Pledger and Department of Family and Community Services - [2001] AATA 914

DECISION AND REASONS FOR DECISION [2001] AATA 914

ADMINISTRATIVE APPEALS TRIBUNAL Nº V2001/873

GENERAL ADMINISTRATIVE DIVISION
  Re:            HELEN PLEDGER
  Applicant
  And:         SECRETARY TO THE
  DEPARTMENT OF FAMILY AND
  COMMUNITY SERVICES
  Respondent

DECISION

Tribunal:       Regina Perton, Member
Date:             5 November 2001
Place:            Melbourne

Decision:The Tribunal affirms the decision of the Social Security Appeals Tribunal dated 10 February 1998 that the debt incurred by the applicant not be waived. The Tribunal sets aside the decision of the Social Security Appeals Tribunal that the recovery of the debt be written off and substitutes a decision that the applicant repay the debt.

(sgd) Regina Perton
Member
SOCIAL SECURITY – administrative error – notification of death of care recipient – ongoing payment despite ineligibility - recovery of social security payments – waiver – write off

Social Security Act 1991 s198, s1223(1), s1236, s1237(1), s1237(2), s1237A(1), s1237AAD

Social Security (Administration) Act 1999 s180
Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince
[1997] 1565 FCA

REASONS FOR DECISION

5 November 2001 Regina Perton, Member

This is an application by Helen Pledger (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) made on 10 February 1998. The SSAT affirmed the decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services (the Department), dated 19 May 1997, that the applicant owed a debt to the Commonwealth, for carer pension that she received, to which she was not entitled. The debt arose as the result of ongoing payments of carer pension for a considerable period after the death of the applicant's mother for whom the applicant provided care. The SSAT also determined that recovery of the debt should be written off at that time. In October 1998, the respondent decided to reinstate repayments.
The hearing of this matter took place on 1 October 2001. The applicant represented herself. Mr David Perdon, an advocate with Centrelink, represented the respondent. The written material before the Tribunal included the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (the T documents) and a submission dated 24 September 2001 from the respondent.
BACKGROUND
The applicant was granted carer pension in late 1992 on the basis that she was caring for her seriously ill mother. The applicant's mother died in April 1993 and the applicant notified the respondent of her mother's death promptly, as she was required to do. The applicant was entitled to carer pension until 15 July 1993, as a bereavement period is allowed for, but continued to pay carer pension to the applicant for almost four years after she ceased to be eligible. The respondent admitted that this situation had arisen due to administrative error
There is some dispute as to when and how often the applicant informed the Department of their error in continuing to pay carer pension to her. Centrelink's records indicate that the applicant received various notices during those four years including three recipient notices, annual pensioner concession cards and annual statements for taxation purposes, all of which indicated that the applicant was in receipt of carer pension. It was not until 1 May 1997, following a proposed medical review of the applicant's mother, that the applicant's carer pension was cancelled. The applicant was given notice by Centrelink in May 1997 that she was required to pay back $33,009.90, being the amount she received as carer pension whilst ineligible. while being ineligible.
The applicant sought review of the decision that she was required to repay the $33,009.90 received as carer pension whilst ineligible. An authorised review officer affirmed Centrelink's decision on 26 June 1997. The applicant applied for review to the SSAT in December 1997. The SSAT, in February 1998, affirmed the decision that the applicant was required to repay the moneys. However, it determined that the applicant's financial circumstances were such at the time of the SSAT hearing, that she should not be required to start repaying the debt at that time.
Following the cancellation of carer payment, the applicant was granted newstart allowance. In October 1998, Centrelink determined that the applicant's circumstances no longer warranted a write off and withheld $49.81 per fortnight of her newstart allowance towards repayment of the debt. The amount withheld per fortnight was eventually reduced to $20.00. On 16 July 2001, the applicant lodged an application with this Tribunal. Since it had been more than three years since the SSAT decision, she applied for, and was granted, an extension of time in which to apply for review.
EVIDENCE
The written evidence from Centrelink included printouts from its computer system which provided the dates and text of several letters sent to the applicant. Centrelink's records indicate that the applicant notified the Department of her mother's death in April 1993. The applicant was given notices on 20 September 1993, 28 August 1996 and 6 February 1997 that indicated that the applicant was being paid carer pension. The respondent also sends out annual pension statements, for taxation purposes, to all its recipients, with a description of the particular social security payment paid. In February 1997, the applicant applied for, and was granted, an advance payment of carer pension and declared in the form that she was on carer pension at that time.
The respondent conceded that an administrative error led to the failure to cancel carer pension after the applicant notified them of her mother's death. However, whilst conceding they were partly to blame for the ongoing payment, it argued that the payment was not received in good faith as the applicant knew she was not entitled to carer pension. The respondent submitted that there are not special circumstances to justify waiver of the recovery of the debt and that the applicant had the capacity to repay the debt at the current deduction rate.
The applicant told the Tribunal that her mother passed away on 18 April 1993 and that she reported the death to the respondent the next day. She said that she had subsequently reported the death several more times by telephone, letter and in person at the respondent's office. The applicant said that her mother's age pension ceased but regular payments of carer pension continued. She said that when the payments continued notwithstanding her having told Departmental officers of the situation, she gave up trying to rectify what she thought was an administrative error in the title of the benefit she was receiving. The applicant said that she believed that she was entitled to a social security payment of some sort after her mother's death and thought that she would have been transferred automatically to the most appropriate payment. Having informed the respondent of the error on several occasions, the applicant said that she decided that if they could not get the description of the benefit right in their correspondence, it was not her problem but theirs.
In 1997, the applicant received a letter in relation to a medical review for her mother. She went to Centrelink and asked why she had received the letter given her mother had died some four years earlier. The carer pension subsequently ceased.
The applicant conceded, in response to a question from Mr Perdon, that she recalled getting pension concession cards with carer pension specified on them but she did not really pay much attention to the description of the type of payment on those cards or in other correspondence. She was adamant that she had told Rosemary, of Centrelink's Fitzroy office, of her mother's death and had advised Rosemary and others on subsequent occasions that she was still getting carer pension even though her mother had died.
The applicant told the Tribunal that she was married in 1973, but she and her husband separated in 1976 and were subsequently divorced. She has not remarried. She has two children. When she and her husband split up, her daughter was two and a half years old and she was pregnant with her son. At the time of the separation, she was working but subsequently received a "deserted wives" pension. She obtained a Ministry of Housing flat in the same high rise building as her mother in 1984 although on a different floor. In 1995, she moved to the flat next door to her mother. The applicant said that she and the children usually slept in her mother's flat as hers was full of furniture that she wanted to keep. After her mother's death, she wanted to take over her mother's flat and was eventually able to do so after taking a case to the Residential Tenancies Tribunal. She had to surrender her flat after the transfer. The applicant has retained her mother's furniture but does not want to dispose of her furniture which she has had since before her marriage. It is of good quality and has sentimental value. The applicant hopes that her children may one day be able to utilise the furniture although her daughter has been living away from home for some time and has not taken any of the furniture. Her son is still at home. After her official transfer to her mother's flat, she was initially able to store the furniture with another resident of the building. However, for the last two to three years, the furniture has been in commercial storage at a current cost per month of $117.00.
The applicant told the Tribunal that she is having difficulty making ends meet. As well as the regular household bills such as food, telephone, utilities etc, she has repayments to make on her Target card. Her son, who is currently on a "work for the dole" programme, pays her some board but she is loathe to ask for much as he is trying to save for an interstate trip.
The applicant was paid the "deserted wives" pension from soon after her son's birth until he turned 16 years of age in 1992. She was told at that time that she would have to look for work and be changed on to a different benefit. The applicant's mother was seriously ill at that time and the applicant was spending most of her time caring for her. Her mother's doctor suggested that she should seek a carer's pension. The applicant said that she had been unaware of such a benefit until the doctor suggested it. She applied for and was granted carer pension in late 1992. The applicant is now on newstart allowance which was granted to her after cancellation of her carer pension. She has tried unsuccessfully to obtain employment. Her age and lack of contemporary experience are barriers to obtaining a position.
The applicant said that she could not recall receiving all of the letters that Centrelink claimed to have sent her. She commented that mail regularly went missing in the high rise building in which she lived. On being questioned by Mr Perdon, she conceded that she knew that the carer pension provided marginally greater benefits than some other forms of social security payment. However, she maintained that she had told Centrelink staff both orally and in writing on many occasions about the death of her mother and nothing had been done about it. Mr Perdon put it to the applicant that there were no letters from her on their Centrelink files. The applicant was insistent that she had sent letters and had made several telephone calls. She said she was aware of other errors made by Centrelink in mistakenly allocating the wrong social security payment to persons who were ineligible for the benefit paid but were eligible for a differently titled benefit so she did not worry about her payment having the wrong title. The applicant said it was unfair that she should have to repay a huge debt when it had been Centrelink who had created the problem by not acting on the information she had provided. She pointed out that even if she were paying back moneys until her death, she would not be able to repay the amount owed.
Mr Perdon submitted that a waiver could not be given unless the full grounds under the legislation were made out. He conceded that administrative error was a major factor but submitted that the applicant had received three pensioner notices, tax statements and concession cards indicating that she was on carer pension. Furthermore, the applicant had sought and obtained an advance of carer pension in February 1997 and in her application for the advance had indicated that she was on such a benefit. Mr Perdon submitted that the applicant had known that she was receiving a benefit to which she was not entitled.
LEGISLATION
Section 198 of the Social Security Act 1991 (the Act) spells out the qualifications for carer payment. The wording of the provision and the methods of assessing the disability of the person requiring care have altered several times over the years since the applicant first became eligible for carer pension but the underlying principles have remained the same. In essence, the carer has to provide constant care for a disabled person who is usually someone reliant on a social security pension or benefit. The care must be provided in the home of the person with the disability.
Section 1223(1) of the Act provides that where a person is not qualified for the payment they have received, the amount so paid is a debt owed to the Commonwealth. At the time of the cancellation of the applicant's carer pension, s1223(1) was as follows:
1223. (1) Subject to subsection (2), if
(a)an amount has been paid to a person by way of social security payment; and
(b)the recipient was not qualified for the social security payment and the amount was not payable to the recipient;
the amount so paid is a debt due to the Commonwealth.
If the debt has arisen as the result of administrative error, it can be waived in certain prescribed circumstances.
1237.(1) On behalf of the Commonwealth, the Secretary may waive the Commonwealth's right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD.
. . .
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).
. . .
1237AAD. 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
There are certain circumstances where the debt can be "written off" rather than waived. The SSAT did this, in its decision in February 1998.
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.
1236.(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
(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 discharge 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.
1236.(1C)   For the purposes of paragraph (1A)(b), if a debt is recoverable by means of deductions from a person's social security payment, the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
1236.(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).
1236.(3)     Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.

CONSIDERATION OF THE ISSUES

The major issue for consideration in this application is whether the payment of carer pension to the applicant was due to administrative error and whether it must or may be waived. A secondary issue which arises if the debt is not waived, is whether the applicant's current circumstances are such that a "write off" would be available and/or appropriate.
In relation to the debt itself, the evidence is undisputed that the applicant received carer pension when she was not eligible for it. The Tribunal finds that the applicant is in debt to the Commonwealth for $30,009.90, being re-payment of carer pension that she received from 15 July 1993 until 17 April 1997.
The Tribunal accepts the applicant's evidence that following her mother's death, she notified the respondent as required. The respondent immediately stopped payment of her mother's pension. The Tribunal accepts that the applicant was told that she was still eligible to receive the carer pension during the bereavement period. However, the respondent continued to pay carer pension to the applicant at the end of that period, namely 15 July 1993. The respondent conceded that the ongoing carer payments beyond 15 July 1993 were the result of administrative error.
The respondent, whilst conceding that administrative error had occurred, submitted that the circumstances were such that the payment could not be solely attributed to administrative error. The respondent submitted that the applicant was aware that she was receiving carer pension despite her ineligibility. It provided evidence that letters, taxation statements and concession cards had been sent to the applicant which stated that she was being paid carer pension. The respondent argued that the applicant had not received the payments in good faith.
In Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] 1565 FCA, the Federal Court considered a matter where a student notified the Department that he was no longer entitled to AUSTUDY but payments continued to be made for several months . The student became aware of the continuing payments and contacted DEETYA repeatedly in an attempt to have the payments stopped. Payment was finally cancelled after the student's Member of Parliament contacted DEETYA on his behalf. The Federal Court held that the money was not received in good faith at any time (even before he became aware of the payments) because he knew he had no entitlement to AUSTUDY. Finn J said at p 4 in relation to the provision concerning waiver of a debt to the Commonwealth:
. . . 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 . . .

Prince has been followed and applied in a number of subsequent cases including Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484. In that matter, the applicant received payment of a duplicate instalment of basic family payment into her bank account. When she later became aware of this additional payment of $2065.60, she queried the payment at her bank but did not contact Centrelink, choosing instead to withdraw the amount after waiting 10 days. Cooper J held that the payment had not been received in good faith.
40. Prima facie, s 1237A(1) is concerned with actual personal receipt by the debtor of the payment or payments which give rise to the debt. The issue of good faith is, for the purpose of the section, to be determined when the debtor commences to exercise control over the payment by retaining it. It is at this time that the recipient must act with the requisite good faith. A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when he or she receives the payment and decides to exercise control over it by retaining it.
41. A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists. …
The applicant admitted that she knew that after her mother's death, she was no longer entitled to a carer pension once the bereavement period had ended. She informed the respondent of the death and expected that carer pension would subsequently cease but it did not. The Tribunal accepts that the applicant did not act fraudulently and that she tried to have the administrative error rectified. However, the Tribunal does not accept that the applicant did not know that she was being paid carer pension during the following years. The Tribunal accepts that the applicant thought that she would be eligible for some other social security pension or benefit in lieu of the carer pension and did not realise that there would be adverse consequences for her if she utilised that money. Nonetheless, the Tribunal is satisfied that the applicant was aware that she was being paid carer pension when no longer eligible and that she utilised those funds.
As is indicated in s1237A(1) of the Act and its attendant legislative note, the debt to the Commonwealth must be waived if the administrative error is the cause of the debt and if the recipient acted in good faith. The case law cited above indicates that a person in the applicant's circumstances, who has tried to rectify an administrative error unsuccessfully, but continues to utilise the payments, is not acting in good faith. The Tribunal finds that the applicant does not meet the mandatory waiver requirements in s1237A(1) of the Act.
Section 1237AAD allows discretionary waiver of part or all of the debt in limited circumstances. The Tribunal is not satisfied that the circumstances of this case are such as to warrant a waiver, given that the applicant knowingly utilised payments received over a number of years.
The applicant also submitted that the debt should be written off. The applicant is currently on newstart allowance and the repayment is at the rate of $20.00 per fortnight. Section 1236 describes the circumstances in which a writeoff may be made. In this case, the only applicable ground would be that under s1236(1A)(b), namely that the applicant has no capacity to repay the debt. Where a person is a recipient of a social security payment from which deductions can be made, s1236(1C) states that a person is taken to have a capacity to repay the debt, unless recovery by that method would cause the person severe financial hardship. The Tribunal is not satisfied that repayment at the current rate will cause the applicant severe financial hardship. The applicant has already renegotiated the amount of the repayments to less than half of that originally imposed in October 1998. The applicant now has no dependents and receives a small amount of board from her son. She has chosen to retain all her mother's furniture, as well as her own, and currently pays $117 per month to store furniture that she does not use. The Tribunal finds that the applicant has the capacity to repay debt at the current rate from her social security payment, and that recovery by those means will not cause her severe financial hardship. The Tribunal is not satisfied that a writeoff is appropriate in the applicant's present circumstances.
DECISION
The Tribunal affirms the decision of the Social Security Appeals Tribunal dated 10 February 1998 that the debt incurred by the applicant not be waived. The Tribunal sets aside the decision of the Social Security Appeals Tribunal that the recovery of the debt be written off and substitutes a decision that the applicant repay the debt.
I certify that the thirty-one [31] preceding paragraphs are a true copy of the reasons for the decision herein of
Regina Perton, Member
(sgd)       Catherine Thomas
              Clerk
Date of Hearing:  1 October 2001
Date of Decision:  5 November 2001
Solicitor for the Applicant:           Nil — self-represented
Solicitor for the Respondent:       Nil — Mr D. Perdon, Advocate with Centrelink