Mendyk and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2011] AATA 497
•19 July 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 497
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2011/1080
GENERAL ADMINISTRATIVE DIVISION ) Re Richard Mendyk Applicant
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
Respondent
DECISION
Tribunal Senior Member A K Britton Date19 July 2011
PlaceNewcastle
Decision The decision under review is affirmed. .....................[sgd]......................
Senior Member A K Britton
CATCHWORDS
SOCIAL SECURITY – pensions – disability support pension – overpayment – debt – administrative error – special circumstances – write-off of debt – decision under review affirmed
Social Security Act 1991 (Cth) – ss 1236(1), 1237A, 1237AAD
Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126; [2003] FCAFC 190
REASONS FOR DECISION
19 July 2011 Senior Member A K Britton 1.Mr Richard Mendyk, the applicant in these proceedings, has been in receipt of the disability support pension (DSP) since 1994. In November 2010, a Centrelink Authorised Review Officer (ARO) decided that Mr Mendyk had been overpaid DSP throughout the period 24 June 2009 to 8 June 2010 and, as a consequence, owed a debt to the Commonwealth. The ARO waived part of the debt on the basis that it was due to Centrelink’s “sole administrative error”, namely that part relating to the period 31 August 2009 to 9 November 2009. The ARO decided to raise and recover from Mr Mendyk the balance of the debt, an amount just under $7000. On review, the Social Security Appeals Tribunal affirmed that decision.
2.It is agreed that Mr Mendyk was overpaid DSP throughout the period 24 June 2009 to 8 June 2010 (the subject period) and that the debt for the period 31 August 2009 to 9 November 2009 should be waived. Accordingly I must decide whether the power conferred by the Social Security Act 1991 (Cth) (“the Act”) to waive or write off all or part of the balance of the debt can and should be exercised.
Background to the debt
3.The debt arose because (i) throughout the subject period Centrelink calculated Mr Mendyk’s pension on the mistaken assumption that his income was $1,000, not $2,000, per fortnight; and (ii) income received by Mr Mendyk in the early part of 2010 was not taken into account.
(i) incorrect income
4.In late June 2009 Mr Mendyk’s weekly wage was increased from $500 to $980 per week. Mr Mendyk claims that he advised Centrelink of this increase. Notices issued by Centrelink to Mr Mendyk from the time the increase was paid until mid-March 2010 misstated his income as $1000 per fortnight. Mr Mendyk testified that he rang on numerous occasions to alert Centrelink of the error but in about March 2010 just “gave up” and told Centrelink to “just put him down for $2,000 per fortnight and be done with it”. According to Mr Mendyk, on most occasions when he rang Centrelink, the officer he spoke with acknowledged that there had been an error and that it would be corrected, but on two, possibly three occasions, he was told that there was no error and his income had been understated as part of “an incentive to get back to work".
5.Produced in these proceedings were copies of Centrelink’s computer access monitoring (CRAM) reports made in respect of Mr Mendyk. These records purport to contain electronic file notes made by Centrelink officers of all phone conversations between Mr Mendyk and Centrelink. They indicate that Mr Mendyk contacted Centrelink on various occasions throughout the subject period: 10 June 2009, 23 June 2009, 31 August 2009, 25 September 2009, 30 December 2009, 24 February 2010 and 11 May 2010. None, apart from the record dated 31 August 2009, make any reference to Mr Mendyk advising Centrelink that his income had been understated.
6.The file note dated 31 August 2009 records that a Centrelink officer contacted Mr Mendyk after receiving wage information from his employer and reads in part:
Contacted customer … Advised cust of rights and obligations with the declaration process. … Eans updated to $2000 per fortnight as cus was mistaken in thinking that only half income would be assessed.
7.Mr Mendyk testified that he did not request a receipt number on any of the occasions he spoke to a Centrelink officer to report the error in relation to his income. He claims that it was not until June 2010 that he was informed of Centrelink’s practice to issue a receipt number to customers on request. He was unable to explain the apparent discrepancy between that claim and that made in the proceedings before the SSAT of being given but later losing a receipt number after initially notifying Centrelink of his pay increase: Mendyk and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] SSATA (Unreported, Bubutievski, Presiding Member 24 February 2011) at [13].
8.In early March 2010, Centrelink advised Mr Mendyk that he was required to report his income on a fortnightly basis. His income was adjusted to $2000 per fortnight from 16 March 2010, apparently on the basis of information provided by Mr Mendyk.
(ii) Failure to declare income from start of 2010
9.A CRAM record dated 30 December 2009 records that Mr Mendyk advised Centrelink that he was stopping work over the Christmas period. A record dated 24 February 2010 records Mr Mendyk as advising that he had re-commenced employment. Records provided by Mr Mendyk’s employer record Mr Mendyk as receiving regular income from the week commencing 8 January 2010.
10.Mr Mendyk claimed and his employer confirmed that he is paid in cash on a weekly basis. Mr Mendyk also claims that his employer does not issue payslips or an equivalent. According to Mr Mendyk, when on occasion to meet work demands, he works more than his standard 28 hour week, he is paid for the extra hours but his employer records his weekly income as unchanged. As I understand it, Mr Mendyk claims that these additional hours are “rolled over” and credited to the next week. Wage records produced by the employer indicate that throughout the 12 months from June 2009, Mr Mendyk earned a regular weekly income of $980.
Should the debt be waived on account of administrative error?
11.Section 1237A of the Act provides that the Secretary, or Tribunal acting as substitute decision-maker, must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth:
Waiver of debt arising from error
Administrative error
(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).
…
12.In Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126, Selway J discussed (at 130) the meaning of the phrase “attributable solely” in the context of s 1237A(1) of the Act:
The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error' can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.
13.Adopting that approach, it is necessary to ask: “is an administrative error made by the Commonwealth the only cause that objectively can be ascribed to some or all of Mr Mendyk’s debt?”. If the answer to that question is yes, and the relevant overpayment was received in good faith, then the power to waive the debt must be exercised.
14.There can be no argument that from 31 August 2009 the overpayment to Mr Mendyk of DSP was in part attributable to Centrelink’s error: Centrelink was on notice from that date that Mr Mendyk’s income had been increased to just under $1,000 per week but failed to act on that information until March 2010. The Secretary, however, submits that the overpayment was caused at least in part by Mr Mendyk’s failure to take steps to alert Centrelink that the income figure used to calculate his rate of DSP was incorrect. Centrelink points to the notices issued to Mr Mendyk throughout the subject period setting out the (incorrect) income figure and which in addition advised Mr Mendyk of his obligation to notify Centrelink if that information was incorrect.
15.Mr Mendyk asserts that in assessing the truthfulness of his claim that he alerted Centrelink to its error, his past dealings with the Agency must be taken into account. He claims that those dealings are characterised by multiple errors on Centrelink’s part, citing for example, the cancellation of his pension in June 2009 without notice; the practice of issuing him with multiple health and travel cards; the error in Centrelink's records about his employer's name; and the failure to act on information it had been provided with in late August 2009 that his income had been understated. He claims that he made every effort to diligently report his correct income as he did not wish to find himself in the position he had been in on two previous occasions of having to repay a debt to Centrelink.
16.Mr Mendyk’s claim that he notified Centrelink on “numerous occasions” that the income figure used to calculate his rate of DSP was incorrect is unsupported and inconsistent with Centrelink’s records. While Centrelink records are not necessarily reliable and not all information received by its officers is recorded, I think in this case it is more likely than not that Mr Mendyk did not, as claimed, notify Centrelink of his correct income. The reference in the record made on 31 August 2009 “… cus was mistaken in thinking that only half income would be assessed” is consistent with the absence of any record of Mr Mendyk notifying Centrelink about his pay increase prior to that date. It is unlikely, in my opinion, notwithstanding any shortcomings in Centrelink’s record-keeping practices, that had Mr Mendyk notified Centrelink on “numerous occasions” of his correct income, this would not be recorded in at least one of the records of calls made by Mr Mendyk to Centrelink prior to March 2010. Taken together with the uncertainly on Mr Mendyk’s part about when and how often he contacted Centrelink and the somewhat implausible claim of being informed at least twice by different officers that the reason his income had been understated was because of some “incentive” arrangement, leads me to conclude that Mr Mendyk’s claim of having notified Centrelink of the error in relation to his income is unreliable.
17.Nor can I accept Mr Mendyk’s claim that he did not return to work until February 2010. That claim is unsupported and inconsistent with his employer’s records.
18.As I understand it, the debt in relation to mid-March 2010 to 8 June 2010 arose because of the discrepancy between the amount of income Mr Mendyk told Centrelink he earned and his employer’s records. As noted by the SSAT, if Mr Mendyk’s account is correct, throughout this period on occasion he has both understated and overstated his income. In, addition if Mr Mendyk’s claim of there being a discrepancy between his actual earnings and his employer’s records is correct, then both he and his employer have provided inaccurate information to the Australian Tax Office. Absent better evidence I am unable to accept Mr Mendyk’s claims about his income for the period, mid-March 2010 to 8 June 2010, where they differ from his employer’s records.
19.To satisfy s 1237A(1) of the Act, it must be established that the only cause that can objectively be ascribed to some or all of Mr Mendyk’s debt is an administrative error made by Centrelink. As stated, the debt for the period 31 August 2009 to mid-March 2010 was the result of Centrelink error. However from 9 November 2009 after Centrelink issued Mr Mendyk with a notice which disclosed that the error in relation to his income persisted and advised that he was obliged to alert Centrelink if the stated income was incorrect, it was also due in part to Mr Mendyk’s failure to notify Centrelink of its error.
20.There is no evidence to suggest that the debt for the balance of the subject period was due to an administrative error made by Centrelink. With respect to the period prior to 31 August 2009, I am not satisfied that Mr Mendyk, as claimed, notified Centrelink of the increase in his pay. With respect to the period post-March 2010, the debt arose because Centrelink calculated Mr Mendyk’s rate of DSP on the basis of pay records provided by the employer, rather than the unsupported verbal advice given by Mr Mendyk.
21.I am not satisfied that any part of the debt relating to the subject period — apart from that relating to the period 31 August 2009 to 9 November 2009 — was attributable to an administrative error made by Centrelink. Given this finding, it is unnecessary to consider whether the second limb of s 1237A(1) is satisfied — that is, whether the payments that gave rise to the debt were received in good faith. Accordingly, the power to waive all or part of the debt conferred by s 1237A cannot be exercised.
can the debt be waived because of Special circumstances?
22.Section s 1237AAD of the Act provides that the Secretary may waive the right to recover all or part of a debt if satisfied that “there are special circumstances (other than financial hardship alone) that make it desirable to waive [the debt]”. I agree, as conceded by Mr Mendyk, that special circumstances are not established in his case.
Can the debt be written off?
23.Section 1236(1) of the Act provides that the Secretary may write off a debt only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
24.There is no evidence and nor is it suggested that one of the pre-conditions to the exercise of the power conferred by s 1236(1) are met. Accordingly the debt cannot be written off under this provision.
Conclusion
25.The power conferred under the Act to write off or waive the debt incurred by Mr Mendyk cannot be exercised in this case. It follows that the decision under review must be affirmed.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member A K Britton.
Signed: ....................[sgd]........................
Associate to Senior Member BrittonDate of Hearing: 30 June 2011
Date of Decision: 19 July 2011
Applicant self-representedSolicitor for the Respondent: Ms B Salaji, Centrelink Program Litigation and Review Branch
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