O'Neill; Secretary, Department of Family and Community Services

[2000] AATA 206

DECISION AND REASONS FOR DECISION [2000] AATA 206

ADMINISTRATIVE APPEALS TRIBUNAL      )

)     No T1999/82

GENERAL ADMINISTRATIVE  DIVISION       )          

Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        

Applicant

And    KATHLEEN FRANCES O'NEILL

Respondent

DECISION

Tribunal       Mr C P Webster (Senior Member)

Date17 March 2000

PlaceHobart

Decision      THAT the decision of the Social Security Appeals Tribunal be set aside, and substituted with a decision to raise and recover a debt of $11,592.40 from the respondent in respect of an overpayment of age pension.         

..............................................
  Senior Member
CATCHWORDS
Social Security – age pension – overpayment – whether debt should be waived as solely due to administrative error – debt not solely due to administrative error as applicant failed to comply with notice.
Social Security Act 1991 – ss.68(5), 1237A

REASONS FOR DECISION

17 March 2000        Mr C P Webster (Senior Member)            

The Issues

1. The Secretary, Department of Family and Community Services ("the Applicant") seeks a review of a decision of the Social Security Appeals Tribunal of 20 April 1999 which set aside a decision of a Commonwealth Service Delivery Agency (Centrelink) to raise and recover a debt of $11,592.40 of 17 December 1998 and reduced the recoverable debt to $2,494.60.

2. The issue to be determined by the Tribunal is whether the payment of age pension received by Kathleen O'Neill should be waived as the overpayment was "attributable solely to an administrative error made by the Commonwealth".

3. The relevant legislation is contained in ss.68, 1223(1); 1223(5); 1224; 1237 and 1237A of the Social Security Act 1991 ("the Act").
   Evidence

4. Ms Belbin, a financial adviser, employed by Professional Investment Services Pty Limited, conducted the respondent's case.   No oral evidence was adduced on behalf of the respondent.

5. Mr Richard Sheriff, a financial information officer, gave oral evidence on behalf of the applicant.   The gist of his evidence was that there is a difference between a cash rollover fund and an annuity fund and the treatment of the funds by the applicant.

6. The facts essentially were not in dispute and it was agreed by both parties that the SSAT had correctly found the facts it relied upon in reaching its decision.

7. The facts which were not in dispute can be stated as follows:-

   (a)On 5 April 1994 the respondent claimed age pension which was granted effective from 10 March 1994.

   (b)On 7 April 1994 the respondent received a notice from Centrelink which advised her that she must advise Centrelink within 14 days if any of a number of events occurred.

   (c)Amongst those notifiable events was "if your combined income, not including maintenance, becomes more than $76 per week"; and "If you or your partner get a new managed investment, or there is a change with your existing investment(s) …".

   (d)On 24 May 1994 the respondent's husband purchased an investment in an ANZ cash rollover fund valued at $159,080.

   (e)On 14 June 1994 the respondent's husband claimed age pension and, as part of that claim process the respondent and her husband notified Centrelink of details relating to that investment.

   (f)It is accepted by the applicant that the respondent complied with her obligations by advising Centrelink of her husband's investment in the cash rollover fund.

   (g)On 29 June 1994, the respondent's husband purchased an annuity from Life Track Management Limited for $153,039.40.   He converted the ANZ cash rollover fund to an annuity.

   (h)That annuity provided a gross annual payment of $10,390.00.

   (i)The respondent did not notify the applicant of the annuity until 1 December 1998.

   (j)That at the time the respondent's partner notified Centrelink of the existence of the cash rollover Centrelink inadvertently failed to record that information.   As a result when the respondent's partner turned 65 on 6 August 1994 Centrelink failed to assess the rate of pension payable to the respondent and her husband correctly by taking the assets in the rollover fund into account.    This was in error by Centrelink.

Discussion of Law

1. Both parties agreed that the respondent had been overpaid for entitlements to age pension and received those payments in good faith.

2. There was no dispute that the respondent had been paid $11,592.40 in excess of her entitlements.

3. The only issue to be determined by this Tribunal is whether the debt should be waived due to administrative error.

4. The relevant legislation is contained in s.1237A of the Act. That section reads as follows:-

   "Administrative error
   …, 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."

1. The determination of this issue is dependent upon whether or not the respondent failed to comply with a notice issued under s.68(1) of the Act. Section 68(5) of the Act states:

   " A person must not, without reasonable excuse, refuse or fail to comply with a notice under subsection (1) to the extent that the person is capable of complying with the notice."

2. The respondent contends that any debt should be waived totally or in part.   The respondent argues that the notification by the respondent's husband of the ANZ cash rollover fund on 24 May 1994 in June 1994 was compliance with the respondent's obligation to notify Centrelink of her changed circumstances and was in effect notice of the purchase of the annuity.

3. The respondent further argues that the failure by Centrelink to record details of the husband of the respondent ANZ cash rollover fund meant that Centrelink overpaid the respondent notwithstanding any subsequent failure by the respondent to advise of her changed circumstances and would have continued to overpay the respondent in any event, even if the respondent had advised Centrelink of the change in her husband's investments.

4. The applicant contends that the notification by the respondent's husband of the ANZ cash rollover fund was not notification of the annuity fund.

5. The Tribunal agrees with the applicant's contentions.

6. The Tribunal considers that the ANZ cash rollover and the annuity purchased from Life Track Management Pty Limited were two distinct investments.   Notification to Centrelink by the respondent's husband of the cash rollover was not notification, either expressly or implicitly of the subsequent purchase of the annuity.

7. Failure by the respondent to advise the applicant of the conversion of the ANZ cash rollover fund to an annuity was a failure by the respondent to comply, pursuant to s.68(5) of the Act, with the notice dated 7 April 1994, served on the respondent in that the respondent failed to notify Centrelink that her combined income had become greater than $76 per week, and that there was a change in her husband's existing investments.

8. Section 1237A(1) of the Act provides that the Secretary must waive a debt if "that is attributable solely to an administrative error".   In the present case the applicant made an administrative error in that it did not take into account when assessing the rate of pension payable to the respondent, her husband's investment in the ANZ cash rollover fund.

9. That error would have resulted in an overpayment.  The respondent  however contributed to the continued overpayment  by not notifying the applicant of her changed circumstances.

10. If the respondent had advised the applicant of her changed circumstances, the applicant would have had the further opportunity of reviewing the rate of payment of the respondent's pension.

11. The respondent either contributed to the overpayment, or was solely responsible for the overpayment after the date of conversion of the ANZ cash rollover fund to the annuity.   The overpayment after the conversion of the ANZ cash rollover fund to an annuity was not solely contributed to the "administrative error" of the applicant.
    Determination

12. That the decision of the Social Security Appeals Tribunal be set aside, and substituted with a decision to raise and recover a debt of $11,592.40 from the respondent in respect of an overpayment of age pension.

    I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Mr C P Webster (Senior Member)

    Signed:         .....................................................................................
      Personal Assistant

    Date/s of Hearing  21 February 2000
    Date of Decision  17 March 2000
    Counsel for the Applicant        Ms L Miller (Administrative Law Section)
    Representative  for the Respondent      Ms Belbin (Financial Adviser)