Ross and Secretary, Department of Family and Community Services
[2005] AATA 1011
•13 October 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 1011
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2004/20
GENERAL ADMINISTRATIVE DIVISION )
Re BETTY ROSS Applicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Ms M J Carstairs, Member Date 13 October 2005
Place Brisbane
Decision The Tribunal varies the decision under review by exercising the discretion to partly waive the debt on the basis of special circumstances. The applicant is required to repay the amount of $15,000 less any payments made in reduction of the debt since 3 April 2003.
........................[Sgd]...........................
M J Carstairs
Member
CATCHWORDS
SOCIAL SECURITY – age pension – whether a debt exists – factors of administrative error combining with other circumstances – special circumstances when viewed together
Social Security Act s1224, 1237, 1237AAD
Betty Smith and Secretary Department of Family and Community Services [1999] AATA 152
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Department of Social Security (1995) 40 ALD 541
Secretary, Department of Social Security v Hales (1998) 153 ALR 259
Director General of Social Services v Hales (1983) 78 FLR 373
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866REASONS FOR DECISION
13 October 2005
Ms M J Carstairs, Member 1. Betty Grace Ross has incurred a debt of age pension totalling $33,468.51. The respondent’s delegate originally calculated the debt at more than $40,000 but part of the debt was waived by the Social Security Appeals Tribunal (SSAT) on the basis of special circumstances.
2. Mrs Ross believes that she should not have to repay any of the debt. She did not directly challenge Centrelink’s calculations of the amount of the debt, however on her behalf Legal Aid Queensland had prepared a written submission which, in particular, questioned whether the debt provisions in the legislation prior to 1 October 1997 allowed the imposition of a debt before that date. If correct, this would affect the overall amount of the debt and would excise part of the debt, as relates to the period 22 February 1996 to 1 October 1997.
BACKGROUND
3. Mrs Ross and her husband, Mr Ross farmed their property Westmoor in the Killarney area of Queensland until 1994 when, after an extended period of drought, and having experienced financial difficulties due to spiralling interest rates, the bank foreclosed on their property. Mrs Ross was already receiving age pension at the time the farm was sold, having applied when she became eligible at the age of sixty in 1991. She is now seventy-four years old.
4. Mr Ross also required social security payments for a period after the farm was sold. He had sustained a back injury which prevented him working. As a result he was paid sickness benefits in the early part of 1994. From the written materials and other evidence it seems that Mrs Ross undertook any necessary communications with Centrelink (then called the Department of Social Security) on behalf of herself and her husband. Mrs Ross said that when her husband’s back condition improved she went to Centrelink and asked for employment assistance for her husband. She said that Centrelink located a position for Mr Ross as a school bus driver, but in the meantime he had found employment as a fork lift driver. Mr Ross then obtained full-time employment in July 1994 when his brother-in-law offered him work at his abattoir in Warwick.
5. Mrs Ross went to Centrelink and told them that her husband had work at the abattoir. A computer record (T13) of her advising Centrelink on 5 July 1994 read as follows:
Client starting at Killarney abattoir on 4.7.94 for a fortnight trial.
6. From then until 2003, Mr Ross worked at the abattoir. Despite Mrs Ross having given this information about commencing employment, and despite Mr Ross later (in 2001) registering with Centrelink under the Pension Bonus Scheme where he set out that he was employed, the Warwick Centrelink office did not include any of his wages in setting the rate of Mrs Ross’ age pension. It is because Mrs Ross was paid her age pension without taking account of Mr Ross’ wages over some eight years that she now has this debt.
7. Mrs Ross says that she is unable to pay such a large amount, and believes she should not be required to do so because she acted honestly and told Centrelink about her husband’s work. Mrs Ross asks that the debt be waived. There are two bases under the legislation on which this could happen. The first is a provision that allows a debt to be waived if it arises solely as a result of administrative error, in this case, error by Centrelink. The second is on the basis relied upon by the SSAT in waiving part of the debt, which is on the basis of special circumstances.
ISSUES
8. There are three issues that I need to look at :
§ Is there a recoverable debt prior to 1997?
§ Should the debt be waived on the basis of sole administrative error?
§ Should the debt be waived on the basis of special circumstances?
IS THERE A RECOVERABLE DEBT PRIOR TO 1 OCTOBER 1997?
9. The first issue relates to Legal Aid’s submission that the legislation does not allow a debt to be raised for Mrs Ross before 1 October 1997. There were a number of changes to the debt provisions in the Social Security Act 1991 over the seven years that Mrs Ross’ debt accrued. The most significant changes to the Act were those that took effect on 1 October 1997. As the SSAT correctly pointed out, prior to then if a person who remained qualified for a social security payment had their income incorrectly assessed, there would be no debt except if there was some fault or contribution on the person’s part. Section 1224(1)(b) of the Act referred to the kinds of fault, including the person having failed or omitted to comply with requirements of the Act.
10. The most frequent issue that arises for social security recipients in terms of complying with provisions of the Act relates to responding to notices sent requiring the recipient to provide Centrelink with certain kinds of information used to assist Centrelink in determining entitlements. In Mrs Ross’ case I was satisfied that notices were issued to her in 1992, 1993 and 1994 which required that she tell Centrelink about two matters: changes in employment; and if their household income went above $76 per week.
11. Mrs Ross told me that she could not understand how the Centrelink officer recorded that her husband’s work at the abattoir was only a trial. She said she would not have said that, because it was her brother-in-law’s business, and he would not have offered her husband employment merely as a trial. Mrs Ross acknowledged, however, that she did not say to the Centrelink officer when advising about her husband’s employment that she was receiving age pension herself. She believed that age pension was her right after the age of sixty. Mrs Ross had told the SSAT that when she reported her husband’s employment she would not have known what his wage was going to be. From this evidence I concluded that Mrs Ross told Centrelink about her husband’s work, but not the amount of his wages and not that she was an age pensioner.
12. Legal Aid submitted that Mrs Ross discharged her obligations completely when she told Centrelink about her husband’s job. Legal Aid submits that, having told Centrelink about the job, it was Centrelink’s responsibility to follow up what wages Mr Ross would receive. Legal Aid referred me to the Tribunal decision, Betty Smith and Secretary Department of Family and Community Services [1999] AATA 152, which concluded [at 28] that:
…the things which Mrs Smith was required to notify the Department of, were not cumulative in respect of the same event. Mrs Smith was required to notify her husband was working which the Tribunal already found that she did. The Tribunal does not accept…that the Department had to know the actual income Mr Smith was earning.
13. I do not accept that Smith’s case is a correct statement of the law. In my view the clear purpose of identifying and specifying different obligations in notices is to ensure that Centrelink obtains the detailed information required to correctly assess what amount a person should be paid. Two separate obligations were set out in notices to Mrs Ross and she discharged only one of her obligations when she notified that her husband started work. She did not discharge the second obligation to tell Centrelink that their weekly income was more than $76. Whilst I agree that a simple enquiry on Centrelink’s part could have ascertained this, I do not accept that the responsibility for providing the information suddenly passed from Mrs Ross to Centrelink.
14. I was satisfied on the facts here that Mrs Ross did not fully discharge her obligations, set out in notices (T9, T10 and T11). She therefore failed to comply with a requirement of the Act, thus activating s1224 and allowing a debt to be raised under that section.
15. After 1 October 1997, as the SSAT correctly stated, the debt provisions in the Act have covered situations where a person has received an amount in excess of what was the correct amount of pension that they should have been paid: s1223(5) of the Act until 1 July 2001, and s1223(1) of the Act from 1 July 2001. These provisions operate regardless of any fault or omission by the person.
16. I am satisfied that Mrs Ross has a recoverable debt for the whole of the period now remaining in issue after the SSAT waived part of the debt, that is, the period from 22 February 1996 to 6 September 2001.
SHOULD THE DEBT BE WAIVED ON THE BASIS OF SOLE ADMINISTRATIVE ERROR?
17. From my conclusion above that Mrs Ross was required, as a separate obligation, to let Centrelink know the amount of Mr Ross’ wages, it follows that the debt has not arisen solely on the basis of administrative error on Centrelink’s part. No part of her debt can be waived on the basis that the error was solely Centrelink’s.
SHOULD MRS ROSS’ DEBT BE WAIVED ON THE GROUNDS OF SPECIAL CIRCUMSTANCES?
18. In regard to the bases for exercising this discretion the cases acknowledge that:
“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition….This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.” (Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3)
19. The discretion addresses whether there are circumstances that distinguish that case from the usual case, in order to justify the departure from the rule by which money overpaid should be repaid by the person who received it. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, the Court held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases and any hardship or unfairness should be sufficient to justify departure from the general rule. The discretion also addresses avoiding unfairness: ….. that something unfair, unintended or unjust had occurred...some feature out of the ordinary (Groth v Department of Social Security (1995) 40 ALD 541 at 545).
20. In Secretary, Department of Social Security v Hales (1998) 153 ALR 259 at 267, French J emphasised that special circumstances is intended to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of a debt.
21. Mrs Ross has raised a number of matters, though some of them are not directly relevant in my view, as grounds for the exercise of this discretion. She described her early life, having to leave school at the age of 13 to work on her parent’s farm; her mother’s death when Mrs Ross was fifteen; and Mrs Ross then being responsible for the care of her baby sister. She was involved with farming all her life. She had a deep attachment to their property Westmoor and was devastated when she and Mr Ross lost the farm. She said how much having her age pension had eased their family circumstances, enabling them to rebuild their lives.
22. Mrs Ross was clearly upset about the debt and about any suggestions that there might have been dishonesty on her part. She said she took comfort from the SSAT saying that she was not at fault. Her doctor wrote (exhibit A2) that he has noticed that she has had problems of stress/anxiety because of her issues with Social Security for which he has provided counselling.
23. Mrs Ross also told me that she and her husband had health problems during the 1990’s. She provided me with extracts from her diary from that time recording long periods when she was unwell, and had admissions to hospital, without a clear diagnosis. It was found that she suffers from diabetes and heart problems and she said that it was particularly distressing to her that by 1996 she had lost about 80% of her effective vision; however she acknowledged this responded well to eye surgery that year.
24. I accept that Mrs Ross has had a difficult life, and incurring this debt at this stage of her life has been stressful. Like others of senior years, she and her husband are not in the best of health. But these matters are not on their own sufficient basis to exercise the discretion on the basis of special circumstances.
25. Equally I did not consider that Legal Aid submission setting out a statement of their financial circumstances gave compelling grounds for the exercise the discretion. The statement of financial circumstances revealed that the household income includes Mr and Mrs Ross’ age pensions and intermittent income from gardening and cleaning work. Income totalled $21,453.46. Household expenditure, including the mortgage payments, exceeded this by some $6,000. Mr and Mrs Ross have dipped into their savings, represented by some $30,000 in a Suncorp account, to cover the shortfall. Mrs Ross said that some of the savings were the result of Mr Ross becoming entitled to access the Pension Bonus Scheme from 2001.
26. Mr and Mrs Ross jointly own their house at Killarney with their son Andrew Ross. The house is valued at $120,000, with a mortgage of some $33,000 remaining. Andrew Ross said that he has been making the recent mortgage payments. Mr Ross was facing surgery for kidney problems at the time of the hearing, and Mrs Ross said this means that there will be extra medical costs in addition to the costs of her medications for a heart condition, blood pressure, diabetes, and osteoarthritis.
27. Overall I considered that their financial circumstances were difficult, but it was not clear that the financial figures presented to me took account of Andrew Ross’s contributions to the household in addition to the mortgage payments.
28. I note that Mrs Ross’ debt is being recovered by Centrelink by withholding $50 per fortnight from her age pension, and it did seem to me that the household finances were beyond re-organising to avoid the shortfall that they are experiencing.
29. However two compelling circumstances in this case that justify the exercise of the discretion. Firstly, the instances of administrative error by Centrelink in dealing with Mr and Mrs Ross are at the extreme. As Mrs Ross pointed out, Centrelink was told, directly or indirectly, four times that Mr Ross was working: in early 1994 when she sought their assistance when he was looking for work; in July 1994 when she told them he had obtained work at the abattoir; in about September 1998 when she made an enquiry about Mr Ross accessing the Pension Bonus Scheme – at that time they did not claim as she was told he could not register as he was older than 65; in September 2001 when Mr Ross applied successfully for registration under the Pension Bonus Scheme.
30. None of Mr Ross’ social security records from 1994 were in evidence. However it seems his social security payments were stopped when Mrs Ross gave the information that he was working. It would be unlikely that his payments would cease merely on the basis of information recorded in the computer note made on 5 July 1994 without knowing the amount of his wages. It is more likely than not that Centrelink undertook further enquiries about his wages at this time before cancelling his payment. Again this would have been an opportunity for Centrelink to cross-check his wife’s records.
31. Mrs Ross said that no-one at Centrelink told her about her obligations when she first became entitled to the age pension, though she admitted that she could not recall much about her interview at the time at the Warwick office. She said she believed that fault lay with Centrelink when they failed to record the information about her husband’s work accurately or complete the enquiry by asking her what his wage would be. Andrew Ross said that I should take into account that his mother honestly believed that she had done all she was required to do when she went to Centrelink. He said that Warwick is a small place and his mother would have been known to some of the Centrelink officers with whom she was dealing because he went to school with some of them.
32. Whether or not Centrelink officers knew the family, it seems to me to be a reasonable further enquiry for Centrelink officers to make of an older person who comes in to report their husband’s employment, whether the older person was themself receiving a Centrelink payment.
33. The second unusual circumstance in this case is that for nearly nine years after 1994 when Mr Ross obtained work at the abattoir, Centrelink sent Mrs Ross no further notices about her pension that would have alerted her to the amount of income being used to calculate her pension. Furthermore she was not sent any income and assets review forms, which would have provided her with the opportunity to state the amount of income coming into the household. These missed opportunities are the real reason that the debt has reached the amount that it has. They are at a stage in their lives where they are ill-equipped to repay such a large sum.
34. In looking at the issues that I must address in relation to the discretion, I note that the SSAT waived the period of the debt occurring after Mr Ross lodged his Pension Bonus Scheme application in 2001. I agree with the SSAT that the discretion is enlivened in the circumstances here. However I consider that Mrs Ross’s circumstances warrant a more generous exercise of the discretion.
35. Firstly, Mrs Ross did not knowingly make false statements or false representations, nor did she knowingly fail or omit to comply with the Act: s1237AAD(a) of the Act.
36. Next, I accept that there are special circumstances. I accept that Mrs Ross is in poor health. She is not well off financially, though far from destitute. The debt covers a long period, and Centrelink is responsible for the length of time that this debt has run. Even after the SSAT waived part of the debt, effectively reducing the period to about five and a half years rather than seven years of overpayment, the debt is over $33,000. This is a substantial sum for an age pensioner to repay. The recovery rate by withholdings of $50 per fortnight means that Mrs Ross will be in her nineties when the debt is recovered in full.
37. I need to be mindful however that Mrs Ross received moneys to which she was not entitled and as pointed out in Director General of Social Services v Hales (1983) 78 FLR 373 the public has the right to expect that moneys paid from the public purse in error will be recovered from the person who obtained the benefit. I am mindful also that Mr and Mrs Ross have had the opportunity to save a significant sum, by Mr Ross continuing to work after retirement age and obtain the benefit of the Pension Bonus Scheme. As set out above, Mr and Mrs Ross are not destitute, even taking account of their advancing age and health demands which require that they have some cash reserves.
38. Taking into account the administrative error in this case and the circumstances where Mrs Ross quickly and honestly provided the information to Centrelink in good faith; in the context of her advanced age, poor health and limited financial resources; the recovery of this amount after an excessively lengthy period would be unreasonable, unfair and unjust. This takes her case out of the ordinary run of cases. Therefore I vary the decision under review to provide that so much of Mrs Ross’ debt should be waived as would mean that the total debt at the date it was raised was $15,000: s1237(2)(a) of the Act.
DECISION
39. The Tribunal varies the decision under review by exercising the discretion to partly waive the debt on the basis of special circumstances. The applicant is required to repay the amount of $15,000 less any payments made in reduction of the debt since 3 April 2003.
I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Ms M J Carstairs, Member
Signed: Jeff Mills
Legal Research OfficerDate/s of Hearing 13 July 2005 [at Warwick]
Date of Decision 13 October 2005 [at Brisbane]
The Applicant appeared in person
For the Respondent Ms S Oliver, Departmental Advocate
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