Rixta Francis and Secretary, Department of Social Services

[2016] AATA 6

Francis and Secretary, Department of Social Services (Social services second review) [2016] AATA 6 (13 January 2016)

Division	GENERAL DIVISION
File Number	2015/2947
Re	Rixta Francis
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

Decision

Tribunal	Deputy President J W Constance
Date	13 January 2016
Place	Sydney

The decision under review, being the decision of the Social Security Appeals Tribunal made 4 June 2015 to refuse to waive the debt owed by Ms Francis to the Commonwealth for overpayment of disability support pension, is affirmed.

.................. [SGD]....................................

J W Constance
Deputy President

Catchwords

SOCIAL SECURITY - disability support pension - overpayment of disability support pension - whether Applicant liable to repay debt caused by overpayment - whether overpayment caused solely by administrative error - whether overpayment received in good faith - decision affirmed

Legislation

Social Security Act 1991 (Cth) ss 1223(1), 1237A, 1237AAD

Cases

Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76

Haggerty v the Department of Education, Training and Youth Affairs [2000] FCA 1287
Beadle v Director-General of Social Security (1985) 7 ALD 670

Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114

REASONS FOR DECISION

Deputy President J W Constance

13 January 2016

introduction

1. On 4 June 2015 the Social Security Appeals Tribunal affirmed a decision that a debt of $42,472.25 owed by Ms Francis to the Commonwealth, could not be waived.  The debt arose as a result of overpayment to her of a disability support pension between 30 December 2010 and 15 December 2014.

2. Ms Francis has applied to this Tribunal to review the decision.

   Background

3. Ms Francis received payments of the disability support pension from 3 January 2009. Initially she did not receive the full rate of payment by reason of the income earned by her partner.

4. The Department’s records include a file note dated 19 March 2010 indicating that from 11 March 2010 Ms Francis was required to report her partner’s earnings fortnightly before a payment would be issued.[1]

   [1] Exhibit R1 p.364.

5. On 26 March 2010 Ms Francis contacted the Department by telephone concerning her reporting obligations. The Departments note of that conversation is that Ms Francis was “still not happy with the inconvenience of having to report but explained when varying income exists, reporting is required.” [2]

   [2] Exhibit R1 p.364.

6. On 19 July 2010 Ms Francis attended a Centrelink office. The Department note of that attendance[3] reads, in part:

   … customer is lodging ptrs group certificate, also would like to discuss reporting requirements.

   When asked why she attended the office that day, Ms Francis said that she did not feel like giving information every fortnight.

   [3] Exhibit R1 p.365.

7. On the same day, the Department ceased to require Ms Francis to report earnings fortnightly. From this time she was assessed against regular fortnightly earnings, based on an annual amount.[4]

   [4] Exhibit R1 p.392.

8. Also on 19 July 2010 a notice was sent to Ms Francis informing her as follows:

   As your and/or your partner’s circumstances have changed, you are no longer required to report every two weeks to get paid. You must tell us within 14 days about events or changes in circumstances affecting your payment (see enclosed form ‘Changes you must tell Centrelink about’ for details).

   …

   Changes you must tell Centrelink about

   This information notice is given under the social security law by a Commonwealth entity. You have an obligation to provide Centrelink with all the information that is relevant to your payment.

   …

   You must tell Centrelink within 14 days… if any of the following happens to you/your partner, or you become aware that any of the following is likely to occur.

   …

   Income from employment changes (the amount earned goes up or down). To help us pay you the right amount you should bring your payslips with you.

9. Notices containing the same advice as that referred to in the preceding paragraph were sent to Ms Francis on 20 October 2010, 12 January 2011 and 6 April 2011.[5]

   [5] Exhibit R1 pp.373-377, 378-381 and 382-385 respectively.

10. In September 2010 Centrelink commenced an investigation into the payments made to Ms Francis. As part of that investigation, in February 2011, it was determined that Ms Francis’ partner’s wages varied from the fixed amount which was recorded on the Department’s system at the time.

11. The investigation was finalised in May 2011. At that time no adjustment was made to Ms Francis’ rate of payment of pension and no debt was raised. No arrears were paid. Ms Francis was notified that the investigation had been completed.

12. Between 30 July 2010 and 6 May 2011 Ms Francis received fortnightly payments of varying amounts between $123.19 and $136.59.  On 20 May 2011 she commenced to receive fortnightly payments of $549.70.

13. A notice forwarded to Ms Francis on 9 June 2011[6] advised that her fortnightly payment was now $549.70.  The notice did not refer to any earnings by her partner.  Previous notices, sent to Ms Francis when she received much lower payments, included details of her partner’s income.[7]

    [6] Exhibit R1 p.32

    [7] Exhibit R1 pp.378-381 and 382-385.

14. In January 2015 the Department reviewed the payments made to Ms Francis to ascertain why she had been paid at a higher rate than that paid initially. A file note on Ms Francis’ file indicates that when the review in 2010 occurred, the record of Ms Francis’ partner’s annual income had been removed and replaced with a reference indicating that fortnightly amounts (based on Mr Francis’ annual income) were to be considered. As a result of an error made by an officer of the Department, no fortnightly earnings by Mr Francis were coded on the record after 27 January 2011.

    Ms Francis’ evidence

15. Ms Francis filed a statement with her Application for Review of Decision dated 13 June 2015.  When she gave evidence she confirmed this statement.

16. In relation to her being advised of the outcome of the review conducted between September 2010 and May 2011 Ms Francis said:

    Then in May 2010 [sic; this should read 2011] at once I got a phone call from a Centrelink ARO, Mr Wakefield, about this review. …… Mr Wakefield told me that he still needed some extra information, but there was nothing to worry about. They had all the details of my husband’s income and payments would continue as usual. I didn’t need to do anything. This was confirmed in a letter dated 19 May 2011. ….. Mr Wakefield also assured me that it was no problem that I didn’t report my husband income every fortnight. The current system was fine and I didn’t even need to bring my husband’s PAYG payment summary in, as they would get that directly from his employer.[8]

    [8] Exhibit R1 p.3.

17. Ms Francis gave the following statement in relation to her receiving an increase in her fortnightly payment of pension from $136.59 to $549.70:

    Shortly after this phone call Centrelink at once started to pay me substantially more. That was a surprise of course and I didn’t quite understand it. But I had just been assured that they all the details of my husband’s income, so I didn’t have any reason to think there was a mistake. I assumed the rules had changed. It was the week of the Budget so that was very well possible.

    Being an honest person I still tried to figure out why I got so much more money, but after multiple hours on the Centrelink website and having found loads of contradictory information I gave up. As I like to know the how and what of life’s events I shortly considered the option of contacting Centrelink to ask for an explanation. But I realized quickly that that was an absurd idea, for everyone who has ever dealt with Centrelink knows that they cannot be contacted in any reasonable way.[9]

    Ms Francis did not attempt to contact Centrelink by telephone nor did she attend a Centrelink office to discuss the payments.  She did not write to Centrelink concerning the payments she had received.

    [9] Exhibit R1 pp.3-4.

    legislation

18. Subsection 1223(1) of the Social Security Act 1991 (Cth) provides:

    (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.

19. Section 1237A provides in part:

    (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.

    …

    (3)  For the purposes of this section, a proportion of a debt may be 100% of the debt.

20. Section 1237AAD provides:

    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.

    issues for determination

21. Ms Francis concedes that she was overpaid disability support pension in the sum of $42,472.25 during the period 30 December 2010 – 15 December 2014. Further it is not in dispute that this amount, less any amount already recovered by the Commonwealth by deduction of payments being made to Ms Francis, is a debt to the Commonwealth in accordance with subsection 1223(1) of the Act.

22. The following issues arise for determination.

    (1)Is the debt “attributable solely to an administrative error made by the Commonwealth”?

    (2)If so, did Ms Francis receive the payments that gave rise to the debt ‘in good faith”?

    (3)If the debt should not be waived under section 1237A, should it be waived in accordance with section 1237AAD of the Act?

    CONSIDERATION

    Issue 1:  Is the debt “attributable solely to an administrative error made by the Commonwealth” ?

23. In Secretary, Department of Family & Community Services v Sekhon [10] the Federal Court said:

    However, it seems to me, the Tribunal failed to consider the significance of the inclusion, in s1237A(1), of the word “solely”. For the subsection to have effect, the “proportion” of the debt -  in this case, it is common ground, that would be the whole of it – must be “attributable solely” to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes.

    [10] [2003] FCA 76 at para. 41.

24. The Secretary concedes that the error of the Department in failing to properly code the entry in relation to her partner’s income, contributed in part to the overpayment of disability support pension to Ms Francis.  Further, had it not been for that error the debt would not have arisen. However, I am not satisfied that the debt is attributable solely to the Department’s administrative error.

25. Notwithstanding that she was advised that she did not have to report every fortnight, Ms Francis was under an obligation to inform Centrelink of any changes in her partner’s income.  Although she was reminded of this obligation on a number of occasions she did not do so, even on an annual basis. Had Ms Francis reported the changes in Mr Francis’ income Centrelink would have been made aware of the lack of coding of his income and the debt would not have arisen.

26. For this reason alone the Secretary is not required to waive the debt by section 1237A.

    Issue 2: Did Ms Francis receive the payments that gave rise to the debt “in good faith”?

27. Even had I been satisfied that the debt was attributable solely to administrative error made by the Department, I would not have decided that the debt must be waived as I cannot be satisfied that Ms Francis received the payments in good faith.

28. In Haggerty v the Department of Education, Training and Youth Affairs[11] the Federal Court has referred to the requirement of good faith in this context as follows:

    … want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt.

    [11] [2000] FCA 1287 at para.16.

29. On the basis of Ms Francis’ evidence I am satisfied that she suspected that she was not entitled to the payments she received. I am satisfied also that she doubted her entitlement. Her concern was such that she spent “multiple hours“ on the Centrelink website  endeavouring to check her entitlement. On the other hand she did not attempt to contact Centrelink by telephone, post or attendance at an office. I do not accept Ms Francis’ evidence that contact with Centrelink is as difficult as she says it is. I note that she was able to engage with Centrelink by both telephone and personal attendance when she wished to change the frequency of her reporting for her own benefit.

30. There was an objective basis for the suspicion and the doubt held by Ms Francis. The amount of the increase in fortnightly payments – from $136.59 on 6 May 2011 to $549.70 on 20 May 2011 – was such an objective basis and did in fact raise the suspicion and doubt in Ms Francis’ mind.  Further, the omission of Mr Francis’ income from the notice advising Ms Francis of the increase was a factor which would raise such suspicion and doubt.

    Issue 3:  Should the debt be waived in accordance with section 1237AAD of the Act?

31. The Secretary did not submit that the debt arose as a result of Ms Francis knowingly making a false statement or knowingly failing to comply with a provision of any of the relevant legislation.

32. I accept the submission on behalf of the Secretary that special circumstances (other than financial hardship alone) have not been shown in this matter. As has often been observed in this Tribunal and in the Courts, special circumstances are those which are “unusual, uncommon or exceptional”.[12] Further, I accept the submission that administrative error alone will not amount to special circumstances. This is clear from the provision of section 1237A dealing specifically with administrative error.

    [12] Beadle v Director-General of Social Security (1985) 7 ALD 670 at para. 12.

33. In Davy and Secretary Department of Employment and Workplace Relations[13] the Tribunal stated:

    “special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances ... that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it….He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement… `The system of administration of the SS Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act.

    [13] [2007] AATA 1114 at para.80.

34. I have no evidence which suggests that Ms Francis’ circumstances warrant a finding that the debt, or any part of it, should be waived under section 1237AAD. The Secretary has been recovering the debt by instalments deducted from Ms Francis’s ongoing pension payments. Interest is not being charged on the debt.  Ms Francis is able to negotiate the amount of each fortnightly repayment.

    CONCLUSION

35. The decision under review, being the decision of the Social Security Appeals Tribunal made 4 June 2015 refusing to waive the debt owed by Ms Francis to the Commonwealth for overpayment of disability support pension, will be affirmed.

I certify that the preceding 35 (thirty -five) paragraphs are a true copy of the reasons for the decision herein of

.............[SGD]................................................

Associate

Dated 13 January 2016

Date of hearing	26 October 2015
Date final submissions received	26 October 2015
Applicant	In person
Solicitors for the Respondent	S Davidson; Department of Human Services