SMITH and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2010] AATA 764

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 764

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/2497

GENERAL ADMINISTRATIVE  DIVISION		)
Re		LOUISE SMITH

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr R G Kenny, Senior Member

Date6 October 2010

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

..................[Sgd]............................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, Benefits and Allowances – Parenting payment – Failure to notify correct levels of fortnightly income – Rate calculations based on incorrect income levels – Overpayment of parenting payment – Debt due to the Commonwealth – No basis for write-off - Debt not attributable solely to Commonwealth error – No special circumstances to enable debt to be waived – Decision under review affirmed.

Social Security Act 1991 (Cth) ss 1068B, 1223, 1236, 1237, 1237A, 1237AAD
Social Security (Administration) Act 1999 (Cth) s 68

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

6 October 2010 Mr R G Kenny, Senior Member    

APPLICATION

1.      On 24 February 2005, Louise Smith claimed income support payments in the form of parenting payment under the Social Security Act1991 (Cth) (“the Act”). She received these payments at various times including from February 2007. On 9 March 2010, a Centrelink officer determined that Ms Smith had been overpaid in respect of parenting payment in the period from 5 May 2008 until 22 January 2010 (“the overpayment period”) and a debt of $1,522.30 was raised. The decision was affirmed by an authorised review officer on 15 April 2010 and then by the Social Security Appeals Tribunal (“the SSAT”) on 18 May 2010.

ISSUES AND CONTENTIONS FOR DETERMINATION

2.      Parenting payment is calculated in accordance with the combined fortnightly income of a recipient[1].  Ms Smith was employed on a casual basis during the overpayment period by Elders Real Estate and Millers Retail Limited.  Her parenting payment was calculated in accordance with the income from those employment sources. 

[1] Section 1068B of the Act

3.      Ms Smith said that she did not accept that she had been overpaid or that she owed money to the Commonwealth.  She contended that Centrelink had been advised of her fortnightly income during the overpayment period, that any overpayment to her was because of error on the part of Centrelink and that she should not be required to pay for Centrelink’s mistakes.  She also submitted that she and her two children were in financial hardship and that the debt should be waived.

4.      Helen Wallis-Dunn, for the respondent, submitted that Ms Smith was overpaid by $1,522.30 which was a debt due to the Commonwealth.  She submitted that the debt had arisen through a failure by Ms Smith to keep Centrelink accurately informed on a fortnightly basis of her income.  She submitted that, in the overpayment period, records from Ms Smith’s employers revealed income totalling $38,144.71 and disclosures by Ms Smith of income totalling $34,269.21.  Ms Wallis-Dunn accepted that the Centrelink fortnightly reporting period did not always coincide with the fortnightly income periods of Ms Smith but submitted that, nonetheless, there was a shortfall in her reported earnings.  She noted a Centrelink record, dated 24 February 2010, where Ms Smith had conceded that she may have missed reporting some components of her earnings.  She submitted that Ms Smith had been sent at least nine notices requiring her to advise Centrelink of her fortnightly earnings.  She submitted that it was this failure to provide accurate records which led to the incorrect parenting payments and that, accordingly, the resultant overpayment was not due solely to error on the part of the Commonwealth.  She also submitted that there were no special circumstances which would justify waiving the debt.   

5.      The issue for determination is whether Centrelink was correctly notified of Ms Smith’s income during the overpayment period and, if not, whether Ms Smith was overpaid an amount which is a debt due to the Commonwealth.

EVIDENCE

Ms Smith

6.      Ms Smith’s evidence was that she notified Centrelink each fortnight of her earnings.  She could not recall discussing her income details with a Centrelink officer in February 2010.  She confirmed that she was employed by Elders Real Estate and Millers Retail Limited during the overpayment period and accepted that she had been paid a total of $38,144.71 during that time.  Ms Smith resigned from her employment in January 2010 and now relies on Centrelink payments for her income.  She struggles each week to make ends meet after she has met recurrent financial commitments for herself and her two children including kindergarten fees, rent and normal living expenses.  She had been forced to borrow from her family and currently owes her sister about $1,000.  She has debts comprising a personal loan of $9,500 and another debt of $17,000 relating to her motor vehicle.  However, she said that the repayments of the vehicle loan are met by child support payments made directly by her former partner.  Her other assets comprise a half share in a house and household furniture.  She said that the amount outstanding on the mortgage for the house exceeds its value and that the co-owner, who lives there, has taken responsibility for all outgoings including mortgage payments.  Ms Smith lives in rented accommodation which she shares with her sister and her cousin.  She is repaying the debt from her Centrelink payments at the rate of $20 per week.  Apart from a hearing problem in one of her children, Ms Smith described the family as having no health concerns. 

Other evidence

7.      Centrelink documents include a file note, dated 24 February 2010, which minutes a conversation between Ms Smith and a Centrelink officer.  When asked if she had declared all of her income to Centrelink, Ms Smith is recorded in that note as stating that she did but that there might be a few hours that she had missed.  Other Centrelink documents in evidence are copies of letters sent to Ms Smith by Centrelink expressed to be information notices under social security law and advising her to report her gross earnings to Centrelink.  Nine such letters were sent to her between June 2008 and October 2009.  Also in evidence were statements from Elders Real Estate and Millers Retail Limited which advise that Ms Smith was employed by them from 24 August 2009 to 30 October 2009 and from 11 March 2008, respectively.

CONSIDERATION

8.       It is not disputed that Ms Smith was eligible for the parenting payment or that the amount paid to her was affected by her income.  I am satisfied that the letters sent to Ms Smith from June 2008 to October 2010 constitute formal notices under s 68 of the Social Security (Administration) Act 1999 (Cth) which obliged her to provide Centrelink with accurate statements of her income. I am satisfied that Ms Smith conversed with a Centrelink officer on 24 February 2010 and that the minute of that conversation accurately reports that conversation. It includes Ms Smith’s concession that she may have missed a few hours of her payments when advising Centrelink of her income. I also accept Centrelink’s calculations that, during the overpayment period, Ms Smith advised Centrelink of income totalling $34,269.21 and that this amount comprised the basis on which parenting payments were made to Ms Smith. I am also satisfied that, during the overpayment period, she received income totalling $38,144.71. It is not contended that Ms Smith deliberately underestimated her overall income and I accept that a source of incorrect notification was the differing time-frames over which Centrelink fortnightly notifications were required when compared with the income payment interval for Ms Smith. Nevertheless, Ms Smith’s income was under-declared and I accept as correct the calculation by Centrelink of the overpayment amount of $1,522.30. The amount of overpayment to Ms Smith is a debt due by her to the Commonwealth in accordance with s 1223(1) of the Act.

Write-off

9. Under s 1236 of the Act, a debt may be written off if it is irrecoverable at law; or the debtor has no capacity to repay the debt; or the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or it is not cost effective for the Commonwealth to take action to recover the debt. The only component of that provision of potential relevance in this matter is that relating to lack of capacity to repay the debt. Ms Smith is now repaying the debt to the respondent through deductions from her current income support payments and I am reasonably satisfied that there is no lack of capacity for the debt to be repaid on that continuing basis. In that situation, the debt should not be written off.

Waiver

10. Section 1237 of the Act lists the circumstances in which a debt may be waived. This includes the waiver of a debt arising from error in accordance with s 1237A of the Act which, in so far as relevant, reads:

“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”.

11. While Ms Smith believed that she had notified Centrelink of her income, the shortfall of $3,875.50 between her notified income amounts and the amounts reported by her employers means that she did not do so. In that regard, I have noted the concession that she made on 24 February 2010 about missing the notification of some of her earnings. Unfortunately, that made a material contribution to the debt in the overpayment period. In that situation, the debt did not arise solely due to error on the part of the Commonwealth and the debt can not be waived under s 1237A of the Act.

12. I am also satisfied that the debt can not be waived under s 1237AAD of the Act, which applies only where there are special circumstances, other than financial hardship alone, that make it desirable to waive the debt. In Groth v Secretary, Department of Social Security[2], Kiefel J observed that special circumstances:

“would require something to distinguish... [the]… case from others, to take it out of the usual or ordinary case. ……. It would of course 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”.

[2] (1995) 40 ALD 541 at 545

13. I accept that Ms Smith experiences a degree of strain in meeting her obligations with Centrelink payments as her sole income source. She is not employed, and this is a situation which she brought about herself. Her major financial obligations relate to her house mortgage and vehicle repayments but these are met by others. She is repaying the debt to Centrelink by means of withholdings of $20 per fortnight from her entitlements under the Act. Although Ms Smith experiences a level of financial hardship, s 1237AAD does not permit waiver of a debt on that basis alone. She and her children have no significant health concerns. No other matters were raised by Ms Smith to satisfy the provision and I am satisfied that there are no factors which would distinguish Ms Smith’s situation from the usual or ordinary case such as to constitute special circumstances. I am satisfied that the debt cannot be waived under s 1237AAD of the Act.

DECISION

14.     The Tribunal affirms the decision under review.

I certify that the 14 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member

Signed:...............[Sgd]...............................................................
  Kate Slack, Research Associate

Date/s of Hearing  30 September 2010
Date of Decision  6 October 2010
The Applicant was self represented
For the Respondent                  Ms Helen Wallis-Dunne