Moran and Secretary, Department of Employment and Workplace Relations

[2007] AATA 1023

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1023

ADMINISTRATIVE APPEALS TRIBUNAL          N°V2006/329

GENERAL ADMINISTRATIVE  DIVISION

Re:           ROBYNE MORAN

Applicant

And:           SECRETARY,

DEPARTMENT OF EMPLOYMENT  AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal:Regina Perton, Member

Date:23 January 2007

Place:Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) Regina Perton

Member

SOCIAL SECURITY ‑ partner allowance ‑ overpayment – administrative error ‑ waiver of debt – in good faith ‑ special circumstances ‑ decision affirmed

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

Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529

Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424

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

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

Secretary, Department of Employment, Education, Training and Youth Affairs v Prince (1997) 50 ALD 186

REASONS FOR DECISION

23 January 2007  Regina Perton

1.      Mrs Robyne Moran is in dispute with Centrelink over a debt she has incurred due to an overpayment of partner allowance by Centrelink, which administers social security benefits on behalf of the Department of Employment and Workplace Relations.  Prior to 13 September 2002, Mrs Moran was receiving partner allowance at the married rate as a result of her husband, Dennis Moran receiving disability support pension (DSP).  On that date, Mr Moran commenced a term of imprisonment.  He was released on 11 November 2002.  While he was in prison, Mrs Moran was entitled to partner allowance at the higher single rate as well as rent assistance.  Prior to his incarceration Mr Moran had been receiving rent assistance as part of his DSP payments. 

2.      On her husband’s release from prison and the resumption of his DSP payments, Mrs Moran’s partner allowance should have reverted to the married rate.  It did not despite Mrs Moran informing Centrelink that Mr Moran had been released.  Mrs Moran continued to be paid partner allowance at the single rate until 14 June 2005.  Mr Moran began receiving rental allowance again on 29 April 2005.  On 7 December 2005, Centrelink raised a debt for $10,754.25 against Mrs Moran for the overpayment of partner allowance and rent assistance between 11 November 2002 and 14 June 2005 (the relevant period).  The amount represented the difference between the maximum married partner allowance to which Mrs Moran was entitled during the relevant period and the maximum single partner allowance and total rent assistance which was, in fact, paid to Mrs Moran during that period.

3.      On 9 January 2006, an authorised review officer of Centrelink affirmed the decision to raise and recover the debt.  On 16 March 2006, the Social Security Appeals Tribunal (SSAT) agreed that there was a debt for the difference between the single and married rate of partner allowance.  However, the SSAT decided that there was no debt in respect of the rent assistance paid to Mrs Moran between 11 November 2002 and 28 April 2005.  The SSAT directed that Mrs Moran’s debt be recalculated in light of its findings.

4.      On 26 April 2006, Centrelink reduced the amount of debt to $5,007.17. This represented the difference between the married and single partner allowance for the relevant period ($4,696.97) plus the payment of rent assistance to Mrs Moran between 29 April 2005 and 14 June 2005 ($310.20) during which period Mr Moran was also receiving rent assistance.

5.      Mrs Moran lodged an application for review of the SSAT decision with this Tribunal on 27 April 2006.  She indicated that she was seeking review as part of the SSAT’s decision was wrong.  She stated that she was being asked to repay a debt which arose as a result of Centrelink’s mistakes.

6.      The issues before the Tribunal are:

·Does Mrs Moran owe a debt to the Commonwealth of $5,007.17?

·Should the debt be waived on the ground that it arose as the result of Centrelink’s administrative error?

·Should the debt be waived due to special circumstances? 

Does Mrs Moran have a Debt to the Commonwealth?

7.      Mr and Mrs Moran lived as a married couple except for a period of enforced separation from 12 September 2002 to 11 November 2002 due to Mr Moran’s imprisonment.  While he was in jail Mr Moran was not paid DSP.  His DSP was reinstated on his release.   

8.      Mrs Moran was paid a higher rate of partner allowance than that to which she was entitled from 11 November 2002 to 14 June 2005.  Centrelink calculated that the difference between the married and single rate of partner allowance for the two years and seven months during which the overpayment was made was $4,696.97.  There is no evidence before the Tribunal to suggest that the calculation is flawed nor has Mrs Moran suggested an alternative figure.  She objects to the imposition of the debt itself.  The documentary evidence before the Tribunal indicates that for a short period, between 29 April 2005 and 14 June 2005, both Mr and Mrs Moran were paid rent assistance.  The legislative provisions only allow one member of the couple to receive rent assistance; normally the DSP recipient.  The Tribunal is satisfied that Mrs Moran received $310.20 in rent assistance to which she was not entitled.   

9. Section 1223(1) of the Social Security Act 1991 (the Act) allows the Commonwealth to raise a debt if a person is paid a social security payment to which she is not entitled. 

10.     The Tribunal agrees with the SSAT’s findings concerning the amount of the debt.  Centrelink has now amended the amount of the debt as directed by the SSAT.  The Tribunal is satisfied that Mrs Moran was overpaid partner allowance for around 33 months, as well as rent assistance for just over six weeks.  The Tribunal is satisfied that Mrs Moran thereby accrued a debt of $5,007.17, which is a debt owed to the Commonwealth.

Should the Debt be Waived due to Administrative Error? 

11. Section 1237A of the Act provides for waiver of a debt arising solely from administrative error:

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.

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).

1237A(1A)  Subsection (1) only applies if:

(a)the debt is not raised within a period of 6 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.

12.     Mrs Moran believes the debt should be waived as it arose as a result of Centrelink’s error.  Mr and Mrs Moran went to the Wonthaggi office of Centrelink to lodge the appropriate forms after Mr Moran’s release from prison on 11 November 2002.  The officer at the counter assured Mrs Moran that he had organised the adjustment of their benefits to reflect the changed circumstances.  Centrelink subsequently reinstated Mr Moran’s DSP payments.  However, it did not reduce Mrs Moran’s partner allowance to the married rate.  Before the Tribunal, Centrelink conceded that Mrs Moran’s debt had arisen as a result of its administrative error.

13. While Centrelink accepts that the debt arose due to its administrative error, the agency submits that Mrs Moran does not satisfy the further requirement for the waiver of a debt in s 1237A(1) of the Act. Section 1237A(1) provides that a debt may be waived if it was received in good faith.  Ms Ailsa Bramley, a Centrelink advocate representing the respondent, stressed that she was not implying that Mrs Moran had acted dishonestly, but rather that she had turned a blind eye to what she knew was a higher payment than that to which she was entitled.

14.     The Tribunal’s interpretation of phrases that are not defined in legislation must be guided by relevant case law in the Federal Court and higher courts.  A number of cases in the Federal Court have interpreted the phrase in good faith in relation to social security disputes.  

15.     The Federal Court case of Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186 concerned an overpayment of youth allowance, which the applicant claimed was solely due to administrative error. Finn J stated, at p 189:

…

The burden of the formula [ ie in good faith] can vary significantly given the purpose it is intended to serve in a given setting. In one context it can focus inquiry upon a person's reason for action (eg as with the good faith duty of company directors); in another, to a person's state of knowledge when a particular event occurs.

For my own part, I consider the burden of the formula ... to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received - ie is not entitled to use the moneys received as his or her own - that person does not receive the payment in good faith.

Given the conventional liability of a mistaken payee of money from consolidated revenue to repay that money irrespective of his or her belief as to an entitlement to it (ie the "rule" in Auckland Harbour Board v R [1924] AC 318), the concession made to the mistaken payee by s 289 of the SYA Act does seem in all probability to be directed to a payee who receives the money (to put the matter positively) in the good faith belief that he or she is entitled to receive it. In other words the frame of the section is to exclude from the right to a waiver, a person who knows or has reason to know that he or she is not entitled to receive the payment. It would be surprising to find that the Parliament intended otherwise …

16.       In Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424, a case which involved an overpayment of family tax benefit due to an administrative error, Cooper J stated at paras 40-41:

Prima facie, s 1237A(1) is concerned with actual personal receipt by the debtor of the payment or payments which give rise to the debt. The issue of good faith is, for the purpose of the section, to be determined when the debtor commences to exercise control over the payment by retaining it. It is at this time that the recipient must act with the requisite good faith. A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when he or she receives the payment and decides to exercise control over it by retaining it.

A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists…

17.     In Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529, a case involving an overpayment of youth allowance due to administrative error, French J stated at para 16:

Consistently with what his Honour said in the Prince case, want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt ….

18.     The meaning of the term in good faith was also discussed at length by Weinberg J in Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576. The matter was described as a most unusual case.  It concerned the ongoing payment of carer allowance to a person who no longer qualified for such a payment.  Ms Pledger had told the Department that she no longer qualified for carer allowance; but when she continued to be paid carer allowance, she thought she was entitled to a differently named social security payment at about the same rate.  So she accepted and spent the payment and eventually stopped worrying about what it was called.  After considering the three cases cited above, Weinberg J stated: 

What seems to emerge from these authorities is that whether a payment has been received in good faith can only be determined after a careful consideration of the actual state of mind of the recipient of that payment. In that sense the test is entirely subjective, and not objective. However, plainly idiosyncratic views as to what might be regarded as acceptable behaviour, including the standards of a "Robin Hood", will not be regarded as amounting to "good faith". It should be noted, in this regard, that wilful blindness is itself a state of mind: Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 219-220.

19.     Mrs Moran was aware that she would be paid a higher rate of partner allowance only for the period during which her husband was in jail and was therefore not entitled to DSP payments.  She demonstrated her awareness of the different rates by her attendance at the Centrelink office on the day of her husband’s release from prison.  Mrs Moran told the SSAT that she thought her partner allowance payments would revert to the normal rate after her husband’s DSP payments were reinstated.  Mrs Moran told the Tribunal of her efforts during 2003 to check the correct rate of her payment.  This included putting the information about her husband’s release on a review form in April 2003.  She stated that she had also contacted the Centrelink hotline on a number of occasions to query the payment but had been told it was correct.  On one occasion, she was told by the national hotline operator to contact the Wonthaggi office.  She said that after trying to contact the Wonthaggi office a few times she gave up because the telephone number was always engaged.  She said that eventually she just gave up trying to ascertain the correct rate of her payment.  Mrs Moran’s efforts to verify the correct rate of payment are a further indicator that she was aware that her payment was too high. 

20.     The Tribunal is satisfied that Mrs Moran knew that she was receiving a higher rate of partner allowance than that to which she was entitled.  In the end, after her efforts to rectify the situation failed, she turned a blind eye to the level of payments and admitted to the Tribunal that she had spent the money.  Taking into account the case law on the meaning of in good faith, the Tribunal finds that Mrs Moran did not receive the payments in good faith. Therefore, she does not meet the criteria for waiver of the debt set out in s 1237A of the Act.

Should the Debt be Waived due to Special Circumstances?

21. Section 1237AAD of the Act provides for waiver of the debt in special circumstances:

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.

22.     The term special circumstances is not defined in the legislation.  For the Tribunal to use its discretion to determine that Mrs Moran’s situation constitutes special circumstances, it must be satisfied that there is something to make her situation stand out from the usual or the ordinary.  An often cited description of special circumstances is found in Re Beadle and Director‑General of Social Security 1984 6 ALD 1, where the Tribunal held that the special circumstances referred to in the Act, must be unusual, uncommon or exceptional.  The term has been considered in many other Federal Court and Tribunal cases.  In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 Branson J stated at para 26 that the circumstances of a particular case must give rise to hardship or unfairness sufficient to justify departure from the general rule.

23.     Mrs Moran raised the circumstances in which her debt arose as being relevant.  She described Centrelink as having made error upon error.  Mrs Moran said that her husband’s health had deteriorated during 2005 as had hers.  She said that they had been required to move from their previous accommodation at the landlord’s request.  They were now renting a cheaper property further from the town but it had cost them over $1,000 to move.  The extra funds from Centrelink had enabled them to do so.  Their car is old and needs replacing. 

24.     The Tribunal accepts that both Mr and Mrs Moran have health problems and a limited income.  However, the Tribunal is not satisfied that the situation that Mrs Moran finds herself is vastly different from other social security recipients who have incurred debts due to overpayments by Centrelink.  Mrs Moran remains on a social security benefit and is able to repay the debt in instalments, taken out of her fortnightly payments.  The amount to be withheld per fortnight is negotiable. 

25.     The Tribunal is not satisfied that the circumstances in this case constitute special circumstances (other than financial hardship alone). Hence, the waiver provisions of s 1237AAD of the Act do not apply.

26.     The Tribunal concurs with the SSAT’s decision in relation to the rent assistance received by Mrs Moran, namely that the debt for rent assistance received by Mrs Moran instead of Mr Moran should be waived.  However, by the time this review application was lodged, that part of Mrs Moran’s debt had already been repaid.

27.     The Tribunal finds that Mrs Moran owes a debt to the Commonwealth for the overpayment of partner allowance and rent assistance totalling $5,007.17, part of which she has already repaid.

DECISION

28.     The Tribunal affirms the decision under review.

I certify that the twenty-eight [28] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Ursula Noyé

Clerk

Date of hearing:  29 September 2006

Date of decision:  23 January 2007
Advocate for applicant:                Self - represented (by telephone)
Advocate for respondent:            Ms Ailsa Bramley, Centrelink Legal Services