Mitbrown and Secretary, Department of Social Services (Social security) - [2025] ARTA 763

Mitbrown and Secretary, Department of Social Services (Social security) [2025] ARTA 763 (16 April 2025)

Applicants: Mrs Mitbrown & Mr Mitbrown

Respondent: Secretary, Department of Social Services

Chief Executive Centrelink

Tribunal Numbers: 2024/S192660 & 2024/S192659

Tribunal: General Member N Foster
Place:Brisbane
Date:16 April 2025

Decision:The Tribunal varies the decisions under review so that recovery of the portions of the debts for the period 22 August 2023 onwards are waived with effect from 22 August 2024.

CATCHWORDS
SOCIAL SECURITY – wife’s Carer Payment and husband’s Age Pension debts – worker’s compensation received by wife as ongoing instalments and lump sum arrears – debts and amounts conceded – compensation claim made but not awarded when carer payment claim made – notification to and advice from Centrelink – waiver of debt – initial portion not due to error by Centrelink, and not waivable – later administrative error and payments received in good faith – husband’s mental health – decision under review varied

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 16(2AB) of the Child Support (Registration and Collection) Act 1988.

Statement of Reasons

BACKGROUND

This review is about whether Mrs Mitbrown and Mr Mitbrown have recoverable debts to the Commonwealth.
Mrs Mitbrown was granted carer payment from 6 February 2023. At that time, her husband, Mr Mitbrown, was already in receipt of age pension.
On 22 August 2024 Services Australia (Centrelink) decided to raise a carer payment debt against Mrs Mitbrown in the amount of $14,207.36 for the period 20 March 2023 to 9 July 2024. On the same date Centrelink decided to raise an age pension debt against Mr Mitbrown in the amount of $10,342.24 for the period 20 March 2023 to 20 August 2024. Both debts were raised on the basis that Centrelink had not taken into account the correct amount of periodic compensation received by Mrs Mitbrown.
Mr Mitbrown and Mrs Mitbrown requested a review and in decisions dated 11 October 2024 and 12 October 2024 an authorised review officer affirmed Centrelink’s decisions. In doing so, the authorised review officer found that, although the portion of the debts from 22 August 2023 onwards was solely due to administrative error by the Commonwealth, the incorrect payments had not been received in good faith.
Mrs Mitbrown and Mr Mitbrown applied to the Tribunal on 25 December 2024. The applications were heard together on 11 April 2025, with Mrs and Mr Mitbrown and their daughter and representative, [Mrs A], appearing by telephone. Mrs Mitbrown was assisted at the hearing by an interpreter in [Language].

CONSIDERATION

Are there debts to the Commonwealth?

Under section 1173 of the SocialSecurity Act 1991 (the Act), periodic compensation payments reduce the rate of certain social security payments, including carer payment and age pension. Where a person was not in receipt of a social security payment at the time of the event that gave rise to their compensation, their periodic compensation payments will reduce their rate on a dollar-for-dollar basis – see subsections 1173(1) and 1173(2) of the Act. If a person’s rate is reduced to nil because of their periodic compensation payments, any excess compensation is treated as ordinary income that may reduce their partner’s rate – see section 1174 of the Act. Where a person has been paid social security payments that they were not entitled to receive, the overpayment is a debt due to the Commonwealth under section 1223 of the Act.
As set out in the hearing documentation, Mrs Mitbrown was paid periodic compensation through her employer at various times. While some of these payments were made in ongoing instalments, others were paid in arrears as a lump sum. When Mrs Mitbrown was granted carer payment from 6 February 2023, Centrelink did not record any ongoing periodic compensation payments. Centrelink later recorded Mrs Mitbrown as receiving periodic compensation of $343.13 per week with effect from 20 September 2023. In October 2024 Centrelink retrospectively updated Mrs Mitbrown’s record on the basis that she had actually been paid periodic compensation in the following amounts:
·$746.78 per week from 20 March 2023 to 1 October 2023;
·$764.47 per week from 2 October 2023 to 31 March 2024; and
·$778.15 per week from 1 April 2024 onwards.
As the actual amount of periodic compensation paid to Mrs Mitbrown precluded any entitlement to carer payment in the period 20 March 2023 to 9 July 2024, Centrelink decided to recover all of the $14,207.36 in carer payment paid to her as a debt. The excess amount of periodic compensation was also assessed as ordinary income of Mr Mitbrown, resulting in Centrelink raising a debt against him in the amount of $10,342.24 for the period 20 March 2023 to 20 August 2024. These calculations are not contested and the Tribunal finds that Mrs Mitbrown and Mr Mitbrown have debts due to the Commonwealth under section 1223 of the Act in the amounts calculated by Centrelink.

Should the debts be recovered?

The central issue in dispute is whether the debts owed to the Commonwealth by Mrs Mitbrown and Mr Mitbrown should be recovered. In written submissions to the Tribunal prior to the hearing, [Mrs A] contended that recovery of her parents’ debts should be waived, either in full or in part. In particular, [Mrs A] submitted that the overpayments were solely due to administrative error by the Commonwealth and that Mrs Mitbrown and Mr Mitbrown had received the incorrect payments in good faith. In addition, there were special circumstances that made waiver of recovery desirable.
At the hearing [Mrs A] told the Tribunal that Mrs Mitbrown was injured at work and made a compensation claim against her employer, seeking wages and damages. At the time of Mrs Mitbrown’s claim for carer payment in February 2023, she had not yet been awarded any compensation. This was probably why [Mrs A] indicated in the claim form that Mrs Mitbrown was not entitled to any compensation. Even if this was an error on [Mrs A]’s part, Mrs Mitbrown’s employer shortly afterwards provided Centrelink with details of the compensation settlement in which Mrs Mitbrown had now been awarded a lump sum of $37,500 for unpaid wages. Although there were no ongoing periodic compensation payments made to her at that time, they were likely to occur in the future. These were later paid as a lump sum in July 2023 and were backdated to March 2023. Shortly after these arrears were paid, Mrs Mitbrown started receiving payslips from her employer, which she showed to Centrelink on visits to its office on 22 August 2023, 11 September 2023, 22 September 2023 and 23 October 2023.
[Mrs A] submitted that Centrelink’s decision to grant carer payment to Mrs Mitbrown without regard to any compensation was an error on its part given that it knew at that time that weekly compensation would soon be paid. In addition, Centrelink later knew about the actual periodic compensation that was being paid given that Mrs Mitbrown provided payslips on four occasions from 22 August 2023 onwards. At the time of her first visit, Mrs Mitbrown was concerned that her compensation payments would affect her Centrelink payments. However, she was told that her Centrelink payments were fine and that she did not need to come back again. Even so, Mrs Mitbrown brought her payslips into Centrelink at later dates because the amounts of compensation in them were different to before. Again, she was told that there was nothing for her to worry about. Based on this advice, Mrs Mitbrown used her funds to renovate her and Mr Mitbrown’s home.
[Mrs A] told the Tribunal that Mrs Mitbrown first realised that something was wrong when she got a tax bill, rather than her usual refund, in July 2024. Her accountant told her to go to Centrelink and it was at this point that [Mrs A] helped her make a statement asking for her case to be investigated. Although the Centrelink records indicate that Mrs Mitbrown advised in August 2024 that she had set aside money to repay her debt, this was money she had set aside after July 2024. Prior to then, she had accepted the information that was repeatedly provided to her that her Centrelink payments were in order. When asked what Mr Mitbrown thought was happening with his payments during the period in question, [Mrs A] told the Tribunal that her father has mental health issues and dementia and does not understand what is going on with his Centrelink payments.
For her part, Mrs Mitbrown told the Tribunal that she went into the Centrelink office on four occasions in 2024 to show them her various payslips. She said that some of the officers that she spoke with were very rude and told her that she did not need to keep coming in. When asked by the Tribunal if she had had concerns at the time about her entitlement, Mrs Mitbrown said that this was only the case the first time that she went in to Centrelink. After she was told that everything was in order, she was not worried that her Centrelink payments were wrong. However, because the amounts on her payslips kept changing, she brought the payslips in again as she did not want there to be any problems. On this point, [Mrs A] said that her mother thought that she was doing the right thing by keeping Centrelink updated about her circumstances and that she did not keep going back to the office because she thought she was being overpaid.
The Act allows for waiver – or permanent non-recovery of debts – in certain limited situations. In particular, section 1237A of the Act provides for waiver on the grounds of administrative error. Under this subsection, there are two requirements for waiver. First, the debt – or some particular portion of it – must be solely due to administrative error by the Commonwealth. Secondly, the person must have received the payments in good faith.
In concluding that the initial portion of the debts under review were not solely attributable to administrative error by the Commonwealth, the authorised review officer found that Mrs Mitbrown did not notify Centrelink about her periodic compensation payments until she provided a payslip on 22 August 2023. Prior to then, Mrs Mitbrown had incorrectly advised Centrelink in her claim for carer payment dated 6 February 2023 that she had not claimed compensation. The authorised review officer accepted that the debts under review were solely due to administrative error from 22 August 2023 onwards given that Centrelink was aware of Mrs Mitbrown’s periodic compensation payments from that point but continued to record incorrect amounts despite ongoing contacts with her and her employer.
In her written and oral submissions to the Tribunal, [Mrs A] highlighted that the authorised review officer’s assessment of administrative error did not take into account information provided to Centrelink by Mrs Mitbrown’s employer prior to the grant of carer payment. While [Mrs A] – who was the person who filled in the claim form for carer payment – acknowledged that she answered the question about compensation incorrectly, she noted that details of Mrs Mitbrown’s compensation were provided by her employer in a fax to Centrelink dated 21 February 2023. The copy of this document in the hearing papers indicates that the employer advised Centrelink that Mrs Mitbrown had received a settlement of $37,500 on 14 February 2023. This sum represented compensation of $343.13 per week for the period 22 February 2021 to 8 February 2023. After receiving this information, Centrelink granted carer payment to Mrs Mitbrown on the basis that this lump sum was the only compensation that she had been paid. Consistent with this state of affairs, the employer later advised Centrelink on 22 June 2023 that no periodic compensation was being paid after 8 February 2023. The Tribunal notes that it was not until 20 July 2023 – some five months after carer payment was granted – that Mrs Mitbrown was retrospectively paid periodic compensation of $746.78 per week in the form of a lump sum of $12,293.85 for the period 20 March 2023 to 16 July 2023. It was at this point that Mrs Mitbrown also started receiving payslips from her employer, the first of which she provided to Centrelink on 22 August 2023.
As discussed at the hearing, the initial portion of the debts under review were essentially unavoidable. While Centrelink was aware that there was a compensation claim afoot, no periodic compensation payments were actually being paid at that time, meaning that Mrs Mitbrown and Mr Mitbrown were entitled to the carer payment and age pension that was paid to them. It was only once periodic compensation payments were granted retrospectively in late July 2023 that this entitlement ceased, by which time it was too late for anyone to prevent an overpayment. As such, the Tribunal finds that the initial portion of the debts under review was not due to error on the part of the Commonwealth and that recovery of this portion cannot be waived under section 1237A of the Act.
Different considerations apply, however, to the portion of the debts from 22 August 2023 onwards given that Centrelink was aware then that Mrs Mitbrown was receiving ongoing periodic compensation payments. In addition to the payslips that she was providing, Centrelink was also in contact with her employer. According to the hearing documents, Centrelink recorded periodic compensation of $343.13 per week with effect from 20 September 2023 based on information provided by the employer on 21 September 2023. The Tribunal notes that this was not the figure reflected in Mrs Mitbrown’s payslips or in information subsequently provided by the employer on 22 December 2023. As reflected in a series of Centrelink computer documents, there appears to have been confusion about the exact amount of Mrs Mitbrown’s periodic compensation, with officers having issues contacting the relevant person at her employer’s workplace. Even so, a Centrelink officer noted in a computer document dated 24 January 2024 that the periodic compensation figure of $343.13 per week that was being used was incorrect and that Mrs Mitbrown was receiving $764.67 per week as at December 2023. Despite this, Centrelink did not update Mrs Mitbrown’s record to reflect this until August 2024.
Given the evidence that Centrelink did not update Mrs Mitbrown’s periodic compensation details in a timely manner, the authorised review officer found that the portion of the debts under review from 22 August 2023 onwards was solely due to administrative error by the Commonwealth. On the evidence before it, the Tribunal likewise finds that this was the case. This means that recovery of this portion of the debts must be waived if the incorrect payments were received in good faith.
Although the meaning of the term is not defined in the Act, the case law has established that a want of good faith will arise where a person knows that they are not entitled to a payment or where a person has a suspicion or doubt about their entitlement that is coupled with some objective basis for this – see Secretary, DEETYA v Prince (1997) 50 ALD 186 (Prince) and Haggerty v DETYA (2000) 31 AAR 529 (Haggerty). Furthermore, as emphasised in Haggerty, regard must be had to the person’s actual state of mind; a lack of good faith cannot be inferred on the basis of what a person should have thought or what someone else in the same position might have believed.
In her evidence to the Tribunal, Mrs Mitbrown acknowledged that she was initially concerned that her rate of carer payment might be incorrect given that she had now been granted periodic compensation. She said that she therefore took her first payslip into Centrelink, where she was assured that her rate of payment was correct. Although she attended Centrelink on three subsequent occasions with new payslips, she told the Tribunal that this was because the payslips were different and she wanted to make sure that she was doing the right thing. Given that she had been told – and continued to be told – that everything was in order, she accepted that her carer payment were correct.
While the authorised review officer found that it was reasonable for Mrs Mitbrown to have known that her payments were wrong, the Tribunal is mindful that her actual state of mind must be considered when assessing whether she received the incorrect payments in good faith. Based on her evidence at the hearing – which the Tribunal accepts as credible and truthful – Mrs Mitbrown’s initial concern that she was being overpaid was allayed at her visit to Centrelink on 22 August 2023. The Tribunal finds that Mrs Mitbrown accepted the information that she was given and that, from that point onwards, she did not know or suspect that she was being overpaid. It follows that Mrs Mitbrown received in good faith the incorrect payments that were made to her and that recovery of the portion of her debt from 22 August 2023 onwards must be waived under section 1237A of the Act. This waiver will have effect from 22 August 2024, the date that her debt was raised.
With regard to Mr Mitbrown’s state of mind, the Tribunal notes the medical evidence indicating that he has chronic paranoid schizophrenia and dementia. Given these issues, the Tribunal accepts [Mrs A]’s explanation that her father did not turn his mind to his Centrelink entitlement, let alone know or suspect that his payments were incorrect. The Tribunal therefore finds that Mr Mitbrown also received the incorrect payments in good faith and that recovery of the portion of his debt from 22 August 2023 onwards must be waived under section 1237A of the Act. Again, this waiver will have effect from 22 August 2024.
With regard to the portion of the debts prior to 22 August 2023, the Tribunal has alternatively considered whether recovery should be waived under section 1237AAD of the Act. This section provides for waiver of recovery where there are special circumstances, other than financial hardship alone, that make waiver desirable. As indicated by the case law, this will typically require there to be something that distinguishes a person’s matter from the ordinary or usual case – see Angelakos v Secretary, DEWR [2007] FCA 25.
In her written submissions to the Tribunal, [Mrs A] identified a number of matters that she contended were reasons why recovery of the debts under review should be waived. These included the various administrative errors made by Centrelink and its ongoing mismanagement of her parents’ case, the financial burden of repaying the debts in full and her parents’ good character. In two accompanying Statements of Financial Circumstances, [Mrs A] advised that Mrs Mitbrown and Mr Mitbrown have a current combined income of just over $2,000 per fortnight from periodic compensation and Centrelink payments. They have joint savings of more than $11,000 but need to pay for $5,000 in house repairs. Mrs Mitbrown’s legal action remains afoot but the amount of money that she will receive from it remains uncertain.
In determining whether recovery should be waived under section 1237AAD of the Act, the Tribunal is mindful that the portion of the debts under review that are attributable to administrative error – approximately two-thirds of the total debt period – do not now need to be repaid. With the remaining initial portion, this was an overpayment that was unavoidable due to the retrospective grant of periodic compensation payments to Mrs Mitbrown. While the Tribunal accepts that Mrs Mitbrown and Mr Mitbrown were not responsible for this overpayment, neither was the Commonwealth. It is generally expected that overpayments of public money should be recovered and, on the evidence before it, the Tribunal considers it appropriate that the initial portion of the debts under review should be repaid. The Tribunal therefore concludes that recovery of this portion of the debts should not be waived under section 1237AAD of the Act.

The Tribunal is satisfied that none of the other non-recovery provisions in the Act apply. It follows that the portion of the debts prior to 22 August 2023 must be recovered.

DECISION

The Tribunal varies the decisions under review so that recovery of the portions of the debts for the period from 22 August 2023 onwards are waived with effect from 22 August 2024.

Date of hearing:	Friday, 11 April 2025
Representative for the Applicant:	[Mrs A]