Secretary, Department of Employment and Workplace Relations v Sherry Ann Gillies

[2007] AATA 57

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 57  

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2006/172

GENERAL ADMINISTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

And SHERRY ANN GILLIES  

Respondent

DECISION

Tribunal Mr J G Short (Member)

Date14 February 2007

PlaceAdelaide

Decision The Tribunal sets aside the decisions under review and substitutes new decisions that Ms Gillies owes a debt to the Commonwealth in the sum of $5,842.31, and that all of the debt should be recovered.

..............................................

J G SHORT
  (Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Disability Support Pension – overpayment – waiver – no reason to waive recovery of any portion of the debt under the legislation – decisions set aside

Social Security Act 1991 ss 1223(1), 1236(1A), 1237A(1), 1237A(1A), 1237AAD

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

REASONS FOR DECISION

14 February 2007   Mr J G Short (Member)

introduction

1. Ms Sherry Gillies received Disability Support Pension (DSP) in the sum of $5,842.31 during the period 25 June 2003 to 6 June 2005. The applicant (the Department) submitted that Ms Gillies was not entitled to receive this payment and that as a consequence, the overpayment comprised a debt recoverable by the Commonwealth. Ms Gillies appealed to the Social Security Appeals Tribunal (the SSAT) and on 24 May 2006 that Tribunal decided to affirm a decision in relation to recovery of an outstanding sum of $4,828.50 and to waive recovery of $1,500 of that sum by favourable exercise of the discretion prescribed under s 1237AAD of the Social Security Act 1991 (the Act) in the light of what it considered to be the special circumstances of the case.  The Department has appealed to this Tribunal. 

2.      Although the original decision-maker raised an overpayment in the sum of $4,828.50, the Department has now provided documentation supporting a submission that the overpaid sum, and in this case the debt, was in fact $5,842.31.   This Tribunal finds that the overpaid sum was $5,842.31.

3.      The debt is said to have arisen out of a failure of Ms Gillies to advise or accurately advise Centrelink of all of her earnings and all of her partner’s earnings.  Ms Gillies said that she did not take issue with the recovery of all of the debt which arose from her failure to advise or accurately advise her earnings.  Ms Gillies said however that she believed she had provided accurate advice in respect of her partner’s earnings and that consequently, that portion of the debt which arose out of an inadequate reflection of her partner’s earnings in her rate of DSP, arose solely or at least in part, due to Centrelink error and as a consequence, recovery of that portion should be waived.  Ms Gillies was not represented at the hearing.  The Department was represented by its advocate, Ms Welfare.

background to dispute

4.      Ms Sherry Gillies is the respondent.  It is common ground that she has been in receipt of DSP since about 2001.  Ms Gillies experienced significant back injuries with resulting chronic pain and depression.  It is as a consequence of her medical conditions and her disability arising from those conditions that she has been qualified to receive DSP.

5.      Ms Gillies has been able to work, at least on a part-time basis, and is currently employed for approximately 21 hours each week, earning $18 an hour.  Her partner is also employed.  She and her partner operate separate bank accounts, but jointly own an unencumbered home with a capital value approximating $430,000. 

6.      It is also common ground that from at least 26 June 2003 until about November 2003 Ms Gillies performed part-time work for two or three different employers, but failed to advise all of those sources of income and to fully advise the amounts earned.  As mentioned, Ms Gillies does not take issue with the portion of the debt referable to her failure to fully advise Centrelink of her income.

7.      In relation to the portion of the debt flowing from Centrelink’s under appreciation of the amount of money being earned by Ms Gillies’ partner, it was not disputed that on 3 December 2002 Ms Gillies appropriately advised her partner’s earnings at a rate of $530 per week.  What is in dispute is the advice provided by Ms Gillies in telephone calls made on 17 October 2003 and 25 November 2003.  Ms Gillies’ evidence in relation to these calls was that she had little recollection of the content of the discussions, but that she would have advised Centrelink that the reported earnings of $530 were achieved weekly rather than fortnightly and that her partner was working full-time rather than part-time.

8.      The Department called evidence from Ms Karen Malone, a technical support officer; trainer and team leader employed by the Department.  Ms Malone provided evidence of Centrelink’s usual practice in relation to recording telephone calls.  She gave evidence of her interpretation of the record of calls made on 17 October and 25 November 2003 and 21 June 2005.  Ms Malone said that the record of a telephone call made by Ms Gillies on 17 October 2003 indicated that the customer service officer who took the call made a record consistent with advice that Ms Gillies’ partner had changed to part-time work and that income of $530 was now derived on a fortnightly basis.  Ms Malone said in relation to a telephone call on 25 November 2003 from Ms Gillies, that the customer service officer who took that call also made a record consistent with advice that Ms Gillies’ partner was achieving income at a rate of $530 per fortnight and that he was now working part-time rather than full-time as had previously been the case.

9.      Ms Gillies confirmed that her partner had at all times worked full-time.  She said that although she had no particular recollection of the content of the telephone conversations conducted on 17 October 2003 and 25 November 2003, she would not have advised income achieved at a rate of $530 per fortnight as she was fully aware that her partner’s income was achieved on a weekly basis.  She suggested that a miscommunication must have occurred, leading to a misunderstanding of the situation by each of the customer service officers who made the records in October and November 2003.  The content of these telephone conversations is virtually the only area in dispute.

issues

10.     The issues for consideration is this case are:

(a)      whether Ms Gillies was overpaid an amount of $5,842.31 between the period 25 June 2003 and 6 June 2005; and if so

(b)whether Ms Gillies owes a debt payable to the Commonwealth in the above-mentioned sum; and if yes

(c)       whether recovery of all or part of the debt should be waived or written-off in the light of the circumstances of this case.

is there a debt?

11.     The Department tendered a document headed “Centrelink Debt Calculator” (Exhibit A3).  I have considered the information contained in that document and am reasonably satisfied that an overpayment has occurred in the sum of $5,842.31.  The original claimed overpayment of $4,828.50 was apparently calculated on the basis that Ms Gillies’ partner received income at a rate of $530 per week, when in fact his earnings were $550 per week. 

12. Section 1223(1) of the Act is commonly known as the no-fault debt provision. This section acts to create a debt in the sum of any overpaid amounts regardless of the cause of the overpayment. In these circumstances I am reasonably satisfied that Ms Gillies has been overpaid and as a consequence owes a debt to the Commonwealth in the sum of $5,842.31.

should recovery of all or part of the debt be waived or written off?

13. Section 1236(1A) of the Act reads as follows:

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

14.     In this case, Ms Gillies did not suggest that write-off, perhaps more appropriately described as delay of recovery of a debt, would be of benefit to her.  In any event I find that none of the preconditions for write-off exist.

15. Waiver of recovery of the debt may be appropriate if the circumstances prescribed in s 1237A(1) and (1A) of the Act apply. These sub-sections read as follows:

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).

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

(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.”

16.     In this case Ms Gillies did not appear to suggest that the under recording of her partner’s income by Centrelink from about November 2003 occurred solely as a result of Centrelink’s error.  She rather suggested that a miscommunication had occurred.  Relevant to this issue however is also the undisputed fact that Ms Gillies was sent recipient notification notices periodically from November 2003 indicating the basis upon which Ms Gillies’ DSP entitlement was calculated.  Those letters contained inaccurate information concerning at least her partner’s income, and in these circumstances Ms Gillies was required to advise Centrelink of the inaccuracy within 14 days.  It is common ground that no such advice was provided.  Ms Gillies suggested that her health was such that it did not occur to her that her payments were inappropriate or that the information contained in the notices was incorrect.  Some support for this contention was provided to the SSAT by Ms Gillies’ local medical officer, Dr Graham Hughes.  Dr Hughes described Ms Gillies as suffering a reduced level of functioning due to physical, mental and stress related difficulties.

17.     While I can accept that Ms Gillies did not set out to defraud Centrelink, at least in respect of the reporting of her partner’s income, I am not satisfied on the evidence before me that the debt arose solely as a result of administrative error.  In these circumstances, waiver under s 1237A of the Act is not possible.

18. The SSAT purported to waive recovery of a portion of the debt, $1,500, in the light of what it considered to be special circumstances. A discretion to waive recovery of all or part of the debt is prescribed in s 1237AAD of the Act. This section reads as follows:

“1237AAD  Waiver in special circumstances

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.”

19.     Sub-paragraph (c) of this section requires that it be more appropriate to waive recovery than to write-off a debt or part of a debt.  In the circumstances of this case I do not consider it appropriate to write-off recovery of the debt and consequently, if I am able to find special circumstances exist and that neither Ms Gillies or any other person knowingly made a false statement or failed to comply with a provision of the Act and that it is desirable to waive recovery of all or a portion of the debt, then I am armed with the discretion to do so. 

20.     The SSAT purported to waive recovery of a portion of the debt in the light of what it considered to be Centrelink’s error in misrecording Ms Gillies’ partner’s income.  This related to the content of the telephone call records made in October and November 2003.  At first blush, it would appear that a miscommunication occurred, perhaps on the basis that Ms Gillies was referring to weekly income, whereas the Centrelink customer service officers believed she was referring to fortnightly income.  The records however not only indicate that there was a change from weekly income to fortnightly income, but also a change in relation to Ms Gillies’ partner’s work status in that his status record was changed from full-time to part-time casual.  It is difficult to see how this last mentioned change could have arisen without some inaccurate advice from Ms Gillies.  I am not satisfied that the inaccurate recording of Ms Gillies’ partner’s income was a result of Centrelink error.  It may have been a result of a miscommunication. 

21.     The SSAT also noted that Ms Gillies’ finances, as described in Centrelink records, were shared with her partner on the basis that each retained separate bank accounts, although they jointly owned an unencumbered residential property valued at over $400,000.  Again, I am not satisfied that Ms Gillies’ financial circumstances can be seen in any way comprising special circumstances.  I accept that Ms Gillies has significant health problems and that her level of functioning has been reduced as a result of those problems.  Nevertheless, I do not consider that this factor, along with the other circumstances of this case, is such as to comprise special circumstances which warrant waiver of any portion of the debt.  It is clear from the decision of French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 that the category of circumstances which may be considered special are not closed, and I have had regard to all of the circumstances of this case in reaching my decision. Under normal circumstances the taxpayers of Australia have a legitimate expectation that debts owed to the Commonwealth should be repaid. I have been unable to find any reason in the circumstances of this case generally to set against that expectation.

conclusion

22.     The decision under review is set aside.  The Tribunal substitutes new decisions that Ms Gillies owes a debt to the Commonwealth in the sum of $5,842.31, and all of the debt should be recovered.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short (Member)

Signed:         ............J Coulthard...........................................
  Associate

Date of Hearing  18 January 2007
Date of Decision  14 February 2007

Advocate for the Applicant       Ms M Welfare

Centrelink Legal Services branch
Advocate for the Respondent   In person