Petta and Department of Family and Community Services - [2001] AATA 611

DECISION AND REASONS FOR DECISION [2001] AATA 611

ADMINISTRATIVE APPEALS TRIBUNAL )

) No W2000/202

GENERAL ADMINISTRATIVE DIVISION       )
           Re      CAROLINA PETTA
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Ms S McKnight, Member

Date29 June 2001
PlacePerth

Decision      The Tribunal sets aside the decision under review and remits the matter back to the respondent to recalculate the debt to be recovered taking into account that the portion of the applicant's debt which is attributable to the Italian pension should be waived, and that there is a debt in relation to the income attributable to the applicant's superannuation for the period 20 February 1997 until 22 July 1999, which is a debt to the Commonwealth which should not be waived.
  ............(-sgd Ms S McKnight)..........
  Member
CATCHWORDS
SOCIAL SECURITY - Social Security Act – nominee – Italian Pension – superannuation pension – notice – administrative error – payment received in good faith – special circumstances

Social Security Act 1991 – ss 68, 74, 1223, 1224, 1237A
Beadle and Director General of Social Security (1984) 6 ALD 1
Re Vitalone and Department of Social Security (1995) 38 ALD 169
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1998) 152 ALR 127

REASONS FOR DECISION

29 June 2001 Ms S McKnight, Member

This is an application by Mrs Carolina Petta ("the applicant") for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 22 May 2000. In that decision, the SSAT decided to vary the decision of a Centrelink delegate of the Secretary of the Department of Family and Community Services ("the respondent") of 25 October 1999, to raise and recover an overpayment of age pension totalling $13,953.10, for the period 20 February 1997 to 22 July 1999.
The SSAT decided that there had been an overpayment of age pension that constituted a recoverable debt, but that the debt commenced from the first payday after 7 March 1997 because of the receipt of the State government superannuation, and from the first payday after 3 March 1998 because of the receipt of the Italian pension by the applicant.
At the hearing the applicant and was represented by Ms L Levy, of the Sussex Street Community Law Service. The applicant did not attend the Tribunal, but gave evidence by telephone with the assistance of an interpreter. Mr S Ellis, an advocate with the Advocacy & Administrative Law Team, Centrelink, represented the respondent. Mr Peter Petta, son of the applicant, gave evidence at the hearing. The Tribunal had before it documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T documents") and took into evidence the following exhibits:
A1 Note written in Italian, signed "Carolina Petta" on note paper;
A2A form written in Italian dated at the bottom 18.6.97 and accompanied by following page being a printout headed: To Whom It May Concern, dated 18.6.1997;
A3Document headed: Attachment 3, being letter with Centrelink stamp dated 5.8.1998, to Mrs Petta, with attachment being statement signed "C. Petta" dated 7.9.1998;
A4Document headed: Attachment 4 with "Archive Docs" handwritten, on it being a bundle of computer printouts;
A5Two page letter in Italian bearing stamp of 7 May 1997 with Heading "INPS";
R1Bundle of documents comprising 7 pages, date stamped 15.4.1999 with INPS logo at top; and
A6Statement of "Mrs Petta's Income and Expenditure".

Background

In 1997 the applicant was in receipt of an age pension. Her husband was hospitalised in January 1997. On 8 January 1997, she was sent a letter from the respondent care of her son's address informing her of an increase in her pension to $251.00 per fortnight due to a change in her circumstances (T4). On the back of the letter it stated:
"How we have assessed your combined yearly income.
Financial Investments $4.04
Overseas Pension $6,067.41
Superannuation/Annuities $12,930.06
Total Income $19,001.51"

At the time the applicant's husband was in receipt of a State government employees superannuation pension and an overseas pension from Italy.

In his evidence, the applicant's son, Mr Petta explained that he was the eldest son and had assisted both his parents in the past in their Centrelink matters.
"Dad had a stroke then he come good again and then Mum couldn't do anything, because she can't write – she can write Italian, but can't write English – and I look after her paperwork and also Dad, after he got sick, because she can't – she couldn't do it.
Mum and Dad always had some problem and a lot of things, and since Dad passed away, 1997, I come to Vic Park to take care of Mother because she's 85 years of age and I looked after most of her paperwork since she was granted an invalid pension…" (Transcript p 7)

On 31 January 1997 the applicant's husband passed away. Her son informed the respondent of this. On 6 February 1997 the applicant received a letter from the Government Employees Superannuation Board, inviting her to complete application forms for a widow's pension (T5). She completed and lodged the forms with the assistance of her son.
On 10 February 1997 the respondent wrote to the applicant care of her son's address advising of her new rate of pension of $351.80 per fortnight (T6). In the letter it stated:
"Please read the back of this letter. It tells you about your social security rights and what you have to tell us."

On the back of the letter it stated:

"How we have assessed your yearly income.
Financial Investments $2.02
Total Income $2.02"

It also stated that the applicant must inform the respondent within 14 days "if your income … increases; if your income as shown above is incorrect; …".

The applicant was granted a widow's pension by the Government Employees Superannuation Board, payable from 1 February 1997. On 7 March 1997, she received the first payment of $1,243.28, including arrears, with subsequent regular payments thereafter, as per a letter to the respondent dated 6 July 1999. That letter (T14) lists all payments made to the applicant between 7 March 1997 and 2 April 1999. Payment rates and amounts varied from time to time over the period.
In or about April 1997, the applicant wrote to Italy querying her entitlement to an Italian Pension (Exhibit A1). Mr Petta stated that following advice received from the Italian INPS in May 1997, he attended Centrelink to make inquiries about his mother's application for an Italian pension. On 18 June 1997, he obtained from the respondent details of his mother's age pension to accompany her application for the Italian pension (Exhibit A2). Mr Petta gave evidence that he went to the Italian Consul to complete paperwork, which was then sent to Italy.
On 21 January 1998 the Italian INPS wrote to the applicant advising she had been granted a survivor's pension which would be payable from 1 February 1997 (T12, p46). Mr Petta states he took the letter and his mother's Italian pension bankbook in to Centrelink, but that the officer he dealt with wasn't interested in taking photocopies or investigating what his mother was entitled to. Mr Petta says he was told to "come back when the money comes." (Transcript p 20).
In March 1998, the applicant received a letter and cheque for arrears of Italian pension for the amount of $7779.17 dated 3 March 1998 (T7, p25). Mr Petta said he deposited the cheque in the bank and took the letter to Centrelink a few days after. He stated that he was told by the officer he spoke to that Centrelink needed a special certificate or article 17 letter, which he and his mother did not receive. He said that his mother did receive such a letter the following year, which he took in to Centrelink.
In April 1999 the respondent received an Article 17 letter regarding the applicant's Italian pension (T11). On 16 April 1999 a letter was sent to the applicant at her son's address to advise that her fortnightly income was reducing to $315.30 starting from 29 April 1999 and that her overseas pension income was $5187.84 (T9). On 5 May 1999, another letter was sent to the applicant, this time listing her yearly income as composed of "Deemed Investments $120.00; Overseas Pension – Not Exempt $4976.36; Total Income $5096.36" (T10). Both letters contained the requirement to advise the respondent within 14 days if the income stated increased or was incorrect.
On 11 June 1999, Mr Petta provided to Centrelink (and Centrelink photocopied) the documents regarding the grant and amount of Italian pension paid to the applicant. (T12 pp 47-55). On 28 June 1999, Mr Petta attended Centrelink to discuss his mother's age pension and it was discovered that the respondent was not aware of her superannuation payments. On 8 July 1999 the respondent received notice from the WA State Superannuation Board advising the superannuation amounts paid to the applicant (T14).
In calculating the applicant's rate of age pension, the respondent did not take account of the applicant's Italian pension payments prior to 16 April 1999, or the applicant's superannuation payments prior to 22 July 1999. On 25th October 1999 the respondent calculated an overpayment of age pension of $13,953.10 for the period 20 February 1997 to 22 July 1999 (T18).

On 8 November 1999 the applicant's son on behalf of his mother requested a review of the decision to raise and recover the debt. A review of this decision was conducted by a delegate of the respondent on the 4 January 2000 (T24), which affirmed the original decision.
On the 22 May 2000 the SSAT decided to vary the decision under review (T2). It decided that there was an overpayment of age pension which constituted a recoverable debt. It found that the applicant's income changed firstly when she received, on 7 March 1997, the payment from the Government Employees Superannuation Board and secondly, on 3 March 1998, when she received her Italian pension from Italy. It found that as the respondent was not advised by the applicant within 14 days of receiving these monies and pursuant to section 74 of the Social Security Act 1991, her age pension became payable at a reduced rate from these dates (T2, p9).
Applicable Legislation

The following legislation is relevant:
Social Security Act 1991
Section 68 Secretary may require notice of the happening of an event or a change in circumstances
68(1) The Secretary may give a person to whom an age pension is being paid a notice that requires the person to inform the Department if:
(a)       a specified event or change of circumstances occurs; or
(b)the person becomes aware that a specified event or change of circumstances is likely to occur.
…
68(3) Subject to subsection (3A) a notice under subsection (1):
(a)       must be in writing; and
(b)       must be given personally or by post; and
(c)must specify how the person is to give the information to the Department; and
(d)must specify the period within which the person is to give the information to the Department; and
(e)       must specify that the notice is a recipient notification under this Act.
Section 74 Automatic rate reduction – recipient not complying with section 68 notification obligations
74. If:
(a)a person who is receiving an age pension is given a notice under section 68; and
(b)the notice requires the person to inform the Department of the occurrence of an event or change in circumstances within a specified period (in this section called the "notification period"); and
(c)       the event or change in circumstances occurs; and
(d)the person does not inform the department of the occurrence of the event or change in circumstances within the notification period in accordance with the notice; and
(e)because of the occurrence of the event or change in circumstances, the person's rate of pension is to be reduced;
the pension becomes payable to the person at the reduced rate on the day on which the event or change in circumstances occurs.
Section 1223 Debts arising under this Act and the 1947 Act
1223.(1) Subject to sections (1A) and 1(B), if an amount has been paid to a person by way of a social security payment on or after 1 October 1997 and:
(a)the recipient was not qualified for the social security payment when it was granted: or
(b)       the amount was not payable to the recipient;
the amount so paid is a debt due to the Commonwealth.
…
1223.(5) If:
(a)an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997; and
(b)because the received amount had not been correctly calculated using the relevant rate calculator, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment that should have been paid to the person under this Act;
the difference between the received amount and the correct amount is a debt due to the Commonwealth.
Section 1224.(1) Debt arising from recipient's contravention of Act
1224.(1) If:
(a)an amount has been paid to a recipient by way of a social security payment; and
(b)     the amount was paid because the recipient or another person:
(i)        made a false statement or a false representation; or
(ii)failed or omitted to comply with a provision of this Act or the 1947 Act;
the amount so paid is a debt due by the recipient to the Commonwealth.
Section 1237A.(1) Waiver of debt arising from error
1237A.(1)       Subject to subsection (1A), the Secretary must waive the right to recover the portion 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 portion 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).

Issues

Notice

Ms Levy contended that the letters sent by the respondent requiring the applicant to notify within 14 days if her income increased or the amounts shown were incorrect, did not meet the requirements of section 68 of the Act. The letters dated 10 Feb 97, 16 April 1999 and 5 May 1999 were addressed to the applicant's name and sent to her son's address in Mandurah (T6, T9, T10). Ms Levy contended that although Mr Petta has assisted the applicant with all her Centrelink matters from the date she received a social security pension in 1974, Mr Petta was not and had not ever been her nominee. Therefore, Ms Levy maintained, when correspondence from the respondent was sent to Mr Petta's address rather than to the applicant's address, it did not satisfy the legislative requirement that "the person to whom an age pension is being paid" be given notice.
In his evidence, Mr Petta stated that on several occasions he went in to Centrelink offices to ask that he be sent a copy of his mother's mail, and that she still be sent her mail at her address. This was for convenience, as he often moved between his own and his mother's residences. In 1994 and 1998, the applicant had signed forms allowing the release of information to a third party, that being Mr Petta (A3). The respondent's Guide to the Social Security Act at 8.4.1.30 states that
"A request for a customer's mail to be directed to a third person, with the payment still being directed to and handled by the customer, is not a nominee arrangement. Effectively the third person is being nominated as an agent of the customer in dealings with Centrelink.
The third person must consent to the arrangement and be aware of the implications of not advising Centrelink of a change in circumstances. The customer MUST still sign:
·any forms that have to be returned, AND
·any notifications of changed circumstances.
Mr Petta told the Tribunal that when he received a letter from the respondent addressed to his mother, he would read it and inform his mother of the contents. Due to the applicant's lack of English language skills and at her request, Mr Petta would go through her mail and read out to her the contents explaining the meaning of the various letters. This was confirmed by the applicant's evidence.
To ensure that he received all mail Mr Petta arranged for a neighbour to pick up mail from his Mandurah address. When asked about the letter of 10 February 1997 (T6), he said that he remembered receiving that particular letter and noted the details and particularly the income amount listed on the back of the letter (Transcript p 28).
The Tribunal finds that notice was given to the applicant by the respondent pursuant to section 68(1) of the Act. Letters from the respondent were received and read by the applicant's son who informed the applicant of their contents. This was at the applicant's request and was an arrangement which suited the family. The Tribunal also finds that while a nominee arrangement was not formalised by the respondent, the lack of a formal arrangement was not responsible for the overpayment. Mr Petta gave evidence he was aware the respondent needed to be informed in regard to errors and changes of circumstances. Indeed, he had been in to Centrelink many times to assist the applicant as well as his father in the past, to inform of matters, to ask questions and to obtain forms and statements. He had also taken the applicant in on some occasions as necessary. The Tribunal finds that the applicant did receive notices in accordance with sections 68(1) and 68(3) of the Act.
Superannuation
Neither the applicant nor Mr Petta advised the respondent that superannuation had been granted to the applicant following the death of her husband. In his evidence, Mr Petta said that he did not inform Centrelink of the changes relating to the applicant's superannuation payments. He had previous experience prior to his father's death whereby the respondent 'automatically' assessed his mother's rate of pension based on his father's superannuation (T4). He assumed that the respondent would know his mother was entitled to receive superannuation due to his father's death. He believed that the respondent knew the applicant would be receiving superannuation and had worked out her age pension entitlements accordingly.
In order for the applicant to receive a widow's superannuation pension she had to complete and submit application forms. She was subsequently paid superannuation pension with arrears on 7 March 1997 (T14). This occurred after receipt of the letter of 10 February 1997 from the respondent setting out the applicant's notification obligations and income assessment basis and amounts. During the time period from the grant of the superannuation widow's pension until June 1999, the applicant also received several notifications from the Government Employees Superannuation Board regarding changes in superannuation payment. (T8, Transcript p29). The respondent was not informed of any of these changes.
The Tribunal finds that the applicant omitted to comply with a notice issued in accordance with section 68(1) to inform the respondent within 14 days of an increase in her income. Pursuant to section 1224(1) of the Act, the resulting overpayment is a debt due to the Commonwealth.
The Tribunal considered the finding of the SSAT that the debt in relation to the superannuation income commenced from the date the payments were first received by the applicant. Pursuant to section 74 of the Act, where a person receiving an age pension does not comply with a section 68 notice, the pension becomes payable at the reduced rate from the day on which the event or change of circumstances occurs. The change in circumstances relates to the applicant's income attributable to the widow's pension superannuation.

Under section 8 of the Act, the term "income" refers to an income amount earned, derived or received by a person, by any means and from any source, for that person's own use or benefit. Income may be derived prior to or at the same time it is received. The income received on 7 March 1997 was backdated to and was payable from 1 February 1997, the day after the applicant's husband's death (T14). The applicant had an entitlement to the superannuation pension from 1 February 1997 (T5, T14). The Tribunal finds that the income was derived from that date. That the applicant had to make a claim for the superannuation payments before receiving them does not alter fact that the payments were income derived from the date the superannuation was payable. The respondent's calculation of the overpayment from the date at which the income was derived is consistent with the requirements of section 8 and section 74 of the Act.
Italian Pension
In her submission Ms Levy contended that the applicant's son, on behalf of his mother, notified the respondent within the 14 days required in relation to the applicant's Italian pension. Mr Petta's evidence was that he attended Centrelink on 18 June 1997 to obtain an income statement which was required for his mother's Italian pension application (A2). On that visit he informed the respondent that the applicant was applying for the Italian survivors pension. His evidence was that he again attended Centrelink when his mother received documents from the Italian INPS notifying her that the pension had been granted. He took those documents with him, including the Italian pension passbook (T12, dated 21 January 1998). The documents contained details of the granting of the pension and the pension amounts. All documents were in Italian. Mr Petta said he showed the documents to an officer of the respondent and informed the officer that the pension had been granted. He said that he was told that there was no need for any of the documents to be photocopied and to come back when the money was received. The Tribunal accepts Mr Petta's account of that visit. The Tribunal finds Mr Petta to be an honest and truthful witness and his account to be a generally accurate one. He consistently described the visit in detail a number of times. Mr Petta also described consistently that when the respondent, in April 1999, asked for the documents so they could be translated, he expressed surprise and questioned why they did not photocopy them when he had previously brought the documents in.
Mr Petta stated that he further attended Centrelink as requested when the letter and cheque arrived from Italy and again informed the respondent of the applicant's Italian pension. He said that he was told that Centrelink required a special certificate or letter, which he did not receive.
The Tribunal accepts Mr Petta's account and finds that Mr Petta took action to inform the respondent in relation to the applicant's application for, and granting of, the Italian survivors pension. He attended Centrelink, took with him relevant documents which he showed to officers of the respondent, and informed the respondent that the pension had been granted. The applicant and her son believed that by his actions the respondent was kept informed of all matters relevant to the application, granting and receipt of the Italian pension. The Tribunal finds that the applicant met notification obligations in relation to the Italian survivor's pension pursuant to section 68 of the Act. Accordingly there is no debt in relation to the Italian pension pursuant to section 1224(1) of the Act.
Mr Ellis submitted that from 1 October 1997 any payment of age pension to the applicant in excess of her entitlement is a debt due to the Commonwealth via section 1223(1) and 1223(5) of the Act. Ms Levy submitted that any debt pursuant to section 1223 should be waived due to administrative error by the respondent in accordance with section 1237A(1) of the Act. Under sub-section 1237A(1) the Secretary must waive the right to recover the portion 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 portion of the debt.
In her submission, Ms Levy for the applicant referred to Re Vitalone and Department of Social Security (1995) 38 ALD 169 in relation to the overpayment of an invalid pension and a wife pension to applicants of Italian origin. In that decision Presidential Member Mathews, J stated:
"I think it much more likely that the incident occurred as Mr Vitalone described, and the officer failed in understanding the significance of what Mr Vitalone was telling her. His English, as I have already commented, is quite limited.
Assuming this to be the case, then the situation is essentially attributable to a lack of communication between Mr Vitalone and the Department. It is a lack for which the Department, not the applicants, should bear responsibility.
In that decision it was held that oral notification was sufficient to comply with notification obligations and that if the significance of the information provided was not understood due to Mr Vitalone's limited English, it was incumbent on the Departmental officer to obtain appropriate assistance.
The documents pertaining to the Italian pension provided to the respondent by Mr Petta were in Italian and their significance would not have been readily determined without translation. In addition Mr Petta, as evident by his testimony at the Tribunal hearing, is at times difficult to understand due to his accent, English language skills and cultural background. The respondent did not arrange for translation of the documents at the time they were presented nor seek assistance to communicate with the applicant or her son in relation to them. The Tribunal finds that at all relevant times the applicant's son on her behalf provided information to the respondent about the applicant's Italian pension. The respondent did not act on the information concerning the Italian pension provided by Mr Petta.
The Tribunal finds that there was an administrative error by the respondent in not taking into account the information provided by Mr Petta about the applicant's Italian pension. As a consequence the Italian pension was not assessed by the respondent in calculating the applicant's rate of age pension prior to 16 April 1999. The Tribunal finds that the overpayment relating to the Italian pension was attributable solely to administrative error by the respondent.
The Tribunal considered whether the overpayment of the age pension due to the receipt of the Italian pension was received by the applicant in good faith.
In Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1998) 152 ALR 127, the term "good faith" and in particular "received in good faith" was considered in relation to the waiver of debt resulting from overpayment of AUSTUDY benefits. In his decision, Justice Finn stated in part as follows:
"The burden of the formula can vary significantly given the purpose it is intended to serve in a given setting. In one context it can focus inquiry upon a person's reason for action (eg as with the good faith duty of company directors); in another, to a person's state of knowledge when a particular event occurs.
For my own part, I consider the burden of the formula in the s289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie 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."

Section 1237A of the Act has similar wording and intent to section 289 of the Student and Youth Assistance Act 1973.

The Tribunal finds that the applicant received the monies in good faith. The applicant has very limited reading, writing and spoken English skills. She was aged 81 years at the time the Italian pension was granted. She fully relies on her son in all dealings with the respondent as well as in other financial matters. Based on the evidence before it, the Tribunal finds that the applicant believed all relevant information had been provided to the respondent and that all such matters were effectively being taken care of through her son.
In his evidence Mr Petta said that he believed that the Italian pension amount paid to the applicant had been calculated and adjusted according to her Australian age pension payment details. An income statement was provided with the application to the Italian Pension Board showing details of the applicant's Australian age pension. He believed the Italian pension was adjusted accordingly. He believed the amount of Age pension and Italian pension received were the correct amounts.
The Tribunal finds that the applicant's state of mind was that her son was taking care of all pension matters and that the amounts she was receiving were the correct amounts. Accordingly the Tribunal finds that the applicant received the age pension payments in good faith.
In accordance with section 1237A(1) of the Act, the portion of the debt in relation to the Italian pension should be waived.
The Tribunal considered whether any portion of the applicant's debt could be waived due to special circumstances, pursuant to section 1237AAD of the Act. Special circumstances in general are taken to be where there is something which would take the matter out of the ordinary case, or where the particular circumstances are unusual, exceptional or uncommon. Whether there are special circumstances will depend on the circumstances of the particular case as referred to in Beadle v Director General of Social Security (1985) 6 ALR 225.
On the basis of all the evidence provided, the Tribunal finds that there are no special circumstances which apply pursuant to section 1237AAD of the Act. There is no evidence of significant financial hardship, nor are there other circumstances which constitute special circumstances under s1237AAD of the Act.
Decision
The Tribunal sets aside the decision under review and remits the matter back to the respondent to recalculate the debt to be recovered taking into account that the portion of the applicant's debt which is attributable to the Italian pension should be waived, and that there is a debt in relation to the income attributable to the applicant's superannuation for the period 20 February 1997 until 22 July 1999, which is a debt to the Commonwealth which should not be waived.
I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Ms S McKnight, Member
Signed:         ..................(-sgd W.Treasure -)......................
  Associate
Date of Hearing  29 January 2001
Date of Decision  29 June 2001
Counsel for the Applicant        Ms L Levy
Counsel for the Respondent    Mr S Ellis