Russell and Secretary, Department of Employment and Workplace Relations

[2006] AATA 209

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 209

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/653

GENERAL ADMINISTRATIVE DIVISION		)
Re		SHELEEMA RUSSELL

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date24 February 2006  

PlaceCoolangatta

Decision

The Tribunal sets aside the decision under review and in substitution thereto decided that:

1.    The debt of parenting payment (single) accrued over the period 5 July 2000 to 8 May 2001 be waived under the “special circumstances provisions” of the Social Security Act 1991; and

2.    The debt of parenting payment (single) accrued over the period 9 May 2001 to 19 February 2002 be written off under the “write-off provisions” of the Social Security Act 1991 for a period of 12 months - and to be reviewed at this time based on a updated statement of Financial Circumstances prepared by Miss Russell and its comparison with the Statement tendered at the Tribunal hearing (Exhibit 2).

3.  The Tribunal remits the matter to the respondent with the Direction that the respondent calculates the actual amount of parenting payment (single) debt accrued over the period 5 July 2000 to 8 May 2001. 

.       ........[Sgd]........

EK Christie

Member

CATCHWORDS

SOCIAL SECURITY – parenting payment (single) – overpayment – debt due to the Commonwealth- administrative error – special circumstances – waiver – whole or part of the debt – write-off

Social Security Act 1991 ss 1236, 1237, 1237A, 1237AAD

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re L and Secretary, Department of Social Security (1995) 21 AAR 412; (1995) 39 ALD 172
Director-General of Social Services v Hales (1983) 47 ALR 281
Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26

Caswell v Powell Duffryn Associated Collieries Ltd [1939] 3 All ER 722
Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543

WRITTEN REASONS FOR ORAL DECISION

8 March 2006  Dr EK Christie, Member

1.      This is an application by Sheleema Russell for a review of the decision made by the Social Security Appeals Tribunal (the “SSAT”) on 19 September 2005 to recover a debt of parenting payment (single) overpayments in the sum of $2,492.63 for the period the period 5 July 2000 to 19 February 2002.

2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” documents) [Exhibit 1] and the various exhibits lodged by the parties.

3.      The applicant represented herself at the hearing. The respondent was represented by Ms J Forsyth a Departmental Advocate.

ISSUES BEFORE THE TRIBUNAL

4.      The only issue for the Tribunal to decide was whether the debt due to the Commonwealth could be waived, in part or in full, for either “administrative error” or “special circumstances” or whether the debt due to the Commonwealth could be “written off”.

5.      As there is more than one decision possible under the provisions of the Social Security Act 1991, the question for the determination of the Tribunal is whether the decision under review is the “preferred” one.

[See Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68]

BACKGROUND FACTS

6.      On the basis of the evidence before it, the SSAT made the following findings of fact:

“(i)       Miss Russell received a parenting payment throughout the relevant period.

(ii)The rate of that parenting payment was worked out on the basis of earnings amounts that were less than the earnings which she actually received.”  (T2, Folio 5).

7.      In response to these findings of fact by the SSAT, Miss Russell stated that she had rung Centrelink regularly to notify changes in income during periods of employment when her income had changed.  At other times, she had mailed payslips to Centrelink.

8.      Miss Russell said that she had always completed the quarterly parenting payment review forms over the relevant period [July 2000 – February 2002] in which the details of her income had been provided.  However, she had been informed that, in accordance with Centrelink Policy, these records are no longer available as they are more than two years old and no longer archived – and so destroyed.

9.      Miss Russell was a sole parent with four children varying in age from four months to her eldest child who had just commenced Year 9.  Her marriage had ended with a degree of hostility.  At the end of their marriage, the family home was left in considerable disrepair – a problem Ms Russell worked on remedying over time, in order to make the home liveable for her children.

10.     The SSAT noted (T2, Folio 4):

“that much of the debt as calculated arises in the first five fortnights of the relevant period, with the bulk of the remainder occurring between August and December 2001.”

Evidence of Sheleema Russell

11.     Miss Russell said that any error on her part, that may have led to the overpayment, was not intentional.  There was no intent on her part to defraud the Commonwealth.

12.     She had raised the fluctuating income problem with queries to Centrelink.  She was employed during the early part of the relevant period in a “needs only” basis as she was a casual employee.  Her weekly employment varied from “nil” (no work) to a “great deal” and, as a result, her weekly income varied considerably.  The Centrelink advice that she had received was that her entitlements would be based on the average weekly income for a 12 week period i.e. linked to the quarterly review forms.  However, whilst she had provided income details in these review forms, they were no longer available – having been destroyed , subsequently, by Centrelink.

13.     She said that she had always provided Centrelink with income advice and that she had trusted Centrelink to do everything correctly.  She had assumed that all the information she had provided Centrelink had found its way to the “right source”.  She had no current capacity to repay the debt due to the Commonwealth arising from her overpayments of Social Security.

14.     Miss Russell said that she also has a very large debt, owed to another source other than Centrelink, that she currently could not pay.  This debt is accruing interest.  She is yet to enter into an arrangement for repaying this debt.

15.     Miss Russell informed the Tribunal that she has very limited deposits in her savings bank account and has no financial reserves for any unforeseen domestic or financial emergency.  She lives on credit cards as a source of income but, in doing so, recognises this will exacerbate her current financial situation.  However, she had no other alternative at this stage.

16.     Miss Russell accepts that she will have to return to work but the actual time this will occur will depend on the needs of her infant as well as her other three children.  Her past employment included work in a senior professional position as an accounts executive.

Consideration of the Issues

17.     The Tribunal has considered all the factual evidence and information before the Tribunal and applied these facts to the requirements prescribed by the Social Security Act 1991 as well as the legal principles that have been developed by our Courts.

18.     Firstly, the Tribunal considers the weight to be given to the evidence of Miss Russell.

19.     The Tribunal finds Miss Russell to be a witness of truth who answered all questions asked of her in an honest and forthright manner.

20.     The next issue for the Tribunal to consider is the factual evidence relating to whether the debt could be waived under the “special circumstances provisions” of the Social Security Act. Section 1237 AAD provides that the Secretary may waive the right to recover all or part of a debt due to “special circumstances”.

21. For this section of the Act to apply to Miss Russell’s’ factual situation, there must be “special circumstances” to warrant waiver [paragraph (a) of section 1237AAD of the Act]. In addition, Miss Russell - or another person, must not have “knowingly” made a false statement or false representation or “knowingly” failed to have complied with a provision of the Act [paragraph (b) of section 1237AAD of the Act]. Both these requirements must be satisfied for Miss Russell to succeed under the “Waiver in Special Circumstances” provision of the Social Security Act.

22. During the hearing, Ms Forsyth conceded that Miss Russell had not "knowingly" made a false statement or representation or had "knowingly” failed or omitted to comply with a provision of the Social Security Act.

23. The next issue for the Tribunal to consider is whether paragraph (b) of section 1237AAD of the Act is satisfied – that is, whether there are “special circumstances (other than financial hardship alone) that makes it desirable to waive” the right to recover all or part of the debt. 

24.     In this regard, the decision-maker must consider how the error occurred i.e. the circumstances which gave rise to the overpayment [The Full Federal Court in Dranichnikov v Centrelink [2003] FCAFC 133].

25.     The Tribunal has considered all of the facts that are relevant in understanding how the overpayments arose and makes the following conclusion:  that there is consistency in the information on fluctuating income provided by Miss Russell to Centrelink over the period 10 July 2000 to 8 May 2001 as can be adduced from records contained in Centrelink File Notes, that were in evidence before the Tribunal as part of the “T” Documents (Exhibit 1).  Specifically:

(a)T7, Folio 37 (10 July 2000):  Miss Russell telephoned Centrelink advising income of $150 per fortnight or $3,900 per annum; and T6 ,Folio 34 (19 July 2000):  Centrelink Notification Notice informing Miss Russell that her entitlements were based on an annual income of $3,900.

(b)T8, Folio 38 (1 September 2000):  Miss Russell rang to advise income of $500 per fortnight ($13,000 per annum); and

T9, Folio 39 (1 September 2000):  Centrelink Notification Notice – entitlements based on $13,000 per annum.

(c)T12, Folio 47 (14 September 2000):  Miss Russell rang Centrelink to advise income of $384 per week ($19,968 per annum): and

T13, Folio 48 (15 September 2000): Centrelink Notification Notice – entitlements based on $9,984 ($384 per fortnight)

Note:  Centrelink subsequently became aware of their error processing this figure on a fortnightly – not a weekly basis, and later changed the error on their system to $19,968 per annum [T14, Folio 51, 20 September 2000].

(d)T29, Folio 82 (8 May 2001):  Miss Russell mailed payslips to advise income of $495 per week; and

T70, Folio 185: Centrelink reviews retrospective information from ICE designs verifying income of $495 per week

(e)        T26, Folio 55 (26 September 2000)

Centrelink File Note verifying payslips provided by Miss Russell.

26.     Accordingly, the Tribunal concludes that there are sufficient positive facts that can be proved to the satisfaction of the Tribunal (the civil standard of proof) to support an inference that Miss Russell provided information to Centrelink of fluctuations in her income over the period 5 July 2000 to 8 May 2001:  See Caswell v Powell Duffryn Collieries Ltd [1939] 3 All ER 722.

27.     Furthermore, the Tribunal agrees with the following observations of the Tribunal in Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543, with respect to advice given to social security recipients by Departmental officers as having application to Miss Russell’s factual circumstances:

“Any failure to regard the seriousness of the consequences of the giving of wrong advice as not being a circumstance special to the person or persons who have suffered as a result of that advice would be cruel.  Citizens are entitled to act upon the advice given to them by representatives of government through its departments and agencies.  Citizens also are entitled to have confidence in the advice that they are given by persons in authority and who represent government departments and agencies.  Citizens should be entitled to expect nothing less.”

And later

“…the responsibility for efficient and effective administration of departmental practice and policy must carry with it a responsibility for any error or mistake which is made by the departmental officers alone.  The presence of the debt in the circumstances of this case is a circumstance undoubtedly special.  That the department would seek to enforce it and recover it only reinforces the circumstances being special.”

28.     The Tribunal makes the further observation that the above conclusions need to be also considered in the context of:

(a)the Tribunal’s finding on the credibility of Miss Russell as a witness;

(b)the fact that her oral evidence was also consistent with income details provided by her second employer to Centrelink i.e. her payment received incorporated a wage component and reimbursement for expenses incurred (T56, Folios 146-155); and her evidence that she completed all quarterly review forms – forms now destroyed by Centrelink.

29.     The Tribunal concludes that based on the above findings, that the circumstances how the overpayment arose are “special circumstances” when the above facts are related to the relevant legal principles:

(a)the factual circumstances meet the description of being “unusual;” or “uncommon” [Re Beadle and Director-General of Social Security (1984) 6 ALD 1] although not necessarily “extremely unusual or uncommon” [Boscolo v Secretary Department of Social Security (1999) 53 ALD 277];

(b)that the factual circumstances are such that something “unfair or unintended or unjust” has occurred in Miss Russell’s case. [Groth v Secretary, Department of Social Security (1995) 40 ALD 541]; and

(c)that the factual circumstances are such that it takes Miss Russell’s case out of the ordinary [Dranichnikov v Centrelink [2003] FCAFC 133].

30.     The Tribunal further finds that the waiver in “special circumstances provision” only applies for part of the relevant period i.e. 5 July 2000 to 8 May 2001.

31.     Finally, the Tribunal considers the factual evidence relating to whether the balance of the debt could be waived under “write off” provisions of the Social Security Act. 

32.     A former President of the Tribunal, Mathews J, observed that the financial circumstances of the debtor and the prospect of the recovery of the debt will necessarily be the primary considerations in deciding whether to write off a debt.  Mathews J summarised the position as follows (at 428):

“The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned.  Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation?  If an affirmative answer is reached to this question, then it would be appropriate to defer recovery [by write off].”

[See Re L and Secretary, Department of Social Security (1995) 21 AAR 412]

33.     In considering its discretion for write-off under the Act, the Tribunal has applied the following factors commonly referred to as the “Hales Factors” [See Director-General of Social Services v Hales (1983) 47 ALR 281; and Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26 at 42] and makes the following findings:

(a)The overpayments of parenting payment to Miss Russell arise as a result of an innocent mistake – not fraud;

(b)The financial circumstances of Miss Russell are straitened.  There is a very significant imbalance between income ($550 per week) and expenses ($870 per week) which is exacerbated by a substantial outstanding debt and further borrowings for the necessaries of life for a family of five; there are no cash or saving bank reserves for an unforeseen financial or personal emergency; her former husband pays negligible child support for their three daughters (Exhibit 2)

(c)       There is no evidence before the Tribunal of any offer of a compromise;

(d)Recovery should be delayed as there is prospects that Miss Russell’s circumstances may improve in time.  Miss Russell has a positive past work history and is clearly a person with professional marketable skills and expertise.  However, her future employment prospects will need to be balanced against the needs of her infant as well as her other three children – and the fact that she lives in a small coastal town; and

(e)There are little prospects for recovery at this stage and any attempt to do so would cause “such personal hardship as to run contrary to the beneficial nature of the legislation”.

34.     For the above reasons and the reasoning of Mathews J in Re L and Secretary, Department of Social Security, the Tribunal concludes that the evidence before the Tribunal is that recovery of the debt of parenting payment (single) accrued over the period 9 May 2001 to 19 February 2002 would cause such personal hardship to Miss Russell as to run contrary to the beneficial nature of the Social Security Act.  Consequently, the Tribunal finds that the debt due to the Commonwealth, for this period of time, should be written off.

35.     However, the write off of the balance of the debt for the period 9 May 2001 to 19 February 2002 should be for a period of 12 months from this decision of the Tribunal and then be subject for an internal review by considering the Tribunal’s findings (“Hales Factors” at paragraph 33), with Ms Russell’s current situation, in order to decide whether the write off period should, or should not, be extended.

36.     For all of the above reasons, the Tribunal sets aside the decision under review and in substitution thereto decided that:

1.The debt of parenting payment (single) accrued over the period 5 July 2000 to 8 May 2001 be waived under the “special circumstances provisions” of the Social  Security Act 1991; and

2.The debt of parenting payment (single) accrued over the period 9 May 2001 to 19 February 2002 be written off under the “write-off provisions” of the Social Security Act 1991 for a period of 12 months and to be reviewed at this time based on a updated statement of Financial Circumstances prepared by Miss Russell and its comparison with the Statement tendered at the Tribunal hearing (Exhibit 2).

37.     The Tribunal remits the matter to the respondent with the Direction that the respondent calculates the actual amount of parenting payment (single) debt accrued over the period 5 July 2000 to 8 May 2001. 

I certify that the 37 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed:         J Lauriston

Administrative Assistant

Date/s of Hearing  24 February 2006
Date of Decision  24 February 2006
Date of Written Reasons          8 March 2006
The Applicant was unrepresented

For the Respondent                  Ms J Forsyth, Departmental Advocate