Morgan; Secretary, Department of Family and Community Services

[2004] AATA 479

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 479

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2003/1103

GENERAL ADMINISTRATIVE DIVISION

Re: SECRETARY,

DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Applicant

And:       LEIGH SELBY MORGAN

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             14 May 2004

Place:            Melbourne

Decision:The Tribunal sets aside the decision under review and substitutes a decision that the respondent owes a debt to the Commonwealth in the amount of $18,526.59 for the period 1 July 1998 to 30 June 2001 and that the debt be recovered.

(sgd) G.D. Friedman

Member

SOCIAL SECURITY - recovery of debt - parenting payment single - earnings from occupation as actor - whether employee or self-employed - waiver of debt - whether administrative error - whether special circumstances exist

Social Security Act 1991 ss 1223(1), 1236, 1237A, 1237AAD

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

REASONS FOR DECISION

14 May 2004  G.D. Friedman, Member

1.      This is an application by the Secretary to the Department of Family and Community Services (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 27 August 2003.  A Centrelink delegate of the applicant department decided, on 18 March 2003, that Leigh Selby Morgan (the respondent) had been overpaid $24,932.58 in parenting payments between 9 July 1998 and 3 July 2001 (the relevant period), and owed a debt to the Commonwealth in that amount.  On 16 June 2003 an authorised review officer varied the decision and reduced the debt to $18,526.59 for the relevant period.  The SSAT  set aside the decision of the authorised review officer and referred the matter back to Centrelink, with the following direction: (a) that there was a debt for the period between 1 July 1998 and 30 June 1999 but that recovery of that debt be waived; and (b) that the debt for the period between 1 July 1999 and 30 June 2001 be set aside until Centrelink obtained information from the respondent’s employers as to the periods to which her payments related, and then the debt for that period should be re‑calculated. 

2.      At the hearing of this matter on 4 March 2004 and 11 May 2004 Mr M. Todd, a Centrelink advocate, represented the applicant and the respondent represented herself.

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T51), plus four exhibits (Exhibits A1‑A4) lodged by the applicant and one exhibit (Exhibit R1) lodged by the respondent.

BACKGROUND

4.      The respondent was born on 18 June 1957 and works as an actor.  From 12 May 1997, she has received parenting payment single.   On 26 May 1998 Centrelink sent the respondent a letter advising her that her rate of pension was calculated on the basis of a total income of $3906.60 per year (made up of earnings of $3906.60 and income from financial investments of $6.00).  During the relevant period, her pension was paid on the basis that her income, other than Centrelink payments, was nil, except for the period between July and August 1998, when $3906.60 was included as her income.

5.      Following data matching with the Australian Taxation Office, Centrelink concluded that the respondent had received the following taxable income:

·  1998/1999      $23,173

·  1999/2000      $17,288

·  2000/2001      $24,873

On the basis of that income, Centrelink calculated that the respondent had been overpaid $24,932.58.

6.      The respondent sought review of that decision and, subsequently, a Centrelink authorised review officer calculated the respondent’s total gross income (apart from Centrelink payments) between 1998 and 2001 as follows:

·   1998/1999     $23,323

·   1999/2000     $24,410

·   2000/2001     $24,873

The authorised review officer concluded that the respondent should be treated as a self-employed person in her own business.  As such, she was entitled to a number of deductions.  As a result of those deductions, the authorised review officer decided the respondent’s relevant income was in fact as follows:

·   1998/1999     $17,349

·   1999/2000     $17,997

·   2000/2001     $15,071

In light of the reduction of the respondent's income, he reassessed the overpayment, and therefore the debt owed by the respondent, at $18,526.59.  The authorised review officer found no grounds to waive or write‑off the debt.

7. On 26 June 2003 the respondent sought review by the SSAT, which found that in 1998/1999 the respondent had notified Centrelink of amounts she received, and that Centrelink had incorrectly taken these amounts as income earned or received in the week the payments were received, instead of being payments of income earned over longer periods. The SSAT found that any debt that arose as a result of the incorrect assessment of income by Centrelink in 1998/1999 was due solely to administrative error by Centrelink. The SSAT found that the respondent was unaware that her income was being assessed incorrectly, and had received the payments in good faith. The SSAT waived the debt relating to 1998/1999 under s 1237A of the Social Security Act 1991 (the Act).  For the years 1999/2000 and 2000/2001, the SSAT found that the respondent did not notify Centrelink of any income received after December 1999.  In failing to do so, the SSAT concluded, the respondent had failed to comply with the Act and a debt arose under s 1224 of the Act.  However, the SSAT was unable to quantify the debt due the lack of evidence as to the periods to which Ms Morgan’s income related.  Therefore, it remitted the matter to Centrelink for re-calculation.

8.      On 8 October 2003 the applicant lodged an application with the Tribunal for review of the SSAT decision. 

EVIDENCE

9.      In oral evidence the respondent stated that she was a freelance actor and had obtained an Australian Business Number (ABN) in 2002/2003.  She told the Tribunal that she had worked for various employers, such as television and film production companies and advertising agencies.  She acknowledged that she worked irregularly, and that she had provided Centrelink with as much information as possible, considering that some jobs lasted only one day.  The respondent stated that Centrelink had advised her to declare her income only for the dates she actually worked, and she did not have accurate records for some of her work. 

10.     The respondent explained that, to the best of her knowledge and recollection, she had provided complete information regarding her earnings to Centrelink.  She acknowledged that, in a number of instances, Centrelink had no evidence that such information had been provided.  In cross-examination, the respondent agreed that she had received notices from Centrelink about her obligations under the social security legislation.  She produced a letter from her treating doctor (Exhibit R1) which noted that the respondent has been experiencing stressful personal and employment circumstances which may have had an impact on her ability to manage her affairs.  The respondent told the Tribunal that she is seeking employment and is in the process of selling her house.

11.     Ms H. Yip, a member of the Centrelink Compliance Team, Area North Central, gave oral evidence that she was the delegated customer service officer involved in calculating payments to the respondent.  She said that a substantial overpayment of parenting payment had occurred, and been discovered following a data-match with information held by the Australian Taxation Office, and that the respondent had provided incomplete records to Centrelink.    

12.     According to computer records held by Centrelink, the respondent advised Centrelink of the following income from  employment in 1998 and 1999:

·   22 May 1998:  employment with Channel 7 ($900) and maintenance received;

·   22   October 1998:  commenced employment with nursing home at $33 per week; one-off payment as freelance performer ($2000);

·   5 November 1998: one-off payment for acting ($6000); ceased work at nursing home;

·   25 June 1999:  re-run of advertisement ($12,000);

·   5 August 1999:  Channel 7 ($800);

·   1 December 1999:  Transport Accident Commission - re-run of advertisement ($600);

·   21 December 1999:  commenced with Cook Green & Moore;

·   24 January 2000:  worked in December.

There were no further records of advice to Centrelink about income.  A data-match established the respondent’s taxable income for the years in question.

CONSIDERATION OF THE ISSUES

13.     Mr Todd submitted that the respondent was overpaid parenting payment single for the relevant period.  He said that the income details provided by the respondent in 1998/1999 were incomplete and inaccurate.  Therefore, the debt to the Commonwealth could not be attributable solely to administrative error by Centrelink.  He submitted that the use of a particular method of assessment, applied on the basis of the facts then known, could not be regarded as an administrative error, simply because facts later revealed indicated that another method of assessment was more appropriate.

14.     Mr Todd also submitted that the respondent did not receive the payments in good faith.  He said that Centrelink sent the respondent notices during the relevant period advising her that nil income was being taken into account in the calculation of her payments.  As she was, in fact, earning income during this period, it was her obligation to follow up the matter with Centrelink.  In addition, the respondent was aware that her payments were being treated differently to others in her business, and she was obliged to make enquiries of Centrelink, rather than assume it was a matter of luck.

15.     Mr Todd stated that, on the respondent’s own evidence and the nature of her work, she should be treated as self-employed rather than an employee.  He pointed to inconsistencies in information provided to Centrelink regarding payments made to her by companies that utilised her services.      

16.     In reaching its decision the Tribunal takes into account the oral and written evidence and the submissions made at the hearing.

17.     The Tribunal agrees with Mr Todd that the respondent received notices from Centrelink informing her of the amounts that Centrelink held to be her earnings.  The Tribunal also concludes from the respondent’s evidence about her ABN, the nature of her work for various television and production companies, and the documentation received from those companies, that the respondent considered herself to be self‑employed.  The Tribunal accepts that this was the correct interpretation for Centrelink to draw.  The Tribunal agrees that the information provided to Centrelink by the respondent about her earnings in the relevant period, was incomplete and inaccurate.

18. The Tribunal accepts the calculations made by the authorised review officer, and finds that, under s 1223(1) of the Act, the parenting payment single made to the respondent during the relevant period constitutes an overpayment, resulting in a debt of $18,526.59 to the Commonwealth.

19. Section 1236 of the Act provides for a write-off of the debt under certain circumstances. The Tribunal finds that the respondent has the capacity to repay the debt and the debt is not irrecoverable at law. Therefore, there are no grounds to write‑off the debt.

20. Section 1237A of the Act provides for waiver of a debt arising 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

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.

In view of its findings that the debt arose partly because of incomplete and inaccurate information provided to Centrelink by the respondent, the Tribunal finds that the respondent’s debt to the Commonwealth was not attributable solely to administrative error by Centrelink. Therefore, the debt cannot be waived under s 1237A of the Act.

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

1237AAD.      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.     In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal held that the special circumstances, referred to in s 1237AAD(b), must be unusual, uncommon or exceptional. The Tribunal accepts that the respondent worked intermittently as an actor during the relevant period and that accurate documentation regarding her income was occasionally difficult to obtain. The Tribunal also takes into account the letter from the respondent’s treating doctor about personal and other issues that may have affected her ability to keep complete records and to meet her obligations to Centrelink.

23.     On balance the Tribunal is satisfied that, although the respondent’s overall situation may have been difficult, the circumstances in this case are not unusual, uncommon or exceptional, and do not constitute special circumstances (other than financial hardship alone). Therefore, the waiver provisions of s 1237AAD of the Act do not apply.

24.     The respondent therefore owes a debt to the Commonwealth in the amount of $18,526.59, which cannot be written off or waived.

DECISION

25.     The Tribunal sets aside the decision under review and substitutes a decision that the respondent owes a debt to the Commonwealth in the amount of $18,526.59 for the period 1 July 1998 to 30 June 2001 and that the debt be recovered.

I certify that the twenty‑five [25] preceding paragraphs are a true copy of the reasons for the decision of:

G.D. Friedman, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  4 March 2004 and 11 May 2004

Date of decision:  14 May 2004
Advocate for applicant:               Mr M. Todd, Centrelink
Advocate for respondent:            Self‑represented