Schiebaan and Secretary, Department of Education, Employment and Workplace Relations

[2008] AATA 306

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 306

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/0011

GENERAL ADMINISTRATIVE DIVISION		)
Re		BART SCHIEBAAN

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Ms Robin Hunt, Senior Member

Date15 April 2008

PlaceSydney

Decision  The decision that Mr Schiebaan has a debt to the Commonwealth is affirmed and the matter remitted for calculation of the amount outstanding.

...................[Sgd]...................

Ms Robin Hunt
  Senior Member

CATCHWORDS

SOCIAL SECURITY – overpayment of newstart allowance – period of absence from Australia – notice of departure and cessation of claim for newstart given to Centrelink – payments continued due to administrative error – no fault on part of applicant – special circumstances not found – decision affirmed.

Social Security Act 1991 ss 1217(4), 1223, 1236, 1237A, 1237AAD

Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186

Department of Social Security v Hales (1998) 82 FCR 154

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

Jess v Scott and Ors (1986) 12 FCR 187

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

15 April 2008 Ms Robin Hunt, Senior Member   

summary

1.Mr Bart Schiebaan went to Japan in 2006 to teach English shortly after he had commenced receiving newstart allowance. He advised Centrelink to stop payments but Centrelink overlooked this and continued to make payments into his Australian bank account. Eventually, after complaints by Mr Schiebaan, Centrelink stopped the payments but then raised a debt. Centrelink raised a debt against Mr Schiebaan in the amount of $3,589.54 representing overpayment for the period 7 February 2006 to 9 June 2006. Although the overpayment arose solely through the administrative error of Centrelink, I have decided that Mr Schiebaan is obliged to return the money to which he was not entitled. My reasons are set out below.

background

2.      Centrelink records show Mr Schiebaan has received newstart allowance intermittently since 30 December 1996. On 7 February 2006, Mr Schiebaan attended a Centrelink office to inform them that he was leaving Australia and would be absent until 17 December 2006. Further Centrelink records show that, on 7 February 2006, Centrelink issued a notice to Mr Schiebaan advising him that he would not be entitled to newstart allowance or a concession card while he was away. However, Centrelink continued to make newstart payments to him until 9 June 2006.

3.      Mr Schiebaan contacted Centrelink again from Japan on 19 June 2006. He asked that his newstart allowance be cancelled. Centrelink records indicate that an officer informed him a debt of $3,589.00 might be raised as this was the overpayment made to him while he was overseas. On the same day, 19 June 2006, Centrelink cancelled the newstart payments. Centrelink then sent Mr Schiebaan notification it was cancelling the payments with effect from 7 February 2006. The following day, 20 June 2006, Centrelink decided to recover the overpayment and raised a debt of $3,589.54.

4.      Mr Schiebaan requested internal review of the decision to raise and recover this debt. Centrelink carried out a review but affirmed the determination to recover the debt on 30 August 2006 and, after acknowledging Mr Schiebaan’s request for further review, an authorised review officer (ARO) affirmed that decision. The Social Security Appeals Tribunal further reviewed and affirmed the decision on 1 December 2006. This is the reviewable decision before me.

issues

5.      The issues in this matter are:

(a)Does Mr Schiebaan owe a debt to the Commonwealth due to overpayment of newstart allowance; and

(b)Are there any grounds for not recovering all or part of the debt.

decision

6.      For the reasons explained later in this decision, I find that:

(a)Mr Schiebaan owes a debt of $3,589.54 to Centrelink for overpayment of newstart allowance, over the period 7 February 2006 to 9 June 2006, as he received fortnightly payments when he was not eligible; and

(b)Waiver of all or part of the debt due, although due to sole administrative error, is not appropriate pursuant to sub-section 1237A(1) of the Social Security Act 1991 (the Act), as the overpayment was not received in good faith, the applicant being at all times aware that he was not entitled to newstart allowance for the period; and

(c)Waiver pursuant to section 1237AAD is not available, as the applicant’s circumstances do not amount to special circumstances; and

(d)Write off of the debt is not available as Mr Schiebaan has not established that he cannot repay the debt, albeit over a long period, and his circumstances therefore do not satisfy section 1236 of the Act.

consideration of evidence

7.      Mr Schiebaan is asking for special consideration as the debt to Centrelink arose despite his efforts to stop any overpayment to him. In claiming special circumstances applied in his case Mr Schiebaan argued he was not at fault in any way for the overpayment by Centrelink and that he has various other debts and expenses which will make it difficult for him to repay the debt.

8.      Mr Schiebaan is now aged 41, having been born on 8 January 1977. He has no substantial property and rents accommodation. He has other bills in addition, including large tax debts and outstanding household debts for services including water, gas, electricity and phone. His income tax debt at 11 December 2007 was $1,528.70.

9.      Mr Schiebaan also has a debt to the Australian Taxation Office under the Higher Education Loan Programme incurred when he was a student at Southern Cross University and at Macquarie University. Although he has reduced the debt from $14,461.00, on 1 June 2001, he still owed $12,779.00 on 11 December 2007.

10.     Mr Schiebaan gave oral evidence that he was relying on being able to secure an advance from Centrelink to meet outstanding household expenses and was aware such an advance would have to be repaid. The respondent tendered a debt action summary showing it had been recovering payment of the debt at the rate of $20 per fortnight and that, at 11 December 2007, the amount outstanding was $3,159.54.  At the time of the hearing, the debt had been further reduced by a small amount.

11.     Mr Schiebaan told the tribunal that he had received the Centrelink overpayments in good faith as that term was generally understood. While he was aware he was not entitled to the payments made, he had no idea the money was going into his Australian bank account until some months after he left Australia. Even when he became aware of this state of affairs, he was unaware how much money had gone into his account. This was because he operated a different account while living in Japan.

12.     He said he became aware of the situation when a friend collected some mail addressed to “Mr Schiebaan” from his former address. Otherwise, it would have been even longer before Mr Schiebaan realised that Centrelink was continuing to place money in his Australian bank account. He had not left a forwarding address for Centrelink as he was not expecting any communication from them after he asked them to cancel his payments. Mr Peter Irish made a written statement on 28 May 2007 setting out that, on one occasion around 20 June 2006, he went to a former address where he and Mr Schiebaan had lived, in order to collect any mail and found mail addressed to Mr Schiebaan. He delivered this to his parents’ address. He has not returned to the former address again and has had no communication from present occupants.

13.     As it happened, Mr Schiebaan only became aware of the Centrelink correspondence because he asked Mr Irish to collect any mail from his former address and to deliver it to his parents. When this occurred, some months after he had been in Japan, his parents discovered Centrelink had been continuing payments and they contacted him. Mr Schiebaan immediately rang Centrelink from Japan and again asked them to stop the payments.

14.     Mr Schiebaan gave evidence that he did not keep track of his Australian bank balance while he was overseas as he was not personally using the account. He was not receiving any bank statements and had no reason to think he should check the account while he was away. He had left some funds in the account to service his weekly payments of $87 towards the purchase of some land he had bought and asked his parents to top up the account balance if necessary. When his mother visited him briefly in Japan, he gave her some cash for this purpose. The Centrelink payments had been expended while he was away as he and his parents had not realised that not all the funds in the account were his original savings and were being supplemented by the unsolicited payments. The money in the account had been mingled and used. Mr Schiebaan had no occasion while he was overseas to check his exact bank balance as he had opened another account in Japan where he was living and working. He was living on his Japanese earnings and his employer deducted his rent and car expenses from his earnings.

15.     The tax debt arose because of his unexpected income due to the Centrelink error. In respect of his foreign earnings and any income of which he was aware, Mr Schiebaan lodged an income tax return with the Australian Taxation Office and received an assessment and refund statement. Mr Schiebaan overlooked the Centrelink payments at this time as he was not entitled to any such payments and was confused about his position. Subsequently, the ATO advised him that they had adjusted his assessment in light of information from Centrelink about the payments and that he owed tax instead of being entitled to a refund. This caused him more difficulty as he had no income at the time and badly needed the tax refund.

findings

16.     There is no contest between the parties that Mr Schiebaan received the amount of the debt stemming from overpayment of newstart allowance while he was living overseas in 2006 and that he was not entitled to the amount which the Secretary is seeking to recover. It is clear that an overpayment did occur and, pursuant to section 1223 of the Act, I find that the overpayment is a debt due and owing by Mr Schiebaan to the Commonwealth.

17.     At the hearing, Ms Lee for the Secretary advised that the amount of the overpayment and resulting debt should be reduced by $23.25 as Mr Schiebaan had departed Australia one day later than was taken into account, that is, he left on 8 February 2006 and not 7 February 2006. In addition, the debt had been reduced by deductions from payments made to Mr Schiebaan since 7 August 2007. The balance of the debt claimed by the respondent as at 27 November 2007 was $3,136.29.

18.     As to possible write off or waiver of the debt in whole or in part I have concluded these are not remedies available to Mr Schiebaan because of the following reasons:

write off

19.Sub-section 1236(1) of the Act provides, subject to sub-section (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise. Sub-section 1236(1A) details the circumstances under which a debt may be written off. The section reads, in part:

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 not cost effective for the Commonwealth to take action to recover the debt.

(1B)  For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if: 

(a)  the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice,….

20.I find that Mr Schiebaan’s circumstances do not fall within any of the listed criteria. Although it is a hardship for him, the debt is already being recovered by deductions of $20 per fortnight. I therefore have concluded that write off pursuant to section 1236 of the Act is not appropriate in this matter. 

sole administrative error

21.The error made by Centrelink in this case might come within the provisions of section 1237A of the Act. However, while the error is patent, there are additional requirements. For Mr Schiebaan to be successful pursuant to sub-section 1237A(1) of the Act, which concerns administrative error, it must be demonstrated that:

(i) the whole debt or a proportion of the debt was solely attributable to administrative error made by the Commonwealth; and

(ii) Mr Schiebaan received the payments that gave rise to the debt in good faith.

22.The respondent accepts that administrative error occurred but argues Mr Schiebaan did not receive the payments in good faith even though he was not in any way at fault. Mr Schiebaan argued that interpretations of the term ‘good faith’ put forward by the respondent distorted the usual accepted meaning. Mr Schiebaan said he had acted in good faith towards Centrelink also and had previously held the belief that Centrelink would act in good faith towards him. He referred me to the definition of ‘good faith’ according to the concise Macquarie dictionary. The term is there defined as meaning ‘honesty of purpose or sincerity of declaration’ and ‘expectation of such qualities in others’. Mr Schiebaan says this is exactly the spirit in which he had behaved towards Centrelink.

23.The Oxford dictionary sets out several references to good faith. In comparing good faith, bad faith and the Latin equivalent, bona fides, mala fides, this dictionary says the primary notion seems to have been the objective aspect of confidence well or ill bestowed. It goes on to say the English uses closely follow those of Latin with good faith meaning fidelity, loyalty and especially honesty of intention in entering into engagements. As well, the Encyclopaedic Australian Legal Dictionary says that ‘acting in good faith’ means, in tort, ‘Behaving honestly without fraud, collusion, or participation in wrongdoing’. Mr Schiebaan says that he acted in a manner consistent with these meanings and so he is entitled to the benefit of sub-section 1237A(1).

24.I agree with much of what Mr Schiebaan says. For example, he argued that Mr Prince must have felt betrayed in his faith in God and in good administration when his constant efforts to stop Centrelink payments failed and he was saddled with a debt. Mr Schiebaan was here referring to the case of Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186. Mr Prince was the victim of an error similar to that involving Mr Schiebaan when he tried more than once to stop Austudy payments to which he was not entitled. Justice Finn of the Federal Court held that he did not receive the payments in good faith even when he was unaware of them. Mr Schiebaan’s case is very similar and I feel bound by the judgment of Finn J to make a similar conclusion that Mr Schiebaan did not receive the payments in good faith according to judicial interpretation. This finding is also consistent with the judgment of French J in Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529. It follows that I must find that Mr Schiebaan is not relieved of the debt under sub-section 1237A(1) of the Act.

special circumstances    

25.Section 1237AAD details the criteria whereby debts may be waived pursuant to a finding that special circumstances exist. The Federal Court has said that for circumstances to be special they must be “unusual, uncommon or exceptional” (Re Beadle and Director General of Social Security (1984) 6 ALD1). As well, generally, what is required are “circumstances… that take the case out of the ordinary” (Jess v Scott and Ors (1986) 12 FCR 187) and that the discretion exists “to allow a flexible response to the wide range of situations which could give rise to hardship or unfairness if the debt is recovered” (Department of Social Security v Hales (1998) 82 FCR 154).

26.The phrase ‘special circumstances’ is not defined in the Act. The Macquarie dictionary gives several meanings of “special”, beginning with “of a distinct or particular character” and a range of other meanings including “different from what is usual or ordinary”. It also gives as meanings, “extraordinary” and “exceptional”. All of these meanings suggest some more than ordinarily difficult situation is required in order to dispense with the debt. In Mr Schiebaan’s situation when compared to that of others who are social security recipients or other people on low incomes who nevertheless are required to make repayments, Mr Schiebaan’s circumstances are not very much out of the ordinary. Social security recipients are usually in poor financial circumstances and Mr Schiebaan has not made out that his situation is dire.

27.In addressing Mr Schiebaan’s particular circumstances, I note his blameless history. I also note the issue of debt, and that his income tax debt is associated with the unsolicited Centrelink overpayments. In considering the reason for the administrative error that occurred, I have already found this was not as a consequence of Mr Schiebaan’s actions and that he notified Centrelink of his intentions to travel overseas on 7 February 2006. However, unfortunate as all this is, I find that special circumstances for the purposes of section 1237AAD do not exist in his case.

conclusions

28.In summary, I conclude that Mr Schiebaan owes a debt as a result of overpayment of newstart allowance for the period 8 February 2006 to 9 June 2006. I have examined write off and waiver provisions of the Act and have concluded that none are appropriate in this matter for the reasons already stated. This means that the decision under review is correct except as to details of the commencement date of the overpayments and the amount remaining outstanding. This must be determined by the respondent by adjusting the debt according to the repayments already made and the reduction by one day’s entitlement on 7 February 2006.

29.Although Mr Schiebaan is required to make the repayment, I note that Mr Schiebaan was in no way at fault and is now in difficult financial circumstances. Mr Schiebaan has produced correspondence from the Australian Taxation Office in support of his claim that he has a particular tax debt as a result of the Centrelink overpayment. As the repayments to Centrelink will occur in a different financial year from the overpayments, these will not reduce his tax debt. While it is up to Mr Schiebaan to negotiate repayment terms with Centrelink it may be that his case could be considered as suitable for assistance under the scheme for defective administration. This matter is outside my jurisdiction.

Decision

30.The decision that Mr Schiebaan has a debt to the Commonwealth is affirmed and the matter remitted for calculation of the amount outstanding.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Ms Robin Hunt, Senior Member

Signed: ........................[Sgd]...........................
  Jennifer Wong, Associate

Date of Hearing:  11 December 2007
Date of Decision:                   15 April 2008
Solicitor for the Applicant:                          Self-represented

Solicitor for the Respondent:  Ms Phyllis Lee, Centrelink Legal Services