Newton and Secretary, Department of Employment and Workplace Relations

[2005] AATA 927

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 927

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/180

GENERAL ADMINISTRATIVE DIVISION		)
Re		DONNA NEWTON

Applicant

And SECRETARY, DEPARTMENT
OF EMPLOYMENT AND
WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date5 September 2005 

PlaceBrisbane

Decision

The Tribunal sets aside the decision under review and in substitution thereto decides to waive the debt due to the Commonwealth, in part, for the period 26 June 1998 to 18 August 1999.

The balance of the overpayment remains a debt due to the Commonwealth that is to be recovered.  The Tribunal remits the matter to the respondent with Directions that:

(a)      the debt due to the Commonwealth be recovered in instalments            of $40 per fortnight; and

(b)      the total amount of overpayments be recalculated in accordance            with the ATO “Notice of Amended Assessment” for the year ending            30 June 1999 filed with the Tribunal on 5 September 1999.

....................[Sgd].....................

EK Christie
  Member

CATCHWORDS

SOCIAL SECURITY - parenting payment - overpayment - administrative error - special circumstances - waiver - whole or part of the debt - write-off

Social Security Act 1991 ss 1236, 1237, 1237A, 1237AAD

Explanatory Memorandum to the Social Security Legislation Amendment (Carer Pension and Other Measures) Bill 1998

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316;  (2002) 70 ALD 1
Prince v Secretary, Department of Education, Employment and Youth Affairs (1997) 50 ALD 186
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re L and Secretary, Department of social Security (1995) 21 AAR 412; (1995) 39 ALD 172
Director-General of Social Services v Hales (1983) 47 ALR 281
Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26
Riddell v Secretary, Department of Social Security (1993) 42 FCT 443

WRITTEN REASONS FOR ORAL DECISION

26 September 2005  Dr EK Christie, Member     

1.      This is an application by Donna Newton for a review of the decision made by the Social Security Appeals Tribunal (the “SSAT”) on 18 January 2005 to recover a parenting payment (single) debt in the sum of $10,865.05 for the period 26 June 1998 to 24 September 2002.

2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” Documents, Supplementary “T” Documents) [Exhibits 1 and 2].

3.      The applicant represented herself at the hearing.  The respondent was represented by Ms C Heffner, a Departmental Advocate.

Issues Before The Tribunal

4.      The only issues for the Tribunal to decide were:  whether the debt due to the Commonwealth could be waived, in part or in full, for either “administrative error” or “special circumstances”; or whether the debt could be written-off.

5.      Ms Heffner informed the Tribunal that the debt due to the Commonwealth was being currently recovered by instalments of $75.00 per fortnight.  At the date of the hearing the balance of the debt was approximately $5,202.

Inquisitorial Powers

6.      At the end of the hearing, the Tribunal exerted its inquisitorial powers and issued a Direction in relation to the respondent to provide any record of telephone file notes in relation to telephone queries made by Mrs Newton as recorded in her diary, over the overpayment period.  In addition,  for Mrs Newton to provide and file a current Statement of Financial Circumstances.

Factual Evidence

7.      At the commencement of the hearing, Ms Heffner for the respondent acknowledged that the Parenting Payment Review Forms completed by Mrs Newton over the period March 1998 to August 2001, in accordance with Departmental policy, had been initially archived and then subsequently destroyed.

8.      On the basis of the evidence before it, the SSAT made the following findings of fact:

“(i)Mrs Newton was in receipt of parenting payment (single) and working on a casual basis.

(ii)Mrs Newton advised Centrelink of her wages on 12 weekly review forms.

(iii)On some of the forms, Mrs Newton only declared six or eight weeks wages instead of 12 weeks and declared net income instead of gross.

(iv)As a result, Mrs Newton was paid parenting payment at a rate that did not take into account her correct wages.”  (T2, folio 10)

9.      In response to these findings of fact by the SSAT, Mrs Newton stated that she agreed with the first three findings of fact. However, she could not respond to the final finding as it was unclear.

§  Evidence of Donna Newton

10.     Mrs Newton was referred to the evidence she had provided at the SSAT hearing (T2, Folios 8, 9) and asked to comment on the status of this information in relation to her application for review by the Tribunal.

(a)      SSAT Paragraph 7 [T2, Folio 8]:

“.       Mrs Newton said she does not owe any money because she provided Centrelink with all her payslips.  Sometimes she faxed them to Centrelink and sometimes she rang Centrelink.  She spoke to numerous people.

.      Mrs Newton said she attached payslips to her [parenting payment] review forms but a lot of those forms are no longer available because she was told that Centrelink had destroyed them.”

Mrs Newton agreed with this statement.  She said that she could not understand how the debt had arisen because she had always provided Centrelink with the most up-to-date information on her income.  Also, she had relied on the following information contained in the parenting payment forms she had completed over time:

“Please attach proof of your last 12 weeks earnings e.g. pay slips, letter from your employer, or Centrelink may need to contact your employer for proof of earnings.” (Emphasis added) [T22, Folio 73]

Mrs Newton said that her employer (Yellow Brick Road Daycare Centre) had provided proof of earnings to Centrelink and that she had relied on Centrelink to obtain accurate information by this means.

(b)      SSAT Paragraph 8 [T2, Folio 8]:

“The Tribunal referred Mrs Newton to the copies of the review forms that were provided by Centrelink and asked her how she had completed the forms.  Mrs Newton said she would only put down on the forms the information from the payslips she had in front of her but would always ring later with further information.”

Mrs Newton agreed with this statement.  She said that she was paid in cash contained in a Bank of Queensland envelope with the amount of net income written on the envelope.

(c)       SSAT Paragraph 9 [T2, Folio 9]

“The Tribunal pointed out that on the forms available, Mrs Newton had usually only listed six weeks of earnings instead of 12 weeks.  There were usually only three payslips attached.  Mrs Newton said she would have rung up with the information once she received the extra payslips.”

Mrs Newton agreed with this statement.  However, she clarified the situation by saying that she worked as casual employee/relief worker and the amount of time she worked in any 12 week period depended on  work being available at the Centre.

(d)      SSAT Paragraph 10 [T2, Folio 9]:

“Mrs Newton told the Tribunal that she thought Centrelink would contact her employer to obtain the information regarding her wages.  Her employer told her that she had been contacted by Centrelink ‘a couple of times’”.

Mrs Newton agreed with this statement and said that it was consistent with the information contained on the Parenting Payment Review Form (T22, Folio 73) which she had relied upon.

(e)      SSAT Paragraph 11 [T2, folio 9]:

“Mrs Newton was unable to explain to the Tribunal why she did not list all the dates she had worked on the review form, even if she did not have the amount of her wages.”

Mrs Newton disagreed with this statement and said the statement failed to recognise the fact that, as a casual/relief work, she did not always work for the entire 12 week period over time.

(f)       SSAT Paragraph 12 [T2, Folio 9]:

“It was pointed out to Mrs Newton that on some of the forms she had listed net wages for one fortnight and gross wages for another. Mrs Newton said that Centrelink should have looked at the payslips provided by her.”

Mrs Newton agreed with this statement.  However, Mrs Newton said that it was necessary for the Tribunal to recognise that her employer paid her in cash and that the cash was contained in a Bank of Queensland envelope, with the amount of cash written on the back of the envelope.  In addition, Mrs Newton emphasised that she had always sent payslips, when they were received, attached to the review form.  The gross amount received was set out.

(g)      SSAT Paragraph 15 [T2, folio 9]:

“Mr and Mrs Newton told the Tribunal that they are struggling financially.  Mr Newton is unable to carry out his normal employment and is on reduced duties.  Mrs Newton is unable to work due to her health.  Mr Newton also has to pay maintenance for children of a previous relationship.”

Mrs Newton said that she was not working because of a 5% whole person impairment to her right hand.  She also suffers an injury to her left hip.  At this stage she is still waiting for a medical clearance to resume work.  She said that the clearance “might take some time” and “even may not right itself”.  In addition, she said that her husband had sustained a back injury and as a result was now in a situation of a “permanent” reduction in work payments.

11.     Mrs Newton gave the following response to questions asked during cross-examination by Ms Heffner:

(a)that she was aware the amount of her entitlement was dependent on the amount of her earnings;

(b)that she had made many telephone queries to Centrelink over time, in relation to her permanent part-time employment situation and had sought advice in completing the parenting payment review forms in this regard;

(c)that she was aware of her obligations as set out in the notification notices sent to her over time;

(d)that the pay advice she received from her employer did not specify her gross earnings – only her net earnings.  As a result, when she did receive the employer’s printer payslip details, for each fortnightly period, she always attached them to the review forms.  However, these printed payslip details came from the Melbourne office of her employer and were sent to her some time after she had been paid her gross fortnightly earnings for a time;

(e)that she also relied on the office administrator of her employer to send her gross earnings details to Centrelink;

(f)that Mrs Newton conceded that there was a discrepancy between the income that her parenting payment entitlement was based on and her taxable income in 1999; and

(g)that she had not raised a query in relation to this difference [paragraph 11(f)] because she had relied on Centrelink to correctly calculate her entitlements – given that she had always provided payslip details on the review forms. In addition, she was aware that her employer had been contacted by Centrelink and had also provided her earnings details to Centrelink.

Evidence of Leanne Burns:  Office Administrator, Yellow Brick Road Childcare Centre (March 2000 – Present Time)

12.     Ms Burns was employed at the Yellow Brick Childcare Centre during the period Mrs Newton received overpayments of parenting payment.  She said that staff at the Centre received their fortnightly pay in Bank of Queensland envelopes. In addition, that the envelope had hand-written on the back the net pay (cash) contained in the envelope. That is, the pay envelope only stated the net income, not the gross income.

13.     She said that, during the period she was the Office Administrator, she faxed pay advice payslips to Centrelink when pay advices were not available at the time an employee was paid.  On “many occasions” Centrelink had run her to provide information on earnings of Mrs Newton.  She said that information on earnings had been faxed/telephoned to Centrelink on a “regular basis”.

Contentions And Submissions Of The Parties

14.     Ms Heffner, for the respondent, submitted that the debt did not arise solely because of an administrative error on the part of the Commonwealth.  Mrs Newton had contributed to the debt by failing to accurately declare all the dates she had worked and by not declaring her wages correctly.  In addition, she contended that Mrs Newton did not receive her entitlements in “good faith”.

15.     Accordingly, the debt could not be waived under the “administrative error” provisions of the Social Security Act.

16.     It was Ms Heffner’s contention that there was nothing “unusual, uncommon or exceptional” in Mrs Newton’s circumstances which would distinguish her case from the usual or ordinary case, so as to warrant the description of “special circumstances”.  Furthermore, she submitted that administrative error could only contribute to “special circumstances” if it existed in conjunction with other circumstances.

17.     Accordingly, Ms Heffner submitted the debt could not be waived under the “special circumstances” provisions of the Social Security Act.

18.     Mrs Newton said that, over the overpayment period, she had taken every possible step to provide Centrelink with the most up-to-date information on her actual work periods and wages and income earned.  Moreover, she had relied on Centrelink to use this information to calculate her entitlements correctly.

19.     The respondent made the following submissions in relation to the further information and evidence arising from the Tribunal Direction made on 20 July 2005:

(a)Verification that electronic file notes of queries had been made by the Centrelink Call Centre on 11 of the 21 dates provided by Mrs Newton over the period January 1998 to August 2002 recorded in her diary.  Furthermore, that on the balance of probabilities, Ms Heffner submitted that no telephone queries were made to the Call Centre on the other 10 dates;

(b)An acknowledgement that Mrs Newton’s financial circumstances, were not sufficiently strained to amount to “special circumstances” or to justify the debt being “written-off”.

The Tribunal’s Decision-Making Powers   

20.     The question for the determination of the Tribunal is whether the decision [under review] was the correct one [that is, when there is only one decision] or preferable one [that is, when a range of decisions are available] on the material before the Tribunal: see Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60, [per Bowen CJ and Deane J, at 68]. There are a range of decisions possible in this application for review. That is whether the debt due to the Commonwealth may be waived, in part, or in full – or written off.

21.     Administrative decision-makers are generally required to address the evidence before them and not confine themselves to evidence before a prior decision-maker whose decision is being reviewed unless the relevant legislation requires a decision to be based upon the circumstances at a particular point of time: see Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316 at 324-326. In this application for review, the Tribunal has considered all the evidence and information before the Tribunal at the date of the hearing, including the supplementary submissions in relation to the Tribunal Direction made on 20 July 2005 and the information subsequently provided and filed by the parties.

Statutory Requirements And Case Law

22. Section 1237 of the Social Security Act 1991 provides for factual situations where a debt due by a recipient of social security to the Commonwealth may be waived, either in part or in full. These factual situations relate to overpayments arising from “administrative error” - or where there were “special circumstances” that led to the overpayment.

23. Section 1237A provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “administrative error”:

“SECTION 1237A – WAIVER OF DEBT ARISING FROM 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).”  [Tribunal emphasis]

24.     For this section of the Social Security Act to apply to Mrs Newton’s factual situation, Mrs Newton must not have contributed, in any way, to the administrative error that led to the overpayment. In addition, Mrs Newton must have received his overpayments of social security entitlements in “good faith”.  Both these requirements must be satisfied in order for Mrs Newton to succeed under the “administrative error” provisions of the Social Security Act.

25.     The legal meaning of “good faith” was considered by the Federal Court in Prince v Secretary, Department of Education, Employment and Youth Affairs [1997-98] 50 ALD 186. In this case, Finn J stated:

“If that person knows or has reason to know that he or she is not entitled to a payment received - i.e. is not entitled to use the moneys received as his or her own - that person does not receive the payment in good faith.  Absent such knowledge or reason to know, the receipt would be in good faith…the [legislation] 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”.

26. Section 1237AAD provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “special circumstances”:

“1237AAD – Waiver 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”

[Tribunal emphasis].

27.     For this section of the Social Security Act to apply to Mrs Newton’s factual situation, there must be “special circumstances” that led to the overpayment of social security entitlements.  In addition, Mrs Newton must not have “knowingly” made a false statement or false representation or failed to have complied with a provision of the Social Security Act.  Both these requirements must be satisfied for Mrs Newton to succeed under the “special circumstances” provisions of the Social Security Act.

28.     The Explanatory Memorandum [“EM”] to the Social Security Legislation Amendment (Carer Pension and Other Measures) Bill 1998 is significant in addressing some issues raised by the respondent in relation to the application of the “special circumstances” provision:

(a)      Under “2. Background [Special Circumstances]” the EM states:

“The problem is that there are some cases involving an innocent mistake by a debtor that makes waiver desirable although not possible under the current waiver provisions.  Accordingly, it is proposed to insert a new special circumstances waiver provision, but with some restrictions on the circumstances under which the new clause can be used.

The new special circumstances clause will be available where:

§  there are special circumstances other than financial hardship alone;

§  the Secretary is satisfied that the debt did not arise wholly or partly because of deliberate fraud by the debtor (including deliberate non-compliance with the Principal Act); and

§  it is more appropriate to waive the debt than to write off the debt pursuant to section 1236.”

29.     The meaning of the term “knowingly” has been considered by the Tribunal in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 where Deputy President Forgie stated (at 445):

“There is nothing in s 1237AAD which suggests that the word ‘knowingly’ should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act.  That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act of or omission.”

And later,

“Knowingly omitting them is something different from fraudulently omitting them    and      I draw a distinction in this case’ [Tribunal emphasis].

30.     The Tribunal has had to consider the meaning and application of the expression “special circumstances” on many occasions.  The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 has been an oft-quoted benchmark as to the interpretation of “special circumstances”.  In that case the Tribunal said (at 3):

“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

31.     In Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277, French J, a case that also referred to the Federal Court’s decision in Beadle, held that “special circumstances” is where there is “something unusual or different to take the matter the subject of the discretion out of the ordinary … [But] that does not require the case be extremely unusual, uncommon or exceptional.”

32.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (a case on “special circumstances” and section 1184 of the Act) at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:

“…would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case…It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

33.     The Tribunal agrees with the following observations of Senior Member Handley in Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543, with respect to advice given to social security recipients by Departmental officers:

“Any failure to regard the seriousness of the consequences of the giving of wrong advice as not being a circumstance special to the person or persons who have suffered as a result of that advice would be cruel.  Citizens are entitled to act upon the advice given to them by representatives of government through its departments and agencies.  Citizens also are entitled to have confidence in the advice that they are given by persons in authority and who represent government departments and agencies.  Citizens should be entitled to expect nothing less.”

and

“the responsibility for efficient and effective administration of departmental practice and policy must carry with it a responsibility for any error or mistake which is made by the departmental officers alone.  The presence of the debt in the circumstances of this case is a circumstance undoubtedly special.  That the department would seek to enforce it and recover it only reinforces the circumstances being special.”

34. Section 1236(1) of the Social Security Act sets out the requirements for a debt due to the Commonwealth to be written off:

“1236 Secretary may write off debt

1236(1 Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

(1A)The Secretary may decide to write off a debt under subsection (1) if, and 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)the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt.”

35.     A former President of the Tribunal, Mathews J, has commented on the write-off provisions of the Social Security Act in Re L and Secretary, Department of Social Security (1995) 21 AAR 412, and observed that the financial circumstances of the debtor and the prospect of the recovery of the debt will necessarily be the primary considerations in deciding whether to write off a debt. Mathews J summarised the position as follows (at 428):

“In summary, I consider that matters relating to the personal financial hardship of the individual are always relevant in any decision as to write off under s 1236(1).  Retrospective considerations may occasionally be relevant.  The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned.  Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation?  If an affirmative answer is reached to this question, then it would be appropriate to defer recovery in the manner contemplated by s 1236(1).”

36.     In considering its discretion for write-off under the Act, the Tribunal has also had regard to a number of factors referred to by the Federal Court in Director-General of Social Services v Hales (1983) 47 ALR 281. These factors were summarised by Senior Member Dwyer in Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26 at 42 as follows:

(a)the fact that the applicant has received public moneys to which he was not entitled;

(b)the way in which the overpayment arose, whether as a result of innocent mistake or fraud;

(c)the financial circumstances of the applicant;

(d)the prospect of recovery;

(e)whether a compromise is offered;

(f)whether recovery should be delayed if there is a prospect that the circumstances of the person who received the overpayment may improve; and

(g)compassionate considerations and the fact that the Act is social welfare legislation and any financial hardship which may result from any action for recovery.

Consideration of the Issues

37.     The Tribunal has applied the statutory requirements and legal principles (paragraphs 15 to 36) to all the evidence and information before the Tribunal in deciding this application for review.

38.     The following findings of fact by the Tribunal are relevant in considering the questions of law to be decided for this application for review:

(a)There were very wide fluctuations in the fortnightly income of Mrs Newton over the entire overpayment period.  These income fluctuations were a direct result of the casual nature of her employment.  Her employer’s demands dictated the extent that she worked in at any 12 week review period at the Centre.

(b)That there is sufficient evidence before the Tribunal to confirm that Mrs Newton did raise queries with Centrelink, at various times over the entire overpayment period, in relation to issues associated with the amount of income and earnings that she received over a 12 week review period.

(c)That the income advice provided to Mrs Newton on receipt of payment by her employer, for each fortnightly period, was less than satisfactory.  These limitations in income advice created difficulties for Mrs Newton to always be able to calculate her correct gross fortnightly income.

(d)Mrs Newton’s employer also faxed to Centrelink payslips when these details were not available at the time Mrs Newton was paid.

(e)Throughout the overpayment period, Centrelink continued to send notification notices to Mrs Newton that set out her obligations as a social security recipient.  The notification notices also stated the amount of income that her parenting payment entitlements were calculated.

(f)That Mrs Newton’s taxable income, as determined by the ATO, for the first financial year that overpayments occurred [1 July 1998 to 30 June 1999] was far greater than the information provided by Mrs Newton to Centrelink for the 12 week review periods during that financial year.

§Administrative Error

39.     The Tribunal firstly considers the factual evidence relating to whether the debt could be waived under “administrative error” provisions of the Social Security Act. 

40.     The Tribunal concludes that, notwithstanding Mrs Newton’s efforts to raise queries with Centrelink and to provide documentation to Centrelink in relation to her earnings, there were occasions where income was undeclared – and sometimes when income was not declared at all.  Mrs Newton acknowledged that she was aware of her obligations as set out in the notification notices sent to her over time.  In these circumstances, the Tribunal cannot make any conclusion other than to find that Centrelink and Mrs Newton have both contributed to the administrative error that led to the overpayments of parenting payment.  The administrative error has not been solely caused by the Commonwealth.  Mrs Newton relied on Centrelink to calculate the entitlements correctly, given that she had “provided them with the most up-to-date information” and, in addition, that Centrelink had been directly provided with payslips from her employer.  However, Mrs Newton did not “cross-check” the basis for her entitlements as set out in the notification notices.

41.     Given this finding that Mrs Newton has contributed to the “administrative error”, there is no need for the Tribunal to consider the issue of “good faith”.  The debt cannot be waived under the “administrative error” provisions of the Social Security Act.

§Special Circumstances

42.     The next issue for the Tribunal to consider is the factual evidence relating to Mrs Newton’s state of knowledge at the time and to events surrounding the overpayment being made.

43.     The application of Callaghan’s case requires Mrs Newton to have “actual knowledge” that she was making a false statement or the act or omission.  However, because of the many queries made by Mrs Newton to Centrelink, plus her efforts to provide Centrelink with the most up-to-date information on her income, earnings and payslips, the Tribunal concludes that Mrs Newton could only have had “constructive knowledge” – rather than “actual knowledge”, that she was making a false statement or representation or that she was failing or omitting to comply with a provision of the Social Security Act.  Accordingly, the Tribunal concludes that Mrs Newton did not “knowingly” make a false statement or representation or that she had “knowingly” failed or omitted to comply with a provision of the Act.

44.     The Tribunal considers that there are facts within Mrs Newton’s circumstances that warrant the description of “special circumstances”.

(a)That Mrs Newton made telephone queries to Centrelink to inform of the most up-to-date information on her income, earnings and payslips over a 12 week period. 

(b)Notwithstanding that the respondent cannot now find any record to verify all telephone contacts recorded in Mrs Newton’s diary, it is also a fact that all 12 week Parenting Payment Review Forms completed by Mrs Newton, over this period, have been destroyed by Centrelink in accordance with Departmental policy for archives.  In this regard, the Tribunal accepts the oral evidence of Mrs Newton and the records extracted from her diary relating to queries made with Centrelink.  Furthermore, the Tribunal considers the submissions made by the respondent, in this regard, to be speculative.  The only “real evidence” before the Tribunal, to rebut or substantiate these telephone contacts, is the diary records of Mrs Newton and her oral evidence.  There is no dispute that Mrs Newton’s diary records corroborated Centrelink records that she made 6 telephone queries over the period June 1998 to March 1999.

(c)Furthermore, the Tribunal has concluded that:

(i) in any 12 week review period, Mrs Newton’s actual employment period and income widely fluctuated each fortnight; 

(ii) that Mrs Newton raised queries with Centrelink and provided them with updates on fortnightly income and earnings; and

(iii)that payslips were also obtained directly by Centrelink from Mrs Newton’s employer during the first 12 months in particular i.e. income information was being provided to Centrelink by different sources.

The Tribunal considers that it would be a reasonable expectation that, in such a situation, it would have been appropriate for Centrelink to consider Mrs Newton’s circumstances and her queries and to review Departmental policy which could be applied in the form of advice given to her to address her circumstances of fluctuating fortnightly income, in order to avoid the consequences on her, as a social security recipient.  However, no such advice was provided to Mrs Newton’s queries and so she continued to rely on Centrelink correctly calculating her entitlements, based on all the information she provided, as well as the income information directly received by Centrelink from her employer.  In this regard, the Tribunal’s observations in McAvoy’s case are a relevant consideration.

(d)The Tribunal further considers that, in all of the circumstances, the overpayment arose due to an “innocent mistake” by Mrs Newton and not through an intention to defraud the Commonwealth.

45.     However, the Tribunal qualifies the length of the period for which “special circumstances” apply.  Mrs Newton acknowledged (in cross-examination) that there was a discrepancy between the income that her parenting payment was based on and her taxable income in 1998/1999 ($21,290).  An Amended Taxation Income Statement for 1998/1999[1] was issued by the ATO on 18 August 1999.Notification Notices issued after 1 July 1999 (T9,T10) stated that parenting payments were calculated on an annual income of $4,376, $4,728 and $5,444 respectively.  Given the extent of the discrepancy between both sources, the Tribunal concludes that from this time, Mrs Newton should have raised a query with Centrelink and to have informed them of the continuing existence of the problem.  However, she failed to do so.  As a result, overpayments continued to be made beyond this time.

[1] Mrs Newton filed an ATO “Notice of Amended Assessment” for the year ending 30 June 1999 at the resumed hearing and later on 19 September 2005.  The “Amended Taxable Income” was $16,775.  The Data Matching Program (ST6, Folio 12) specifies a Taxable Income for this period of $21,290.

46.     The Tribunal concludes that “special circumstances” only apply for part of the period parenting payments were made to Mrs Newton:  the period 26 June 1998 to 18 August 1999.  The debt due to the Commonwealth can be waived only for this period.  The overpayments to the Commonwealth for the period 19 August 1999 to 24 September 2002 remain a debt due to the Commonwealth that can be recovered.

47.     In making the conclusion that “special circumstances” apply for part of the period that parenting payment overpayments were made to Mrs Newton, the Tribunal had given due regard to the following legal principle as to the breadth of the discretion in relation to “special circumstances”:

“The Full Federal Court, in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 at 450 commented:

‘Each particular case must be considered on its merits.  It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.’”

§Write-Off

48.     Next, the Tribunal considers the factual evidence relating to whether the debt could be written-off under the “write off” provisions of the Act.

49.     The Tribunal has considered the “Hales factors” and concludes:

(a)      Mrs Newton received public moneys to which she was not entitled;

(b)      The overpayment arose as a result of “innocent mistake”;

(c)The current income details of Mrs Newton indicate that her family’s current net income is around $1,395 per fortnight and current net expenses – based on the necessaries of life, are around $1,200 per fortnight.  The family has significant outstanding debts but has only modest saving bank deposits;

(d)There are positive prospects of recovery as the debt is currently being recovered at $75 per fortnight.  However, Mrs Newton has submitted that this amount is causing difficulty and has submitted that it should be reduced to $20 per fortnight.  Ms Heffner has submitted with the current debt structure that there would be reasonable grounds to reduce the recovery instalments to $50 per fortnight; and

(e)The question of compromise has not been raised.

50.     On consideration of the “Hales factors” to Mrs Newton’s factual situation, the Tribunal finds that there is no basis for a write-off of the residual debt due to the Commonwealth.  However, given the fact that the amount of the debt due to the Commonwealth has now changed and, based on Mrs Newton’s most recent Statement of Financial Circumstances, the Tribunal remits the matter to the respondent with a Direction that the fortnightly instalments for recovery of the debt be reduced to $40 per fortnight.

51.     For all of the above reasons, the Tribunal sets aside the decision under review and in substitution thereto decides to waive the debt, in part, for the period 26 June 1998 to 18 August 1999. 

52.     The balance of the overpayment remains a debt due to the Commonwealth that is to be recovered.  The Tribunal remits the matter to the respondent with a Direction that the debt be recovered in instalments of $40 per fortnight.

I certify that the 52 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed:         Jeff Mills
  Legal Research Officer

Date/s of Hearing  20 July 2005, 5 September 2005
Date of Decision  5 September 2005
Date of Written Reasons          26 September 2005      
The Applicant appeared in person  
For the Respondent                  Ms C Heffner, Departmental Advocate