Peters and Secretary, Department of Family and Community Services
[2004] AATA 1261
•26 November 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1261
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2004/190
GENERAL ADMINISTRATIVE DIVISION ) Re ROSARIO PETERS Applicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Dr EK Christie, Member Date26 November 2004
PlaceBrisbane
Decision The Tribunal sets aside the decision under review and in substitution therefor decides to waive the overpayments of $4,906.67 of age pension received by Mrs Peters for the period 11 July 1996 to 22 September 2003.
.....................[Sgd]....................
EK Christie
Member
CATCHWORDS
SOCIAL SECURITY – age pension – overpayment - administrative error – special circumstances - waiver of whole or part of the debt – writeoff of debt
Social Security Act 1991 s 1236, 1237A, 1237AAD
See 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
Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511
Jebb v Repatriation Commission (1988) 80 ALR 329
Prince v Secretary, Department of Education, Employment and Youth Affairs [1997-98] 50 ALD 186
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277
Re L and Secretary, Department of Social Security (1995) 21 AAR 412
Re Marshall and Cairns and Secretary, Department of Family and Community Services [2003] AATA 352
Schulze and Secretary, Department of Family and Community Services [2004] AATA 705
Cymerman and Secretary, Department of Family and Community Services [2003] AATA 1354WRITTEN REASONS FOR ORAL DECISION
30 November 2004 Dr EK Christie, Member 1. This is an application for review of the decision made by the Social Security Appeals Tribunal (the “SSAT”) made on 26 February 2004 to recover a wife pension debt in the sum of $4,906.67 for the period 11 July 1996 to 22 September 2003.
2. In its “Application of the Law and Reasons”, the SSAT made the following conclusions:
“24 …The debt is not attributable solely to administrative error but was caused by Mrs Peters’ (or her husband’s) failure to keep Centrelink abreast of increases in his Netherlands pension. This means that the debt is unable to be waived in accordance with the provisions of section 1237A(1) of the Act.
25 That being said the Tribunal is satisfied that there was a failure on Centrelink’s part to actively check the levels of foreign pensions which, like ours, seem in the main to be indexed for inflation. Since some recipients of a Netherlands pension were in fact reporting periodic increases, this might well have prompted Centrelink to satisfy itself as to whether this was the accepted practice. When the respective governments enter into reciprocal agreements such as this one surely such matters must be canvassed. Moreover had Centrelink been more mindful of the time that had elapsed, in this case more than seven years, it could usefully have undertaken annual reviews or audits and sought taxation notices of assessment at those times.
29 …The Tribunal finds that Mrs Peters’ situation cannot be considered to constitute ‘special circumstances’ within the legislative meaning of that term. That being so, the Tribunal finds itself unable to exercise the discretion to waive the right to recover the debt in the special circumstances of Mrs Peters’ case, in accordance with the provisions of section 1237AAD of the Act.” (T2 Folios 21, 22) [Emphasis added].
3. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” documents) [Exhibit 1] and the various exhibits lodged by the parties.
4. The applicant was represented by Mr P Canning of Counsel. The respondent was represented by Mr R McQuinlan, Departmental Advocate.
Issues before the Tribunal
5.The only issues for the Tribunal to decide were:
(a)whether the debt could be waived, in part or in full, for either “administrative error” or “special circumstances”; and
(b)whether the debt could be written off.
6. During the proceedings before the Tribunal, Mr McQuinlan conceded “that there was no knowing failure on the part of Mrs Peters”. He stated that:
“She gave evidence and she was cross-examined on the point and it seems fairly clear that from Mrs Peters’ point of view she didn’t know that she had an obligation to tell Centrelink about her husband’s income…because she trusted that her husband would perform that role. She indicated at length the relationship between her and her husband: that she was kept out of the [loop].”
Findings of Fact
7. On the basis of the evidence before it, the SSAT made the following findings of fact:
“(i)Throughout the overpayment period Mrs Peters was in receipt of wife pension.
(ii)In a notice dated 9 July 1996 Mrs Peters was advised that the rate of her wife pension was based on a combined annual income from an overseas pension of $7,225.85, and was required to tell Centrelink within 14 days if this income was incorrect or increased.
(iii)Numerous such notices which were sent to Mrs Peters between 17 October 1996 and 3 July 2003 advising her that combined annual incomes ranging from a low of $6,596.43 to a high of $10,864.96 were being used to calculate the rate of her wife pension and similarly required notification of any increases.
(iv)Mrs Peters did not notify Centrelink of regular increases in the rate of Mr Peters’ Netherlands pension.
(v)In assessing the rate of wife pension payable to Mrs Peters, Centrelink continued to use the Netherlands pension figure of $7,225.85, subject to variations in exchange rates, provided by the SVB on 4 January 1994.” (T2, Folio 18, 19)
Contentions and Submissions of the Parties
8. Mr Canning submitted that there was no evidence to suggest that Mrs Peters knowingly made a false statement or representation, as she did not have “actual knowledge” that she had failed or omitted to comply with a provision of the Act. It was Mr Canning’s contention that to “knowingly fail” required a conscious, deliberate failure to comply with a provision of the Act – rather than an inadvertent or an unintentional failure to comply, on the part of Mrs Peters.
9. Mr Canning submitted that it was significant that Mrs Peters had no knowledge of the spousal allowance component of her late husband’s SVB pension and so could not be aware that her pension had been adjusted as a result. In this situation, he contended that without knowledge or access to the basic information that she was required to disclose, Mrs Peters could not have had constructive knowledge of the requirements for complying with the Act.
10. Mr Canning submitted that Mrs Peter’s lack of knowledge or access to her late husband’s Netherlands pension was in itself, a “special circumstance”. Moreover, Mr Canning submitted that the Department’s sole reliance on notification notices – rather than any proper review or audit, had resulted in the continuation of the overpayments over time.
11. Mr Canning concluded with the submission that the recovery of overpayments from Mrs Peters social security entitlements would result in financial hardship.
12. Mr McQuinlan submitted that Mrs Peters’ circumstances did not come within the meaning of “special circumstances” and so warrant a review of the debt. Mrs Peters had failed to comply with her obligations to notify Centrelink of any increases in her continued income. Furthermore, he submitted that the notices issued to her were clear and unambiguous in their requirements.
13. Mr McQuinlan contended that Mrs Peters had not provided sufficient reasons for failing to inquire into her late husband’s income situation and so being able to inform Centrelink about any changes. Mr McQuinlan referred to the time in 1999 where her social security payments were directed from payment to a joint account held with her late husband, into a separate account in her name. Consequently, he submitted at this time and in this situation, that Mrs Peters should have actively enquired into her husband’s financial circumstances and so have been able to advise Centrelink to inform of changes, as appropriate.
14. It was Mr McQuinlan’s contention that someone who relied on their partner to report their income details to Centrelink could not avoid the consequences that followed if the partner failed to do so. That is, it was his contention that a social security client had a personal obligation to notify Centrelink and that this obligation could not be abdicated to a third party. He further submitted that this reasoning also applied to social security recipients who mistakenly assumed Centrelink carried out checks, as there was no basis for such an assumption.
15. Mr McQuinlan contended that an analysis of Mrs Peters’ income and expenses indicated that there was not an unusually high level of debt to cause such financial hardship to justify the description of “special circumstances”.
16. Mr McQuinlan concluded with the submission that if the situation arose that Mrs Peters had no capacity to repay the Social Security debt until her private debts had been repaid, then the debt due to the Commonwealth could be written off for a defined period i.e. until such time as her current private debts were repaid.
Supplementary Submissions – Write-off
17. Mr McQuinlan submitted that on the respondent’s analysis of the Financial Information questionnaire signed by Mrs Peters on 25 October 2004, it appeared that her fortnightly income was $815.90 and expenses were $1,004.66. This indicated a fortnightly deficit of $188.76, not taking into account board of $50 per fortnight paid by her adult son. Consequently, he contended that on a simple analysis of fortnightly income v expenditure, it would be reasonable to conclude Mrs Peters would suffer severe financial hardship if Centrelink took action to recover the debt, the subject of these proceedings. However, Mr McQuinlan contended that it was open to temporarily write-off recovery of this debt. Mr McQuinlan stated that several of the expenses asserted by Mrs Peters were in the form of loans to finance companies and these loans were expected to be fully paid off in the next two to four years. Accordingly, it was Mr McQuinlan’s contention that the period of any write-off should not extent beyond 19 August 2006 and recovery should commence from that date.
18. Prior to the resumed hearing, Mrs Peters’ instructing solicitor Mr Scott, in response to the above submission by Mr McQuinlan, acknowledged that the respondent would not oppose an order to write-off recovery of the debt until 19 August 2006.
The Tribunal’s Decision-Making Powers
19. “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 is 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.
20. 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; Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511 at 521; Jebb v Repatriation Commission (1988) 80 ALR 329 at 333).
Statutory Requirements And Case Law
21. Section 1237 of the Social Security Act 1991 provides for circumstances where a debt due by a recipient of social security to the Commonwealth may be waived, either in part or in full. These circumstances arise if the overpayment arose from “administrative error” or whether there were “special circumstances” that led to the overpayment.
22. 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].”
23. For this section of the Social Security Act to apply to Mrs Peters’s factual situation, Mrs Peters must not have contributed, in any way, to the administrative error that led to the overpayment. In addition, Mrs Peters must have received her overpayments of social security entitlements in “good faith”. Both these requirements must be satisfied for Mrs Peters to succeed under the “administrative error” provisions of the Social Security Act.
24. 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”.
25. 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].”
26. For this section of the Social Security Act to apply to Mrs Peters’s factual situation, there must be “special circumstances” that led to the overpayment of social security entitlements. In addition, Mrs Peters 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 Peters to succeed under the “special circumstances” provisions of the Social Security Act.
27. 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.”
28. 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.”
29. 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.”
30. 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.
1236(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.”
31. 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).”
Consideration of the Issues
32. The first issue for the Tribunal to consider is the factual evidence relating to whether the debt could be waived under “administrative error” provisions of the Social Security Act . The relevant provisions of the Act makes it quite clear that, any contribution on the part of the applicant to the administrative error that has led to the overpayment of social security entitlements, will result in a failure to have the debt waived for “administrative error”.
33. Mrs Peters’ oral evidence before the Tribunal was that she did not read all the information contained in any of the notification notices sent to her. For example, she did not read the back of the notices that set out some of her obligations as a social security recipient.
34. Accordingly, the Tribunal concludes that the failure of Mrs Peters to fully read the notification notices sent to her over the period 17 March 1995 to 3 July 2003 (T5, Folios 33-118) has contributed to the “administrative error” that has led to the overpayments. Consequently, the Tribunal finds that the debt cannot be “waived” under the “administrative error” provisions of the Social Security Act.
35. The next issue for the Tribunal to consider is the factual evidence relating to whether the debt could be waived under the “special circumstances provisions” of the Social Security Act. The respondent has conceded that Mrs Peters had not knowingly contravened a provision of the Act (see para 6).
36. With respect to a consideration of the legal meaning of “special circumstances”, the evidence of Mrs Peters, in this regard, can be summarised as follows:
(a)That she was completely unaware of the amount her late husband received in his Dutch pension as he never told her. In addition, she was unaware of any change in his Dutch pension over time. If she raised these questions with him, he had told her that it was “none of her business” and to not interfere. To avoid arguments, she accepted this situation as she did not wish to affect her husband’s coronary condition;
(b)In these circumstances of being unable to discuss his financial situation with her late husband, she had trusted him to complete the forms and that she “just let him do it”;
(c)She acknowledged the notification notices, when both pension payments were made into their joint account, were sent to Mr and Mrs Peters. However, she never opened these jointly addressed notices and so was unaware of what income her late husband received in his Dutch pension;
(d)Mrs Peters distinguished between different forms of notification notices sent to her and that some of these notices (e.g. Exhibit 4: “Your Wife Pension Form”) did not disclose the information as to the sources of income upon which the “Combined Annual Income” was calculated. This situation was a source of confusion for her;
(e)Mrs Peters acknowledged that she only read the front page of the notification notices to see how much she had been paid – never looking at the back page which outlined her obligations as a Social Security recipient;
(f)That she and her late husband went to the Centrelink office about 5 times a year. During these times, she had discussed her pension with Centrelink staff. However, during these discussions, the question of the income received by her late husband’s Dutch pension was never raised;
(g)That her late husband moved out of the house in 1999; and
(h)Under cross-examination, she acknowledged that had she read the material on the back of the notification notices, she would have informed Centrelink if the income amount specified on the back was incorrect.
37. In Re Marshall and Cairns and Secretary, Department of Family and Community Services [2003] AATA 352, the Tribunal was confronted with a reasonably analogous factual case to Mrs Peters’ application for review. Marshall and Cairns were partners and both received the age pension. However, Ms Cairns had no involvement in providing information to Centrelink in relation to Mr Marshall’s income [assets and business investments]. The Tribunal waived Ms Cairns’ overpayments in full for “special circumstances” but decided that the overpayments received by Mr Marshall, over the same time period, were a debt that the Commonwealth could completely recover.
38. In the Marshall and Cairns’ case, the Tribunal found that:
(i)Ms Cairns had no “control” into the financial affairs, business and assets of her partner as he refused to disclose this information to her;
(ii)In such a situation, Ms Cairns completely relied on her partner to provide Centrelink with the current financial information;
(iii)Ms Cairns had never been given any indication by her partner that there was, or may have been, a problem with the entitlement she received – based on the information he had given to Centrelink; and
(iv)The consequence of the omission of Ms Cairns’ partner to disclose financial information to Ms Cairns was that she had no basis to query whether she had been paid the correct social security entitlements.
39. In Schulze and Secretary, Department of Family and Community Services [2004] AATA 705, the Tribunal concluded:
“I note that it has been accepted by this Tribunal in several cases that the obligation to notify of a change in relevant circumstances is personal to the recipient of the social security payment, and cannot be performed by an agent: Re Junor and Secretary, Department of Social Security (1997) 48 ALD 326 citing Re Johns (GC and NN) and Repatriation Commission (1996) 40 ALD 769. …the obligation to notify of changes in relevant circumstances is personal…”
40. The Tribunal notes that Mrs Peters was not a “nominated” person for Centrelink purposes and there is no evidence or information before the Tribunal that Mrs Peters had ever been sent, or completed, an “SS313: Authority for Nominated Person” form.
41. The Tribunal concludes, for the following reasons, that the debt should be waived under the “special circumstances” provision of the Act as the following findings of part represent “unusual” or “uncommon” facts (Beadle’s case) – and do not necessarily have the quality of being “extremely” “unusual” or “uncommon” facts (Boscolo’s case); in addition, that the outcome is unintended or unjust (Groth’s case):-
(a)Mrs Peters’ lack of control and knowledge on the status of her late husband’s Dutch pension as he failed to disclose this information to her;
(b)her complete reliance on her late husband to provide Centrelink with the correct financial information;
(c)no indication given by Mrs Peters’ late husband, over time, that there may be problems with the amount of social security entitlement Mrs Peters received based on the changing amount of Dutch pension he received;
(d)the acknowledgement by the respondent that Mrs Peters had trusted her late husband to perform the role of informing Centrelink of his financial situation;
(e)that Mrs Peters was not a “nominated” person for Centrelink purposes.
(f)in these circumstances, Mrs Peters did not have a basis to raise a query with Centrelink whether she had been paid the correct social security entitlements; and
(g)the following acknowledgement by Mr McQuinlan:
“I should reinforce that on the facts of today it is very clear that Mrs Peters is a person who is quite genuine. And I’d accept her evidence as being honest and forthright.”
42. In making this finding of special circumstances the Tribunal makes the observation that this is not the first occasion for “the department or Centrelink to realise that it was not using the correct information in making its payments of Age Pension to some of the recipients of a pension from the Netherlands. In not carrying out any audit or check for almost seven years, it contributed to Mrs Cymerman’s thinking that she was being paid on a proper basis and that she had fulfilled its requirements”. See Cymerman and Secretary, Department of Family and Community Services [2003] AATA 1354.
43. However, whilst a partial waiver for “special circumstances” was granted in Cymerman’s case, the factual basis for how the overpayments arose and so warrant the description of “unusual” or “uncommon” circumstances in Cymerman’s case can be clearly distinguished from Mrs Peters’ case. Mrs Cymerman, in contrast to Mrs Peters, always had full control and full knowledge of the amount of pension she received from the Netherlands over time.
44. Given this decision, the Tribunal has no need to consider the write-off provisions of the Act.
45. For all of the above reasons, the Tribunal sets aside the decision under review and in substitution therefor decides to waive the overpayments of $4,906.67 of age pension received by Mrs Peters for the period 11 July 1996 to 22 September 2003.
I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of Dr RK Christie, Member
Signed: Camille Banks
AssociateDate/s of Hearing 5 & 26 November 2004
Date of Decision 26 November 2004
Date of Written Reasons 30 November 2004
Counsel for the Applicant Mr P Canning of Counsel
Solicitor for the Applicant Keith Scott and Associates
For the Respondent Mr McQuinlan, Departmental Advocate
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