Russell; Secretary, Department of Family and Community Services
[2004] AATA 953
•14 September 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 953
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N04/228;
GENERAL ADMINISTRATIVE DIVISION ) N04/229
Re Secretary, Department of Family and Community Services
Applicant
And
David and Maia Russell
Respondent
DECISION
Tribunal Dr MEC Thorpe, Member Date 14 September 2004
Place Sydney
Decision The decision under review is affirmed.
[Sgd] Dr MEC Thorpe, Member
CATCHWORDS
SOCIAL SECURITY – consideration of whether debts are due to the Commonwealth – whether the debts should be recovered – investment property disclosure considered – Age Pension and Partner Allowance considered – assessment of rates payable – consideration legislative provisions – assessment of whether debts are due to the Commonwealth – whether administrative error occurred – whether debt may be written off – decision under review is affirmed.
Social Security Act 1991
Social Security (Administration) Act 1999 – section 68(2)
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Secretary, Department of Education, Employment, Training & Youth Affairs v Prince (1997)26 AAR at 387-388
Re Vitalone and Secretary Department of Social Security in (1995) 38 ALD 169
Pledger v Secretary Department of Family and Community Services [2002] FCA 1576
REASONS FOR DECISION
14 September 2004 Dr MEC Thorpe, Member 1. This is an application made by the Secretary of the Department of Family and Community Services (“the Applicant”) for a review of the decision of the Social Security Appeals Tribunal (“SSAT”) made on 19 January 2004 to set aside a decision of the Authorised Review Officer on 19 July 2002. The decision of the SSAT decided to set aside decisions to raise and recover debts due to the Commonwealth by Mr and Mrs Russell (“the Respondents”) and substitute new decisions that the Commonwealth’s right to recover the debts is waived. The SSAT also decided that in addition, any amounts already recovered from Mr and Mrs Russell are to be refunded to them. The subject of this current appeal is a review of this previous decision and the extent to which it was correct.
2. At the hearing before the Tribunal on 10 June 2004, the Applicant was represented by Mr Gary Richardson, an Advocate from the Service Recovery Team at Centrelink. The Respondent’s, Mr David and Mrs Maia Russell, were self represented, with Mrs Russell being the predominant advocate.
THE ISSUES
3. In this current appeal, the central issues for the Tribunal to decide and determine are whether the debts owed to the Commonwealth should be written off.
4. It should be noted that at the hearing, the application for review by Mr David Russell (N04/228) and the application for review by Mrs Maia Russell (N04/229) were heard together as a joint application.
BACKGROUND
5. In order to assess the current application, the foundational facts of the case need to be outlined. Age pension was granted to Mr Russell with effect from 4 July 2000. Partner allowance was granted to Mrs Russell with effect from 4 July 2000 and Centrelink did not consent the granting of it. Mrs Russell was transferred to age pension with effect from 20 November 2000. It appears that their payments did not take into account the value of an investment property owned by Mr Russell.
6. In July 2001 Mr Russell was selected in a data match of Centrelink and Australian Taxation Office rental property records. Centrelink asked Mr Russell to provide information about the investment property in question and on 10 October 2001, Mr Russell provided an estimate. The estimate was used to reassess the age pensions of Mr and Mrs Russell and subsequently a reduction in their pension rates was implemented.
7. Furthermore, Centrelink obtained historical valuations for the property and used these to reassess the pension entitlements of Mr and Mrs Russell. On 13 May 2002, a Centrelink delegate decided that as the value of the property had not been taken into account, Mr Russell had been overpaid age pension and Mrs Russell had been overpaid partner allowance and age pension for the period 4 July 2000 to 19 April 2002.
8. On review of the alleged debts, the period of overpayment was reduced to 4 July 2000 to 10 October 2001 given that Mr Russell had provided details about the property on the latter date. As a result the debt due by Mr Russell because of overpayment of age pension was $5,016.67. The debt due by Mrs Russell due to her alleged overpayment of partner allowance remained at $3,112.83 and the debt due by her to alleged overpayment of age pension was reduced to $3,726.38.
THE RESPONDENTS’ SUBMISSIONS
9. The Respondents gave a factual account of the scenario before the Tribunal as set out in the “background” of this decision. They indicated that they had visited Gosford Centrelink and applied for a part pension. In the process of applying for the pension, they indicated emphatically that they had issued Centrelink with the necessary documentation as regards the Unit property they had bought. The Respondents stated that they had provided to the Centrelink all the floor plans and deeds and stated that they could “furnish them with documents” as required. The Respondents spoke with their financial advisor who they said had faxed through all the relevant documentation to Centrelink concerning their investment property.
10. The Respondents indicated that prior to 19 July 2002, there had been no correspondence about a debt being owed. After the debts were raised, the Respondents stated that $5,000 was garnisheed from Mr Russell’s account. As a result of this, Mrs Russell indicated that she wrote to Centrelink commenting that she had been subjected to harassment and emotional stress.
11. During cross-examination the Respondents were referred to correspondence from Centrelink on 9 May 2002 (T15/80). The Respondents agreed as to the address indicated on the letter and that they had received it. The Respondents were pointed to the paragraph that indicates that “you must tell us within 14 days about events or changes in circumstances affecting your payment”. The Applicants appeared to indicate that they thought their circumstances had not changed.
THE APPLICANT’S SUBMISSIONS
12. The Applicant indicated that it is not in dispute that Centrelink failed to take into account the value of Mr Russell’s investment property when calculating the rates of his and Mrs Maia Russell’s payments. As a result of this occurrence, the rates of age pension paid to Mr Russell and the rates of partner allowance and age pension payable to Mrs Russell for the period 4 July 2000 to 10 October 2001 were greater than they should have been.
13. The Applicant argued that the debts should be recovered. The Applicant contended that while section 1236(1A) of the Act prescribes circumstances where a debt may be written off; none of these circumstances outlined apply to the situation of Mr and Mrs Russell and therefore it was maintained that the debts cannot be written off.
14. The Applicant contended that section 1237A(1) indicates that the Secretary must waive the right to recover the proportion of the debt that is attributable solely to administrative error by the Commonwealth provided that the debtor received in good faith the payment(s). While the SSAT decided that the debts were due solely to administrative error, the Applicant strongly disagreed with this assertion. According to the Applicant’s Statement of Facts and Contentions, Centrelink letters were sent to Mr Russell on 11 August 2000 (T10), 6 September 2000 (T14), 20 November (T17) and 13 December 2000 (T19). The Applicant argued that each of these letters notified Mr Russell that he was required to tell Centrelink within 14 days if any of the “things” listed did occur or would happen. One of the matters listed was a reference to “if your combined assets other than financial investments are more than $126,308.98” then notification to Centrelink must be made.
CONSIDERATION AND INTERPRETATION OF LEGISLATION
15. There is no dispute that the amounts are debts due to the Commonwealth.
16. Section 1236 of the Act empowers the Secretary to write off a debt for a stated period or otherwise. Where a debt is written off, an administrative decision is made that the debt is not currently recoverable for a variety of prescribed reasons. The debt still exists, however, and recovery may proceed at a later time. Section 1236(1A) of the Act prescribes the circumstance in which a debt may be written off and states:
“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)it is cost effective for the Commonwealth to take action to recover the debt.”
None of the matters in s.1236 (1A) (a) - (d) apply to the Respondent.
17. Furthermore, section 1237A(1) of the Act states that:
“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).”
18. This is the substantial issue in this case. Centrelink acknowledged that the information about the Cairns Unit was not coded at the time of the original application. The Russells believed that they had provided all the relevant information and that they had no reason to question payments that were then made to them. The Tribunal considers that it was then not unreasonable for the Russells not to respond to letters from Centrelink after payments had stopped as they had in good faith provided Centrelink with full details of their assets. The Tribunal considers that Mr and Mrs Russell’s debts arose solely because of administrative error, as described in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190. Section 1237A (1) applies only to the proportion of a debt “attributable solely” to administrative error and this is discussed by Selway J in Sekhon:
“The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error”.
I am satisfied that the whole of the debts arose solely because of the Applicant’s
administrative error.
19. The original decision maker and the review officer have acknowledged that
Centrelink did not code the information about Mr Russell's Cairns Unit, but that
because Mr and Mrs Russell did not respond to letters sent by Centrelink after the
payments started, the debts did not arise solely because of an administrative error.
Having considered that Mr and Mrs Russell provided all the information at the
Interview 14 July 2000 and the subsequent granting of the pensions, under section
1237AAD the Tribunal considers that debts arose solely because of administrative
error.
20. At the time Mr and Mrs Russel advised the Centrelink office in Gosford fully of
their circumstances and provided Centrelink with all their documents, including
Certificates of title of their property, including a Unit in Cairns in Mr Russell's name.
This information was provided by their financial adviser Mr J. Garner. Following the
receipt of this information Centrelink then provided Mr Russell an age pension and a
partner allowance to Mrs Russell. At a later date in November 2000 Mrs Russell was
also transferred to the age Pension. There would therefore appear to be no reason
for Mr and Mrs Russell to not believe that they were entitled to the payments
and that they were acting in good faith.
21. Centrelink did not dispute that it failed to take into account the value of Mr Russell's investment property when calculating the rates of payment for Mr and Mrs Russell for the period 4 July 2000 to October 2001. Also it is not in dispute that Mrs Russell was paid partner allowance from 4 July 2000 until 23 November 2000.
22. It is not in dispute that Centrelink sent “obligation letters” to Mr and Mrs
Russell including the requirement that if their combined assets other than financial
investment were more than $126,558.98, they were to advise Centrelink and that
neither Mr or Mrs Russell contacted Centrelink. The Applicants indicated to the
Tribunal that they did not respond to these letters because they did not think their
circumstances had changed.
23. The Tribunal finds that Mr and Mrs Russell received the payments in good faith as that expression was interpreted by the Federal Court in Secretary, Department of Education, Employment, Training & Youth Affairs v Prince (1997) 26 AAR at 387-388 (Finn J):
“For my own part, I consider the burden of the formula in the section 289 setting to be obvious enough. Its concern is with the state of mind of a person: if that person knows or has reason to know that he or she is not entitled to a payment received – that person should not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.”
24. The Tribunal does not believe that the Russells contributed to the error in the Centrelink office as they in all good faith provided all relevant information to the officer in Centrelink, information endorsed by their financial adviser. Mr and Mrs Russell believed they acted in good faith knowing they had provided all relevant information to Centrelink and being granted a pension on the information provided. Their circumstances had not changed subsequently and it was therefore reasonable that when asked in subsequent correspondence from Centrelink if their circumstances had changed that they did not advise of any changes in circumstances. Further the Tribunal notes the of the letters sent by Centrelink, and applying the decision of the Administrative Appeals Tribunal in Re Vitalone and Secretary Department of Social Security in (1995) 38 ALD 169, considers that in this case, both Mr and Mrs Russell had complied with their obligations under section 68 of the Administration Act, as the value of their assets had not changed since the information provided by them at the interview on 14 July 2000.
25. The Tribunal is of the view that Mr and Mrs Russell were receiving the pension in good faith, as there is nothing to indicate that the Russells have not received the payment in good faith. This distinction between receiving a payment in good faith and acting in good faith is made quite clear in Pledger v Secretary Department of Family and Community Services [2002] FCA 1576. The Tribunal considers it reasonable to assume that Mr and Mrs Russell did not know or suspect that they were not entitled to payments at the rate at which they were paid until the correspondence of October 2001. This correspondence followed an independent data match of Centrelink and the Australian Tax Office rental property records. The Tribunal is satisfied that this was the first real knowledge that Centrelink or Mr and Mrs Russell had of the Administrative error by Centrelink and the overpayments.
26. The debts were raised more than 6 weeks after the first payment that caused the debt of both partner allowance and age pension. Subsections 1237(A) and (1A) are satisfied.
27. Centrelink has been recovering the debts by withholdings and Mrs Russell has repaid the $1000 lump sum. The amounts recovered so far should be repaid to Mrs Russell.
DECISION
28. The Tribunal affirms the decision under review.
I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of:
Signed: Neil Glaser
AssociateDate of Hearing 10 June 2004
Date of Decision 14 September 2004
Representative for the Applicant Mrs Maia Russell (Self Represented)Advocate for the Respondent Mr Gary Richardson
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