Small and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2008] AATA 453
•30 May 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 453
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/1456
GENERAL ADMINISTRATIVE DIVISION ) Re ZENA SMALL Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Miss E.A. Shanahan Date30 May 2008
PlaceMelbourne
Decision The Tribunal sets aside the decision under review and substitutes a decision waiving the debt owed to the Commonwealth as this debt resulted solely from an administrative error by Centrelink. E.A. Shanahan
Member
SOCIAL SECURITY – widows allowance – overpayment – debt owed to the Commonwealth – income reporting requirements – loss of data by Centrelink – administrative error – failure to notify Centrelink of its errors – payment received in good faith – special circumstances – decision set aside
Social Security Act 1991
Groth v Secretary, Department Social Security (1995) 40 ALD 541
Jazaziedska v Secretary, Department of Family and Community Services (2000) 65 ALD 242
Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576
re Beadle and Director-General of Social Security (1984) 6 ALD 1
re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
re Gerhardt and Department of Employment, Education and Training (AAT 10941, 17 May 1996)
re Panacci and Department of Employment and Workplace Relations [2008] AATA 30
re Secretary, Department of Family Community Services and Jonauskas [2001] AATA 72
re Ward and Secretary, Department of Family and Community Services [2000] AATA 0212
Secretary, Department of Family and Community Services v Hocking [2002] FCA 1328
Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126
REASONS FOR DECISION
30 May 2008 Miss E.A. Shanahan 1. On 14 December 2006 an officer of Centrelink determined that Mrs Small had been overpaid the sum of $6,545.10 in windows allowance between 5 October 2005 and 19 September 2006. Centrelink is the service delivery agent for the Department of families, housing, community Services and Indigenous Affairs. Mrs Small sought review of the decision by an Authorised Review Officer (ARO). The ARO affirmed the decision on 5 February 2007. Mrs Small then sought review of the ARO decision by the Social Security Appeals Tribunal (SSAT). On 26 March 2007 the SSAT affirmed the decision. Mrs Small then lodged an application for a review of the SSAT decision by the Administrative Appeals Tribunal on or about 17 April 2007.
2. Mrs Small was represented by Ms M. Wall of counsel, instructed by Mr L. Jaffit and the Respondent by Mr T. Noonan, an advocate from Centrelink. The Tribunal had before it the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T-Documents).
3. The parties tendered the following exhibits.
for the applicant
· Exhibit A1 – Centrelink payment letter dated 4 October 2005.
· Exhibit A2 – Centrelink payment letter dated 10 October 2005.
for the respondent
· Exhibit R1 – The T-Documents.
· Exhibit R2 – Centrelink letter dated 29 July 2005.
· Exhibit R3 – Centrelink information advice regarding Newstart Allowance and Widows Allowance.
· Exhibit R4 – Centrelink computer entry of 23 September 2005.
· Exhibit R5 – Centrelink computer entry dated 5 October 2005.
· Exhibit R6 – Centrelink computer entry raised 14 December 2006.
· Exhibit R7 – Centrelink computer entry outlining payments from 19 September 2007 until 23 January 2008.
· Exhibit R8 – Statement of Leonard Lim dated 16 January 2008.
· Exhibit R9 – Statement of John Gleadhill dated 16 January 2008.
4. Mrs Small and Mr Leonard Lim gave evidence to the Tribunal.
ISSUES BEFORE THE TRIBUNAL
1.Does Mrs Small owe a debt to the Commonwealth?
2.Should the debt owed be waived on the grounds of sole administrative error (s 1237(a) of the Social Security Act 1991 (the Act)?
3.Should the debt be written off for a period under s 1236 of the Act?
4.Should all or part of the debt be waived on the grounds of special circumstances? (s 1237AAD of the Act)
BACKGROUND TO THE APPLICATION
5. Mrs Small’s husband died from a malignant condition on 6 August 2001. Thereafter, she was solely responsible for the upkeep and care of her two sons aged 15 and 11 at the time of their father’s death. Mrs Small was also responsible for her late husband’s debts to his lawyer. She commenced receiving parenting payment single (PPS) shortly after her husband’s death (T22, p170) and reported her fortnightly earnings in accordance with Centrelink’s requirements; (Example T22, p137-141) including her change of employment from self-employed casual part-time to part-time casual with Deaf Children Australia on 25 February 2004, with a gross fortnightly income of $613.59.
6. Mrs Small was aware that she would no longer qualify for PPS when her youngest son turned 16 . In anticipation of this, she made enquiries on 29 July 2005 regarding social security benefits available to herself and her son. On the advice received from one Doreen, she decided to lodge a claim for youth allowance for her son and widow allowance for herself as she was now 50 years of age.
7. The Centrelink computer entry (Cairns office) records that Mrs Small was to be sent a copy of Information you need to know about your claim for – Newstart and Widow Allowance. Mrs Small made further enquiries regarding her eligibility for social security benefits on 2 August 2005 (T22, p135), on 3 August 2005 (T22, p134) and on 30 August 2005 (T22, p134). The latter related to her eligibility for a widow allowance. While her application was being processed further Centrelink entries were generated regarding a health care card or low income card. On 7 September 2005 (T22, p132) a computer entry states that payslips lodged were not those of the immediately prior preceding eight weeks and the most recent pay slip was not yet available. The entry states advised probably not required as HCC issued with WDA if granted.
8. On 7 September 2005 Centrelink requested Mrs Small obtain a letter from her employer confirming she had not had recent workforce [sic] within 14 days. Recent workforce experience is defined in the act as employment of 20 hours or more a week for a total of 13 weeks or more at any time during the 12 months immediately before the day the woman lodged the claim for allowance. As previously recorded in relation to Mrs Smalls PPS payments she had commenced work at Deaf Children Australia in February 2004 and had not worked more than 20 hours in the 12 month period required by the definition in the Act.
9. Centrelink granted Mrs Small widow allowance from 7 September 2005, based on a declared income of $613.50 per fortnight. (T4, p23). On 22 September 2005 Mrs Small was advised that an immediate payment of $160.44 would be made for the period to 20 September 2005 due on 23 September 2005 with regular payments of $166.75 after that date. This notice confirmed that the widow’s allowance was based on the declared income of $613.50 per fortnight. The same notice instructed as to Mrs Small that it was her responsibility to advise Centrelink of changes in employment and income, including hours of employment.
10. Mrs Small said that prior to receiving the widow’s allowance she had been asked to confirm her income and hours of work. She informed Doreen that she was working less than 20 hours per week and was told that she did not need to report her income fortnightly as she had been doing while in receipt of PPS. She also declared her hours of work and income in the widow’s allowance claim form.
11. On 4 October 2005 two letters were generated by Centrelink apparently from the Oakleigh office with a return address to Cranbourne. Mrs Small’s Centrelink office was Windsor, which has a return post office box in Rosanna. It is assumed that both letters dated 4 October 2005 would have arrived in accordance with the evidence of Mr John Gleadhill on 6 or 7 October 2005. One of these letters stated that Mrs Small’s fortnightly widow allowance payment would be $536.80 based on a fortnight income of $1.02 and the other stated that her income as at 7 September 2005 had been $612.48 and from 4 October 2005 was $1.02.
12. Mrs Small had difficulty reconciling these amounts until she realised that the $612.48 added to the $1.02 equalled $613.50 – the amount of income she had declared and used to assess her widow’s allowance on 22 September 2005. She concluded that the second letter had corrected her income as declared, that is, the one noting her income to be $1.02.
13. The advice given by Doreen that she did not have to report her income fortnightly was confirmed in the letter from Centrelink dated 10 October 2005 (T7, p31 and Exhibit A1). As is usual practice, all the letters contained a list of circumstances or changes that must be reported to Centrelink, including, if you start to receive or stop receiving income, your income changes from the rate last notified or the income shown above is incorrect. Mrs Small said that she read all of these letters from Centrelink. However, the letter of 10 October 2005 commenced with:
Important information about your widow allowance. As your circumstances have changed you are no longer required to report every two weeks to get paid. You must tell us within 14 days about events or changes in circumstances effecting your payment (see the enclosed form changes you must tell Centrelink about for details).
Mrs Small understood the reference to as your circumstances have changed to relate to the fact that she had recently advised Centrelink that her hours of employment were now stable at 15.5 hours per week, in contrast to the fluctuating hours she had worked prior to early September 2005. Mrs Small had never been informed of the amount of widow’s allowance to which she was entitled.
14. Centrelink has acknowledged that Mrs Small’s original application, income advice, payslip documentation etc was destroyed on or about 5 October 2005. Mrs Small was not informed of the loss of this data. As her hours of employment and earnings remained constant except on two or three occasions when she filled in for half an hour for a fellow employee who was sick, she did not notify Centrelink of any change of her circumstances.
15. Centrelink’s files do not contain records of any contact between Centrelink and Mrs Small between 10 October 2005 and 4 September 2006. On the later date she was instructed to complete a form even if your details have not changed. Mrs Small completed this form and attached her employers advice of her income, copies of payslips with hours worked. This information led Centrelink to conclude that she had been overpaid; which led to it raising an overpayment debt of $6,545.10.
16. Mrs Small was retrenched by Deaf Children Australia, along with all other casual and part-time staff in December 2006. She subsequently obtained part-time work with Interflora and then permanent part-time work as a bank teller. Her current earnings of $854 net per fortnight appear to disqualify her from receiving window’s allowance.
17. Mrs Small rents an apartment in Caulfield for $1,213 per month. While the rent is high she needs to live near her sons’ school and her Synagogue. She owes a debt of $144,000 for her sons’ education at a Jewish school and owes approximately $11,000 to her late husband’s solicitor. She spends a minimum on food and clothing as she is endeavouring to pay off the school fees at $50.00 per month and the legal fees at $25.00 per month. Her circumstances have improved slightly now that her eldest son, aged 21 or 22 years, is working. He assists with some of the costs of living.
EVIDENCE BEFORE THE TRIBUNAL
mrs small
18. Mrs Small’s evidence is contained in the Background To The Application above. In addition, she confirmed she had a lengthy experience with social security benefits provisions and dealing with Centrelink while she was in receipt of a PPS; and was therefore acquainted with the requirements for the fortnightly reporting. Mrs Small claimed that one of the letters, dated 4 October 2005, said it had two enclosures, a reporting statement and an account statement. The letter did contain an account statement but no reporting statement. She had kept the original (Exhibit A1) which she had annotated. Then, she wrote to all of three offices of Centrelink from where letters had been received, including her own Windsor Centrelink office requesting a copy of the accounting report. She photocopied the original letters keeping the original herself. She assumed the three offices where not communicating with each other but would ultimately do so. The front page of the letter dated 10 October 2005 (Exhibit A2) stated list of changes on back page but this page was blank.
19. Under cross-examination, Mr Noonan drew Mrs Small’s attention to the Centrelink computer entry of 7 September 2005 (T22, p132). This stated that the granting of widow’s allowance was subject to verification of no recent workforce experience. A letter (T3, p22) had been sent to her requesting a letter from her employer asking that you have not had recent workforce [sic]. Mrs Small said she didn’t understand this as she had already provided the information. Similarly, she was asked about proof of employment (Centrelink computer entry dated 26 September 2005) regarding a newstart allowance (NSA) enquiry. Mrs Small said she had already provided proof of employment and in fact that is what the computer entry states. Mr Noonan asked if the rise in pension allowance payment estimate from $166.75 on 4 October 2005 to $536.80 on 10 October 2005 had not surprised her and led her to make enquiries. Mrs Small said she had assumed that Centrelink knew what they were doing.
MR LEONARD LIM (BY TELEPHONE)
20. Mr Lim had provided a statement dated 16 January 2008 (Exhibit R8). Mr Lim has been the Senior Technical Manager, Letters and Communications Section of Centrelink, since July 2005. He had provided a copy of the letter dated 10 October 2005 and the likely appearance of the letter entitled changes to your reporting , your account statement dated 10.10.05 and a document headed Changes you must tell Centrelink about.
21. Mr Lim told the Tribunal that all letters stay on the computer for 28 days and are then archived. Every letter sent has two attachments to the cover letter, the reporting form and the what you must tell Centrelink about form. Under cross-examination Mr Lim said he could not say that errors never occurred in these communications.
22. The Tribunal asked for more details of the process. Mr Lim advised that the letters were computer generated and the printing of all letters was outsourced. The letters were placed in an envelope by a machine.
DOCUMENTARY EVIDENCE
23. Exhibits R2 to R5 are Centrelink computer records put to Mrs Small in cross- examination and have been dealt with. Exhibits R6 and R7 records Mrs Small’s widow allowance payment from 19 September 2007 to 23 January 2008 (Exhibit R6) and deductions from these payments, in light of the debt raised, from 5 September 2007 to 9 January 2008 (Exhibit R7).
MR JOHN GLEADHILL (Exhibit R8)
24. Mr Gleadhill is a Centrelink Level 3 Officer and the Liaison Officer (Brisbane) in Output Management. He is responsible for overseeing the printing and mailing of letters and forms in Queensland and the Northern Territory. He advised that the same procedure operates in Victoria. System-generated customer mail refers to the creation of letters and forms by the Centrelink computer. Mr Gleadhill confirmed the printing and mailing procedures described by Mr Lim and said that letters to Mrs Small would have been printed and posted in Melbourne and should have been delivered one day later. Records of the number of letters collected by Australia Post are kept and tallied with the Centrelink data base. Some letters are damaged; the usual highest rate being of 6 in 50,000, although Mr Gleadhill had seen up to 30 spoils in a batch. These spoils are reprinted the next day. Mr Gleadhill was unable to say which batch contained Mrs Small’s letter of 10 October 2005. The likely batch printed on 11 October 2005 had no spoils.
RELEVANT LEGISLATION
25. Qualification for widow allowance is set out in s 408BA(2) of the Act and relevantly states.
(2)Subject to section 408BB, a woman is qualified for widow allowance in respect of a period if:
(a)she has turned 50; and
(b)she was a member of a couple and since turning 40:
(i) her partner died; or
(ii) …
(iii) …
(c)she satisfies the Secretary that she has no recent workforce experience on the day when she makes her claim for the allowance; and
(d)at least one of the following is satisfied:
(i) …
(ia) …
(ib) …
(ii) …
(iii) …
(iv) both the woman and her partner were Australian residents at the time when the qualifying event under paragraph (b) occurred; and
(e)throughout the period, she:
(i) is not a member of a couple; and
(ii) throughout the period, she is an Australian resident.
…
26. Section 408BA(3) states::
(3)For the purposes of subsection (2), recent workforce experience is employment of 20 hours or more a week for a total of 13 weeks or more at any time during the 12 months immediately before the day the woman lodged the claim for the allowance.
27. Section 1223(1) addresses a legally recoverable debt as follows:
(1)Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
28. Administrative error waiver is addressed in s 1237A(1) of the Act which states:
(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).
Waiver is also addressed in s 1237AAD of the Act which states:
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, 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.
Note 1:Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
Note 2:This section has effect subject to section 1237AAE in relation to an assurance of support debt.
SUBMISSIONS
Mrs Small
29. Miss Wall acknowledged that Mrs Small had received overpayments of widow allowance totalling $6,545.10 but argued that this debt to the Commonwealth should be waived in accordance with s 1237A or s 1237AAD.
30. Miss Wall contended that Centrelink’s error in deleting Mrs Small’s earning data on or about 5 October 2005 was the sole cause or at least the primary error in the overpayment of Mrs Small’s widow allowance. Additionally, Centrelink had made other mistakes - in that the advice given to Mrs Small on 29 July 2005 that she did not need to report her earnings fortnightly was incorrect; Centrelink failed to include the necessary enclosures with its letter of 10 October 2005 and the written notices sent to the Applicant by Centrelink were inconsistent and ambiguous.
31. The Respondent had argued in its Statement of Facts and Contentions that the debt was not solely due to Centrelink’s errors; the applicant had contributed to the overpayment by not reporting that the amount of her income of $1.02, as advised in the notice of 4 October 2005, was incorrect; and that she had not reported variations in her earnings. Miss Wall submitted there were no errors or factors on the part of Mrs Small that contributed to the overpayment but if the Tribunal determined that Mrs Small had contributed in some way her contribution was merely incidental to the Commonwealth’s (Centrelink’s) errors. In the alternative, Ms Wall contended that if there was any contribution by Mrs Small in the causation of the debt, the debt should be divided, with the vast proportion being attributable solely to Centrelink’s error.
32. Section 1237A of the Act prohibits waiver of the debt if the debtor did not receive the payment in good faith. Miss Wall distinguished cases such as re Panacci and Department of Employment and Workplace Relations [2008] AATA 30 wherein, as a result of a Centrelink error, Mrs Panacci received a 500 percent increase in her parenting payment. Mrs Small had provided Centrelink with all the details of her work and her income and relied on Centrelink to calculate her benefit accordingly. She had not been advised as to how much she would receive in window’s allowance on a fortnightly basis and had only been advised that she qualified for widow’s allowance some eight days prior to the Centrelink error taking effect. In addition, Ms Wall submitted that the authorities such as Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576 have established that the actual state of mind of the recipient of the payment is an entirely subjective test. The evidence supported the conclusion that she did not wilfully turn a blind eye but clearly had a genuine belief that she was entitled to all of the payments received.
33. Section 123AAD provides that the Secretary to the Department of Families, Community Services, Housing and Indigenous Affairs (the Secretary) may waive the debt unless it arose (wholly or partly) from the debtor knowingly failing or omitting to comply with the provision of the Act; and there are special circumstances that make it desirable to waive the debt. Miss Wall refuted the Respondent’s argument that Mrs Small knowingly omitted to comply with the information notices dated 4 October and 10 October 2005. Ms Wall submitted that there was no evidence to support this conclusion. To the contrary, the Centrelink ARO, in her letter to Mrs Small, stated I do not believe that you knowingly failed to satisfy your notification obligations. (T18, p97).
34. Ms Wall submitted that the authorities relied on by the Respondent, namely reDavy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114 and reSecretary, Department of Family Community Services and Jonauskas [2001] AATA 72, in considering the meaning of the word knowingly could find no reason that this term should be given any meaning other than that a person has actual knowledge rather than constructive knowledge.
35. Ms Wall also submitted that, if the Tribunal was to find that Mrs Small owed a debt to the Commonwealth, the debt ought to be waived due to special circumstances. In relation to this submission, Mrs Small listed her current earnings of $400 per week, rent of $300 per week and the debts of $144,000 in school fees for her two children and the $11,000 that remained outstanding from her husband’s legal fees. Miss Wall also contended that the number of mistakes by Centrelink: namely the removal of the Mrs Small’s earnings from her assessment file; the provision of incorrect advice as to reporting on 29 July 2005; the failure to enclose necessary forms with the letter of 10 October 2005 and the provision of inconsistent and ambiguous written notices to Mrs Small, and the ramifications of those mistakes, could arguably amount to other circumstances.
THE RESPONDENT
36. Mr Noonan outlined the manner in which the debt had arisen and the amount of that debt. As there is no argument that Mrs Small was overpaid widow’s allowance of $6,545.10 between 5 October, 2005 and 19 September 2006. Centrelink had not taken Mrs Small’s earnings from Deaf Children Australia into account in the calculation of the widow allowance. Mr Noonan contended that Mrs Small, on receiving the advice of 4 October 2005 from Centrelink, stating that her fortnightly income was $1.02, should have realised that this was incorrect and advised Centrelink to that effect. The letter of 10 October 2005 from Centrelink and the information notice had advised Mrs Small to report, among other matters, any changes in income from employment within 14 days.
37. Mr Noonan submitted that the debt owed to the Commonwealth could not be waived as it was not attributable solely to an administrative error made by the Commonwealth, nor had the Applicant received the payment in good faith. The Respondent relied on the Tribunal’s decisions in re Ward and Secretary, Department of Family and Community Services [2000] AATA 0212 and re Gerhardt and Department of Employment, Education and Training (AAT 10941, 17 May 1996) both of which had considered the meaning of the term solely and determined that this meant exclusively or only or to the exclusion of all else. In re Ward the Tribunal also said at paragraph 47:
This means that 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 (ie they are incidental to the Commonwealth’s error), then it may be that the debt is attributable solely to the Commonwealth’s administrative error.
38. In Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126, Selway J said at paragraph 35:
The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error …
39. With respect to the term good faith, Mr Noonan cited Jazazievska v Secretary, Department of Family and Community Service (2000) 65 ALD 242 wherein the Federal Court stated at paragraph 41:
A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable enquiries where doubt exists …
and particularly on the decision in Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576 where the Federal Court said at paragraph 59:
What seems to emerge from these authorities is that whether a payment has been received in good faith can only be determined after a careful consideration of the actual state of mind of the recipient of that payment. In that sense the test is entirely subjective, and not objective. However, plainly idiosyncratic views … will not be regarded as amounting to "good faith". It should be noted, in this regard, that wilful blindness is itself a state of mind …
40. Mr Noonan submitted that Mrs Small’s failure to inform Centrelink that her total fortnightly income was not $1.02 and her failure to comply with information notices issued on 4 October and 10 October 2005 contributed to the incursion of the debt. In addition, Mrs Small’s evidence that she had been advised by Doreen on 29 July 2005 that she would not be required to report earning if she worked less than 20 hours per week was not substantiated by the entries in the Centrelink computer records. Likewise, the Centrelink computer records contained no reference to Mrs Small’s request for a copy of the enclosure entitled changes you must tell Centrelink about that she said had not been provided with the letter of 10 October 2005. Nor was there any entry recording that the Applicant had queried information contained in the letter as your circumstances have changed, you are no longer required to report every two weeks to get paid.
41. Mr Noonan submitted that had Mrs Small made such an enquiry the debt would probably not have been raised. The very same letter referring to your circumstances have changed dated 10 October 2005 had also enclosed instructions as to changes you must tell Centrelink about … income from employment changes (the amount earned goes up or down). The information sheet regarding widow allowance also informed applicants that they must tell Centrelink if their income from employment changed. Mr Noonan contended that the withdrawal of the fortnightly reporting requirements did not effect the obligation imposed by the information notices dated 4 October and 10 October 2005 to advise Centrelink of employment income changes.
42. Mr Noonan argued that Mrs Small had not received the payments in good faith on the basis that, the increase to $536.80 per fortnight commencing on 4 October 2005 should have created strong doubt in her mind as to her entitlement to the increased payment. Given that she had been in receipt of PPS for some years, Mrs Small knew or ought to have known that any increase in income would result in a reduction in a social security benefit. Mr Noonan submitted that it was open to the Tribunal to find that Mrs Small knowingly failed to comply with information notices dated 4 October 2005 and 10 October 2005 and failed or omitted to comply with provisions of the Act. Mr Noonan relied on the decisions of Deputy President Forgie in re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 and re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, wherein DP Forgie determined that knowingly meant that a person had actual knowledge.
43. Mr Noonan also submitted that Mrs Small’s circumstances were insufficiently special to warrant the exercise of the discretion contained in s 1237A of the Act. (reBeadle and Director-General of Social Security (1984) 6 ALD 1; Groth v Secretary, Department of Social Security (1995) 40 ALD 541; re Davy). He submitted that the Applicant had the capacity to repay the debt via withholdings from her widow allowance and that the current rate of repayment of $15 per fortnight was not causing her severe financial hardship.
TRIBUNAL’S DELIBERATIONS
44. Mrs Small had been in receipt of PPS since her husband’s death in August 2001 and had advised Centrelink fortnightly of any changes in her income or hours worked, changes of employment and her residential address (Centrelink entries provided in T-Documents dated 10 November 2004 to 7 June 2005). Mrs Small was fully aware of the content of Centrelink’s advices entitled changes you must tell Centrelink about and had complied with these instructions. She was equally aware that when her son Bradley turned 16 on 30 July 2005 she would no longer qualify for PPS.
45. On 29 July 2005 Mrs Small contacted Centrelink by telephone and spoke with an officer called Doreen. Doreen generated three computer entries (T22, p136-137). The entry 57 of 75 (T22, p136) was an update of Mrs Small’s earnings from her employment with Deaf Children Australia. Document 56 of 75 (T22, p136) relates to Bradley’s eligibility for a youth allowance and Mrs Small’s income for 2005/2006 reported as not being greater than $11,232. The entry 58 of 75 records the issue of a claim form for widow allowance and the pamphlet entitled INFORMATION YOU NEED TO KNOW – NEWSTART AND WIDOW ALLOWANCE (T22, p137). Mrs Small claimed that Doreen advised her that, as she worked less than 20 hours per week, fortnightly reporting of income and hours worked would not be required. There is no entry confirming the exact nature of this advice, other than the positive listing that Notification Provisions had been advised. However, the Tribunal cannot find any reason to doubt Mrs Small’s sworn evidence.
46. As Mrs Small was uncertain as to whether she qualified for widow allowance, she sought an appointment with a Centrelink officer for her nominated representative on 2 September 2005, having spoken to an officer at Windsor office on 29 August 2005 and not had her queries resolved. This appointment did not eventuate.
47. Mrs Small’s claim for widow allowance was acknowledged on 7 September 2005 and she was advised that the widow allowance would be granted subject to verification of no recent workforce experience and the provision of payslips covering the eight week period immediately prior to lodgement.
48. On 26 September 2005 an officer recorded that Mrs Small had advised that her earnings were now regular, having previously been variable. It was her evidence that she advised Centrelink that her hours were now set at 15.5 hours per week. The Centrelink officer wrote Had already coded as 2WE reporter, and can’t seem t ochange [sic] until has lodged. (doc 41 of 75 (T22, p131)). She had provided proof of earnings at $613.50 per fortnight on 12 September 2005 by letter (doc 42 of 75 (T22, p131)).
49. Not infrequently the Centrelink central computer records refer to Mrs Small’s contact as a query regarding newstart allowance (NSA). The Tribunal has assumed this has arisen from her being originally sent an information sheet entitled Information you need to know – Newstart and Widow Allowance as she had not applied for NSA nor was she eligible to do so at any time.
50. Over a period of 18 days (from 22 September 2005 to 10 October 2005) Mrs Small received four letters from Centrelink. That of the 22 September 2005 correctly stated her declared income at $613.50; that of 4 October 2005 was $1.02 less than that declared; the second letter of 4 October 2005 stated her income to be $1.02 based on investments (bank balance of $888) and that of 10 October 2005 confirmed the advice that she claimed to have been given on 29 July 2005, namely that she was not required to report fortnightly as her circumstances had changed. Mrs Small interpreted the changed circumstances as referring to her notification of 26 September 2005 that her hours of work were now regular. The addition of the two income sums noted on the letters of 4 October 2005, resulting in a total of $613.50, Mrs Small’s declared fortnightly income.
51. The letter of 22 September 2005 stated her fortnightly payments would be $166.75 (widow allowance of $67.55 and rent assistance of $99.20), as did the letter of 4 October 2005 which stated the fortnightly payment would be $166.75 until 5 October 2005 and thereafter $536.80 per fortnight.
52. At no time prior to the commencement of the widow allowance had Mrs Small been provided with an estimate of the amount she would receive. As at 7 September 2005 Centrelink were still awaiting verification from her employer that Mrs Small had no recent workforce experience and the provision of the most recent payslips. Nor was Mrs Small privy to the fact that all her records regarding her widow allowance application had been deleted from Centrelink records. She did not query the recording of income of $1.02 as this estimate was issued on the same day as the estimate of $612.48 as her income, she having interpreted this as totalling her income correctly as $613.50. The Tribunal finds this interpretation, albeit mistaken, to be logical and acceptable given her ignorance of the destruction of her declared earnings data by Centrelink in early October 2005.
53. One of the letters of 4 October 2005 and that of 10 October 2005 state that there are two enclosures; one your reporting statement and two your account statement.
54. Mrs Small gave evidence that the letter of 10 October 2005 (Exhibit A2) did not contain the list of changes required in the reporting statement and that she queried this failure by letter addressed to the Windsor Centrelink office with copies to the Box Hill and Cranbourne offices, but did not receive a reply. She had assumed that these three offices were not communicating with each other but would do so eventually. Mr Leonard Lim gave evidence and Mr John Gleadhill provided a statement regarding the method in which Centrelink’s letters to their customers were computer-generated and then printed, enclosures added and placed in envelopes by a sub-contractors off-site facility. Errors in this process were extremely low in number but not impossible. Mr Gleadhill had seen a maximum of 30 so called spoils in a batch of 50,000 letters.
55. There are no records in the Centrelink computer of any contact with Mrs Small until 30 June 2006 when she reported that she had lost her concession card. On 20 July 2006 she advised a change of address. It was not until 17 August 2006 when in the course of a general enquiry Centrelink discovered that Mrs Small’s income derived from Deaf Children Australia was not coded on file (doc 38 of 75 T22, p 130) and Mrs Small was asked to provide all payslips back to September 2005. It was at this time, 17 August 2006 that Centrelink’s administrative error in deleting her earnings from 7 September 2005 until the present time was recognised. Centrelink then raised the debt on 14 December 2006.
56. Mrs Small gave evidence that she had earned $613.50 or less per fortnight working 31 hours per fortnight throughout the period, except for two or three occasions when she filled in for a co-worker who was ill. This in fact occurred on seven occasions with the total excess hours worked being 10 hours and 15 minutes. In most instances she worked less than 31 hours per fortnight and earned less than $613.50. These variations were not reported given the content of the letter of 10 October 2005 advising that fortnightly reporting of earnings was not required. The content of this letter was contradictory in that it stated quite clearly that there was no need to report fortnightly and then in the section entitled what you must tell Centrelink, a listing of reportable changes which accompanies all Centrelink communications, it said that changes in earnings and hours worked must be reported. Mrs Small was very familiar with reporting requirements when in receipt of PPS and accepted the advice of the letter of 10 October 2005 at its face value.
57. The Tribunal agrees with Ms Wall’s submissions that Centrelink’s correspondence with Mrs Small was ambiguous and confusing.
58. The Tribunal finds that Centrelink’s administrative error in deleting records of Mrs Small’s earnings, original application and her employer’s verification of employment and earnings from her file initiated the chain of events leading to the overpayment of $6,545.10 in widow allowance between 5 October 2005 and 19 September 2006. Mrs Small had at least a four years history of social security payments, during which time she reported fortnightly without fail and the records of these earnings remain in the Centrelink computer system. The deletion of her data from early October 2005 was not known to her; nor was she given an estimate of what she would be paid prior to approval of her application for widow allowance. Mrs Small appears to have developed a high degree of trust and reliance on Centrelink’s processing of her entitlements.
59. The Tribunal finds Mrs Small to be a witness of truth and accepts her explanation as to why she did not query the stated earnings of $1.02 as advised by Centrelink in its letters of 4 October and 10 October 2005. The Tribunal also accepts that she understood the letter of 10 October 2005 to mean what it said, in stating that she was not required to report her income and any changes in that income, fortnightly.
60. There is no evidence the Mrs Small did not receive the widows allowance payments other than in good faith. The ARO concluded her decision statement of 5 February 2007 with the sentence: (T18, p 97)
I do not believe you knowingly failed to satisfy your notification obligations but I do not find special circumstances in your case with which to waive recovery of the debt.
61. The authorities considered by the Tribunal have been outlined in the parties submissions and these authorities make it clear that the word solely means exclusively. In re Ward, Deputy President Forgie said at paragraph 47:
This means that 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.
62. The Tribunal accepts that recipients of Social Security benefits have a responsibility, if not an obligation, to alert Centrelink to any perceived error or questionable decision. Mrs Small’s circumstances appear, or hopefully appear, to be quite unusual in that over a short period of time (18 days) she received conflicting and ambiguous advice from Centrelink about her widow allowance. The latter was approved on 7 September 2005, subject to her providing additional information. She complied with the request. She was totally unaware that Centrelink had deleted all data regarding her earnings and, apparently, copies of her original claim form. Her past experiences with Centrelink, from at least 2001, had acquainted her with the reporting requirements and her history of compliance was exemplary. The records relating to her PPS payments remain in existence. While it may well be purely serendipitous, her interpretation of the incomes stated in the two Centrelink letters of 4 October 2005, that $1.02 plus $612.48 equalled her declared income of $ 613.50 per fortnight, is acceptable.
63. The Tribunal finds that the debt owed to the Commonwealth by Mrs Small should be waived as it arose solely due to Centrelink’s administrative error in deleting her relevant data from its computer records.
64. While there is no need to do so, the Tribunal has considered Mrs Small’s application under s 1237AAD for waiver of the debt due to special circumstances.
65. Mrs Small has had a very difficult and even tragic decade coping with her husband’s illness and death in 2001, the responsibility of raring her two sons by herself and the accrual of substantial debts arising from her sons’ school fees. She has worked part-time throughout this period and endeavours to pay off these debts. She has the potential to continue to do so. However, she does not meet the requirements of special circumstances as enunciated in re Beadle and Groth.
66. The Tribunal sets aside the decision under review and substitutes a decision waiving the debt owed to the Commonwealth as this debt resulted solely from an administrative error by Centrelink.
I certify that the sixty-six (66) preceding paragraphs are a true copy of the reasons for the decision herein of
Miss E.A. Shanahan(sgd) Mara Putnis
Clerk
Date of Hearing 21 January 2008
Date of Decision 30 May 2008
Counsel for the Applicant Marita Wall
Solicitor for the Applicant Len Jaffit, Victorian Legal Aid
Advocate for the Respondent Tim Noonan, Centrelink Legal Services
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