Phillips and Secretary, Department of Family and Community Services
[2005] AATA 966
•4 October 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 966
ADMINISTRATIVE APPEALS TRIBUNAL Nº V2005/210
GENERAL ADMINISTRATIVE DIVISION
Re: MAUREEN SHIRLEY PHILLIPS
Applicant
And: SECRETARY,
DEPARTMENT OF FAMILY ANDCOMMUNITY SERVICES
Respondent
DECISION
Tribunal: Mr C. Ermert, Member
Date: 4 October 2005
Place: Melbourne
Decision:The Tribunal varies the decision under review to the extent that Mrs Phillips owes a debt to the Commonwealth for the overpayments that occurred from 26 August 2000 to 17 July 2004 but the portion of debt accrued after 9 February 2001 is waived. The matter is to be remitted to the respondent for the calculation of the amounts involved.
(sgd) C. Ermert
Member
SOCIAL SECURITY – benefits and entitlements – age pension – overpayment – whether applicant failed to notify Centrelink of her husband's income variations – recovery of debt – whether right to recover debt should be waived – whether there has been an administrative error – whether there are special circumstances
Social Security Act 1991
Beadle v Director‑General of Social Security (1985) 7 ALD 670
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Beadle and Director‑General of Social Security (1984) 6 ALD 1
Re Callaghan and Secretary, Department of Social Security (1997) 45 ALD 435
REASONS FOR DECISION
4 October 2005 Mr C. Ermert, Member
INTRODUCTION
1. Mrs Maureen Shirley Phillips has been in receipt of age pension since 5 April 2000. Her husband, Mr Albert John Phillips, started full‑time work with the Driver Education Centre on 14 August 2000. On 28 August 2000 a notice was sent by Centrelink to Mrs Phillips advising that the information used for calculating her age pension was a combined annual income of $30,941.32. The letter also contained instructions for her to inform Centrelink within 14 days if the combined income increased.
2. Mr Phillips’ salary varied almost every fortnight. However, Mr and Mrs Phillips did not notify each change to Centrelink. It was their understanding that Centrelink staff was telling them to provide Mr Phillips’ annual income when he received his tax assessment. Mrs Phillips advised of changes to Mr Phillips' earnings on 9 February 2001, 17 April 2002 and 15 November 2003 (T19). On each of those occasions Centrelink sent notices to Mrs Phillips advising her of the new rate of combined income upon which her age pension was based and containing the instructions to notify Centrelink within 14 days of any increase in earnings.
3. As a result of a data matching program review completed on 27 April 2004, Centrelink determined that Mr Phillips’ earnings had exceeded the amounts Mrs Phillips had advised Centrelink of; and as a result there had been an overpayment of Mrs Phillips’ age pension of $8066.38 between 26 August 2000 and 17 July 2004. Centrelink raised a Debt determination and submission in that amount. Centrelink advised Mrs Phillips of the overpayment and debt in a letter dated 22 September 2004.
4. Mrs Phillips requested a reconsideration of the decision on the grounds that she had supplied details of her husband's income to Centrelink on a regular basis and that Centrelink did not pick up that she was being overpaid when it should have. On 15 November 2004 a customer service officer determined that the decision was correct. The matter was then forwarded to an authorised review officer (ARO) of Centrelink. The ARO recorded that Mrs Phillips had been told by Centrelink staff to advise Centrelink of Mr Phillips’ annual income when he received his tax assessment. Nevertheless, he affirmed the decision on 3 December 2004.
5. On 24 December 2004 Mrs Phillips applied to the Social Security Appeals Tribunal (SSAT) for a review of the ARO's decision. On 8 February 2005 the SSAT affirmed the decision under review. The basis of the SSAT decision was that, although Mrs Phillips advised Centrelink of annual increases in her husband’s income, she did not notify Centrelink of changes in her husband’s income as required. As a result, Mr Phillips’ earnings for the period in question were greater than the amounts declared by Mrs Phillips. Consequently, Mrs Phillips was paid more than her correct entitlement. The SSAT was unable to find special circumstances sufficiently different from any person reliant on age pension to justify waiver of any part of the debt. On 7 March 2005 Mr Phillips applied for a review of the SSAT decision.
6. At the start of the hearing Mr Phillips advised the Tribunal that Mrs Phillips was not well enough to attend the hearing and that the matter was so stressful for her that she would not be able to give evidence personally at any time, even by telephone. Under the circumstances as described by Mr Phillips, and with the agreement of the parties, the Tribunal heard the matter on the basis of the available documentation and submissions from the parties.
THE ISSUES
7. The issue in this matter are :
· is there a debt to the Commonwealth; if so,
· must the debt be waived, or
· should the debt be waived?
8. The standard of proof for the consideration of these issues is on the balance of probabilities.
Is there a debt to the Commonwealth?
9. The first issue to be decided is whether there is a debt due to the Commonwealth. Section 1223(1) of the Act provides:
1223(1) Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
10. In this case it is not in dispute that Mrs Phillips has been paid in excess of her entitlement. Mrs Phillips' payments were based on the information regarding Mr Phillips' earnings, provided to Centrelink on a roughly annual basis. However, Mr Phillips’ earnings varied considerably and he consistently earned more than the amount of income being used to assess his wife’s rate of age pension. There is also no dispute that Centrelink has correctly applied the Rate Calculator such that the amount overpaid between 26 August 2000 and 17 July 2004 is $8,066.38.
11. Section 1223(1AB) prescribes a number of reasons for a person to be taken to be not entitled to obtain the benefit of a payment. These reasons include payments made as a result of an administrative error or as a result of contraventions of the social security law, false statements or misrepresentations. In this case there is no dispute between the parties that the applicant has no entitlement to the payment received. There is no evidence of administrative error in determining the benefits paid, calculated on the basis of the information provided to Centrelink by Mrs Phillips. There are also no issues in this case of contraventions of social security law, false statements or misrepresentations.
12. On the evidence in the documentation, not disputed by the parties, I find that a payment has been made to Mrs Phillips to which she was not entitled; and therefore Mrs Phillips owes a debt to the Commonwealth.
Must the debt be waived?
13. Section 1237A(1) of the Act provides that:
…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... (emphasis added)
14. Mr Phillips contends that he and his wife complied with the instructions given to them by Centrelink. Their understanding, from what they were told by Centrelink staff, was that they only had to advise Centrelink of his annual income when he received his tax assessment. Accordingly, they provided details of Mr Phillips’ earnings in the form of annual taxation documents. When sending the taxation assessments to Centrelink Mrs Phillips included a covering letter asking to be advised if any further information was required. They received no requests from Centrelink in response to those covering letters. Further, Mr Phillips stated that, had he and his wife known of the requirement to notify Centrelink every time his earnings varied, he would have done so. Mr Phillips had earlier made a similar statement to the ARO, as recorded in the ARO’s decision dated 3 December 2004 (T22, p128). Since becoming aware of the requirement to provide information on each occasion his fortnightly earnings vary, Mr and Mrs Phillips have done so. Mr and Mrs Phillips believed that they had, at all times, supplied all the required information and that Centrelink should have discovered any error much earlier.
15. On each occasion of being provided with information on the earnings of Mr Phillips Centrelink sent a notice to Mrs Phillips confirming the income used to calculate the regular age pension payments. The notices include the statement:
…
WHAT YOU MUST TELL US
You must tell us within 14 days…if your combined income…increases.
16. Mr Phillips concedes that Mrs Phillips did not inform Centrelink within 14 days of each increase in his earnings. Changes to his earnings occurred almost every fortnight throughout the period in question; but this information was not provided to Centrelink within the required 14 day periods. It was Mr and Mrs Phillips’ understanding that they were only required to provide the information annually. It is clear that Mrs Phillips did not provide the information as required. This constitutes an error by Mrs Phillips.
17. As a result of this error by Mrs Phillips, I find that the debt can not be attributed solely to an administrative error of the Commonwealth. The Secretary is therefore not obliged by s 1237A(1) of the Act to waive the right to recover the debt.
18. In regard to the applicant’s request for consideration of waiver of part of the debt, a note to s 1237A(1) specifically disallows the 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.
Should the debt be waived?
19. Section 1237AAD of the Act gives the Secretary a discretion to waive the right to recover all or part of the debt if the Secretary is satisfied that:
· the debt did not result from the debtor knowingly making a false statement or representation;
· that the debt did not result from the debtor knowingly failing to comply with a provision of the Act; and
· there are special circumstances that make it desirable to waive; and
· it is more appropriate to waive than write off the debt.
Each of these criteria is considered in turn.
Did Mrs Phillips knowingly make a false statement?
20. There is no contention by the respondent that Mrs Phillips at any time made a false statement or representation to Centrelink. Indeed, the evidence is that Mr and Mrs Phillips provided copies of Mr Phillips' taxation documentation in order to ensure that they made full and complete disclosure of his earnings, albeit on an annual basis. I am satisfied that the debt did not arise from the debtor knowingly making a false statement or representation.
Did Mrs Phillips knowingly fail to comply with the Act?
21. The next issue is whether Mrs Phillips knowingly failed to comply with a provision of the Act by not providing advice to Centrelink within 14 days of an increase in Mr Phillips’ earnings. There is no question that Mrs Phillips did not provide the information as required. The question arises whether Mrs Phillips knowingly failed to provide the information.
22. The respondent submits that payment notices were sent to Mrs Phillips requiring her to notify Centrelink of any increases in earnings. The difficulty I have is that there is no evidence that either Mrs Phillips or Mr Phillips read the notices in sufficient detail to understand the instructions.
23. There is evidence that Mr and Mrs Phillips felt they had no need to read the notices in detail. According to Mr Phillips, they were advised orally on a number of occasions by Centrelink staff to submit the required information annually. This possibility was conceded by Mr Todd when he said "…Centrelink would accept that advice could very well have been given back in 2000 – they only had to advise of the annualising – his annual salary” (trans p7).
24. When sending Mr Phillips’ tax statements to Centrelink Mrs Phillips wrote covering letters asking to be informed if further information was required. There were no responses from Centrelink to these requests. Mr Phillips stated "…Never at any time have we received a return letter asking for information. So we were led to believe that we fulfilled their criteria” (trans p10).
25. Even had Mr and Mrs Phillips read the notices in detail, it is not clear that they would have understood the requirements contained within it. Mr Phillips submitted that the notices were difficult to understand. He stated
…Various departments that I dealt with have agreed in sympathy, if you like, with me – yes we understand the information is very hard to follow …Well okay, if you are admitting it is hard to follow, why don’t you clear it up? Make it easy to read English so people do understand, and know what their rules and regulations are. (trans p6).
26. Taking into account the concession by Mr Todd of the possibility that Mr and Mrs Phillips may have been given incorrect information by Centrelink staff, and the lack of reply by Centrelink to Mrs Phillips' covering letters, I am satisfied that Mrs Phillips believed that she had provided all the required information. Under those circumstances, I find it quite possible that Mr and Mrs Phillips felt no need to read the notices in detail. Even had they done so, it is not clear that they would have understood the obligations contained within the detail of the notice. I am satisfied that Mrs Phillips did not knowingly fail or omit to comply with a provision of the Act.
27. The meaning and application of the word “knowingly” in a similar context was explored by Deputy President Forgie in Re Callaghan and Secretary, Department of Social Security (1997) 45 ALD 435 (Callaghan). This matter is distinguished from Callaghan due to the lack of any evidence that Mrs Phillips read any of the notices in sufficient detail to be aware of the 14‑day notification requirement. In Callaghan the applicant conceded that he had read the statement of the requirement and it was found that he was aware of the requirement. In this matter there is no evidence of such awareness.
Are there special circumstances that make it desirable to waive?
28. Section 1237AAD(b) of the Act provides for consideration of special circumstances (other than financial hardship alone) that make it desirable for the Secretary to waive the payment of the debt. In his submission Mr Phillips requested consideration of his wife’s illness. He contended that her illness was exacerbated by this issue; that it got to the point where she just broke down and started getting severe pains and that he had to take her to hospital. He also stated that the dispute with Centrelink exacerbated her stroke.
29. Mr Todd submitted that illness and stress in relation to the debt are fairly common experiences for Centrelink claimants who find themselves facing a debt and therefore cannot be seen as unusual in the way that word is interpreted in Re Beadle and Director‑General of Social Security (1984) 6 ALD 1.
30. The meaning of special circumstances has been considered in a number of previous cases. In Re Beadle Toohey J stated (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 have a particular quality of unusualness that permits them to be described as special. (emphasis added)
In the same case on appeal (Beadle v Director‑General of Social Security (1985) 7 ALD 670 at 674), the Full Federal Court reiterated the need to avoid limiting the scope of what might constitute special circumstances when it explained that:
…We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General bearing in mind the purpose for which the power is given. The phrase "special circumstances", although lacking precision, is sufficiently understood in our view not to require judicial gloss.
In a later case, Groth v Secretary, Department of Social Security (1995) 40 ALD 541, at 545, Keifel 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…i]t 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. (emphasis added)
31. Although Mrs Phillips' illness may not be considered unusual, uncommon or exceptional, it is the context of the circumstances that differentiates this matter. Mr and Mrs Phillips have, at all times, provided to Centrelink all the information they believed, and had good reason to believe, was required. There was no attempt to mislead. On three occasions, they had asked in writing to be advised of any further requirements, without response from Centrelink. It is clear that Mr and Mrs Phillips at all times intended to fully meet the requirements of the Act and had a reasonable belief that they were fully compliant.
32. On the other hand, Centrelink clearly failed to act on the information that was provided to it. After submission of the first of Mr Phillips’ taxation assessments, Centrelink had sufficient information to recognise that a discrepancy existed between the previously stated earnings and actual earnings. The discrepancy was not recognised, nor was it investigated. Indeed, the same occurred each year over the period in question without Centrelink staff recognising the situation of an accumulating overpayment.
33. In this case we have Mrs Phillips acting in a reasonable belief that she is meeting all the requirements, at the same time as Centrelink staff is failing to recognise the existence of an accumulating overpayment and failing to act to remedy the situation. I consider that in this context the circumstances are markedly different from the usual run of cases. Further, there is an element of unfairness to the applicant in this situation that is a feature out of the ordinary. Accordingly, I find in this case that the circumstances are sufficiently out of the ordinary to be special. I also find that the special circumstances are such as to make it desirable to waive some or all of the debt.
Is it more appropriate to waive than write off the debt?
34. Mr Todd advised that the total debt was $8,066.38. Of this an amount of $1258 has so far been recovered. These figures are not in dispute. The current rate of recovery is $20 a fortnight. Mr Phillips does not claim this to be a financial hardship. However, the question here is not one of financial hardship. It is whether it is more appropriate to waive than write off all or part of the debt.
35. The T documents (T6) show that on 9 February 2001 Centrelink raised a notice showing a combined annual income for the calculation of pension payment of $26,721.86. This amount was significantly reduced from the $31,107.46 notified on 31 August 2000. Such a reduction should have raised an awareness in Centrelink staff of the possibility of an overpayment and initiated questions of clarification to Mrs Phillips. There is no evidence that such a preliminary investigation was undertaken. Had the possibility of overpayment been recognised at this point of time the amount of debt owed by Mrs Phillips would have been significantly less than the final amount of over $8000. The debt could have been repaid comparatively quickly and easily by Mrs Phillips. The stress to Mrs Phillips would have been avoided and the expense of the recovery process considerably reduced.
36. Having regard to the proper use of public money, the debt accrued until 9 February 2001 should properly be recovered. The debt accrued after that date could and should have been avoided by the actions of diligent staff of Centrelink. I find it appropriate to waive that portion of the debt accrued after 9 February 2001.
FINDINGS
37. I make the following findings in regard to this case:
· A debt is due to the Commonwealth by Mrs Phillips as a result of an overpayment of age pension due to a failure by Mrs Phillips to advise Centrelink within 14 days of each increase in Mr Phillips' earnings between 26 August 2000 and 17 July 2004.
· The amount of debt has been correctly calculated at $8066.38.
· The debt is not attributable solely to an administrative error made by the Commonwealth. Therefore, there is no obligation under s1237A(1) of the Act to waive the right to recover the debt.
· The debt did not result from Mr and Mrs Phillips making a false statement or false representation.
· The debt did not result from Mr and Mrs Phillips knowingly failing or omitting to comply with a provision of the Act.
· There are special circumstances other than financial hardship alone that make it desirable to waive part or all of the debt, those circumstances being that at all times Mr and Mrs Phillips provided the information as orally instructed by Centrelink staff and the existence of the overpayment should have been discovered by Centrelink staff on 9 February 2001, and
· It is more appropriate for the Secretary to waive that part of the debt that accrued after 9 February 2001.
DECISION
38. The decision under review is varied to the extent that Mrs Phillips owes a debt to the Commonwealth for the overpayments that occurred from 26 August 2000 to 17 July 2004 but the portion of debt accrued beyond 9 February 2001 is waived. The matter is to be remitted to the respondent for the calculation of the amounts involved.
I certify that the thirty‑eight [38] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr C. Ermert, Member
(sgd) Catherine Thomas
ClerkDate of Hearing: 29 July 2005
Date of Decision: 4 October 2005
Advocate for applicant: Mr Phillips (husband of the applicant
Advocate for the respondent: Mr M. Todd, Centrelink
0
0
0