Schifilliti and Secretary to the Department of Family and Community Services

[2002] AATA 396

DECISION AND REASONS FOR DECISION [2002] AATA 396

ADMINISTRATIVE APPEALS TRIBUNAL        Nº N2001/1313
GENERAL ADMINISTRATIVE DIVISION
  Re:         Amalia Schifilliti
  Applicant
  And:       Secretary to the Department of Family
  and Community Services
  Respondent

DECISION

Tribunal:       Mr P.J. Lindsay, Senior Member
Date:             28 May 2002
Place:            Sydney

Decision:The Tribunal affirms the decision under review.

. . . . . . . . . . . . . . . . . . . . . . . .
  Mr P.J. Lindsay
  Senior Member
CATCHWORDS – Social Security – Family Allowance – whether compliance with notice – information required by notice previously provided in response to separate notice – debt due to Commonwealth – waiver of debt – decision affirmed
Social Security Act 1991 ss. 872, 1224, 1237A, 1237 AAD

REASONS FOR DECISION

Mr P.J. Lindsay, Senior Member

1. This is an application by Mrs Amalia Schifilliti, the applicant, for review of a decision by the Social Security Appeals Tribunal (the SSAT), dated 2 August 2001 which affirmed a decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services (the respondent) dated 12 July 2001.  The initial decision by Centrelink was that there had been an overpayment of Family Allowance to Mrs Schifilliti during the period 1 January 2000 to 30 June 2000 because her taxable income for the 1998-99 year, combined with her husband's, exceeded $70,493.

2. At the hearing Mrs Schifilliti gave evidence, as did her husband Mr Gaetano Schifilliti. Ms Schuster of Centrelink's Advocacy and Administrative Law team represented the respondent. The Tribunal had before it the documents (T documents) lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act).
   background

3. On the basis of the material in the T documents and the evidence, the Tribunal is satisfied that from 1994 Mrs Schifilitti has received Family Allowance in respect of her sons Francis and Anthony.  Mrs Schifilliti, who is 45 years of age, lives with them, her husband and her eldest son Joseph.  On 24 February 1999 Family Allowance payments for Francis ceased, as he then commenced to receive Youth Allowance.

4. Towards the end of 1999 Centrelink cancelled Francis' Youth Allowance because his parents' combined taxable income exceeded the upper limit.   Mrs Schifilliti then applied for Family Allowance for Francis and payments for him effectively recommenced from 13 November 1999. 

5. On 8 February 2001 a Centrelink delegate determined that an overpayment of Family Allowance of $624.05 had been made to Mrs Schifilliti.   Mrs Schifilliti asked Centrelink to reconsider its decision.  An authorised review officer examined the matter and on 12 July 2001 affirmed that the overpayment was a debt that should be recovered.  Following the SSAT's decision to affirm the authorised review officer's decision, Mrs Schifilliti lodged an application with the Tribunal on 27 August 2001.
   evidence

6. As well as running her household, Mrs Schifilliti works part time as an evening supervisor at Franklins in Bankstown.  Mrs Schifilliti acknowledged that she had received Family Allowance or equivalent entitlements for some years.  She was aware that entitlement cuts out above certain income levels, but she was not sure of the amounts of income concerned.  Mrs Schifilliti said that she has always left banking and other financial matters to her husband to look after.  She would never read bank statements or correspondence from Centrelink. Mr Schifilliti informed the Tribunal that some years ago, he and his wife agreed that the Family Allowance should be paid into a separate account, a trust account for the boys.  They received information infrequently about payments into the passbook account, usually when carrying out a transaction on the account, which Mr Schifilliti said they did not operate very often. 

7. In response to Centrelink's request for information about Francis' entitlement to Youth Allowance, Mr Schifilliti went to a Centrelink office in Bankstown on 5 November 1999 and delivered copies of his and his wife's 1998-99 income tax returns.  The returns had been prepared by an accountant and lodged at the Australian Taxation Office, Mr Schifilliti thought, some time in October 1999.   He gave the accountant information about their income from various sources, such as interest, and also about the additional amounts that he had received for accrued leave and superannuation upon his retirement in November 1998.  Mr Schifilliti was not sure of the precise amount of taxable income disclosed in his return at the time he signed it.   Furthermore he told the Tribunal that when he took in the copies of the returns to Centrelink, he did not look at the amounts of taxable income.  

8. While he was at the Centrelink office to deliver the tax returns, Mr Schifilliti did not ask whether the information in the returns would be available for use by the Family Allowance section of Centrelink as well as the Youth Allowance section.  Mr Schifilliti said that the officer who accepted the returns did not ask any questions or provide him with any information about his wife's entitlement to Family Allowance for Francis in the event of cancellation of his Youth Allowance.  It transpired that Francis' Youth Allowance was cancelled due to his parents' combined taxable income exceeding the relevant upper limit.

9. Mrs Schifilliti signed an application for Youth Allowance in respect of Francis on 1 December 1999 (T6).  Mr Schifilliti personally delivered it to Centrelink at Bankstown. 

10. Mrs Schifilliti told the Tribunal that her husband informed her that Centrelink had written to her on 6 December 1999 (T7) providing information about the Family Allowance payments that she would receive in 2000, but she did not read the letter.  She could not recall the contents of the letter because she did not really pay much attention to the matter.  Mr Schifilliti said he clearly remembered receiving the letter.  In part the letter read as follows:

    This letter is about your Family Allowance in 2000 and what you must do.  The amount of Family Allowance you get depends on your and your partner's combined annual income. …
    The table below shows you how your family income may affect the amount of Family Allowance that you receive. …
    You must tell us within 14 days after this letter is given to you, if: your and your partner's combined taxable income in the 1998-99 financial year was more than the income limit that applies to you;…

1. Mr Schifilliti told the Tribunal he discussed the letter with his wife, in particular Centrelink's request that she should inform Centrelink within fourteen days of the date of the letter if her and Mr Schifilliti's combined taxable income for 1998-99 exceeded $70,493.  Mr Schifilliti said that, as he had already given Centrelink the tax returns about five weeks earlier, he thought that they had the information they wanted and so he tore up the letter.  He thought it not unusual that Centrelink would not have yet acted on the information he had provided because, when Francis applied for the Youth Allowance, Centrelink took about two and a half months to respond.  In fact, Mr Schifilliti had had to chase up Francis' application, which Mr Schifilliti himself had delivered to Centrelink's office, and at the time was informed that there was no record of the application having been received and that another would have to be submitted.  This was not something he wanted to do, as the original application had taken one and a half hours to complete.  He was relieved to be contacted some days later with the news that Centrelink had found Francis' original application.   Mr Schifilliti said that he had worked in the public service for 34 years before his retirement, and from his experience it was common for different sections of a department or agency to share files and other information.  He was confident, therefore, that it would simply be a matter of time before the relevant officer in the Family Allowance section received the 1998-99 tax returns.

2. Centrelink wrote to Mrs Schifilliti on 22 December 1999 (T8) informing her that she would receive the minimum amount of Family Allowance for Francis since he was over 16 years of age and that from January 2000 she would receive $47.40 in Family Allowance each pay day.   The letter noted that Centrelink had used 1997-98 taxable income amounts and that her combined income was less than $70,493.  Mr Schifilliti could not recall whether they received the letter.  A similar letter was sent to Mrs Schifilliti dated 30 December 1999 (T9) informing her that from 17 January 2000 her Family Allowance payments would be $48.00.  In addition the letter noted that Centrelink had used 1998-99 taxable income amounts and her combined income was under $70,493.  Mr Schifilliti was sure that he did not receive the letter.

3. In cross-examination Mr Schifilliti was asked whether he expected his wife's Family Allowance to be reduced upon the 1998-99 taxable incomes being received by the relevant section within Centrelink.  He said that, after he tore up the letter of 6 December 1999, he did not think about how their combined income might affect the Family Allowance payments.  Since the payments were made into an account that that was seldom operated he said he would not have immediately noticed if the payments were reduced.

4. Centrelink paid $627.45 in Family Allowance to Mrs Schifilliti from 1 January 2000 to 30 June 2000 (T17).  In January 2001, as a result of a data matching exercise using the records of the Australian Taxation Office, Centrelink found that Mrs Schifilliti's and her husband's combined taxable income for 1998-99 exceeded the limit of $70,493, as notified in Centrelink's letter of 6 December 1999.  It was not in dispute between the parties that Mrs Schifilliti's taxable income in 1998-99 was $19,170 and Mr Schifilliti's was $98,206 (T15).  Nor was there any dispute between them that, if Family Allowance had been paid in error, then the amount of the overpayment was $624.05 (there was an entitlement to a small amount of $3.40).  Centrelink has now been repaid the amount of $624.05. 
   consideration and findings

5. Mr Schifilliti maintained that any overpayment of Family Allowance was due to incompetence on the part of Centrelink.  At their request regarding Francis' entitlement to Youth Allowance, Mr Schifilliti had provided Centrelink with the information they sought about his and Mrs Schifilliti's 1998-99 taxable income.  On his reading Centrelink's letter of 6 December 1999 advising that Centrelink must be notified if the specified 1998-99 taxable income levels were exceeded, Mr Schifilliti thought that he need take no action as he had earlier given Centrelink the relevant tax returns containing that information.  For Mr Schifilliti, his provision of the required information to Centrelink's Youth Allowance section, amounted also to providing the information to Centrelink's Family Allowance section.  His experience as an officer in the Department of Veterans' Affairs was that employees working in a section of the department had access to relevant information held in other sections.

6. Ms Schuster submitted that there was no basis for Mr Schifilliti's supposition as to the passing on of information within Centrelink other than his experience in another department.  Ms Schuster noted that there was no evidence that Mrs Schifilliti or her son had agreed with Centrelink that their files should be connected or the information within them passed on.  In her submission, the Family Allowance payments were not made to Mrs Schifilliti as a result of any administrative error on the part of Centrelink.

7. Centrelink stated in the letter of 6 December 1999 that it was a notice under s.872 of the Social Security Act 1991 (the Act).  That section relevantly provides:

   (1) The Secretary may give a recipient of family allowance a notice that requires the recipient to inform the Department if:
   (a) a specified event or change of circumstances occurs; or
   (b) the recipient becomes aware that a specified event or change of circumstances is likely to occur.
   …
   (6) A recipient must not, without reasonable excuse, refuse or fail to comply with a notice under subsection (1) to the extent that the recipient is capable of complying with the notice.
   Penalty: Imprisonment for 6 months.
   …

Prior to its repeal with effect from 1 July 2001, s.1224 of the Act provided:

(1) If

(a) an amount has been paid to a recipient by way of social security payment or fares allowance; and
(b) the amount was paid because the recipient or another person:

(i) made a false statement or a false representation; or
(ii) failed or omitted to comply with a provision of the social security law or this Act as in force immediately before 20 March 2000, the 1947 Act or the Social Security (Fares Allowance) Rules 1998;

the amount so paid is a debt due by the recipient to the Commonwealth.
…

1. Did Mrs Schifilliti refuse or fail to comply with the notice given under s.872 without reasonable excuse? The Tribunal finds that Mrs Schifilliti ignored the notice, causing her not to report her and her husband's taxable income for 1998-99 to Centrelink as was required in relation to her ongoing entitlement to Family Allowance payments. Thus she failed to comply with the notice. The Tribunal is satisfied that it was not reasonable for Mrs Schifilliti to ignore the notice on the assumption that the information had already been provided, as the notice was given to her some five weeks after her husband had delivered the tax returns to Centrelink. On the contrary, given the experience in relation to Francis' application for Youth Allowance, Mrs Schifilliti should have followed up the notice instead of allowing the feeling of frustration from the earlier dealing with Centrelink to take over, and then sitting back and assuming matters would take their course. In the absence of an agreement or other communication with Centrelink, it was not reasonable for her to assume that information provided in relation to her son's entitlement would be linked up with her Family Allowance application or passed on to officers in Centrelink who deal with matters other than Youth Allowance. The Tribunal finds that, had Centrelink been informed that Mrs Schifilliti's 1998-99 taxable income combined with her husband's was $117,376, she would not have been paid any family allowance during the period 1 January to 30 June 2000 because her income ceiling under s.1069-H27 of the Act was $70,493. It follows that, as the Tribunal finds that Mrs Schifilliti failed to comply with the notice under s.872, the amount of $624.05 is a debt due to the Commonwealth.

2. Can and should the debt be waived? The debt must be waived where s.1237A of the Act applies:

   (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).
   …

The Tribunal is not satisfied that administrative error on the part of Centrelink was a cause, let alone the sole cause, for payments of Family Allowance to have been made during the relevant period.  The Tribunal finds that Mr Schifilliti did not request that the tax return information be passed on to the Family Allowance section of Centrelink.  The information was provided to enable an assessment of the Youth Allowance that Francis received, not for the assessment of any other person's benefits and the tribunal so finds.

1. The respondent may waive the debt, wholly or in part, where s.1237AAD of the Act is applicable:

   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.
   …

Even if the Tribunal were satisfied that the debt was not wholly or partly attributable to Mrs Schifilliti's failing to comply with the Act, there was no evidence about her circumstances.  Moreover, the Tribunal is not satisfied on the basis of Mr and Mrs Schifilliti's arguments that there are circumstances that make it desirable to waive the debt. Accordingly the Tribunal finds that there are no special circumstances present. 

1. It follows that the decision under review should be affirmed.

   I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of  Mr P.J.Lindsay, Senior Member

   Signed: L Houston   .....................................................................................
     Associate

   Date of Hearing  07/05/2002
   Date of Decision  28/05/2002

   Solicitor for the Respondent              Hannelore Schuster