Miller and Secretary, Department of Family and Community Services

[2005] AATA 810

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 810

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/142

GENERAL ADMINISTRATIVE  DIVISION		)
Re		DONALD MILLER

Applicant

And SECRETARY DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Senior Member M D Allen

Date24 August 2005

PlaceSydney

Decision The decision under review is set aside and this matter remitted to the Respondent with the direction that the Applicant is to repay to the Respondent the sum of $13,328.81 being overpayment of Age Pension for the period 7 October 1999 to 1 April 2003.

(Sgd) M.D. ALLEN

..................................................
  Senior Member

CATCHWORDS

SOCIAL SECURITY – overpayment of Mature Age Allowance and Age Pension – whether debt incurred solely by administrative error – whether special circumstances exist – decision under review set aside and remitted to the Respondent with the direction that the Applicant is to repay the sum of $13,328.81 being overpayment of the Age Pension.

Social Security Act 1991 s 1223(1), s 1237A, s 1237AAD

Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576

Iannella v French (1968) 119 CLR 84

Beadle v Director General Social Security (1985) 60 ALR 225

Dranichnikov v Centrelink [2003] FCAFC 133

Baker v The Queen (2004) 78 ALJR 1483

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

REASONS FOR DECISION

24 August 2005 Senior Member M D Allen

1.      By application made the 10^th day of February 2004 the Applicant sought review of a decision by the Social Security Appeals Tribunal (the SSAT) to affirm a decision to recover from the Applicant overpayment of social security benefits in the total sum of $37,084.61.

2.      The said total overpayment consists of the sum of $23,755.80 being overpayment of Mature Age Allowance in the period of 31 July 1996 to 6 October 1999 and $13,328.81 being overpayment of Age Pension for the period 7 October 1999 to 1 April 2003.

3.      When the matter came on for hearing before me at Newcastle the Respondent had adjusted the claimed overpayment of Mature Age Allowance to the sum of $14,864.62 overpaid in the period 1 October 1997 to 6 October 1999. Thus the total overpayment became the sum of $28,193.43.

4. Subsection 1223(1) of the Social Security Act 1991 reads:

“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.”

5.      As I understand the Applicant’s case, he resists payment of the debt primarily upon the ground that the said debt was incurred solely by administrative error on the part of the Respondent.

6. Section 1237A of the Social Security Act reads inter alia:

“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.”

7.      If however, I were to find that the debt did not arise solely due to administrative error, the Applicant submitted that there were special circumstances sufficient to justify waiving all or part of that debt. Section 1237 AAD Social Security Act reads:

“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 the debt.”

8.      Matters not in dispute are that the Applicant, who was born on 7 October 1934 was first granted a social security benefit namely Newstart Allowance on 21 February 1996. On 31 July 1996 that benefit was changed to Mature Age Allowance. No documents are presently available to show whether that transfer was automatic or whether the Applicant had requested the change. The Applicant himself has no recollection of filling out any forms in order to initiate the change in benefit type.

9.      During the period February 2003 to April 2003, Centrelink carried out a data matching exercise with the ATO to ascertain if the Applicant had correctly declared his wife’s income to Centrelink and found that the wife’s income had been understated. It was accepted that the error was due to the income of the Applicant’s wife being recorded as fortnightly instead of weekly.

10.     The Applicant’s evidence was that after being retrenched in February 1995 he did not think he was entitled to any social security benefit because his wife was working. Friends advised him that he may have been entitled to a part benefit and so he applied and was granted New Start Allowance in February 1996. 

11.     At the time he applied for Newstart Allowance, the Applicant informed the officer at Centrelink that his wife was receiving the amount of $370.00 per week in wages.

12.     During the hearing it was apparent that the Applicant, who left school in the second year of high school, and whose main working life had been as a shop assistant, had no concept of the difference between gross and net income. He said that he declared “what she was bringing home”. However I unequivocally accept his evidence that he would have told Centrelink of his wife’s weekly wage as he and his wife had always received their wages weekly.

13.     I also accept the Applicant’s evidence that to the best of his recollection, he took one of his wife’s payslips with him when he completed the forms at the Centrelink office.

14.     Unfortunately the original claim forms and the fortnightly claims submitted after the initial grant of Newstart Allowance have been destroyed by the Respondent.

15.     During the course of the hearing, I requested the Respondent’s representative to obtain, if possible, a sample of the form used for claiming Newstart Allowance in 1996.

16.        Subsequent to the hearing, the Respondent forwarded to me, with a copy to the Applicant’s solicitors, examples of forms SU19 being applications for Job Search/Newstart benefits. The letter and the annexed forms were taken in as Exhibit R2.

17.     As arranged, I then received further written submissions on behalf of the Applicant relating to those forms.

18.     Annexure A to Exhibit R2 does not advance matters, whereas annexure B is irrelevant as it refers to a period in 2005. Annexure C however is pertinent as it is apparently a form used in the period April-June 1996. I note that the form at question 6 asks:

“If your partner did work what was the amount earned (before tax and other deductions)”.

To me it is entirely understandable that someone in the position of Mr Miller would, when his wife was being paid weekly, answer question 6 by stating her weekly earnings and thus the form, to my mind, corroborates the Applicant’s evidence.

19.     Having seen and heard the Applicant give evidence and be cross examined plus the fact he diligently declared to Centrelink the income he received from casual jobs obtained by him, I accept that he informed Centrelink that his wife was been paid $370.00 per week . I am strengthened in this view by the Applicant’s uncontradicted evidence that he and his wife always thought weekly regarding their wages.

20.     What is known from the documents currently available, is that when the Applicant’s benefit was changed from Newstart Allowance to Mature Age Allowance on 5 August 1996 a Centrelink file note records that “partner earns $370.00 per fortnight.”    

21. Document T4 of the documents prepared for the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 is a copy of Mrs Miller’s Group Certificates for the tax years ended 30 June 1996 and 30 June 1997. This shows her annual income as $24.875.00 and $25,975.00 respectively. No evidence was adduced as to how the Respondent came to have possession of these documents. Assuming that these documents were in the Respondent’s possession at the relevant times, it should have been apparent to officers dealing with the Applicant’s file that income had been understated.

22.     I can only conclude that the Applicant gave information as to his wife’s earnings to Centrelink and that error solely on the part of Centrelink officers led to that income being incorrectly recorded as fortnightly rather than weekly, as stated by the Applicant. In other words, a  portion of the Applicant’s debt is attributable solely to administrative error made by the Commonwealth. 

23.     I am further satisfied that the Applicant received the payments in good faith. As to what constitutes receipt in good faith I refer to the discussion by Weinberg J in Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576 especially at paragraph 102 where His Honour says:

“I conclude by noting that the expression ‘received in good faith’ in s 1237A(1) encompasses such a wide variety of circumstances that it is not helpful to seek  to define them exhaustively. Instead, in each case there are considerations of degree, involving an assessment of the importance of a particular aspect of the state of mind of the recipient of the payment. Paradoxically, in an Act which is replete with highly technical language and which defines some terms in a manner which is almost unintelligible, the expression ‘good faith’ is left undefined. Regrettably, on this occasion commendable legislative restraint has not produced clarity.”

24.     Document T40 is a copy of a letter dated 12 October 1999 sent to the Applicant. That letter informs the Applicant that he was to be paid an Age Pension as and from 7 October 1999 (his 65^th birthday). The rate of payment for the period 7 October 99 to 19 October 1999 was based on a combined annual income of $10,108.10.

25.     As the Applicant had informed Centrelink that his wife earned $370.00 per week then clearly this amount is wrong.

26.     That letter states under a heading “WHAT YOU MUST TELL US” the following:

“Your combined income, not including financial investments or maintenance increases.

Your combined income as shown above is incorrect.”

27.     Unfortunately the Applicant’s memory is not good which is understandable in a man of his age. He said that he recalls receiving letters from Centrelink but does not now recall what they were about. As I understood his evidence, he did not pay particular attention to the detailed instructions in the letters.

28.     This failure to fully read and understand the “fine print” of the Centrelink letters has had two results. First, the Applicant has failed to appreciate and then advise Centrelink of any discrepancy in the amount shown as combined earnings. Secondly he has failed to advise Centrelink of any wage increases obtained by his wife since first notifying Centrelink in 1996 that she earned $370.00 per week.

29.     Mrs Miller in her evidence confirmed that she had received wage rises and that she had told her husband about them.

30.     I find therefore, that as and from 7 October 1999, any overpayment to the Applicant cannot be said to have been solely the result of administrative error. By not correcting the incorrect combined income amount and by not advising Centrelink of any increase in his wife’s take home pay, the Applicant has contributed to the error.

31.     As I pointed out in argument, if the Applicant had notified Centrelink of any increase in his wife’s wage, the major error of underestimating the combined annual income may have been discovered. Had he checked the amount shown as combined annual income in the letter of 12 October 1999 he should have been aware of the underestimation and notification of this to Centrelink may have corrected future error.

32.     I note that on 10 November 1999 the Applicant apparently telephoned Centrelink and queried why part of his pension had been decreased since transferring to Age Pension. The file note reads:

“Clt wished to know why part pension had been decreased since transferring to age pension from NMA.

Advised clt that the pension income test disqualifies him from max rate due to his wifes EANS exceeding income limit.

Advised him that if he commences employment, part pension will be reduced further for 25c for each $1 earnt.

Also reissued clt’s PCC with age details.”

I cannot understand nor is it explained why the Applicant’s wife’s income was not particularised in the course of this conversation. Obviously, the officer dealing with the enquiry must have had regard to the wife’s earnings but I can only conclude neither party adverted to the week/fortnight discrepancy.  

33.     Regarding any overpayments post 7 October 1999, I regard the Applicant as the author of his own misfortune.

34. That the Applicant has, in part, caused the error by his own mistakes does not mean that the ameliorating provisions of s 1237AAD Social Security Act do not apply.

35.     I am  satisfied that the Applicant did not “knowingly “make a false statement or representation nor did he knowingly failed or omit to comply with a provision of the Social Security Act. The word “knowingly” has been discussed in several Tribunal decisions however I believe the correct understanding of the word is that stated by Barwick CJ in Iannella v French (1968) 119 CLR 84 at 96 namely:

“The words ‘knowingly’ which I think is part of the connotation of ‘wilfully’ in connexion with an offence or treated as satisfied by a reckless indifference as to whether or not the act was lawful. “

36.     In this matter I am satisfied that the Applicant did not “knowingly” make a false statement.

37.     Special circumstances have been discussed in numerous cases. Although the leading case so far as Social Security law is concerned has been Beadle v Director General of Social Security (1985) 60 ALR 225 in Dranichnikov v Centrelink  [2003] FCAFC 133 another Full Court said at paragraph 65:

“The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth). Their Honours point out that the question whether there were special circumstances was one for the decision maker (in that case the Director General) bearing in mind the purpose of which the power was given. The reference to the first instance decision from which the words ‘unusual, uncommon or exceptional’ come’ was not actually affirmed by the Full Court.”

and went on to state at paragraph 66:

“To some extent the question whether there were special circumstances must depend on how it came about that the error occurred… There will be requirement that the circumstances are such that takes the case out of the ordinary: Jess v Scott (1986) 12 FCR 187 and the cases in various contexts in the decision which Lockhart, Shepherd and Burchett JJ discussed.”

38.     These comments can be compared to the judgment of Callinan J in Baker v The Queen (2004) 78 ALJR 1483 at 1517 where His Honour quoted Lord Bingham of Cornhill LJ in R v Kelly (Edward) [2000] QB 198 at 208 as to the word “exceptional”, namely:

“We must construe ‘exceptional’ as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance may not be unique, or unprecedented, or very rare; but it cannot be one that is regularly or routinely, or normally encountered”.

And added:

“Special reasons in my opinion share those characteristics”.

39.     In this matter there is no doubt that the recovery of the overpayment has had a profound and deleterious effect upon the Applicant and his wife. This has been made worse by an apparent belief by the Applicant that the Respondent could sell his home in order to satisfy the debt. I will say more of this later.

40.     Following notification of the debt, the Applicant was required to seek treatment from his general practitioner for hypertension. It is not suggested that stress occasioned by notification of the debt caused his hypertension but it would seem it exacerbated the condition such that medication to control it was now required.

41.     Exhibit A5 is a report dated 15 September 2004 by Dr Darcy, Psychiatrist. Dr Darcy opined that as a result of the Applicant’s present difficulties with Centrelink he was suffering an acute stress reaction.

42.     Mrs Miller gave evidence of the Applicant telephoning her at work in tears and frightened that Centrelink would sell the matrimonial home. Both she and the Applicant have lost weight because of “stress” and the Applicant’s mental faculties have been affected.   

43.     Evidence was given as to the straitened financial circumstances of both the Applicant and his wife. Both, but particularly the Applicant, have postponed necessary dental treatment because of a lack of income. The Applicant is currently repaying the debt at $30.00 per fortnight and this reduces their available cash flow. Mrs Miller who also is elderly, would like to reduce her hours of work but currently cannot afford to do so.

44.     A matter that was submitted by the Applicant’s counsel (instructed by Legal Aid) is that difficulties of proof in this matter have occurred because of the Respondent’s procedure for destroying documents. If data matching is to occur documents such as the Applicant’s original applications, which may have evidence that he had clearly noted his wife’s income as $370.00 per week, should have been available. I agree with this submission and it is most unfair to aged beneficiaries, indeed to any social security beneficiary, to require them to recollect what was said and what was recorded years previously.

45.     I further agree with the submission that the length of time over which the debt has allegedly been allowed to accumulate together with the destruction of documents has prejudiced the Applicant’s ability to defend any claim made against him by the Respondent and has inflated the debt.

46.     Balancing these considerations is the fact that the Applicant has had the use of monies to which he was not entitled.

47.     The Applicant claimed that he was most upset when a woman at the Charlestown Centrelink office told him that if he did not pay the debt the “Government” would sell his and his wife’s house.

48. If this statement was made it should not have been. What I do note from the section 37 documents however, is that at one stage, in order to secure the debt and yet allow the Applicant and his wife security of their own home, discussions were held with the Applicant regarding a mortgage over the matrimonial home in favour of Centrelink. Such a mortgage to be realised upon death. This arrangement seems to me to be a very valid one and I am not convinced that the Applicant, who struck me as not understanding legal concepts (understandably), may well have invested these discussions with more coercive intent than was apprehended by those dealing with him.

49.     The debt, in its totality, is considerable for an aged pensioner and his wife. I believe that the totality of the debt plus the Applicant’s ill health and honest mistake, aggravated by Centrelink, all amount to special circumstances.

50.     On the other hand, the Applicant has equity in his home and this could now be realised by a mortgage which gave to the Applicant and his wife a current lump sum but was realised upon death or the sale of the property.

51.     In Groth v Secretary, Department of Family and Community Services (1995) 40 ALD 541 Kiefel J stated:

“…for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case…”

Later on the same page, Her Honour expressly approved the Tribunal’s reasoning in holding that Mr Groth’s circumstances were not out of the ordinary when the provisions of the Social Security Act have the same effect on him as it did on other person’s qualified to receive a disability support pension.    

52. In this matter, I have already found that the overpayment of Social Security benefit in period 1 October 1997 to 6 October 1999 was due to error solely on the Commonwealth therefore pursuant to section 1237A Social Security Act repayment of that sum should be waived. Even if I were wrong in this regard I believe that the circumstances surrounding that overpayment are sufficient to constitute special circumstances and require waiver of the debt pursuant to section 1237AAD Social Security Act. 

53.     So far as the overpayment for the period 7 October 1999 to 1 April 2003 is concerned, I do not regard the circumstances as special, the Applicant has had the use of the money and the now relatively modest repayment while causing straitened circumstances will not involve any real hardship to the Applicant and his wife. The decision of the Tribunal will be therefore that the decision under review is set aside and the matter remitted to the Respondent with direction that the Applicant is to repay an overpayment of social security benefits to the Respondent in the sum of $13,328.81.  

I certify that the 53 preceding paragraphs are a true copy of the reasons for the decision herein of

Signed:         (E.Pope)           .....................................................................................
  Associate

Date of Hearing  13 July 2005
Date of Decision  24 August 2005
Counsel for the Applicant         Ms K Sant
Solicitor for the Applicant          Legal Aid Commission of New South Wales   

Advocate for the Respondent   Mr G Lozynsky, Centrelink Legal Services Branch