McPherson and Department of Family and Community Services - [2000] AATA 611

DECISION AND REASONS FOR DECISION [2000] AATA 611

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/798

GENERAL ADMINISTATIVE DIVISION          )
           Re      NICOLE MCPHERSON
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal DR J D CAMPBELL, Member

Date27 July 2000
PlaceNewcastle

Decision The decision under review is affirmed.

…..(Sgd) Dr J D Campbell…..
Member
CATCHWORDS
Social Security – Family Payment – estimates – overpayment – debt – waiver – administrative error – good faith – special circumstances
Social Security Act 1991, sections 885, 891, 1223, 1237.
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186

REASONS FOR DECISION

27 July 2000 DR J D CAMPBELL

Ms Nicole McPherson ("the Applicant") in this matter seeks a review of the decision of the Social Security Appeals Tribunal dated 4 March 1999, which affirmed the decision of an authorised review officer dated 14 January 1999. This latter decision affirmed a decision of a delegate of the Secretary, Department of Family and Community Services ("the Respondent") dated 17 November 1998 to recover a debt of family payment of $840.80 from the Applicant.
A hearing was held in Newcastle on 21 March 2000 at which the self represented Applicant presented oral evidence. The Respondent was represented by Ms Mantaring, an advocate from the Administrative Law section of Centrelink.
The following material was placed in evidence before the Administrative Appeals Tribunal ("the Tribunal"):
Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 T1 – T22, pp1 - 82
Respondents statements of facts and contentions dated 14 February 2000 Exhibit R1

issues:

The relevant issues in this matter are:
(a)whether the Applicant was overpaid Family Payment in the amount of $840.80; and if so
(b)whether this overpayment is a debt to the Commonwealth; and if so
(c)whether the debt should be recovered; and if so
(d)whether there are special circumstances that the Tribunal should consider.

legislation

The relevant legislation in this matter is the Social Security Act 1991 ("the Act") and in particular sections 885, 891, 1223, 1237.
background
On 20 August 1996 the Applicant completed and lodged with the Respondent an income and assets form in which was nominated an estimated combined taxable income for the Applicant and her partner of $30,500 for financial year 1995/96 and $28,400 for financial year 1996/97 (T3, p16).
On 20 August 1996 the Respondent advised the Applicant that she would be paid family payment of $68.55 every fortnight commencing from 29 August 1995. The correspondence to the Applicant nominated the estimated combined income for financial year 1996/97 of $28,400 as the income used to calculate the rate, and gave notice to the Applicant under section 872, 873 and 873A of the Act that she must notify within 14 days if the combined taxable income for the financial year 1996/97 was to exceed $31,240 (T4,p22). A parenting allowance of $64.10 per fortnight was advised as a further benefit to the Applicant on 1 September 1996 (T5, p24).
On 10 October 1996 the Applicant completed a review of family payment and childcare assistance form, which was lodged with the Respondent on 28 October 1996. For this the Applicant nominated the combined taxable income for financial year 1995/96 for her and her partner as $32082 and an estimated combined taxable income for financial year 1996/97 of $30,000 (T6, p28).
On 31 October 1996 the Respondent advised the Applicant that she would receive a family payment of $38.80 per fortnight commencing 7 November 1996. Further the Respondent advised the Applicant that she should notify the Respondent within 14 days if the combined taxable income for financial year 1996/97 exceeded $33,000 (T7, p30). The Applicant queried the rate change on 8 November 1996 (T8, p32).
On 15 December 1996 the Applicant was advised that her family payment rate would be $55.15 per fortnight commencing 2 January 1997 and she was to advise the Respondent within 14 days if the combined taxable income for financial year 1996/97 exceeded $33,000 (T9, p34).
On 14 January 1997 the Applicant was advised of a lump sum advance of family payment and advised to notify the Respondent within 14 days if combined taxable income for financial year 1996/97 exceeded $30,000 (T10, p36).
In a claim for childcare assistance completed and lodged on 14 February 1997 the Applicant again nominated a combined taxable income for financial year 1996/97 of $30,000 (T11,p46). On 8 March 1997, the Respondent advised the Applicant that she would receive $26.74 family tax payment per fortnight commencing 27 March 1997 and that this had been assessed on estimated combined taxable income for financial year 1996/97 of $30,000 (T12, p50)
On 13 March 1997 a letter was sent to the Applicant by the Respondent concerning parenting allowance (T13, p53). In a future letter to the Applicant dated 7 April 1997, the Respondent advised of new rates for family payment, family tax payment and child care assistance and requested the Applicant advise the Respondent within 14 days if the combined taxable income for financial year 1996/97 exceeds $33,000 (T14, p56).
In further correspondence dated 7 July 1997 concerning payment in advance of family payment, the Applicant was requested to notify the Respondent within 14 days if the combined taxable income for financial years 1996/97 or 1997/98 exceeded $30,000 (T15, p59).
On 8 September 1997 the Respondent , in advising a change of rate of family payment to the Applicant, again requested advise within 14 days if the combined taxable income for financial year 1996/97 or 1997/98 exceeded $33,000 (T16, p63).
As a result of a data matching exercise completed on 17 November 1998 it was established by the Respondent that the combined annual taxable income for financial year 1996/97 was $35,242 and that as a consequence there had been an overpayment of $840.80 (T17, p65). It was noted that the Applicant stated that she had lodged a further estimate of $35,000 in April 1997. A recoverable debt of $840.80 was considered to be established pursuant to ss1223 (3) of the Act covering the period 29 August 1996 to 14 August 1997.
On 15 December 1998 the Respondent notified the Applicant of the decision to raise an overpayment of family allowances and that this was a debt due and payable (T18, p73). The decision was affirmed by an authorised review officer on 14 January 1999 and by the Social Security Appeals Tribunal on 4 March 1999.
applicant's evidences:
The Applicant stated that she was familiar with the need to update an estimate given at an earlier stage, as she had done so when she increased the estimate of combined income for financial year 1996/97 from $28,400 to $30,000. Further the Applicant stated that she went to Centrelink at Wallsend in April 1997 and advised them of an increased estimate of $35,000 for financial year 1996/97. The Applicant acknowledged that she had not received any letter from the Respondent indicating use of this new estimate. Further the Applicant acknowledged that she knew that the family allowance payments would decrease as a result of an increased estimate. The Applicant further stated that her family allowance payments were paid directly to the Newcastle Permanent Building Society and that apart from the balance, she would only have detailed knowledge of transactions when she received her annual statement.
The Applicant also told the Tribunal that she did both her own and her husband's income tax at the end of July, and that their respective incomes [for financial year 1996/97] would have been known to her at the end of July 1997, namely a combined taxable income of $35,544. In response to questions in cross examination the Applicant was unable to remember the issues surrounding advice received from the Respondent in July and September 1997 and certainly there was no recognition on her part of issues arising from such advice.
submissions
The Applicant submitted that she was aware of the issues associated with the use of estimates and particularly the need to update an estimate during the course of a financial year. It is the Applicant's position that sometime in April 1997 she provided a revised estimate of $35,000 for the combined taxable income for financial year 1996/97 when she attended Centrelink offices at Wallsend. It was the Applicant's contention that the Respondent failed to record and act upon this revised estimate.
The Respondent contends that at all times it acted upon the advice of estimates given by the Applicant and that the matter is essentially one of overpayment arising from an incorrect estimate by the Applicant. The Respondent contends that there were numerous communications to the Applicant after the purported advise of a revised estimate in April 1997, and that in each of these communications, there was a sum nominated, against which a rate had been calculated. None of these sums were of the order of $35,000, and at no stage did the Applicant seek to address this issue. Further the Respondent contends that the Applicant would have known the combined actual income for financial year 1996/97 when completing the tax returns in late July 1997, and again there was no effort taken to address or notify the Respondent of the actual combined taxable income for financial year 1996/97.
The Respondent contends that any overpayment which occurred between 20 August 1996 and the purported advising of a revised estimate in mid April 1997 arose solely as a result of using the estimates provided by the Applicant and was not associated with any administrative error. Further the Respondent contended that even if administrative error was found to exist in relation to overpayments from mid April 1997 to 14 August 1997, the Applicant could not be said to have received such payments in good faith and her failure to address correspondence addressed to her during that period was a particular difficulty in establishing the issue of good faith.
consideration and findings:

The only factual matter that is contested between the parties is whether or not the Applicant presented a revised estimate of $35,000 for the combined taxable income for financial year 1996/97 in April 1997. The Tribunal, in considering the issues of the Applicant's position in this matter notes that the Applicant was conversant with the issues surrounding the provisions of the estimates, and the reasons as to why revised estimates were required on a timely basis. Further it was evident to the Tribunal that the Applicant had particular knowledge about family payments and that in overall general terms, the Applicant had a satisfactory understanding of her responsibilities in terms of issues raised in this matter. In this regard the Tribunal is prepared to accept that the Applicant did provide a revised estimate in April 1997 and for whatever reason it was not recorded by the Respondent.
Nevertheless it is clear to the Tribunal that the combined taxable income for the Applicant for financial year 1996/97 was $35,254 and this was more than 110% of the recorded estimates of $28,400 in August 1996 and $30,000 in October 1996 for the same period. The Tribunal notes the following sections of the Act which provide:
"885.(1) If:
(a)       in working out the rate of family allowances payable to a person, regard is had to the person's income for a tax year; and
(b)       the income to which regard was had consisted of an amount estimated by the person; and
(c)       the person's income for that tax year is more than 110% of the amount of the income on which the determination of the rate of family allowance was based;
the person's rate of family allowance is to be recalculated on the basis of that income.
…
891
If:
(a)       the Secretary makes a determination of a person's rate of family allowance; and
(b)        in making the determination, the Secretary had regard to the person's income for a tax year;
(c)       the income to which regard was had included an amount or amounts estimated by the person; and
(d)       the person's income for the tax year is more than 110% of the amount of the income on which the determination referred to in paragraph (a) was based; and
(e)       the Secretary makes a determination varying the person's rate of family allowance, or           cancelling the person's family allowance, to give effect to the recalculation required by section 885;
the later determination takes effect on the day on which the earlier determination took effect.
…
1223(3) Subject to subsection (4), if:
(a)       an amount (the 'received amount") has been paid to a person by way of family allowance; and
(b)       the person's rate of family allowances is recalculated under:
(i)        section 884 (amendment of assessable income); or
(ii)       section 885 (underestimate of income); or
(iii)      section 886 (failure to notifiable event); or
(iv)      section 886A (overestimate of child maintenance expenditure); and
(c)       the received amount is more than the amount (the 'correct amount') of the family allowance payable to the person;
the difference between the amount and the correct amount is a debt due to the Commonwealth."

The Tribunal, after consideration of the nominated sections of the Act, finds that the Applicant's rate of family allowance for the period 29 August 1996 to 14 August 1997 should be recalculated in accordance with section 885(1), with the latter rate taking effect from the date of the earlier determination (section 891). The Tribunal concurs that there has been an overpayment of family allowance of $840.80 and finds that this is a debt due to the Commonwealth (section 1223 (3)).
In considering whether there are particulars in this matter which would allow the debt to be waived, the Tribunal notes the following sections of the Act which provide:
"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.
1237A(1A) Subsection (1) only applies if:
(a)       the debt is not raised within a period of 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.
…
1237 AAD.     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 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 he debt".

The Tribunal in considering the issue of administrative error notes again that for whatever reason the Respondent failed to record and act upon the revised estimate given by the Applicant in April 1997, and concludes that this is an administrative error solely made by the Commonwealth. If action had been taken to act upon the estimate, there would have been a rate recalculation of family allowance at the time (April 1997) and the new rate (lower) would have been in effect since the date of the earlier determination (August 1996) and the new lower rate would have been paid through to August 1997. The nett consequence of this is that a debt, resulting from overpayment through August 1996 to April 1997, would have occurred for which the Applicant would have a responsibility to pay.
In considering any debt that arose as a consequence of the administrative error in April 1997, the Tribunal, aware that the Applicant understood that a higher estimate of combined income would mean a lower rate of family allowance and that the Applicant received correspondence from the Respondent in April and July 1997 nominating the combined income of $33,000 and $30,000 for financial year 1996/97 for rate calculation of family allowance payments, finds that the Applicant having notified a revised estimate, was provided with knowledge that would indicate that her revised estimate had not been acted upon. The Tribunal notes that the Applicant has little memory for these two pieces of correspondence. Nevertheless the Tribunal does conclude that the Applicant was provided with knowledge which she, in turn and again for whatever reason, did not act upon. Accordingly it is the Tribunal's finding that the Applicant, being a person with a solid understanding of the family allowance payment arrangements, did not receive the overpayments of family allowance after her reviewed estimate in April 1997 in good faith, for this reason and for further reasons that by her own admission she was aware that higher estimates of income meant lower rates of allowance payments. In making such a finding the Tribunal has had regard to what Finn J said in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186.
"…It is clear in the present case that at all relevant times after 22 December 1993 Mr Prince actually knew that he had no entitlement to receive AUSTUDY payments. Is the consequence of this that he could never claim that any of the payments he received from DEETYA as AUSTUDY payments in 1994 were received in good faith even though at the time of receipt of the first three he was unaware that he had received the payments? In other words, can a receipt be otherwise then in good faith when the recipient is unaware that the payment has been received? The short answer to that in my view is "yes". Knowing that, in the relevant period, he had no entitlement to receive an AUSTUDY payment, he was never in a position to be able to assert that any mistaken payment made to him was one to which he had entitlement. Thus while he may have received a payment of which he was ignorant, he could not, in the sense that I have explained, have received it in good faith.
…"

Further the Tribunal notes that the Applicant was further advised on 8 September 1997 by the Respondent that an estimate of a combined taxable income for financial year 1996/97 of $30,000 was still being used for family allowance rate calculation and that the Applicant was to notify the Respondent if the combined taxable income for financial year 1996/97 or 1997/98 exceeded $33,000. The Tribunal notes that the Applicant had not notified the Respondent of the combined taxable income for financial year 1996/97, which by the end of July 1997 she would have known to be $35,254, as she prepared the tax returns. The Tribunal also notes that such was not advised to the Respondent and the issues of overpayment only arose as a consequence to a data matching program. Again the Tribunal concludes that the actions of the Applicant are not consistent with the receipt of family allowance payments by the Applicant up to 14 August 1997 to be in good faith.
In summary it is the Tribunals finding that the Applicant did not receive any family allowance payments post April 1997 in good faith and accordingly any debt arising is not waived.
The Applicant did not address on the issue of special circumstance, and the Tribunal, having reviewed the issues in particular to this matter, finds that there are no circumstances nominated which would allow the issue of special circumstances to be further evaluated.
As a consequence of the Tribunal's findings, the Applicant has a debt of $840.80 owing to the Commonwealth.
determination

The Tribunal determines that the decision under review be affirmed.

I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of DR J D CAMPBELL
Signed:         .....................................................................................
  Associate
Date of Hearing  21 March 2000
Date of Decision  27 July 2000
Representative for the Applicant              self represented
Representative for the Respondent        Ms Susan Mantaring