Secretary, Department of Social Security v Greenwood, M.J
[1992] FCA 183
•07 APRIL 1992
Re: SECRETARY, DEPARTMENT OF SOCIAL SECURITY
And: MARGARET JANE GREENWOOD
No. WA G110 of 1991
FED No. 183
Social Security
(1992) ASSC 92-125
(1992) 15 AAR 345
(1992) 26 ALD 554
COURT
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)
CATCHWORDS
Social Security - Sole Parent's Pension - overpayment of pension - recovery of overpayment under s.246(1) of Social Security Act - questions of causation - requirement under s.163 of Social Security Act to report commencement of employment - failure to report commencement of employment within 14 days - non-compliance with requirement under s.163 of the Act - whether a cause or contributing cause of the overpayment.
Social Security Act 1947 s.163
March v E. and M. Stramare Pty Ltd (1991) 99 ALR 423
Director-General of Social Services v Hangan (1982) 45 ALR 23
Re Matteo and Director-General of Social Services (1981) 4 ALD 398
Director-General of Social Services v Hales (1983) 47 ALR 281
Efstratiadis v Commonwealth (1990) 22 FCR 167
Federal Commissioner of Taxation v Swift 89 ATC 5101
HEARING
PERTH
#DATE 7:4:1992
Counsel for the Applicant: Mr P. Macliver
Solicitors for the Applicant: Australian Government Solicitor
Counsel for the Respondent: Mr K.E. Yin
Solicitors for the Respondent: Jackson McDonald
ORDER
THE COURT ORDERS THAT:
1. The appeal is allowed.
2. The decision of the Administrative Appeals Tribunal given on 26 September 1991, to set aside the decision of the delegate of the respondent dated 16 August 1990 to recover the amount of $1,001.70 being Sole Parent's Pension alleged to be overpaid in respect of the period 29 March 1990 to 26 April 1990, be set aside.
3. The direction of the Tribunal, that so much of the sum of $1,001.70 as may have been paid by the respondent to the applicant be refunded to her, be set aside.
4. There be no order as to costs.
Note: Settlement and entry of Orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
Introduction
On 22 December 1989 Margaret Jane Greenwood applied for the grant of a Sole Parent's Benefit under the provisions of the Social Security Act 1947. At the time of application she was unemployed. On 1 February 1990 benefit was granted and shortly thereafter Mrs Greenwood commenced part-time employment. She did not notify the Department of Social Security of that fact until 27 April 1990. The Department contended that she was obliged to inform it within 14 days of the event. Because she failed to do so Mrs Greenwood, it was said, was paid more than she was entitled to receive. Mrs Greenwood on the other hand, argued that she had acted at all times in accordance with advice she had received from a departmental officer. She appealed to the Social Security Appeals Tribunal against the decision to recover the overpayment and was unsuccessful. She appealed to the Administrative Appeals Tribunal and was successful in part. The Secretary of the Department now appeals from the decision of the Administrative Appeals Tribunal to this Court.
Factual Background
Margaret Jane Greenwood was born in England on 8 March 1942. She has lived in Australia since 1952. On 6 January 1987 she and her husband separated. Mrs Greenwood retained custody of their two children then aged 4 and 7 years. On 7 January 1987 she applied to the Department of Social Security for payment of a Supporting Parent's Benefit. On 11 February 1987 she was advised by letter from the Regional Manager of the Department at Morley that she had been granted a Supporting Parent's Benefit of $334.00 per fortnight commencing from 8 January 1987. The letter advised her, among other things, that:
"IF YOUR INCOME OR RENT VARIES OR YOU START PAYING RENT TO A PUBLIC HOUSING AUTHORITY YOU MUST NOTIFY THIS OFFICE WITHIN 14 DAYS."
Mrs Greenwood commenced receiving benefit. On 15 February 1987 and 15 March 1987 she completed and returned to the Department, forms entitled "Sole Parents 4 Weekly Review". They included the question:
"Do you get any income from any source which you have not told the Department about before? (e.g. Income from employment, maintenance payments, boarders or lodgers, payments from any other Government department)"
On 15 February 1987 Mrs Greenwood answered that question "No". On the form completed on 15 March 1987, she declared the receipt of maintenance from her husband at the rate of $150 per month. On 16 April Mrs Greenwood's entitlement was reviewed in an interview with a departmental officer in which a form called a "Post Grant Interview Package Sole Parent" was completed. In answer to the question "Have you been employed since your pension/benefit commenced?" she said, "No". Answers to other questions indicated her only income apart from benefit was $150 monthly maintenance. The interview form also indicated that her rights and obligations under the Act had been explained, but the content of the explanation was not otherwise elaborated.
On 28 May, 10 September and 2 December 1987, Mrs Greenwood completed "Sole Parent 12 Weekly Review" forms. In each case she indicated that she had done no paid work during the previous 12 weeks. Maintenance from her husband was again declared. On 2 December 1987 she advised the Department that she would be changing her address, would no longer be paying rent and so would not be eligible for rental assistance. At some time during 1988, which does not appear from the record, the Department decided to cancel the Supporting Parent Benefit apparently on the basis that Mrs Greenwood either had resumed cohabitation or was in truth not separated from her husband. An appeal to the Social Security Appeals Tribunal ("SSAT") was upheld on 12 December 1988 and the departmental decision set aside. The SSAT decided that Mrs Greenwood and her husband had separated in January 1987 and that from the date of that separation she had been eligible to receive the Supporting Parents Benefit.
On a "Sole Parent 12 Weekly Review" form dated 7 March 1989, Mrs Greenwood again advised that she had not done any paid work during the preceding 12 weeks. Departmental records indicate that she rang on 27 April and told them that she had commenced employment with Alfred Marks Employment Agency on 9 March 1989 and had received payments for the weeks between and including the week ended 10 March 1989 and the week ended 28 April 1989. An internal assessment conducted by the Department on the same day bore a note that there was a possible overpayment. This was apparently not further pursued until the second half of 1990. A further departmental file note of 4 May set out the wages figures but it is not clear whether this was the result of a separate contact by Mrs Greenwood. An Employer Report was obtained from Alfred Marks Personnel on 9 May indicating that employment had commenced on 9 March 1989 and was likely to continue. The wages notified were confirmed together with a payment of $168.75 in the week ending 5 May.
A departmental file note dated 25 May 1989 and signed by J. Gregory included the following handwritten text:
"Adv. Wages up to 12.5.89 was $337.50 gross 19.5.89 " $435.94 gross Cd advise would be ok to ring every 6 weeks with wage details.
J. Gregory
25/5/89"
The abbreviation before the word "advise" is not clear from the document in the appeal papers before the Court. In different handwriting on the same file note the following appears:
"Contacted Wages Clerk Alfred Marks Pers. She advised wages.
5/5 - 168.75 )
12/5- 337.50 ) 1105.32 - 4 = 276.33 pw 19/5 - 435.94 ) x 52 = 14369.16 26/5 - 163.13 ) "
A further Sole Parents 12 Weekly Review dated 31 May 1989 indicated that Mrs Greenwood had worked in the previous 12 weeks. She did not give details of her wages as requested by the form but instead wrote on it the words "AS ADVISED TO YOU BY PHONE".
On 23 June 1989 and 20 July 1989 departmental notes again recorded advice received from Mrs Greenwood about her earnings from temporary work. On 28 July 1989, she informed the Department that she was now working with Alfred Marks on an on-call basis only.A Sole Parent Weekly Review Form was completed by Mrs Greenwood on 22 August. Her employment at Alfred Marks was declared. The box entitled "Total Weekly Wage Before Tax" was completed with the insertion of the word "varies". Under questions about the dates of her employment she wrote:
"WORKING ON A TEMPORARY BASIS. ADVISED DEPT DIRECT OF EARNINGS WHICH VARY EACH WEEK."
On 24 August 1989 Mrs Greenwood was told by telephone by a departmental officer that they would update her pension on income stated on 12 weekly reviews only. In the note of that conversation there followed a list of her weekly earnings from 2 June 1989 to 18 August. The file note also bore the handwritten endorsement:
"a/n is aware of her obligations to advise of changes in wage/gross wage details on SPR 12 Wklys."
Another file note of 20 September 1989 indicates Mrs Greenwood advised of her earnings for the weeks ending 1, 3 and 15 September. It also bore the comment:
"a/n's earnings to be averaged every 12 weeks per file note."
A further advice of wages is recorded on 27 October 1989. On 13 November 1989 Mrs Greenwood wrote informing the Department that she was working full-time for a few weeks and was unable to get into a departmental office to hand in her Sole Parents 12 Weekly Review which was attached. That form bore her endorsement:
"WORKING ON A TEMPORY (sic) BASIS. DEPT ADVISED DIRECT OF EARNINGS WHICH VARY (EVERY WEEK)."
On 1 December 1989, Mrs Greenwood advised of her wages for the weeks ending 3, 10, 17 and 24 November. It was the same officer, J. Gregory, who appears to have taken the call. On 8 December 1989 she was advised by letter from the Department that her sole parents pension was no longer payable because of the amount of her income and maintenance. On 22 December 1989, Mrs Greenwood lodged a fresh claim. Her former employment with Alfred Marks Employment Agency was declared again and the gross weekly wages described with the word "VARIES". In answer to the question "Are you still doing this work?" she ticked the answer "NO". She stated that the date on which she had last worked was 24 September 1990. Under the question "Are you doing any other work (such as casual, part-time employment)?", she ticked the answer "NO" but wrote in the words "BUT WILL BE SOON". A file note of 28 December 1989 recorded the receipt of advice from Mrs Greenwood in the following terms:
"I am not working, as it was only a temporary assignment. My wages varied as I was on call to replace staff on holidays or clear a backlog of work."
Mrs Greenwood was sent a letter dated 1 February 1990 informing her that she had been granted a Sole Parent's Pension of $384.60 a fortnight commencing from 4 January 1990. The letter said, inter alia:
"You are required to tell us within 14 days if your income, not including maintenance, becomes more than $64.00 a week."
The letter concluded with the words "please also read the back of this letter". On the back was printed a notice under s.163 of the Social Security Act which began with the following words:
"The authority for the notification requirements listed below and on the front of this notice is in Section 163 of the Social Security Act. The rate of your pension, widowed person's allowance, rehabilitation allowance or sheltered employment allowance may need to be varied if certain events or changes of circumstances occur. For this reason you are required to tell the Department within 14 days if any of the following occur, or if you know in advance if they are likely to occur. Please have this letter with you if you telephone or call at any of our offices. If you are paid too much pension or allowance because you fail to tell the Department when you are required to do so, the overpayment may be recovered from you. There are also penalties for not telling the Department when required to do so. You must tell us if:
. you, or your spouse, start paid work."
There followed a substantial list of other events not material for present purposes requiring advice to the Department within 14 days of their occurrence. Nowhere was there expressed a general requirement to advise of income from employment or variation in income within 14 days of receipt or otherwise.
Mrs Greenwood resumed work and received payment for the week ending 23 February 1990 but did not inform the Department of this until 27 April 1990 when she completed a Sole Parents Review form. In answer to the question "Did you do any paid work during the past 12 weeks?" she advised that she had started work on 23 February 1990 with Alfred Marks Personnel and that it was temporary. Under the heading "Gross Weekly Earnings" she wrote "VARIES AS ADVISED BY PHONE". A departmental file note of 1 May 1990 recorded advice of wages for the weeks ending 23rd February; 2nd, 9th, 23rd and 30th March 1990; 6th and 13th April 1990. Wage details for the period from the week ending 6th April to 25th May were advised and again on 22nd June 1990 for the weeks ending 1st, 8th and 15th June. J. Gregory was the officer noting the information to the file. A Sole Parent Review filled out on 20 July 1990 advised details of wages from 14th May 1990 to 12th June 1990.
On 16 August 1990, the Department wrote a letter to Mrs Greenwood in which it was said, among other things:
"You have been paid $2,243.70 more than your entitlement under Section 168 of the Social Security Act. The overpayment occurred because you were paid rent assistance for the period 8.1.87 to 10.12.87 whilst you were still residing in your own home. You were also overpaid for periods in which you worked but did not advise of the changes in your income within 14 days. You have been allowed an earnings credit and this has been taken into account. The Department is entitled to recover the amount overpaid under Section 246 of the Social Security Act."
The letter asked her to make a full refund within the next 14 days.
Mrs Greenwood telephoned the Department on 23 August 1990. She discussed both the question of rental assistance and her earnings. The officer with whom she spoke agreed that she had advised of her earnings regularly but said that:
"... at times she had commenced work and had not advised within 14 days of commencing i.e. "Qualifying event"."
By a further letter from the Department dated 27 August Mrs Greenwood was advised that pension payments would be suspended until the overpayment of $2,243.70 had been recovered from her. She replied on 4 September saying that if she had been overpaid it was through no fault of her own as she had "religiously advised" her earnings over the previous two years. She said that she had been told by a departmental officer called Joan that advice of her earnings on a five or six weekly basis was fine as long as it was within the eight week assessment period. She had received similar advice from an officer called Leanne on 30 August.
Upon an internal review the claimed overpayment was reduced from $2,343.70 to $1,872.50. Those elements of the remaining claimed overpayment which related to earnings were justified by the review officer in writing in the following terms:
(a) 13-27/4/89: you commenced work on 9/3/89 for Alfred Marks Employment Agency but did not advise the department until your phone call on 27/4/89 - prior to this, you had received several letters from the department on which the notification requirements were stated, one of which was that notification of commencing work is required within 14 days. Although the department has been late in calculating this overpayment, the cause of the overpayment was due to late notification. In calculating this part of the overpayment your earnings credit has been correctly allowed.
.
.
.
(d) 29/3/90 - 26/4/90: Sole Parent's Pension was re-granted from 4/1/90 after you ceased work on 22/12/89 - you advised this in a statement you made on 28/12 and on the claim that you lodged on 28/12. You recommenced work in February - first paid on 23/2 - but did not advise the department until your phone call on 1/5 which was outside the 14 day requirement - which was stated in the letter sent to you on 1/2 advising that your pension had been regranted. In our discussion on 5/10 you stated that you did not realise that there were different requirements regarding notification - for commencing work and continuing work. Your advice on 1/5 was over nine weeks from your first pay (on 23/2), whereas your advices in the past had been every 3-4 weeks. It is also noted that the advice given to you by staff was in regard to notification for continuing work and had not been erroneous as this advice was related to specific queries made by you. For these reasons, this part of the overpayment stands as there was no fault attributable to the department."
The earnings overpayment for the first period from 13th to 27th April 1989 was $332.80 and for the period from 29th March to 26th April 1990 was $1,001.70. The rent assistance overpayment was $538. This represented a total overpayment of $1,805.70. The earnings component of that was $1,334.50.
Mrs Greenwood appealed against the decision to the Social Security Appeal Tribunal, but the decision under review was affirmed on 30 November 1990. She then appealed to the Administrative Appeals Tribunal which on 26 September 1991 made a decision in the following terms:
"(a) to affirm the decision of the delegate of the respondent made on 16 August 1990 to recover the amount of $332.80 being Sole Parent's Pension overpaid in respect of the period 13 to 27 April 1989.
(b) to set aside the decision of the delegate of the respondent dated 16 August 1990, affirmed by the Social Security Appeals Tribunal on 30 November 1990, to recover the amount of $1,001.70 being Sole Parent's Pension alleged to be overpaid in respect of the period 29 March 1990 to 26 April 1990;
(c) to direct that so much of the latter amount as may have been paid by the applicant to the respondent be refunded to her; and
(d) to grant liberty to either party to apply for further directions in relation to the implementation of this decision."
The Secretary of the Department now appeals against the decision insofar as it purports to set aside the delegate's decision and directs repayment of the amount received from Mrs Greenwood.
The Tribunal's Decision
At the conclusion of its hearing the Tribunal gave oral reasons which were subsequently published in an expanded and edited form. The only amounts in issue before the Tribunal were the earnings-related overpayments as they stood after internal review namely $332.80 for the period 13 to 27 April 1989 and $1,001.70 for the period 29 March to 26 April 1990. The facts were largely uncontested. The Tribunal set out a history broadly covering the factual background already adverted to in these reasons. It said that the basis for raising the overpayments was the fact that Mrs Greenwood was in receipt of part-time earnings during the relevant periods coupled with the fact that she had not notified the Department within 14 days of receiving each payment of those earnings as required by notices given to her by the Department at various times from December 1988 through to February 1990.
The Tribunal noted in particular that in the letter from the Department to Mrs Greenwood dated 1 February 1990 it had been stated:
"You are required to tell us within 14 days if your income, not including maintenance, becomes more than $64 a week."
The Tribunal found that over a considerable period of time between April 1989 and August 1990 the Department had received advice from Mrs Greenwood on a number of occasions and had verified the information that she had given but on no occasion had made any direct representation to her that the practice she had adopted was unacceptable or regarded as a breach of her reporting obligations. It was not until 16 August 1990 that Mrs Greenwood was advised by a letter of that date from the Department of the result of the calculations that had been made and that she was deemed to be in receipt of overpayments of sole parents pension.
The Tribunal referred to s.163(1) of the Act under which the Secretary may give notice requiring a person to notify the Department if an event or change of circumstance specified in the notice occurred. Given that Mrs Greenwood had received such notices on a number of occasions, it found that she had failed to comply with their requirements as she had not notified the Department within 14 days of each occasion on which she received payment for her part-time work. But a distinction was made between the two periods in respect of which the overpayments were said to have arisen. In relation to the later period between 29 March and 26 April 1990, the Tribunal said that the basic cause for the overpayment was the Department's own default for not having given notice to Mrs Greenwood at an earlier stage of her failure to comply with its requirements. Had the matter been raised as early as 27 April 1989 the subsequent problems would not have occurred. The Tribunal took the view that Mrs Greenwood's failure to notify her earnings in accordance with her obligations was the result of the Department's failure to advise her that she was not complying with its requirements. The periodic reporting practice she had adopted, which was acquiesced in over a relatively long period of time and during which she received benefits to which she may not have been entitled, was not to be regarded as a contributory cause of the second overpayment. After reviewing some of the cases relevant to the construction of s.246 of the Social Security Act, the Tribunal said at p 12 of its decision:
"The Tribunal has taken the view that her reporting of her specific earnings at 4 to 6 week intervals had no direct effect on the creation of a situation where ultimately, after some considerable time, an overpayment was sought to be recovered. The problem the respondent faces is that its own acquiescence virtually constituted an adoption of that process such that it effectively reduced to zero, that is totally subsumed, any contributory force her failure to report particular earnings within 14 days might have had. It was not, in the terms used by Von Doussa J. in McAuliffe (a reference to McAuliffe v. Secretary Department of Social Security (Federal Court, 21 June 1991), "a contributory factor". This aspect of the matter can be simply demonstrated by contrasting the situation between a failure to report any earnings, whether at 14 days notice or otherwise, and the course adopted by the applicant in this case whereby the department was kept advised of her earnings and cannot plead ignorance of them. The applicant's "failure" here was not one of concealment; it was one of revelation, though not precisely at the specific intervals laid down by the respondent. Even a failure to review the position leading to overpayments that might flow from an outright failure to report at all could, if acquiesced in for some period of time lead one to conclude that the creation of an overpayment situation was solely due to the respondent's own ineptitude, a situation hypothetically contemplated by Fitzgerald J. in Hangan (Director General of Social Services v Hangan (1982) 45 ALR 23). The Tribunal is not satisfied that even if Mrs Greenwood had notified the respondent of her part-time earnings at the required intervals the result would have been any different from what occurred in the actual circumstances when she did specifically disclose her earnings, though at longer periods."
The Tribunal went further and after referring to the judgment of the High Court in March v. E. and M. Stramare Pty Ltd (1991) 99 ALR 423 and the reference in that decision to the "but for" test of causation in the context of a negligence action, concluded:
"Having regard to the facts discussed ... above, the Tribunal, even if it were persuaded that the applicant's failure to advise earnings to the respondent according to the 14 day prescription in the various notices she had received was a "necessary precondition" of the overpayment (in the sense used by McHugh J.) or "an essential condition" (in the sense used by Deane J.) applying a common sense judgment on the matter, the Tribunal has concluded it is not a situation where the overpayment would not have occurred "but for" the designated default of the applicant."
The Tribunal also observed that it could not discern any real basis for a distinction between the period of overpayment in respect of which the respondent waived recovery and the second of the two periods which was the subject of the application before the Tribunal.
With respect to the first period involving the amount of $332.80 the Tribunal concluded that the notice furnished to Mrs Greenwood in December 1988 which notified her of the requirement to advise the Department of any change of events within 14 days of its occurrence, should have been given greater heed and although it was not abundantly clear what the effect of that notice was, she should have been in a position where, if in any doubt, she could have made an inquiry of the Department before 4 or 5 weeks had passed. With respect to the period from 29 March to 26 April 1990 the conclusion reached by the Tribunal was:
"...that the overpayment was not properly raised in so far as the basic cause was the department's own inaction and probably a departmental officer's representations that the applicant should continue in her practice of 5 to 6-week reporting."
Grounds of Appeal
The Secretary of the Department on appeal to this Court seeks to have the decision of the Administrative Appeals Tribunal set aside in so far as it set aside the decision of the delegate of the Secretary and directed that so much of the overpayment of $1,001.70 as had been paid by the applicant to the Secretary be refunded to her. The questions of law said to be raised on the appeal are:
(a) The correct construction of sub-s.246(1) and (2) of the Social Security Act 1947; and
(b) Whether the Administrative Appeals Tribunal has power to direct a refund of the sum previously recovered from her.
The substance of the grounds of appeal as amended at the hearing was as follows:
1. That the Tribunal erred in law in finding that Mrs Greenwood's periodic reporting practice should not be regarded as a contributory factor to the overpayment raised in respect of the period 29 March 1990 to 26 April 1990.
2. The Tribunal should have found that the overpayments made for that period were made in consequence of Mrs Greenwood's failure to comply with s.163 of the Act and would not have been made but for that failure.
3. The Tribunal should have found that the amount that had been paid by way of pension should not have been paid within the meaning of s.246(2) of the Act.
4. The Tribunal erred in law in finding that the applicant's own conduct prevented the raising and recovering of overpayment in relation to the period 29 March 1990 to 26 April 1990.
5. The Tribunal erred in law in directing the applicant to repay moneys paid to it by the respondent in the absence of statutory authority to do so.
6. The Tribunal should have found that the Secretary was under a duty to deduct the amount from the future payments of pension to the respondent in the absence of action under s.251(1) of the Act.
7. The Tribunal should have found that there was no decision before it the review of which was capable of supporting the relief sought.
Statutory Framework
Section 163 of the Social Security Act 1947 sets up a mechanism for notification by persons in receipt of pensions, benefits or allowances of events which may affect their entitlements. The section provides in the relevant parts:
"163(1) The Secretary may give, personally or by post, to any person to whom or on behalf of whom a pension, benefit or allowance is being paid under this Act a notice requiring that person, if an event or change of circumstances specified in the notice occurs or if that person is aware that an event or change of circumstances specified in the notice is likely to occur, to notify the Department or to notify the officer specified in the notice, within the period and in the manner specified in the notice, of the occurrence or likely occurrence of that event or that change of circumstances.
.
.
.
(3) An event or change of circumstances shall not be specified in a notice in pursuance of sub-section
(1) unless the occurrence of that event or change of circumstances might affect the payment of a pension, benefit or allowance.
(4) The period for compliance specified in a notice given under this section shall be -
(a) in the case of a notice given under sub-section (1)-
(i) where the notice relates to the payment of a benefit under Part XIII - immediately; or
(ii) in any other case - not less than 14 days; or
(b) in the case of a notice given under subsection (2):
(i) where the notice relates to the payment of a benefit under Part XIII - such period as is
specified in the notice; or
(ii) in any other case - not less than 14 days."
Sub-section (5) provides for penalties for non-compliance with notices.
Section 246 of the Act relates to recovery of overpayments. Only sub-ss.(1) and (2) are relevant for present purposes:
"246(1) Where, in consequence of a false statement or representation, or in consequence of a failure or omission to comply with any provision of this Act, an amount has been paid by way of pension, allowance or benefit under this Act which would not have been paid but for the false statement or representation, failure or omission, the amount so paid is a debt due to the Commonwealth.
(2) Notwithstanding anything contained in this Act, where -
(a) an amount has been paid by way of pension, benefit or allowance under this Act that should not have been paid;
(b) an amount has been paid by way of pension or allowance under the Veterans' Entitlements Act 1986 or the Seamen's War Pensions and Allowances Act 1940 that should not have been paid;
(c) an amount has been paid to a person under a prescribed educational scheme that should not have been paid; or
(d) on or after 12 August 1988, an amount has been paid to a person under a program included in the programs known as Labour Force Programs that should not have been paid;
and the person to whom that amount was paid is receiving, or is entitled to receive, a pension, benefit or allowance under this Act (other than a funeral benefit under Part VIII), that amount (including any amount payable by the person under subsection (3)) shall, unless the Secretary takes action under sub-section 251(1) in relation to that amount, be deducted from that last-mentioned pension, benefit or allowance by reducing each payment of that pension, benefit or allowance by a proportion of that pension, benefit or allowance, being a proportion decided by the Secretary in each particular case until the sum of the amounts by which the payments are reduced equals that amount."
The section has been the subject of two renumbering amendments. It was previously s.181, renumbered as s.246 by Act Number 85 of 1988. Section 181 was previously s.140 renumbered as s.181 by Act Number 77 of 1987.
The Question of Causation
It is not in dispute that for the period 29 March 1990 to 26 April 1990, Mrs Greenwood was paid an amount of sole parents benefit which was $1,001.70 more than she was entitled to receive. That overpayment was calculated according to the income she derived from other sources during the relevant period. The departmental decision which she took on appeal was described in her application to the Administrative Appeals Tribunal as "to repay an overpayment of $1,872.50". The decision was described in the published reasons of the Administrative Appeals Tribunal as a decision "to recover the amount of $1,001.70, being Sole Parents Pension alleged to be overpaid in respect of the period 29 March 1990 to 26 April 1990.
Sub-section 246(1) has been the subject of judicial analysis in its various and varied incarnations as s.140(1) and s.181(1) as amended from time to time. The question whether the sub-section gives rise to a reviewable decision or merely creates a liability where certain facts exist has been considered. It has been held that a determination by the Secretary or a delegate that there is a duty due by virtue of the sub-section, is a reviewable decision as much as the decision to recover the debt. In Director General of Social Services v Hangan (1982) 45 ALR 23 at 31, Toohey J. approved of the statement of the Tribunal in Re Matteo and Director-General of Social Services (1981) 4 ALD 398 that in invoking s.140(1) of the Act an officer must form an opinion or reach a conclusion that there has been a failure or omission to comply with a provision of the Act, that benefits have been paid in consequence and that he should seek recovery. The determination of the amount and the decision to seek recovery, subject to internal review and review by the Social Security Appeals Tribunal, are decisions which can be reviewed by the Administrative Appeals Tribunal. Fitzgerald J. said in Hangan that any duty to recover a debt under s.140(1) must be related to a determination by someone that the conditions of recoverability exist (at 44). The conclusion that there was a recoverable payment was a matter which the Administrative Appeals Tribunal had jurisdiction to review (at 47).
In Director General of Social Services v Hales (1983) 47 ALR 281 at 306, Lockhart J. rejected a submission that there was no reviewable decision under s.140(1) and accepted as the clearest formulation its description as a decision that a benefit paid to Mrs Hales was not payable, that it had been paid in consequence of her failure or omission to notify changes in her income, that it would not otherwise had been paid and that it should be recovered. His Honour relied upon Hangan in coming to that conclusion. Sheppard J. in the Hales' case at 318 expressed a reservation as to whether there was a decision but did not feel disposed to disagree with the conclusions reached by the other judges.
Von Doussa J. has observed in Efstratiadis v. Commonwealth (1990) 22 FCR 167 at 174 that the 1985 amendment to s.140(1) "eliminated the necessity for certain departmental decisions under s.140 and also served to emphasise that s.140(1) and (2) as amended are "self-operating" in the imposition of liability". Nevertheless I am satisfied that on the approach taken in Hangan and Hales, which is applicable to the sub-section in its present form, a determination that the necessary conditions in s.246(1) have been satisfied and that there is a debt due to the Commonwealth are decisions amenable to review by the Tribunal.
The law is also, in my opinion, clear that it is sufficient, in order to establish the causal connection posited by s.246(1), that the failure or omission relied upon was a contributing cause to the overpayment alleged. In Hangan at 33, Toohey J. said of s.140(1), in comments which are applicable to the section in its present form:
"The sub-section does not have two components. Rather there is a composite provision which speaks of an amount being paid in consequence of something, which would not have been paid but for that something. The words "but for" are a corollary of the words "in consequence of" and serve to explain those words."
At p 47 Fitzgerald J. said:
"The phrase introduced by the words "in consequence of" in s.140(1) will usually add little, if anything, to the question whether or not the relevant payment would have been made "but for" a failure or omission to comply with a provision of the Act. If that question be answered negatively, the amount paid is not recoverable. If that question be answered affirmatively, it seems to me that it would seldom, if ever, be possible to dispute that the payment was a "consequence of" the failure or omission to comply with a provision of the Act. However, that question is by no means the same as the question whether or not the omission or failure was the cause, or the dominant or effective cause, of an overpayment."
In Director General of Social Services v Hales, Lockhart J. followed Hangan and characterised the proposition for which it is authority in the following terms at p 309:
"...on the proper construction of s.140(1) it is not necessary that the failure or omission mentioned therein be the effective cause of the overpayment, that it is sufficient that the failure or omission be a contributory cause, that the relevant payment was made as a consequence of the failure or omission by the pensioner to comply with his obligations ... and that the payments would not have been if there had not been such a failure."
Sheppard J. agreed at p 318.
The Right Test on the Wrong Facts
The fact of overpayment was not in issue before the Tribunal and it referred to the Full Court decisions which I have mentioned and extracted from them the propositions for which they are authority. Central to its decision was a finding that the overpayments were not made as a consequence of Mrs Greenwood's failure to comply with the requirements made in the letter sent to her on 1 February 1990.
The questions which arise in deciding matters of causation, although involving value judgments, have traditionally been seen as questions of fact - March v E. and M.H. Stramare (1990) 99 ALR 423 at 429-430 (Mason C.J., Toohey and Gaudron JJ. agreeing). To the extent that the Tribunal's decision on the question of causation was a decision on a question of fact, it cannot be reviewed in these proceedings which are limited to the resolution of questions of law on which the appeal is brought (s.44(1) Administrative Appeals Tribunal Act, Federal Commissioner of Taxation v Swift 89 ATC 5101 at 5113).
In this case, in my opinion however, the Tribunal enunciated the correct legal principles but applied them to irrelevant facts and in so doing erred in law. It proceeded upon the basis that the overpayment was raised because Mrs Greenwood was in receipt of part-time earnings during the relevant period and had not notified the Department within 14 days of receiving each payment of those earnings as required by the s.163 notices. But the notice of 1 February 1990 did not require notification of every change in income. The quotation from the letter of 1 February 1990 referred to by the Tribunal in its reasons required notification within 14 days "...if your income not including maintenance becomes more than $64.00 a week". That was not a requirement to notify of every change in income but of an increase in income which took it beyond the specified level. There was no other requirement in the text of the letter to notify the Department of every change in income within 14 days. Nor was there any such requirement in the s.163 notice on the reverse of the letter. There was however a requirement already mentioned that Mrs Greenwood tell the Department within 14 days if she commenced paid work.
Mrs Greenwood did not advise the Department within 14 days of commencing paid work with Alfred Marks in February 1990. There was nothing in the Department's acceptance of her periodic reporting of income which relieved her of the obligation imposed by the notice of 1 February 1990. The Tribunal did not address the actual requirement of the notice which was the express basis upon which the second overpayment was maintained when the overpayments were reviewed internally on 5 October 1990. The review officer, in his advice to Mrs Greenwood, said in respect of that period
"Sole Parent's Pension was re-granted from 4/1/90 after you ceased work on 22/12/89 - you advised this in a statement you made on 28/12 and on the claim that you lodged on 28/12. You recommenced work in February - first paid on 23/2 - but did not advise the department until your 'phone call on 1/5 which was outside the 14 day requirement - which was stated in the letter sent to you on 1/2 advising that your pension had been re-granted."
Advice given at some earlier time by a departmental officer that 12 weekly reports of income were acceptable did not address the s.163 requirement in the letter of 1 February 1990. Non-compliance with that requirement meant that commencement of employment in February 1990 was not advised until many weeks later. That non-compliance could not be said to have flowed from the Department's advice to Mrs Greenwood or its acceptance of the practice of periodic reporting which she adopted. Having regard to the terms of the requirement under s.163 to report the commencement of employment and having regard to the Tribunal's findings of fact, the overpayment could not in logic be said to have resulted from acquiescence by the Department in Mrs Greenwood's reporting practice. That practice covered variations in income not commencement of employment.
I am confident that Mrs Greenwood has misunderstood her obligations and it may be said that they could have been spelt out more clearly in the oral advice she received. But for the reasons I have given there was no basis in logic for the finding that the Department was responsible for the overpayment. That error of logic means that the legal principles which were correctly stated by the Tribunal, were misapplied and that there was therefore an error of law. In my opinion the Tribunal's decisions in relation to the second overpayment cannot be supported and must be set aside. Section 246(1) of the Social Security Act applied to the overpayment in this case. It was a debt due to the Commonwealth. For these reasons the appeal will be allowed. In the circumstances, however, I think it right that there should be no order as to costs.
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