Ruvceska and Secretary, Department of Employment of Workplace Relations

[2006] AATA 480

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 480

ADMINISTRATIVE APPEALS TRIBUNAL          №  V2005/1118

GENERAL ADMINISTRATIVE   DIVISION

Re:            ROZITA RUVCESKA

Applicant

And:SECRETARY,

DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal:       Mr Egon Fice, Member

Date:2 June 2006

Place:Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) Egon Fice

Member

SOCIAL SECURITY – disability support pension – overpayment – recovery of debt – failure to notify Centrelink of partner’s income - write off debt – waiver – good faith - special circumstances.

Social Security Act 1991 (Cth) ss 133, 1223(1), 1223(5), 1236(1), 1237A(1) and 1237AAD

Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424

Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529

REASONS FOR DECISION

2 June 2006  Mr Egon Fice, Member

1.      Mrs Ruvceska received the disability support pension (the DSP) after making a claim in January 1997.  Centrelink acts as agent for the respondent.  By a decision made on 27 July 2005, a Centrelink officer determined that Mrs Ruvceska had been overpaid $20,069.40 between 5 March 1998 and 8 February 2005 because she had failed to notify Centrelink of the correct amount of her partner’s self-employment income during that period.  The Centrelink officer decided to raise and recover the overpayment as a debt due to the Commonwealth.  On 16 September 2005 an Authorised Review Officer (ARO) recalculated the debt at $18,985.81, being overpayment between 15 September 1999 and 8 February 2005.  On 11 November 2005 the Social Security Appeals Tribunal (“SSAT”) affirmed the Decision of the ARO.  Mrs Ruvceska seeks review of that decision.

background

2.      Mrs Ruvceska lodged an application for social security payments on 2 January 1997.  She provided details of her and her partner’s assets and income.  On her application form Mrs Ruvceska noted that her partner had, in the previous year, commenced his own business which was described as a truck driving/earth moving business.  She also advised that, from his 1996 income tax return, he had made a loss of $4110.00 for the 1996 income tax year.

3.      Mrs Ruvceska was transferred to the DSP commencing on 30 October 1997.  By letter dated 20 November 1997 Centrelink notified Mrs Ruvceska of the details of her DSP pension.  The letter stated that Centrelink had assessed the combined yearly income of Mrs Ruvceska and her partner at $16.50.  The letter also stated that Mrs Ruvceska was required to notify Centrelink within 14 days if her or her partner’s income increased.

4.      In June 1998 Mrs Ruvceska’s eldest daughter [Vidanka] successfully applied for the youth allowance (“YAL”).  Because the YAL also requires the parents of the child to disclose their assessable income, Mrs Ruvceska supplied Centrelink with details of her partner’s assessable income upon the completion of an annual tax return.  She also provided details of her partner’s income in respect of her youngest daughter [Belinda] who was also granted the YAL after lodging a claim on 13 March 2003.

5.      Mrs Ruvceska was also sent a letter by Centrelink dated 22 November 2002 regarding the DSP.  That letter set out the amount of pension which she was receiving and also the information used for calculating her regular payment.  Under that heading, the letter noted that her partner and her combined income, used for calculating the DSP was $13.74.  The letter also advised Mrs Ruvceska that she was required to inform Centrelink in the event that her or her partner’s combined income increased.  She did not respond to that letter.

6.      In about September 2004 Centrelink realised that Mrs Ruvceska’s partner’s income for that financial year was approximately $45,000 and that she had not provided that information to Centrelink in respect of the DSP.  She was sent a letter dated 20 September 2004 seeking further information.  Mrs Ruvceska provided her partner’s tax returns which indicated taxable income as follows:

1997      -       $26,100

1998      -         $3,207

1999      -       $21,440

2000      -         $1,713

2001      -       $10,585

2002      -       $23,018

2003      -       $25,258

2004      -       $45,184

7.      After taking into account Mrs Ruvceska’s partner’s taxable income between 1997 and 2005, Centrelink initially calculated that there had been an overpayment of $20,069.40.  This was later varied by an ARO who determined that Mrs Ruvceska received an overpayment of $18,985.81 between 15 September 1999 and 8 February 2005.

considerations

8.      At the hearing of this matter, Mrs Ruvceska admitted that she had received the letters sent by Centrelink on 20 November 1997 and 22 November 2002.  She said that she had read the letters and had understood her obligation to notify Centrelink of an increase in her or her partner’s combined income.  She confirmed that she understood she was required to notify Centrelink if the income Centrelink had used to calculate her DSP was incorrect.  According to Mrs Ruvceska she did comply with that requirement because she had notified Centrelink of her partner’s taxable income in respect of her eldest daughter’s YAL payments.  She said that she believed that by providing that notification she had fulfilled her obligations in respect of the DSP payments made to her.  She understood that she was giving the information to Centrelink and that was all she was required to do.

9.      As far as the overpayments made between 15 September 1999 and 30 June 2001 are concerned, the then relevant section of the Social Security Act 1991(Cth) (“the Act”) provided:

1223(5) If:

(a)an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997; and

(b)because the received amount had not been correctly calculated using the relevant rate calculator, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment that should have been paid to the person under this Act;

the difference between the received amount and the correct amount is a debt due to the Commonwealth.

10.     After 30 June 2001, the relevant section is s 1223(1) which provides:

1223(1) Subject to this section, if:

(a)       a social security payment is made; and

(b)a person who obtains a 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.

. . .

11. Mrs Ruvceska does not dispute that she owes a debt to the Commonwealth under the Act nor does she dispute the amount calculated by the ARO.

12.     The Secretary may, on behalf of the Commonwealth, exercise a discretion to write-off a debt under s 1236(1A), but 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 not cost effective for the Commonwealth to take action to recover the debt.

13. A debt is taken to be irrecoverable at law if the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant six year period mentioned in s 1231, s 1232 or s 1233 of the Act has elapsed (s 1236(1B)).

14.     The write-off provisions in the Act do not apply to Mrs Ruvceska. There is no suggestion that the debt is irrecoverable at law as the Secretary has taken action for recovery of the debt within the six year period starting on the first day on which an officer (Centrelink) became aware of the circumstances that gave rise to the debt. Also, Mrs Ruvceska agreed that she and her partner owned a block of land, which was valued at approximately $40,000. That land is unencumbered. Mrs Ruvceska also said in evidence that she had been meeting debt repayments in the sum of $58.60 per fortnight and that those payments were not causing her financial hardship. The balance of her debt owed to the Commonwealth as at the date of the hearing was $17,724.21. It is therefore clear that the Secretary should not exercise the discretion which is available under s 1236(1) of the Act.

15. The real issue in this matter is whether the debt due to the Commonwealth should be waived. Section 1237A(1) of the Act provides:

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. 

1237A(1A)      Subsection (1) only applies if: 

(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or 

. . .

That is the case as far as Mrs Ruvceska is concerned.

16. The waiver provisions set out in s 1237A(1) of the Act require two limbs to be met. The debt must be attributable solely to an administrative error made by the Commonwealth and the debtor must receive the overpayment in good faith.

17.     The first question which arises is whether, because Mrs Ruvceska notified Centrelink of her partner’s taxable income in respect of her daughters’ YAL payments, the failure of Centrelink to apply her partner’s taxable income to the calculation of her DSP payments constitutes an administrative error. I do not believe that to be the case. The letter dated 20 November 1997 sent to Mrs Ruvceska, which she said she received, was a notice given under s 133 of the Act. Section 133 of the Act, as it was then, fell under Part 2.3, Division VIII, which dealt with recipient obligations under the DSP. The obligations of recipients of the YAL were set out under Part 2.11 of Division VIII. Although notices under both Parts are similar, the legal obligation to provide the information sought by the Secretary is different in each case. Under the DSP provisions, the person to whom the pension is paid is required to provide the requested information. In this case of course, that would be Mrs Ruvceska. Under the YAL provisions, the obligation falls on the person to whom the YAL is being paid and, that happens to be Mrs Ruvceska’s daughter. Therefore, it cannot be said that Mrs Ruvceska has complied with her obligations under the DSP provisions to provide the information requested by providing her partner’s income tax returns under the YAL provisions. It is possible, although there was no evidence on this, that the requirements under the YAL provisions were different to those under the DSP provisions. In any event, the letter of 20 November 1997 required Mrs Ruvceska, as the recipient of the DSP, to notify Centrelink in the event that the combined income shown in that letter, which was $16.50, was incorrect. Furthermore, notice was required to be provided within 14 days, and not annually after completing a tax return. In my view, Mrs Ruvceska has failed to comply with the notification provisions of s 133, as they then were. For that reason, it cannot be said that the overpayment to her was made solely as a result of an administrative error. Therefore, although it is not strictly necessary for me to determine whether Mrs Ruvceska received the payments in good faith, in the event that I am wrong, I will do so.

18.     In Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424 at 435 ‑ 436, Cooper J, when dealing with s 1237A(1) of the Act, said:

[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 . . .

19.     In Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529 at 534, French J said:

Consistently with what his Honour said in the Prince [Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1998) 152 ALR 127] case, 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.  . . .

20.     Mrs Ruvceska admitted in evidence that she was aware that her entitlement to the DSP depended upon the combined income of her and her partner.  She must also necessarily have been aware from reading the letters from Centrelink dated 20 November 1997 and 22 November 2002, that the income upon which her DSP payment was based was incorrect.  The first letter stated that her combined income was $16.50 and the second letter referred to a combined annual income of $13.74.  Given that she had been remitting to Centrelink copies of her partner’s tax returns, and that her partner’s tax return for the year ended 30 June 2002 disclosed a taxable income of $23,018, the information that Centrelink was using to calculate her DSP payment was plainly incorrect.  Mrs Ruvceska also confirmed in evidence that, when she contacted the Centrelink officer on 3 August 2005, she told that Centrelink officer that she had often been asked by her friends why she was still receiving the DSP when her partner’s income was substantial.  She said that she thought that she was still under the threshold.  She was also aware that her daughters’ YAL was varied as a consequence of the lodgement of her partner’s tax returns which disclosed varying amounts of taxable income over the years, although the DSP payment never altered.  Mrs Ruvceska said in evidence that she relied on Centrelink to “figure it out for themselves”. 

21. On the above evidence, it is difficult not to conclude that Mrs Ruvceska held a suspicion that she may not have been entitled to the amount of DSP that was paid to her and that there was an objective basis for that suspicion or doubt. The fact that she chose not to make enquiries about the correct DSP payment is, in my view, evidence that she did turn a blind eye to the circumstances which clearly raised doubts about her entitlement to receive and retain the payments made under her DSP. Therefore, I am of the view that Mrs Ruvceska did not receive the overpayments in good faith as is required under s 1237A of the Act. That, of course, is not to say that she received the payments fraudulently. There is no evidence of fraud in this case.

22. Finally, s 1237AAD of the Act provides that:

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 a 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.

23. Unfortunately for Mrs Ruvceska, although there is no question that she made a false statement or a false representation, it is clear from the evidence that she failed to comply with s 133 of the Act requiring her to provide the information sought under the notices given in the letters of 20 November 1997 and 22 November 2002. She cannot therefore seek to have the discretion under s 1237AAD exercised in her favour.

conclusion

24. I am satisfied that, as at 8 February 2005, Mrs Ruvceska received an overpayment of $18,985.81 by way of DSP. That overpayment is a debt owed to the Commonwealth and it can be recovered under the Act. It is not appropriate that the debt be written off and Mrs Ruvceska does not meet the requirements of either s 1237A or s 1237AAD of the Act dealing with waiver of the debt. Therefore, it is my view that the decision made by the SSAT on 24 November 2005 was correct and it should be affirmed.

I certify that the twenty‑four [24] preceding paragraphs are a true copy of the reasons for the decision of:

Mr Egon Fice, Member

signed     Catherine Lake

Clerk

Date of hearing:  10 May 2006

Date of decision:  2 June 2006
Advocate for the applicant:          Self-represented
Advocate for the respondent:       Ms J. Hume, Legal Services Branch, Centrelink