Pizarro and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2012] AATA 9

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2012] AATA 9

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2011/1557

GENERAL ADMINISTRATIVE DIVISION		)
Re		SYLVIA PIZARRO

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal M D Allen, Senior Member

Date12 January 2012  

PlaceSydney

Decision The decision under review is affirmed.

.....................[sgd]........................

M D Allen
  Senior Member

CATCHWORDS

SOCIAL SECURITY – overpayment of parenting payment – whether overpayment due to negligence on the part of Centrelink – no grounds for write-off or waiver.

Social Security Act 1991, s 1223, 1236, 1237A, 1237AAD

Secretary Department of Social Security v Ellis (1997) 26 ALD 1

REASONS FOR DECISION

12 January 2012 M D Allen, Senior Member

1.      By application made the 27^th day of April 2011, the Applicant sought review of a decision by the Social Security Appeals Tribunal that affirmed a prior determination to raise and recover from the Applicant an overpayment of parenting payment (single) in the sum of $15,829.15, representing overpayments incurred by the Applicant in the period 6 April 2009 to 5 July 2010.

2.      The Applicant originally approached Centrelink for payment of disability support pension following her taking leave from her employer as a result of illness.  Originally the Applicant was granted sickness allowance but, following further advice from Centrelink officers, she made an application for parenting payment (single) which was granted with effect from 6 January 2009.

3.      By letter dated 10 February 2009 Centrelink notified the Applicant of the grant of parenting payment (single), and also informed her of the requirement to notify Centrelink should there be any change to her income or assets.

4.      Subsequently other notices were issued to the Applicant instructing her to advise Centrelink should there be any change to her assets or income.

5.      In or about March 2009 the Applicant became aware that she could be eligible for income protection insurance through her superannuation provider.  She applied and following investigations by and correspondence with an insurance company, the Applicant was advised by the said insurance company that she was entitled to income protection insurance and that payments would be backdated to 6 April 2009. 

6.      The Applicant states that she asked the insurance company to advise Centrelink of their decision and the payments to be made to her but that company refused. 

7.      The income protection payments were at the sum of $3,042.31 gross per month. 

8.      The Applicant claims that following notification to her by the insurance company that her claim for income protection had been accepted, she attempted to notify Centrelink by handing to a Centrelink officer at the Ryde office a form for Workers’ Compensation/Income Protection, which had been given to her on a previous occasion.  Apparently the Centrelink officer she was dealing with advised her that she had completed the wrong form.  Notwithstanding the reluctance of the Centrelink officer to accept the said form, the Applicant persisted and the officer grudgingly took the form and the Applicant saw her place it on a shelf next to her desk. 

9.      Because the Applicant had reservations regarding the Centrelink officer’s reluctance to take the form, she again contacted Centrelink Ryde on 7 December 2009.  A record of this contact is at document T17 pg 121 of the documents prepared for the Tribunal pursuant to section 37 of the Administrative Appeals Act 1975 and reads:

“Customer contacted RYDE on 7 DEC 2009 regarding Change in Earnings Details for Parenting Payment Single.  Information was obtained via Personal - In Office.  Document created by YNO on 7 DEC 2009.”

10.     I note that this file entry is equivocal as to whether the Applicant provided details of her income protection payments and that no amounts are noted.  I find it strange that if the Applicant received a lump sum payment from her income protection insurer in September/October 2009 as claimed by her, then delivered a form to Centrelink in October 2009, she would wait until December 2009 to ascertain that her advice had been actioned, especially if she had doubts. 

11.     More to the point however, is that the Applicant was advised in November and December 2009 as to how her parenting payment (single) was calculated – see documents T48, T49 and T50.  If the Applicant had had regard to these documents she must have become aware that the income protection payments were not being taken into account.

12.     As I understand the Applicant’s evidence the said documents were sent to her electronically.  I have grave doubts as to whether this is an appropriate method of contacting social security recipients, especially when this correspondence is relied upon by the Respondent as being a notice under social security law.

13.     That said, the Applicant did not deny receiving the said notices.  If she did not fully appreciate their import then that is unfortunate.

14.     The result has been that the Applicant has been paid social security benefits to which she was not entitled.

15. Subsection 1223(1) of the Social Security Act 1991 states:

Debts arising from lack of qualification, overpayment etc.

[see Note 5]

(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.

16. Sections 1236, 1237A and 1237AAD of the Social Security Act 1991 provide various means by which a debt to the Respondent by a social security recipient might be alleviated.

17. Section 1236 of the Social Security Act 1991 states:

Secretary may write off debt

(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.

(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)it is not cost effective for the Commonwealth to take action to recover the debt.

(1B)For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or

(aa)the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or

(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or

(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or

(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.

(1C)For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:

(a)deductions from the debtor’s social security payment; or

(b)deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or

(c)setting off under section 84A of that Act;

the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.

(2)A decision made under subsection (1) takes effect:

(a)if no day is specified in the decision—on the day on which the decision is made; or

(b)if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).

(3)Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.

18. Currently the Applicant is not on social security benefits as she has been retrenched from her previous employment and is in receipt of a termination payment. The period during which that payment is deemed to apply will soon expire and the Applicant will again revert to dependence upon the social security system, until such time as she can find employment. In these circumstances namely the imminent receipt of social security benefits, s 1236 of Social Security Act 1991 is not a section which can be applied.

19. Subsection 1237A(1) Social Security Act 1991 states:

Waiver of debt arising from error

Administrative error

(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).

20.     In this matter I find the debt was contributed to by the Applicant in that she failed to adequately read the notices sent to her.  Had she read the said notices, she could not fail to have realised that her income support payments were not being taken into account.

21. Section 1237AAD states:

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 a false representation; or

(ii)failing or omitting to comply with a provision of this Act, the Administration 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.

Note 1:Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

Note 2:This section has effect subject to section 1237AAE in relation to an assurance of support debt.

22.     The term “special circumstances” was explained by Carr J in Secretary, Department of Social Security v Ellis (1997) 46 ALD 1 at 4:

In Beadle v Director-General Social Security (1985) 7 ALD 670; 60 ALR 225, a full court of this Court had to consider whether the Administrative Appeals Tribunal and erred in its interpretation of s 102(1)(4a) of the Act which provided for an extension of time in which to claim a family allowance ‘… in special circumstances …’.  At ALR 228 the full court said ‘Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate… It would depend upon the circumstances of a particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise minutes 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 Groth v the Secretary Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to Beadle said ‘… for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case.  That was, I consider, the only enquiry to be undertaken in this 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.  The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.’

Later (on the same page) Kiefel J expressly approved the tribunal’s reasoning in holding that Mr Groth’s circumstances were not out of the ordinary when Pt 3.14 of the Act (in which ss 1168 and 1184 are to be found) had the same effect on him as it did on other persons qualified to receive a disability support pension.  Her Honour added:

‘It [the tribunal] went on to find that his circumstances and those of his family although difficult, did not constitute hardship and they could not be said to be different from other pension recipients.’

23.     At the outset I am not satisfied that the Applicant either knowingly made a false statement or representation, or omitted to comply with a provision of the Social Security Act 1991.  There may have been a degree of wilful blindness to her omitting to fully read and understand the emails sent to her by Centrelink, but I am not satisfied she had the requisite degree of intention (or mens rea to use the criminal law term) to amount to a wilfully false omission.

24.     The Applicant is in straightened financial circumstances, and currently there is no evidence that her circumstances will improve.

25.     As stated above she is currently unemployed and has been since July 2011 due to departmental restructuring.  She has been actively seeking employment without success, and has been informed by recruiters that because her last employment with the Department of Health was “very unique” she will find it difficult to attract an employer.

26.     Although her ex-husband has an order against him by the Child Support Agency this order is unenforceable, as the ex-husband has left Australia and is currently living in Chile.  Because of interference with the children by her ex-husband’s parents, the Applicant has been forced to change their school and move her residence.  The children are subject to Court orders which have placed them on the airport watch list to prevent the father or his family attempting to remove them from Australia. 

27.     Both children suffer health problems, and one has learning difficulties, and the Applicant incurs expense as a result.  The former matrimonial home was sold as a result of the husband’s failing to maintain payments and the Applicant did not receive any moneys as result of the forced sale.  To make ends meet the Applicant has had to seek financial assistance from her parents. 

28.     There can be no doubt that the Applicant’s financial situation is precarious but, that said, many recipients of social security benefits are also in financial difficulties.  Were she able to obtain employment the Applicant’s financial situation would be much improved. 

29.     The Applicant has received monies to which she was not entitled and I see nothing about her circumstances, parlous as they might be, that render them special in the sense that she should be relieved from making repayments.

30.     Notwithstanding that I have not found special circumstances in the Applicant’s case, the Respondent should be particularly mindful of the financial and other pressures upon the Applicant when it fixes a repayment rate.  The rate at which overpayment is recovered from the Applicant is a matter which is within the provenance of Centrelink and not this Tribunal, however, the Respondent must be careful not to impose upon the Applicant, and more particularly her children, a crushing burden which detrimentally affects their quality of life.

31.     For the reasons above the decision under review is affirmed.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of M D Allen, Senior Member.

Signed: ................................[sgd]..............................................
             Nicholas Olson, Associate

Date of Hearing  19 December 2011
Date of Decision  12 January 2012
Solicitor for the Respondent     Mr G Lozynsky