"SAE" and Department of Family and Community Services - [2000] AATA 288

DECISION AND REASONS FOR DECISION [2000] AATA 288

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S99/193

General Administrative DIVISION )

Re SAE
Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date13 April 2000
PlaceAdelaide

Decision Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor, decides that the debt in the period 29 July 1998 to 30 September 1998 be waived in its entirety pursuant to section 1237AAD of the Act.

(Signed)
J.A. KIOSOGLOUS
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances - Sickness Allowance – overpayment - departmental error – delay in raising debt different to delay in effecting change in rate – no explanation for delay in effecting rate change - special circumstances
Social Security Act 1991 ss.1237A, 1237AAD
Secretary, Department of Employment, Education, Training and Youth Affairs v Prince (1997) 50 ALD 186
Re Secretary, Department of Family and Community Services and Morgan [1999] AATA 390
Re Stewart and Secretary, Department of Family and Community Services [1999] AATA 552
Re Ivovic and Director-General of Social Services (1984) 3 ALN 61

REASONS FOR DECISION

13 April 2000 Senior Member J.A. Kiosoglous MBE

This is an application by SAE (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 12 May 1999 (T2) which affirmed the decision of a delegate of the respondent dated 4 November 1998 (T21) as affirmed by an authorised review officer (ARO) of the respondent dated 30 November 1998 (T27) to raise and recover a debt of Sickness Allowance.
The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T29), together with three exhibits, two lodged by the applicant (Exhibits A1-A2) and one lodged by the respondent (Exhibit R1). In addition, the Tribunal heard evidence from the applicant, who represented himself. The respondent was represented by Ms Adele Pugsley, a departmental advocate.
The respondent conceded that the debt arose as a result of administrative error and the issues before the Tribunal are whether or not the applicant received the payments of Sickness Allowance in good faith, and whether any other grounds exist so as to warrant waiver of the debt.
history of the application
The applicant was in receipt of Sickness Allowance in 1998, and was granted a monthly disability income benefit of $1,279.06 from Tyndall Life Insurance Company from 28 April 1998, as advised in a letter to him dated 10 July 1998 (T6).
The applicant received a letter dated 4 June 1998 advising him of the need to notify the respondent within 14 days if "you start to receive or stop receiving income" (T4/33). The definition of income in the notice includes "sick or accident insurance" (T4/34).
The applicant advised the respondent on 20 July 1998 that he was receiving compensation payments (T7), this being within 14 days of his receipt of the letter from Tyndall Life Insurance Company. Due to an administrative error, no action was taken on the advice until October 1998. On 4 November 1998 the delegate raised a debt of Sickness Allowance, which was amended by the ARO on 30 November 1998, in the amount of $1,648.22 covering the period 23 July 1998 to 30 September 1998. This was affirmed by the SSAT on 12 May 1999 who stated (inter alia) in its reasons for decision:
" …
It is unfortunate that Centrelink did not return calls and there is no question that the debt occurred as a result of a very poor administrative response to the advice provided by [the applicant]. However, because [the applicant] was, in the Tribunal's view, aware that he was not entitled to ongoing sickness allowance, he cannot meet the "good faith" requirement even though he actively tried to effect the termination of any excess payments.
…"

applicant's evidence and submissions

The applicant told the Tribunal that he provided all information as requested to the Department within the allotted time frames. He stated that at the time he told the Department of the receipt of the insurance money, he had no concerns as to his entitlement to Sickness Allowance as the insurance money only reflected some 55-60% of his earning capacity.
The applicant stated that he contacted Welfare Rights Centre (WRC) because he was told to do so by the Insurance Company, and that WRC had advised him to inform the Department in order that they could calculate the rate.
He told the Tribunal that the SSAT and ARO had misunderstood him in relation to phone calls made to the Department, and that of the six or so calls he made to the Department at the relevant times, four concerned a Health Care Card, and two concerned the amount being paid into a particular bank account. He further stated that no mention was ever made of possible rate changes as a result of the insurance money.
He stated that the letter he received from the Department dated 25 August 1998 (T14) clearly told him that he would be paid Sickness Allowance, and that it was reasonable to assume that since this letter arrived after he had provided information in July 1998, the Department had acted upon that information and correctly calculated his rate.
respondent's submissions
Ms Pugsley submitted, on behalf of the respondent, that the applicant did not receive the monies in good faith as he was aware that the insurance money would affect his Sickness Allowance following the receipt of the letter dated 4 June 1998. This was evidenced by him contacting the WRC and making phone calls to the Department. She submitted that the applicant's account to the Tribunal of the content of the phone calls to the Department were not credible given his statements to the SSAT and ARO. At another stage in proceedings however, Ms Pugsley asserted that the applicant's credit was not in issue and that it accepted that he acted honestly in his dealings with the Department.
In relation to good faith, she referred the Tribunal to Secretary, Department of Employment, Education, Training and Youth Affairs v Prince (1997) 50 ALD 186 wherein Finn J stated at p189 (inter alia):
" …
For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.
… "
She submitted that the applicant's circumstances are not otherwise special so as to warrant waiver pursuant to section 1237AAD of the Social Security Act 1991 (the Act), and sought to distinguish Re Secretary, Department of Family and Community Services and Morgan [1999] AATA 390 on the basis of the time delay in that case in the raising of the debt.
discussion and findings
It not being in dispute that there is a debt, the Tribunal turns therefore to consider grounds for waiver, pursuant to either sections 1237A or 1237AAD of the Act.
In Re Morgan, Senior Member Hotop considered a case wherein no reasonable explanation was offered by the Department as to why it took them so long to adjust Mrs Morgan's rate of Family Payment following receipt of a new income estimate from Mrs Morgan. In that case, Senior Member Hotop stated (inter alia) at paragraphs 55 and 56:
"55. … The Tribunal acknowledges that, in the event of an overpayment of social security, a reasonable period of time must be allowed for Centrelink (formerly DSS) staff to calculate the amount of the overpayment and raise the appropriate debt against the recipient. But calculating the amount of an overpayment debt and raising that debt are one thing; effecting a social security rate reduction is quite another. There seems to the Tribunal no good reason why the DSS in the present case, upon receipt of the new income estimate from Mrs Morgan on 5 March 1997, did not take immediate steps to effect the appropriate FP rate reduction on the basis of that information or, if that was not practicable, at least to notify Mrs Morgan that her present state of FP was higher than she was entitled to and that action would be taken as soon as possible to calculate her appropriate FP rate and recover from her the amount of the overpayment. Mr Jones informed the Tribunal that it is common practice at Centrelink that when certain customer information is entered into the computer system, a letter to the customer is "automatically generated". Indeed the DSS letter to Mrs Morgan dated 20 February 1997 (Exhibit R1), is an example of such a letter for it was "generated" in response to the telephone contact made by Mrs Morgan on that very day. Mr Jones' comment and that example serve only to reinforce the Tribunal's view that, upon receipt of the new income information from Mrs Morgan on 5 March 1997, a reduction of her FP rate should have been effected on the next FP payday of 13 March 1997 or, at the very least, a standard form letter should have been immediately "generated" notifying her of an impending FP rate reduction and of associated matters regarding overpayment of FP and debt recovery. Such a letter would have served to put Mrs Morgan on notice and given her some opportunity to plan financially for the eventuality of her having to repay an overpayment of FP to the DSS.
56. In the abovementioned circumstances - namely, the failure by the DSS to act on the information provided by Mrs Morgan on 5 March 1997 and stop the overpayment of FP to her by effecting the appropriate reduction in her FP rate until the FP payday of 24 April 1997 or at least to notify her of her overpayment situation and the consequences thereof as regards debt recovery - the Tribunal is satisfied that it would be unreasonable or inappropriate for the Secretary now to seek to recover that part of Mrs Morgan's debt that arose during the period from 5 March 1997 to 10 April 1997. In other words, the Tribunal finds that those circumstances constitute special circumstances that make it desirable to waive the right to recover that part of Mrs Morgan's debt, within the meaning of para (b) of s1237AAD of the Act.
… "
With respect, this Tribunal concurs with the reasoning in Re Morgan. Ms Pugsley sought to distinguish Re Morgan on the basis that there was about a twelve month period in that case before the various debts were raised, whereas in the present case, the debt was raised relatively quickly. As this Tribunal noted in Re Stewart and Secretary, Department of Family and Community Services [1999] AATA 552 at paragraph 32, Re Morgan draws a distinction between a reasonable time in which to raise a debt and a reasonable time in which to effect a rate reduction. It is that failure to effect a rate reduction within a reasonable time of the receipt of information which gave rise to special circumstances in Re Morgan, and a similar conclusion can be reached here. It would be equally "unreasonable or inappropriate" (Re Ivovic and Director-General of Social Services (1984) 3 ALN 61 at pN97) in this case to seek to recover the money for the period 29 July 1998 to 30 September 1998 where the Department had failed to effect the appropriate reduction or at least notify the applicant that he was receiving more than his entitlement and the Tribunal so finds.
No explanation was offered as to why the Department took so long to change the rate. It is vital that the Department acts promptly (as it most often does) to change rates, so as to hopefully minimise overpayments, and avoid the frustrating system of raising necessary debts. In situations such as the present where a recipient has complied with his notification obligations, and informed the Department as required within 14 days, it is even more inappropriate for the Department to then seek to recover monies paid as a result of their failings.
Accordingly, it is unreasonable or inappropriate for the Department to now seek to recover the monies which became owing as a result of its failure to act upon the supplied information or notify the applicant in any way, and consistent with the reasoning in Re Morgan, the Tribunal waives the debt pursuant to section 1237AAD of the Act.
This being the case, it is unnecessary to canvas the issue of good faith. This is not to say however that the Tribunal is making an adverse finding on good faith by not canvassing it herein.
decision
For the reasons given, and pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor, decides that the debt in the period 29 July 1998 to 30 September 1998 be waived in its entirety pursuant to section 1237AAD of the Act.

I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A.K. Kiosoglous MBE
Signed:         .....................................................................................
  Personal Assistant
Date/s of Hearing  24 March 2000
Date of Decision  13 April 2000
Counsel for the Applicant        In person
Solicitor for the Applicant         -
Counsel for the Respondent    Ms A. Pugsley
Solicitor for the Respondent    Centrelink