matter to 25 February 2002, and issued the following Direction:
"The Tribunal directs that this matter is adjourned to a Telephone Directions Hearing at 9.45 am on 25 February 2002 and a Resumed Hearing at 10.00 am on 11 March 2002 on the basis that:
1.The applicant is to provide by 31 January 2002 quarterly returns for the period from 1 July 1998 to 30 June 1999.
2.If there are any modifications to rental figures or to business income, then tax returns and tax assessment notices are to be provided.
3.The applicant is to provide bank statements for all financial investments, such as shares, term deposits, bank accounts, for the period from 9 July 1998 to 12 September 2000.
4.Mr Underwood will advise the applicant as to the bank statements already held by the Department."
At the telephone Directions Hearing on 25 February 2002, the information had not been provided by the applicant, but in due course the information was provided, and the Resumed Hearing took place today. I was informed that the provision of the additional information had led to a further recalculation of the debt to $4,936.33. I was informed also by Mr McLeod that he continues to dispute the calculation of the debt. I proceeded then to hear some further evidence from the applicant and Mr McLeod, as to the circumstances surrounding the events between March 1998 and 12 September 2000, and the parties' submissions.
The applicant submits that she and Mr McLeod have been misinformed and misled by the Department from the outset; that the Department's errors have caused these various amounts of debt to be raised. The applicant believed from what she was told by the Department, that she did not have to do any more; that no matter what her husband did, it would not affect her pension. She kept the Department up-to-date. Mr McLeod had contact with the Department regarding problems with their tenant and, for the purposes of the Court proceedings, obtained details of Centrelink payments to the applicant, and the fact that he was not in receipt of Centrelink payments. In addition, Mr McLeod asserts that he was contacted by Centrelink in October 1998, regarding a training program. He says that he told the officer that he did not want retraining as he had started his own business. This was, in his view, sufficient information for the Department.
The applicant maintains that shares and other assets disposed of by Mr McLeod subsequent to March 1998, related to his divorce settlement with his first wife. They were not her business, and Mr McLeod maintains that the Department should have told him that his assets and sale of assets would be taken into account in relation to the applicant's pension. The applicant asserts that this problem is all due to administrative error. It is solely administrative error, and the debt should be waived in accordance with section 1237A(1) of the Act.
The Department argues that the applicant was obliged to advise if there was a change in income, if she started work, and if she, or her husband, sold shares, or a managed investment. She did not advise. She was under an obligation, as advised in each of the letters, that if the income was incorrect, she had to advise. She alleges that she notified the Department about the husband's business, and that she was told that his income would not affect her pension. The Department maintains that this advice was never given. If such advice was given, as alleged, this is not reconcilable with the applicant's assertion that she kept Centrelink up-to-date with information regarding changes to Mr McLeod's business.
The Department maintains also, that in relation to her obligations to advise of change of income and circumstances, on her evidence, she did not read the letters and therefore, did not notify. It cannot be said, therefore, that the debt arose solely out of administrative error. She was not checking her current circumstances against the requirement of notification. She was required also to advise if she started work, although the Department would concede that it appears that her payment for her work for Mr McLeod was a book entry, it was still "income" upon which taxation was levied, and attributable to her over a financial year, and the Department was not advised. In relation to the sale of shares, the Department maintains that shares were sold by Mr McLeod, and he withdrew amounts from a superannuation rollover fund. None of these matters were advised to Centrelink by the applicant.
The Department submits, finally, that for waiver due to administrative error to be applicable, the error has to be totally attributable to the Department. Even if the Department were to accept that the applicant did everything she could to advise the Department regarding the business, there are three other reasons for the existence of the debt, namely the failure to advise of her income, Mr McLeod's sale of assets, and the increase in their combined income, none of which are attributable to Departmental involvement, or error, and there are no special circumstances in this matter which would give rise to the exercise of discretion under section 1237AAD of the Act.
I am satisfied, on the whole of the evidence, that the debt did not arise solely due to administrative error. I am satisfied also, that there are no special circumstances. The SSAT affirmed the debt, and remitted the matter back to the Department for recalculation. The debt has been recalculated, but under the terms of the reviewable decision, the quantum of the debt is not a decision reviewable by this Tribunal. The Department has not made a decision. It is a decision which will be made subsequently by the Department in implementation of this Tribunal's decision. If the applicant is dissatisfied with that decision, she will need to apply for review in accordance with the legislation.
For these reasons, the Tribunal affirms the decision under review.
I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member WJF Purcell
Signed:         .....................................................................................
  Associate
Dates of Hearing  3 December 2001 and 18 September 2002
Date of Decision  18 September 2001
Counsel for the Applicant        In person
Solicitor for the Applicant         -
Counsel for the Respondent    Mr J Underwood
Solicitor for the Respondent    Centrelink Admin Law Team