SIMONNE ORD and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2012] AATA 256

[2012] AATA 256

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2011/4748
Re	SIMONNE ORD
APPLICANT
And	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT

DECISION

Tribunal	Senior Member C R Walsh
Date	2 May 2012
Place	Perth

Decision Summary

The Tribunal affirms the decision under review.

.....(sgd) C R Walsh.............

Senior Member

Catchwords

Social security – parenting allowance – parenting payment - whether applicant overpaid parenting allowance and parenting payment – whether overpayments are a debt due to the Commonwealth – whether the Commonwealth’s right to recover the whole or a part of the debts should be written off or waived – whether debt arose solely due to administrative error made by the Commonwealth – good faith – waiver in special circumstances – decision under review affirmed

Legislation

Social Security Act 1991 – section 117 - section 1064 – section 1223(1) – section 1236 - section 1237 – section 1237A – section 1237AAD – former section 1302A

Social Security (Administration) Act 1999 – section 237

Acts Interpretation Act 1901 – section 29(1)

Cases

Re Gerhardt and Secretary Department of Employment, Education and Training (AAT 10941, 17 May 1986)

Chapman and Secretary to the Department of Family and Community Services [2003] AATA 436

Callaghan and Secretary, Department of Social Security [1996] AATA 413 (18 November 1996)

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

Groth and Secretary Department of Social Security (1995) FCA 1708

Re Ivovic and Director General of Social Services (1981) 3 ALN N95

Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25

Timothy Davy and Secretary Department of Employment and Workplace Relations 2007 AATA 1,114

Duarte; Secretary, Department of Family and Community Services [2000] AATA 927 (25 October 2000)

Director-General of Social Services v Hales (1982-83) 47 ALR 281

Secretary, Department of Social Security v Riddell 15 September 1993 No A93/62

Secondary Materials

Guide to Social Security Law – Chapter 6.7.2.40 - Chapter 6.7.3.08

REASONS FOR DECISION

Senior Member C R Walsh

2 May 2012

INTRODUCTION

1. Mrs Ord seeks a review of the decision of the Social Security Appeals Tribunal (SSAT), dated 20 October 2011, which affirmed the decision made by a Centrelink Authorised Review Officer (ARO) on 27 November 2007 to raise and recover a debt of:

   (i)$4,550.70, arising from the overpayment of parenting allowance for the period 6 July 1995 to 12 March 1998; and

   (ii)$2,461.60, arising from the overpayment of parenting payment for the period 26 March 1998 to 16 August 1999.

   2.   The stated reasons for Mrs Ord’s application for review are that:

   “

   ·The SSAT erred in its opinion on the issue of Special Circumstances; and

   ·The SSAT failed to fully consider the “Guide to Social Security Law” with regard to Departmental Activity and the extended 6 year period.”

   BACKGROUND FACTS & EVIDENCE

2. Mrs Ord made a claim for home child care allowance (HCCA) on 14 September 1994, which was granted and paid from 29 September 1994.

3. Mrs Ord was notified of the grant of the payment by letter dated 26 September 1994, which also required her to advise the Department of Social Security (Department), now Centrelink, within 14 days of changes in her circumstances such as her personal income increasing to more than $10.85 per fortnight.

4. On 30 June 1995 Mrs Ord was sent a letter informing her that HCCA was being replaced by “parenting allowance” from 1 July 1995 and that her rate of payment was based on her income of $0.38 per fortnight.  The letter required her to contact the Department within 14 days of her income increasing to more than $0.38 per fortnight.  Mrs Ord did not contact the Department within 14 days to advise it that she was receiving income of around $173 per fortnight from Carabooda Estate Wines from 1 July 2005.

5. On 21 March 1998 Centrelink notified Mrs Ord that from 20 March 1997 her “parenting allowance” payments were being replaced with a new payment called “parenting payment”.  The letter advised that she would be paid $65.10 per fortnight based on nil fortnightly income.  The letter required her to contact Centrelink, within 14 days, if her income went over $60 per fortnight.  Mrs Ord did not contact Centrelink, within 14 days, to advise it that she was receiving income of $200 per fortnight from Carabooda Estate Wines.

6. Mrs Ord’s “parenting payment” was cancelled from 16 August 1999 as she no longer met the “parenting payment” qualifications (i.e. because she no longer had a dependent child, under 16 years, living with her).

7. On 24 August 1999 a data matching exercise undertaken between Centrelink and the Australian Taxation Office (ATO) indicated that Mrs Ord had received $5,200 income during the 1997/1998 financial year.  In contrast, Centrelink records showed her income, at 24 August 1999, as $0.

8. On 19 September 1999 Centrelink wrote to Mrs Ord requesting that she contact it regarding the information it had received from the ATO concerning her income for the 1997/1998 financial year. 

9. On 4 October 1999 Centrelink received a letter from Mrs Ord advising the income  she had received during the income years ended 1997 and 1998 was from Carabooda Estate Wines, a business owned by her husband.

10. On 12 October 1999 Centrelink requested that Mrs Ord provide further details to it about her income.

11. On 21 October 1999 Centrelink received a letter detailing payments Mrs Ord had received from Carabooda Estate Wines during the financial years 1995 to 1999.  That letter stated:

    “As requested I have detailed hereunder my earnings, which relates to an allowance I have received from Carabooda Estate Wines from 1 July 1995:

    1995/96  $4 500.00
    1996/97  $4 800.00
    1997/98  $5 200.00
    1998/99  $5 200.00
    1999 to date              $1 200.00 (i.e. $400.00 per month)”

12. On 4 November 1999 Centrelink calculated that Mrs Ord had been overpaid $4,550.70 in “parenting allowance” during the period 6 July 1995 to 12 March 1998 and $2,461.60 in “parenting payment” during the period 26 March 1998 to 16 August 1999.

13. On 4 November 1999 Mrs Ord was notified that she had been overpaid $7,012.30 of parenting allowance and parenting payment during the period 6 July 1995 to 16 August 1999.

14. On 15 November 1999 Mrs Ord requested that Centrelink review her file and the debt owing to Centrelink.  There is no evidence that such a review was undertaken by Centrelink.

15. Commencing 6 December 1999 Mrs Ord’s debt was reduced via withholdings from her family allowance payments.

16. On 23 July 2001 Centrelink wrote to Mrs Ord regarding reviewing the debt arrangements.  At that time, the amount outstanding was $6,237.22.

17. On 26 July 2001 Mrs Ord wrote to Centrelink requesting a response to her letter dated 15 November 1999.  On 14 August 2001 Mrs Ord again requested a review of the debt decision.

18. On 21 August 2001 a Centrelink Manager reviewed the debt decision and responded to Mrs Ord’s letters.  That letter stated, in part:

    “I have recently received your request to review my decision about your Parenting Allowance/Parenting Payment overpayments raised 4.11.99…….

    After careful consideration I have decided that the decision was correct under Section 1224 of the Social Security Act 1991. In making my decision I have taken into account the following factors: You were advised of your notification obligation in writing at each change in allowance/payment. No record can be found that you notified of your income from Carabooda Estate Wines until you replied to a data match letter sent 9.9.99. Your income from Carabooda Estate Wines exceeded the allowable limit for payment of the allowances and the decision to raise and recover this debt remains unchanged.”

19. On 24 August 2001 Mrs Ord requested a further review of the debt decision.  She stated “…I do not want this debt hanging over my head indefinitely and would ask that you review your decision and in light of Centrelink’s portion of the blame accept 50% payment in full and final settlement of your claim.”  There is no evidence that Centrelink conducted a further review of its decision concerning Mrs Ord’s debt.

20. Centrelink’s records show that on 28 August 2001 it received a letter from Mrs Ord disagreeing with Centrelink’s decision regarding her parenting payment/allowance debts, requesting that Centrelink review its decision to recover the whole amount of the debt and proposing that she repay 50% as full and final settlement of her debt.  There is no evidence that Centrelink responded to that letter.

21. Mrs Ord’s debt continued to be reduced via fortnightly withholdings from her family assistance payments until 18 August 2004.

22. On 12 May 2005 and 25 June 2005 Centrelink wrote to Mrs Ord regarding the recovery of the outstanding amount of the debt, being $5,016.37.

23. Following a telephone contact by Mrs Ord on 17 October 2005, Centrelink sent Mrs Ord a letter which included copies of Centrelink’s letters to her dated 9 September 1999 and 12 October 1999 as well as the original overpayment letter of 4 November 1999, which she said she had not received because an Australia Post employee had been ‘dumping’ mail in her area.

24. On 18 October 2005, after discussing the family’s financial circumstances with Mrs Ord’s husband, Mr Ord, Centrelink agreed to temporary write off of recovery of the debt for a period of three months for “short term financial hardship” and a further review in three months.

25. On 10 November 2005 Centrelink sent Mrs Ord a copy of the review letter dated 21 August 2001, outlining how the debts arose, and a covering letter informing her of the review and appeal process.

26. On 8 May 2006 Centrelink wrote to Mrs Ord regarding recovering the outstanding amount of her debt, being $5,016.37.

27. On 4 December 2006 Centrelink discussed the recovery of the debt with Mr and Mrs Ord.  Mr Ord advised Centrelink that he and his wife would never be able to repay the debt and that Centrelink “should write off the debt for good”.  Further discussions regarding the recovery of the debt took place on 20 February 2007, 21 February 2007 and 5 March 2007.

28. Centrelink wrote to Mrs Ord on 7 May 2007 once again requesting repayment of the debt.

29. On 20 May 2007 Mrs Ord wrote to Centrelink and enclosed a cheque for $50 on the basis she had been advised by a Centrelink officer that if the outstanding debt amount was less than $5,000 it would be easier for Centrelink to write the debt off permanently.  There is no evidence that Mrs Ord received such advice from Centrelink.

30. On 30 August 2007 Mrs Ord contacted Centrelink requesting that a Centrelink ARO review the debt decision.

31. On 3 October 2007 Centrelink temporarily wrote off the recovery of the debt (being $4,966.37) for the reason that recovery of the debt was not “cost-effective” at that time.

32. On 27 November 2007 a Centrelink ARO reviewed and affirmed the decision to raise and recover the parenting allowance and parenting payment debts.

33. On 2 May 2008 and 22 May 2009 Centrelink sent letters to Mrs Ord regarding the repayment of her debts.  Then, on 4 September 2011, the debts were referred to a debt collection agent.

34. On 9 September 2011 Mrs Ord applied for a review by the SSAT.  On 20 October 2011 the SSAT affirmed the decision to raise and recover the relevant debts.  Mrs Ord now seeks a review of the SSAT’s decision by this Tribunal.

    ISSUES

35. It is not disputed that Mrs Ord was, at all material times, qualified for HCCA, parenting allowance and parenting payment.  The issues for consideration by the Tribunal are:

    (i)Was Mrs Ord was overpaid parenting allowance (during the period 6 July 1995 to 12 March 1998) and parenting payment (during the period 26 March 1998 to 16 August 1999); if so,

    (ii)       Are the overpayments debts due to the Commonwealth; and, if so

    (iii)      Should recovery of the debts be written off or waived in whole or part?

    WAS MRS ORD OVERPAID PARENTING ALLOWANCE (DURING THE PERIOD 6 JULY 1995 TO 12 MARCH 1998) AND PARENTING PAYMENT (DURING THE PERIOD 26 MARCH 1998 TO 16 AUGUST 1999)?

    HCCA

36. The legislation relevant to this application is contained in the Social Security Act 1991 (Act) and the Social Security Administration Act1999 (Administration Act).

37. Section 929 of the Act set out the method of calculating HCCA and relevantly stated that the ordinary income free area was $282 per year and that the person’s income above this level reduced the rate of payment by 25 cents for each dollar.

38. Income is defined in section 8 of the Act and subsection 8(2) includes income from employment or by way of an allowance.

39. When Mrs Ord claimed HCCA on 14 September 1994 her rate of HCCA was calculated based on nil fortnightly income.

40. Her fortnightly income did not exceed $10.85 per fortnight therefore she was not overpaid HCCA during the relevant period.

    Parenting Allowance

41. HCCA was replaced by parenting allowance from 1 July 1995. 

42. Section 1068A of the Act set out the methods of calculating the rate of parenting allowance and relevantly provided that any income in excess of the ordinary income free area of $60 per fortnight reduced the person’s rate of payment by 50 cents for each dollar for income less than $80 per fortnight and by 70 cents per dollar for income over $80 per fortnight.

43. Mrs Ord was notified of the changes to her payment by letter of 30 June 1995 and that her rate of payment was based on income of 38 cents per fortnight.  That letter required Mrs Ord to notify the Department if her income increased above that amount.

44. Mrs Ord’s fortnightly income was in excess of 38 cents per fortnight during the relevant period (refer to paragraph 12 above) and the income limit that allowed any payment of parenting allowance to Mrs Ord.  Consequently, Mrs Ord was not entitled to parenting allowance during the period 26 March 1998 to 16 August 1999 and was overpaid $4,550.70.

    Parenting Payment

45. Parenting allowance was replaced by parenting payment effective 26 March 1998.

46. Sections 1068B-A2 to 1068B–A4 of the Act set out the method for calculating the rate of parenting payment.  Relevantly sections 1068B-D27 to 1068B-D31 of the Act provided that a person with income in excess of $60 per fortnight had their parenting payment reduced by 50 cents in the dollar, for income less than $80 per fortnight, and by 70 cents in the dollar for, income over $80 per fortnight.

47. Mrs Ord was notified by letter dated 21 March 1998 of the changes to her payment, that her rate of payment was based on nil fortnightly income and that she must advise Centrelink if her income exceeded $60 per fortnight.

48. Her fortnightly income was in excess of $60 per fortnight during the relevant period (refer to paragraph 12 above) and in excess of the income limit that allowed any payment of parenting payment.  Consequently, Mrs Ord was not entitled to be paid parenting payment during the period 26 March 1998 to 16 August 1999 and was overpaid $2,461.60.

    ARE THE OVERPAYMENTS DEBTS DUE TO THE COMMONWEALTH?

49. Section 1223(1) of the Act states:

    “1223(1)Subject to subsections (1A) and (1B), if an amount has been paid to a person by way of social security payment on or after 1 October 1997 and:

    i.the recipient was not qualified for the social security payment when it was granted; or

    ii.        the amount was not payable to the recipient;

    the amount so paid is a debt due to the Commonwealth.”

50. For the above reasons, Mrs Ord was not entitled to receive the overpaid amount of parenting allowance of $4,550.70 in respect of the period 6 July 1995 to 12 March 1998 or the overpaid amount of parenting payment of $2,461.60 for the period 26 March 1998 to 16 August 1999.  Consequently, those overpaid amounts constitute debts due to the Commonwealth under section 1223(1) of the Act.

    WHETHER RECOVERY OF THE DEBTS SHOULD BE WRITTEN OFF OR WAIVED

    Write off of debts

51. Section 1236(1A) of the Act states that the Secretary may decide to write-off a debt under section 1236(1) of the Act 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)the debtor is not receiving a social security payment under this Act and or it is not cost effective for the Commonwealth to take action to recover the debt.”

52. A decision by the Secretary to write off a debt takes effect on the day it is made or on an earlier or later date specified in the decision.  Importantly, where a debt is written off under section 1236 it still exists in law (i.e. the debt is not extinguished) and may be pursued later.  That is, the debt remains enforceable at law but an administrative decision has been made not to pursue the debt either indefinitely or for a certain period (for example, in circumstances where there is no point trying to recover the debt due to the debtor’s financial circumstances). 

53. In this regard, Chapter 6.7.3.08 of the Guide to Social Security Law (Guide) provides:

    “6.7.3.08 Statutory Limitation Period

    Summary

    A debt may be written off for an indefinite period. However, if no action has been taken after 6 years since the start of the debt, the debt will often be deemed irrecoverable at law. At any time, the write off can be reversed and recovery proceedings begun where circumstances change. Unlike a waiver, write off does not extinguish a debt.

    Act reference: SSAct section 1236 Secretary may write off debt, section 1231 Deductions from debtor's pension, benefit or allowance

    Six year limitation period

    As a general rule, the recovery powers in social security law (withholding, garnishee and legal proceedings) can only be used if there has been recovery action on a debt within 6 years of the start of the debt.

    The 6 year period starts on the first day an officer becomes aware of the circumstances that gave rise to a debt, or could reasonably have been expected to have done so.

    The period can be extended if there has been some activity on the debt during that 6 year period. Every time that any activity (such as recovery action) takes place within the initial 6 year period, a new 6 year period begins. In effect, this means that since any action extends the 6 year period, recovery can be extended indefinitely. Nevertheless, Centrelink is expected to recover the debt within the shortest possible time-frame.

    The 6 year limitation period is renewed whenever:

    ·     a repayment is made (this includes a withholding), or

    ·     the person acknowledges that they owe the debt, or

    ·     legal action or garnishee action is taken, or

    ·     a file review relating to action for the recovery of the debt occurs, or

    ·     other internal departmental activity relating to action for the recovery of the debt occurs.

    If departmental activity (including file review) were begun within the initial 6 year period, the limitation period would be extended a further 6 years. Each resulting recovery action or debt repayment would begin another 6 year period, as above. However, if departmental activity were the only action taken, or this did not result in any debt recovery, the extended 6 year period would be seen as lapsed, and the debt irrecoverable at law.

    Once the statutory 6 year period has expired, compulsory recovery cannot be pursued.

    Although a debt may be irrecoverable at law due to the expiration of the 6 year period, the debt still exists and recovery may be waived where appropriate.” [Emphasis added]

54. Mrs Ord maintains that her debt is “irrecoverable at law” (for the purposes of section 1236(1A)(a) of the Act).  In support of this, she referred to Chapter 6.7.2.40 of the Guide which states, in part:

    “6.7.2.40 Debt Recovery by Legal Proceedings

    Summary

    SSAct section 1232 provides that the Commonwealth may take legal proceedings in a court of law to recover debts under the SSAct.

    Statutory limitation period for recovery through legal proceedings

    SSAct subsection 1232(2) provides that recovery through legal proceedings cannot be commenced after the end of the period of 6 years starting on the day on which the debt or overpayment arose.

    SSAct subsections 1232(4), (5) and (6) provide different commencement dates for this 6 year period according to the circumstances of the case.

    Extension to the initial 6 year limitation period

    Where recovery action takes place within the initial 6-year period, a new 6-year period automatically commences from the last date of that action. Each subsequent action, within a 6-year period, extends the limitation period by a further 6 years. Although this has the potential to provide unlimited time for debt recovery, the onus is still on Centrelink to recover the debt within the shortest possible timeframe.

    Departmental activity

    If a file review or departmental activity as described in subsections 1232(6)(ii) and (iii) commence within the initial limitation period, the limitation period should be extended by a further 6 years. However, if the departmental activity is the only action taken during the extended limitation period, or does not result in the whole of part-recovery of the debt, the extended limitation period would be seen as lapsed. The debt for these cases would be written off as irrecoverable under social security law.

    However, if recovery action or debt repayment does result from the departmental activity during the extended period of time, the limitation period would then continue to be extended with each recovery action.

    Act reference: SSAct section 1232 Legal proceedings.”

1. Mrs Ord’s contention is that the $50 cheque payment she made to Centrelink on 23 May 2007, under cover of a letter dated 20 May 2007, should not be regarded as “departmental activity” because it was made “without prejudice” and, therefore, the 6 year limitation period has lapsed and the debt is “irrecoverable at law” for the purposes of section 1236(1A)(a) of the Act.

2. The Tribunal disagrees.  Mrs Ord’s letter of 20 May 2007 indicated that she was paying $50 of the debt so as to reduce it to less than $5,000, which she believed would make it easier for Centrelink to write off the debt permanently.  It also indicated that if this action didn’t occur she would take this matter further and contact the Commonwealth Ombudsman.  Further, Centrelink’s records indicate that the issue of the waiver was discussed with Mrs Ord during the telephone conversation she had with a Centrelink officer on 30 August 2007, at which time Mrs Ord requested a review of the debt decision by an ARO.

3. The evidence before the Tribunal is that recovery action by Centrelink took place on the following occasions:

   ·      on 3 October 2007 Centrelink temporarily wrote off the recovery of Mrs Ord’s debts;

   ·     27 November 2007 an ARO reviewed the recovery of Mrs Ord’s debts;

   ·     on 2 May 2008 and 22 May 2009 Centrelink sent letters to Mrs Ord regarding repayment of her debts; and

   ·     on 4 September 2011 Mrs Ord’s debts were referred to a debt collection agent.

   Consequently, there has not been a six year lapse in recovery action of Mrs Ord’s debt by Centrelink such that the debt is not “irrecoverable at law” for the purposes of section 1236(1A)(a) of the Act:  refer to Chapter 6.7.3.08 of the Guide in paragraph 59 above.

4. Mrs Ord further submitted that she has “no capacity to repay the debt” for the purposes of section 1236(1A)(b) of the Act.  In relation to this issue, Mr Ord advised the SSAT that:

   “34………he and Mrs Ord have joint ownership of their home in Gidgegannup valued at around $900,000 and she has some other assets including a car.  Their sole source of income is his annuity of $36,000 per annum.  He said, however, that they are “not pleading poverty” and, if required, have the capacity to repay the outstanding balance of the debts in small instalments.” [Emphasis added]

5. In Mrs Ord’s written submissions to this Tribunal she stated:

   “During the [SSAT] hearing my husband indicated that it was not our wish to plead poverty as we had every confidence that justice would prevail in relation to the facts of the appeal.  However, I have no source of income and rely on my husband’s annuity to meet daily expenses.  As this annuity has not been increased since his retirement eight years ago any payment will cause considerable hardship.  Apart from a 9 year old vehicle I have no assets of my own.  All other assets are jointly owned with my husband…….I do not have the capacity to pay if my husband is unable and unwilling to assist.  Following the global financial crisis the capital in my husband’s annuity has been severely reduced and it is doubtful that he can maintain his current rate of monthly annuity.  This would further impact on his ability to make any payment whatsoever….”

6. Based on the evidence before the Tribunal, it cannot be said that Mrs Ord has “no capacity to repay the debt” for the purposes of section 1236(1A) of the Act.  As set out above, Mr Ord told the SSAT that they “have the capacity to repay the outstanding balance of the debt in small instalments”.

   Waiver under section 1237A – Administrative Error

7. Section 1237A(1) of the Act provides that the whole or a part of a debt must be waived if it was caused solely by administrative error.

8. The meaning of “solely” was discussed by the Tribunal in Re Gerhardt and Secretary, Department of Employment, Education and Training (AAT 10941,17 May 1996) as follows:

   “There is nothing…which indicates that any meaning should be given to “solely”other than its ordinary meaning. Applying those ordinary meanings to the subsection mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth's administrative error. The Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth's administrative error (i.e. they are incidental to the Commonwealth's error), then it may be that the debt is attributable solely to the Commonwealth's administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact.”

9. As set out in the Background Facts, by letter dated 30 June 1995 Centrelink notified Mrs Ord that she must advise it, within 14 days, if her income increased above $0.38 per fortnight.  Further, by letter dated 21 March 1998 Centrelink notified Mrs Ord that she must advise it, within 14 days, if her income increased above $60 per fortnight.  Mrs Ord did not respond to those letters and did not inform Centrelink that her income (from Carabooda Estate Wines) had increased until October 1999 and this was the reason that that the overpayments that gave rise to the debts occurred.  Accordingly, the debts cannot be attributed “solely” to administrative error by the Commonwealth (Centrelink) such that recovery of the debts cannot be waived under section 1237A(1) of the Act.

   Waiver under section 1237AAD – Special Circumstances

10. Section 1237AAD of the Act provides that 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 [the Act], the Administration 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.”

11. The meaning of ‘knowingly’ was discussed by the Tribunal in Callaghan and Secretary, Department of Social Security [1996] AATA 413 (18 November 1996), where Deputy President Forgie concluded at [48] that:

    “There is nothing in section 1237AAD which suggests that the word “knowingly” should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act.  That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.”

12. There is no evidence that Mrs Ord “knowingly” made a false statement or representation or that she “knowingly” failed or omitted to comply with the Act or the Administration Act for the purposes section 1237AAD(a) of the Act. That is, there is nothing to suggest that Mrs Ord “knowingly” failed to advise Centrelink of her income from Carabooda Estate Wines. Therefore, it is appropriate to consider the application of the “special circumstances” waiver in section 1237AAD of the Act to Mrs Ord.

13. The term “special circumstances” is not defined in the Act.  However, the term has been extensively considered in case law and the most frequently cited cases are as follows:

    ·Beadle and Director- General of Social Security (1984) 6 ALD 1 where the Tribunal stated (at 3):

    “...An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special...”

    ·Groth and Secretary Department of Social Security (1995) FCA 1708 where the Federal Court stated:

    “...The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss...it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of Terziman follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied...

    ·Re Ivovic and Director General of Social Services (1981) 3 ALN N95 where the Tribunal stated:

    “…The reference to special circumstances “by reason of which” a person liable “should be released” requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes…Thus whilst keeping the dominant principle of [recovery of debt] in mind, [the decision maker] must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise…”

    ·Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25 where the Federal Court stated:

    “…There is less overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case…”

    ·Timothy Davy and Secretary Department of Employment and Workplace Relations 2007 AATA 1,114 where Deputy President Forgie stated at [80], in part:  

    “…“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances…that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it…He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement…The system of administration of the Social Security Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act… “

    ·Duarte; Secretary, Department of Family and Community Services [2000] AATA 927 (25 October 2000) where Dr Campbell commented at [44-45]:

    “...while inferences of administrative tardiness have been alleged in the speed with which the overpayment issues have been dealt with since first knowledge of the overpayments by the Applicant, the Tribunal has difficulty in concluding that administrative error and/or tardiness are uncommon, unusual or exceptional by their very occurrence. In further delineation of the issue the Tribunal has looked to the effects that such actions may have had on upon the Respondents to see whether there were any effects which could be seen to be unusual, uncommon or exceptional. In this matter, at most it would have appeared to cause some stress, particularly for the first Respondent, but in terms of effect the stress does not appear to have prevented her from carrying on a normal and busy work schedule

    ...As a consequence of the examination of the particular circumstances, the Tribunal finds that such circumstances either alone or together do not constitute special circumstances.”

14. In determining whether a debt should be waived, it is appropriate for the Tribunal to examine all factors relevant to the case, the wider scheme of the overall administration of the Act and the wider public interest of recovery moneys to which the recipient was not entitled:  see the Full Federal Court’s decision in Director-General of Social Services v Hales (1982-83) 47 ALR 281 and the Tribunal’s decision in Secretary, Department of Social Security v Riddell 15 September 1993 No A93/62.

15. Mrs Ord maintains that she did not receive the letters sent to her 26 September 1994, 30 June 1995 and 21 March 1995 because an Australia Post employee had been ‘dumping’ her and her husband’s.  In her written submissions to the Tribunal Mrs Ord stated:

    “4.1.3During the period in question an employee of the Commonwealth, i.e. a postal delivery officer was discovered to have been dumping mail over a prolonged period.  When his dumping ground was discovered the majority of the mail had deteriorated so badly that it was undeliverable and was destroyed.  Letters were sent by Australia Post to residents in the affected areas which included my address advising of the situation.  The incident was also reported in either the Wanneroo Times or The West Australian newspaper or both.

    4.1.4Following Centrelink’s review of the alleged debt I contacted Australia Post for confirmation of this event and precise dates.  Whilst a representative from Australia Post provided anecdotal confirmation of the mail dumping no official confirmation could be made as all records would have been destroyed after 5 years in accordance with its relevant legislation.”

16. Mrs Ord’s circumstances are summarised in paragraph 52 of the SSAT’s decision as follows:

    “

    ·     If Centrelink had notified her that her entitlements would be affected by the income she received she would have worked for no payment at her husband’s business Carabooda Estate Wines as she had done before.

    ·     The ‘whole scenario’ relating to the problems with the delivery of her mail around the time the overpayments arose was grounds for finding special circumstances to her case.  Consistently, since 2001 she has denied receipt of Centrelink’s letters dated 1 July 1995 and 21 March 1998;

    ·     It was not until 2007 when she received the authorised review officer’s decision that she was made aware of the deeming provisions relating to service by post.  By that time Australia Post had destroyed its records relating to the period during which the overpayments arose.  If she had been notified earlier, she could have obtained proof of the mail dumping;

    ·     If she had receive Centrelink’s letters dated 1 July 1995 and 21 March 1998 at the time they were sent she would have notified of the changes in her income.  When Centrelink notified her of the discrepancy between her income as declared by the ATO and that on her Centrelink record she responded promptly and provided the requested information;

    ·     At one stage Centrelink advised her that the debts could be written off, which she understood to mean permanently, only to have the debt reinstated 12 months later with the explanation that the write off was only temporary as this was all that was permissible given the circumstances;

    ·     In a subsequent telephone contact Centrelink advised her that the debts could be written off on a permanent basis if the amount of debts was less than $5,000.  Accordingly she made a repayment of $50 to reduce the outstanding balance below $5,000 but the debt was not written off;

    ·     Centrelink has failed to grant a timely review of the debts; Centrelink’s response to much of her correspondence has been to ignore it or sent out form letters.  She considered that:  “This demonstrated an obvious reluctance to commit responses and advice to writing.  Despite obvious support from some Centrelink personnel, verbal misinformation, conflicting and misleading advice have also been received over the past eleven years”;

    ·     The ongoing stress of the prolonged dispute relating to the raising and recovery of the debts has had an adverse impact on her health “and at times it has seemed easier to give in.””

17. Further, Mrs Ord’s written submissions to the Tribunal state at paragraph 4.4, in part:

    “4.4     Special Circumstances – Summary

    ………………

    4.4.2Is it the ordinary or unusual case in which critical advice has not been received due to mail being dumped; or is it a common occurrence whereby a husband gives his wife a portion of his income which then financially disadvantages her; or is it not exceptional for an officer of Centrelink to lie in order to procure payment or at best renege on an offer once the conditions have been met?  It is my contention that each of the three circumstances outlined above relating to Mail Dumping, Income and Promised Write Off each constitute “Special Circumstances” within the meaning of the act and together constitutes a compelling case.”

18. In relation to Mrs Ord’s ‘mail dumping’ argument, the Tribunal notes section 29(1) of the Acts Interpretation Act1901 which provides:

    “Where an Act authorizes or requires any document to be served by post, whether the expression “serve” or the expression “give” or “send” or any other expression is used, then unless the contrary intention appears the service shall be deemed to be effected by properly addressing prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

19. Section 29(1) of the Acts Interpretation Act is similar to current section 237 of the Administration Act which applies to notices of decisions under the Act, and provides a presumption of service that can be rebutted by evidence to the contrary, as well as former section 1302A of the Act.

20. Based on the evidence before the Tribunal, the relevant Centrelink letters were properly addressed and posted by Centrelink to Mrs Ord. Therefore, in the absence of any clear evidence that those letters were not received by Mrs Ord, the Tribunal considers that they should be regarded as having been delivered pursuant to section 29(1) of the Acts Interpretation Act.

21. Mrs Ord claims to have been given incorrect advice and information about her debt over the years.  However, this is not borne out by the contemporaneous Centrelink notes or other evidence.  For example, there is no evidence in support of Mrs Ord’s contention that she was advised by a Centrelink officer that if she reduced her debt below $5,000 it would be written off permanently. 

22. Further, it is not unusual or uncommon for a person who has incurred a Centrelink debt to be stressed about the situation.  However, there is no evidence that Mrs Ord has sought professional assistance or that her health has been affected to such an extent as to constitute a “special circumstance”:  Duarte, Beadle, Groth, Ivovic and Angelakos.

23. Mrs Ord’s position is that she does not have the capacity to repay the debt if her “husband is unable or unwilling to assist”:  refer to paragraph 60 above.  Whilst the Tribunal acknowledges that the Ords’ financial circumstances may be difficult, there is no evidence that their hardship is different from that of others having to repay a Centrelink debt.  Difficult financial circumstances are common among recipients of welfare payments and cannot be said to be unusual, uncommon or exceptional in the context of other recipients of income support payments: Beadle, Groth, Ivovic, Angelakos, Davy and Duarte.  Further, as set out above (in paragraph 59), Mr Ord told the SSAT that they do “have the capacity to repay the outstanding balance of the debts in small instalments.”

1. After considering the totality of Mrs Ord’s’ circumstances, the wider scheme of overall administration of the Act and the public interest in recovering moneys to which Mrs Ord was not entitled under the Act, the Tribunal considers that Mrs Ord’s circumstances are not sufficiently special to warrant an exercise of the discretion in section 1237AAD of the Act to waive all or a part of her debt:  Davy, Ivovic, Riddell and Hales.  There is no injustice or unfairness in requiring Mrs Ord to repay the money to which she had the benefit but no entitlement and therefore it is not desirable to waive the debt pursuant to section 1237AAD of Act:  Davy.

   DECISION

2. For the above reasons, the Tribunal affirms the decision of the SSAT, dated 20 October 2011, to raise and recover the: (i) parenting allowance debt of $4,550.70 for the period 6 July 2005 to 12 March 1998; and (ii) parenting payment debt of $2,461.60 for the period 26 March 1998 to 16 August 1999.

I certify that the preceding Eighty (80) paragraphs are a true copy of the reasons for the decision herein of Senior Member C R Walsh.

......(sgd) T Freeman ......................

Associate

Dated  2 May 2012

Date(s) of hearing	5 April 2012
Advocate for the Applicant	Mr Terrence Ord
Advocate for the Respondent	Ms M Conlon