Panacci and Secretary, Department of Employment and Workplace Relations
[2008] AATA 30
•14 January 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 30
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V 200700015
GENERAL ADMINISTRATIVE DIVISION ) Re GABRIELE PANACCI Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Mr John Handley, Senior Member Date14 January 2008
PlaceMelbourne
Decision The decision under review finding overpayment and a debt is affirmed. The application is remitted to Centrelink to recalculate the debt in accordance with these reasons.
(Sgd) John Handley
Senior Member
SOCIAL SECURITY – applicant was receiving benefits at $76.18 per fortnight; after 12 weekly review benefits increased to $399.90 per fortnight – applicant's circumstances had not changed – error detected by Centrelink 18 months later – applicant did not enquire of reason for increased payments – whether an overpayment – whether permissible to write off or waive – payment not made by sole error of Centrelink and not received in good faith – circumstances not special and not desirable to waive overpayment – decision affirmed – remitted to respondent to recalculate debt
Social Security Act 1991 (Cth) s 1223(1AA), s 1236, s 1237A(1) and s 1237AAD
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 242
Pledger v Secretary, Department of Family and Community Services [2000] FCA 1576
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
REASONS FOR DECISION
14 January 2008 Mr John Handley, Senior Member 1. The applicant has been in receipt of parenting payment (PP) since 1998. She has also been a casual employee of the City of Casey. The income earned by her from time to time was declared to Centrelink and the rate of PP was calculated accordingly. However, in April 2006, an officer of the respondent decided that the applicant had been overpaid PP in the period 31 January 2001 to 5 November 2002 in the sum of $14,595.92. The Social Security Appeals Tribunal (SSAT) on 13 December 2006 affirmed that decision. The applicant seeks a review of that decision.
2. By reason of a data match search of the Australian Taxation Office (ATO) and by regard also to wage records obtained from the City of Casey, the respondent calculated the applicant had been paid $48,616.95 gross in earnings from her employment during the period 31 January 2001 to 5 November 2002. During that period, the applicant was paid $19,143.92 in PP. The amount that should have been payable to the applicant by Centrelink, if it had known of the income earned, would have been $4548.00. Accordingly, the overpayment in issue by these proceedings was calculated at $14,595.92. (The applicant acknowledged that she was paid the total amount of PP and income referred to above).
3. In addition to giving evidence at the hearing of these proceedings, the applicant also relied on a seven page Statement of Facts and Contentions that she had prepared and which comprehensively recorded her circumstances, her relationship with Centrelink and submissions supporting a write-off or waiver of the debt if found. Mr Noonan appeared on behalf of the respondent. He lodged a Statement of Facts and Contentions prior to the hearing and also lodged written submissions after the hearing concluded. The applicant gave oral submissions at the conclusion of the hearing and later lodged a written written reply to the submissions of the respondent. A number of documents were received into evidence and will be referred to in these reasons.
the evidence
4. Prior to January 2001, the applicant said she declared the income she earned in a 12 week review form that was routinely posted to her by Centrelink. She said Centrelink required a declaration of the income earned for each of the six fortnightly periods making up the 12 week review. It was her practise to personally deliver the form to a Centrelink office and take with her the pay receipts in evidence of the income declared. A Centrelink officer would photocopy the pay receipts and return the originals to her. She did not make a photocopy of the review form, but kept a handwritten note of the income declared for each of the six fortnightly periods. Mr Noonan said the form for the period in issue was no longer available, having been culled by Centrelink. He confirmed that it had been lodged by reference to a Memorandum found at p189 of the T‑documents.
5. Centrelink would then forward a letter to her confirming the rate of PP that would thereafter be paid, having regard to an average of the income earned in the previous 12 week period. It would also annualise the income earned and record in the body of the letter an amount of annual income. The letter is in the form of a recipient notice which compelled her to notify of specified changes in her circumstances, including increases of income.
6. The recipient notice forwarded to the applicant following the 12 week review in the period immediately before January 2001 is found at T3. It records that the amount of PP that would be paid – having regard to the income disclosed in the review form, was $76.18. That figure was calculated having regard to the annualising of her income which was struck at $25,063.96.
7. In January 2001, the applicant said she received a review form, completed it and personally delivered it to Centrelink. The letter that she would have otherwise expected to receive from Centrelink – consistent with previous practise – was not received. Accordingly, she was not given written notice of the rate of PP that would be paid. A few days after the review form was lodged, Centrelink commenced to make payment of PP to her at $399.90 per fortnight. Payments continued, rising to $435.20 per fortnight until October 2002.
8. The letter the applicant said she did not receive was dated 18 January 2001. A copy of it is found at T4. It confirms a fortnightly entitlement of $399.90. The annual income is recorded as $276.50.
9. The applicant said that for some years she has had difficulty with postal deliveries to her home address. She has lodged complaints with the Ombudsman and has also reported her complaints to the Postal Manager of the Narre Warren Postal District. She acknowledged at the hearing that a duplicate of the letter found at T4 records her name and postal address correctly. The respondent lodged documentation from one of its officers confirming that the letter to the applicant found at T4 was part of a bundle of letters posted by pre-paid mail to the applicant.
10. As recorded above it was the applicant's practise to separately record the income declared by her in the 12 week review forms. A handwritten note completed by her recording the income disclosed in the form that was delivered to a Centrelink office in January 2001 is found at p103 of the T‑documents. That note was also given to the SSAT when it heard the appeal lodged by the applicant. It records that in the 12 week period concluding on 19 January 2001 the applicant earned a total of $6354.71. On the handwritten note the applicant has also recorded – because of her knowledge of Centrelink practise – that that sum would convert to an average income of $529.55 per week. That figure would have been annualised to the sum of $27,537.07.
11. The handwritten note found at p103 also records that in the Christmas period spanning late December and early January, the applicant did not receive income. She explained that by reason of being a casual employee and not being engaged by the City of Casey over the Christmas period, she did not earn. A number of documents (within the T‑documents) lodged by the respondent confirm that in previous years income was not earned over the Christmas period (refer pay records from the employer and a summary of the content of previous 12 week review forms).
has the applicant been overpaid?
is there a debt?
12. It would appear that errors were made by Centrelink in calculating the entitlement to PP. Because the rate of PP is in large part dependent on the income earned by the applicant for a preceding 12 week period, in the present case it would appear that Centrelink has calculated that the applicant did not earn in that period.
13. I am satisfied that the applicant did earn income in the 12 week period immediately prior to January 2001 and that income was declared. I am satisfied that the handwritten note at p103 records the amounts received in the six fortnightly periods and those amounts were declared to Centrelink in the review form. There is a slight discrepancy between the amounts declared and the pay records (T11). The discrepancy appears to relate to a fee for EFT of wages paid fortnightly and an amount deducted for superannuation. However, it would not appear that Centrelink has averaged the income earned in the 12 week period nor was it annualised. Rather, it decided, that in the 12 week period ending in January 2001, the applicant did not earn income. A summary of the earnings found at T23 p137 records the amount at 17 January 2001 as 0.00. In those circumstances it also remains unexplained why the letter of 18 January 2001 records that the applicant's annual income was $276.50. It is also unexplained how the fortnightly sum of $399.90 was calculated. I presume it is the maximum or close to the maximum amount payable to a person who was regarded as not having earned in the review period.
14. I am satisfied that the applicant was overpaid. In the period following January 2001 until November 2002, the applicant did work and did earn income. As may be seen from paragraph 2, in that period she earned $48,616.95.
15. The applicant had considerable knowledge of her reporting obligations and was also well experienced in the practises of Centrelink in calculating PP entitlement. The handwritten note at p103 records her calculations of the average weekly income and the likely annualised figure that would have been calculated by Centrelink. I am satisfied that the letter of 18 January (T4) was not received by the applicant but I am satisfied that she should have known that the rate being paid to her of $399.90 was an error and was far and above her proper entitlement. I draw that conclusion for a number of reasons. Firstly, the letter forwarded to her on 12 October 2000 as a result of her submitting a 12 weekly review form for the period then concluding, recorded a PP entitlement of $76.18 based on an annual income of $25,063.96. On the applicant's own calculations contained within her note at p103, the annual figure would have calculated at $27,537.07. It is not possible to comprehend why the annualised income amount being greater in January than it was in October would cause Centrelink to pay her a rate of PP at 500 per cent greater than she had previously been receiving. The applicant acknowledged in her evidence and in her submissions that she did not contact Centrelink after payments commenced at $399.90 per fortnight. When asked in evidence did that dramatic sudden increase cause any alarm bells to ring and say "why am I getting this payment?", the applicant said, no I didn't make an enquiry. I didn't feel anything was necessary. The normal routine is we provide them with all the information they make their calculations and do what they need to do with the information we provide (Transcript, p33).
16. Additionally, the applicant said that she had been advised by a Centrelink officer Graham that she did not need to report fluctuations in her income subsequent to January 2001 because it was not a reporting obligation contained within a recipient notice. In her written submissions, the applicant recorded:
From my reporting in January 2001 to November 2002 I have no change to report. Income fluctuated averaging $1059 per fortnight. Half the 44 fortnights between January 2001 and November 2002 were higher than $1059.12. The remainder significantly lower and some zero dollars income. I did not report increase in variation for same reason I did not report decreased or $0 income as I trust everything will balance as advised by Graham. Fluctuations are not a change in circumstance when total income earned remains within the gross annual estimate.
17. The rate of PP that was being paid after January 2001 should have rung alarm bells. It would appear that the applicant's income in the 12 week period immediately before January 2001 was slightly greater than the income of the 12 week period ending in October 2000, yet the dramatic increase in the rate of PP should have alerted her to errors on the part of Centrelink. Copies of recipient notices lodged by Centrelink (Ex R2) record the rate of PP and the annualised income of 12 week periods previous to January 2001 are as follows:
PP
Annualised Income
12 October 2000
76.18
25,063.96
19 July 2000
30.06
27,594.08
2 February 2000
184.20
13,662.78
16 November 1999
117.00
17,154.93
2 June 1999
123.40
16,506.41
3 March 1999
270.50
8,614.43
I cannot understand by regard to this history of payment, why the applicant, with an annualised income, as calculated by her of $27,537.07, did not comprehend that being paid at $399.90 per fortnight exceeded her proper entitlement.
18. Her evidence and her written submissions with respect to fluctuations or variations in income within the range of estimated income are inaccurate. The applicant was not required to give an estimate of income until late 2002 or early 2003. While she may have been given the advice referred to above, it would not have been given before November 2002. Fluctuations or variation in income – particularly with casual employees – are phenomena over which there must be some vigilance to ensure that the annual income received does not exceed the amount previously estimated. But that would not have been an issue for the applicant. This review is concerned with an overpayment during the 20 month period between January 2001 and November 2002 and during which time she did not receive a 12 week review form.
19. Another reason offered by the applicant for the belief that she had an entitlement to the increased rate of PP was by reason of an adult male friend of her mother's commencing to reside at her home in about January 2001. That person – Franz Fersterer ‑ is identified in the handwritten notes at p103. Apparently his name was recorded in the review form against a question, I presume, asking for the identity of persons residing in the family home. The applicant said (Transcript, p34) that she thought the increase in PP was because of a major change in the home. The applicant acknowledged that she made that assumption and did not make an enquiry of Centrelink whether the increase in the rate of PP was by reason of Mr Fersterer residing at her house. (In her Reply at paragraph 4E(ix), the applicant submitted she would only have contacted Centrelink about the increased payments if she had not disclosed Mr Fersterer commencing to reside). It is inconceivable that Centrelink would make an increase in payment of PP to the applicant by reason of an adult person (his date of birth was recorded on the review form) residing with her. The applicant qualified for the benefit because she was a parent of children. The assumption made by the applicant was clearly wrong.
20. In all of the circumstances I am satisfied that the applicant was overpaid PP and there is a debt. (Refer s 1223(1AA) of the Social Security Act 1991 (the Act).
can the debt be written off or waived?
write off.
21. Section 1236 of the Act gives the respondent a discretion to write off a debt only if a debt is:
(a)Irrecoverable at law; or
(b)The debtor has no capacity to repay the debt; or
(c)The debtor's whereabouts are unknown; or
(d)It is not cost effective for the Commonwealth to recover the debt.
22. None of those circumstances apply. The debt is recoverable, she is repaying it by instalments, the whereabouts of the applicant are known and it would be cost effective to take action to recover the debt. The applicant remains employed and is earning income.
waiver.
23. Section 1237A(1) provides that the respondent must waive a right to recover the proportion of a debt which is attributable solely to an administrative error made by the Commonwealth, if the debtor received the payments in good faith that gave rise to that proportion of the debt.
24. For reasons given earlier, I am satisfied that there was an error made by Centrelink in its processing of the review form of January 2001, but I am not satisfied that any proportion of the debt is attributable solely to administrative error made by the Commonwealth. It must have been obvious to the applicant from the very first payment received in January 2001 that she was being paid PP at a rate far in excess of her entitlement. She should then have made enquiries of Centrelink and I am confident that it would have then been detected that the rate of PP at $399.90 was incorrect and the amount of annual income fixed by it at $276.50 was an error. Because I am satisfied that the applicant did not receive the letter of 18 January 2001, she would have learnt by making enquiries that the annual income as calculated by Centrelink was incorrect. The records would have then been adjusted and payments thereafter would have been made at the correct rate. As a recipient of public monies, the applicant had an obligation to notify Centrelink of the error which would have been apparent. I do not accept the validity of the applicant's contention (refer earlier) that it was not necessary to contact Centrelink because they make their calculations. The applicant's failure to notify Centrelink of suspicions she should have reasonably held have also caused the overpayments to be made. A more vigilant attitude to receipt of public monies should have been exercised. I do not accept the applicant's contention in the Reply at paragraph 4E(xi) that it is unreasonable to criticize her for failing to enquire about the increased payments when there was no knowledge or thought to arouse this action. I would have thought an increase in payment from $76.18 per fortnight to $399.90 per fortnight would have aroused at least some curiosity and an enquiry of whether there was a legitimate entitlement to payments at that rate. The debt is not solely attributable to the Commonwealth within the meaning of Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 (at paragraph 35), because the overpayment – and no proportion of it – was not singularly or only caused by Commonwealth error.
25. Additionally, or in the alternative, even if it could have been established that some proportion of the debt was attributable solely to an error on the part of the Commonwealth, I would have found that the payments which gave rise to the debt were not received in good faith. An absence of good faith does not amount to fraudulent conduct on the part of the recipient of a benefit but it does mean that the recipient acts without an honestly held belief of entitlement to receive and retain the payment. The state of mind of the recipient must be examined and the test of good faith is entirely subjective. (Refer Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 242 and Pledger v Secretary, Department of Family and Community Services [2000] FCA 1576). The applicant turned a blind eye to the rate and receipt of payments. On the evidence she could not reasonably have held an honest belief of entitlement at $399.90 per fortnight. The payments were not therefore received in good faith.
26. Section 1237AAD gives the respondent Secretary a discretion to waive all or part of a debt if he is satisfied that:
(a)The debt did not result wholly or partly from the debtor knowingly:
(i)Making a false statement or false representation; or
(ii)Failing or omitting to comply with a provision of the 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.
27. I am not satisfied that the applicant knowingly made any false statement or false representation or failed or omitted to comply with the Act. Knowingly must have a conscious or deliberate intent as opposed to constructive knowledge. (Refer Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435).
28. I am not satisfied that the applicant does have some circumstances which are special and I am not satisfied that those circumstances, even if they were special, make it desirable to waive.
29. During the period 2002 the applicant cared for her mother who suffered the effects of cancer and who subsequently died. The applicant also has a teenage son who suffers from attention deficit disorder and who apparently engaged in destructive and sometimes violent conduct. The applicant, in earlier years, also endured the behaviour of other persons close to her which need not be repeated in this decision but were graphically described by her in her evidence and which is found within the Transcript. However, I cannot find that the applicant's circumstances can be taken out of the usual or ordinary case . . . that something unfair, unintended or unjust had occurred . . . (and) there must be some feature out of the ordinary (refer Groth v Secretary, Department of Social Security (1995) 40 ALD 541). Special circumstances do not require a finding that the circumstances are exceptional (refer Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25). Care of a parent or a child who suffers illness is not special. It is common or usual. It can cause distress or worry and it may impose obligations. But these are circumstances not out of the ordinary. The personal events endured by the applicant occurred when she was much younger. Yet despite all of these circumstances – personal and family – she has raised a family, largely as a single mother and has worked, provided and accumulated assets. I cannot find her circumstances to be special.
30. If special circumstances were found, those circumstances must be of a type or kind that make it desirable to waive. I could not make that finding. I acknowledge the applicant's circumstances – including personal illness for which she did not work for six months – but she has received a considerable amount of public monies to which she was not entitled. She has been a full time employee of the City of Casey since October 2006 with a guaranteed (refer Reply at paragraph 3a) salary of $42,418 per annum. She owns her own home and has an interest in two other properties which are subject to mortgage but from which a rental income is received. Monies invested also assist the applicant to meet mortgage payments without any impact on her weekly salary (refer Reply at paragraph 3g).
31. The applicant also asserted that any overpayment, if found, had been collected because income tax had been paid on the sum of $19143.92 (refer paragraph 2 earlier) to the ATO which collects money for the Commonwealth (Reply at paragraph 2e). The tax paid on the amount in issue was submitted as $7233.00. I know of no authority which permits me to find that the excess tax paid can be offset or credited towards a refund of the overpayment. This review concerns a debt to the respondent, not a credit to the ATO. I would suggest the applicant seek advice or assistance either from the ATO or an accountant or the Taxation Ombudsman.
32. It was also asserted – either collateral to the above or as a special circumstance – as a consequence of declaring the sum of $19,143.92, that a lesser amount of family tax benefit was paid and the Medicare levy was imposed. An adjustment may be possible concerning these matters and I suggest again that the applicant make enquiries. If benefits were reduced or a liability was imposed, an adjustment may be possible and I cannot, now, find that these circumstances are special.
33. Apparently by reason of the applicant's unhappiness with Centrelink she proposes to disallow her 18 year old son and her daughter – when she turns 16 later this year – from receiving Youth Allowance. Any credit the applicant expects from denying her children an income to which they are properly entitled is irrelevant to these proceedings. I properly would have thought it would be in their interests to receive Youth Allowance, if only to relieve her of some financial responsibility. Punishing the children is hardly relevant to advancing her case for waiver by special circumstance or offsetting liability to repay monies overpaid to her.
34. The decision under review that found an overpayment and a debt is affirmed. However, I remit the application to Centrelink to recalculate the amount of the debt. It was obvious at the hearing and from the applicant's reply to the respondent's submissions that she had difficulty comprehending the methodology of the calculations found at T12, and interpreting other data held by the respondent found within the T‑documents. The tables and terms used to make the calculations are complex and the applicant should be reassured that the debt did take account of all the documented evidence of income earned – including periods of time when income was not earned. (I should note at this stage that the criticism by the applicant – evident in her Reply – of the respondent's calculations and general processing and communicating the overpayment decisions were submitted by her either as evidence of sole departmental error(s) and or receipt by her, in good faith, of benefits overpaid. The nature of these comments in my view are more in the nature of her inability to comprehend the methodology of calculating the overpayment). I direct Centrelink to recalculate and to do so in a form which can be readily understood and without language or expressions that are well known only to Centrelink officers. If this exercise cannot reasonably be undertaken, I suggest that the applicant be invited to consult with an appropriately qualified Centrelink officer who can explain the methodology and interpret or explain the Tables found at T12.
I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr John Handley, Senior MemberSigned: Grace Carney, Personal Assistant
Date of Hearing 11 September 2007
Date of Decision 14 January 2008
Solicitor for the Applicant Self Represented
Departmental Advocate Mr T Noonan
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