"SRVVV" and Anor and Secretary, Department of Family and Community Services - [2002] AATA 1337

DECISION AND REASONS FOR DECISION [2002] AATA 1337

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/930; N2001/931

GENERAL ADMINISTRATIVE DIVISION       )
           Re      "SRVVV" "SRWWW"
  Applicants
            And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr S Webb, Member

Date24 December 2002
PlaceParkes, New South Wales

Decision The Tribunal determines to set aside the decision under review and in substitution therefor decides: (i) with regard to SRWWW, the Commonwealth's right to recover the debt raised pursuant to subsection 1223(1) of the Social Security Act 1991 in the amount of $23,594.20 must be waived; and (ii) with regard to SRVVV, the Commonwealth's right to recover the debt raised pursuant to subsection 1223(1) of the Social Security Act 1991 in the amount of $23,594.20 must be waived.
[SGD] Mr S Webb, Member
CATCHWORDS
SOCIAL SECURITY – Invalid/Disability Support Pension – Wife Pension – Notification – Over payment – Debt – Sole administrative error – Good faith – Waiver

LEGISLATION
Social Security Act 1991 ss 132 (repealed), 172 (repealed), 1223, 1224 (repealed), 1237A, 1237AAD

AUTHORITIES
Re Vitalone and Secretary, Department of Social Security (1995) 38 ALD 169
Re Greenwood and Secretary, Department of Social Security (1991) (1991) 25 ALD 775
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186
Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Derriman and Secretary, Department of Family and Community Services [2002] AATA 215
Jones v Gordon (1877) 2 App Cas 616
Re Secretary, Department of Social Security and Smitherman (1991) 22 ALD 336

REASONS FOR DECISION

Mr S Webb, Member

The applications from SRWWW and SRVVV ("the Applicants") seek review of a decision of the Social Security Appeals Tribunal ("the SSAT") on 23 May 2001 to affirm the decision of an Authorised Review Officer ("ARO") on 7 December 2000 to raise and recover debts, in the amount of $23,594.40 each, from the Applicants. The ARO decided to vary the decision of a Centrelink delegate on 20 November 2000 to raise and recover debts, in the amount of $26,652.40 each, from the Applicants, amending a previous decision to raise debts against each of the Applicants in the amount of $29,104.90
The Tribunal convened a hearing in this matter on 9 October 2002 in Parkes at which the self represented Applicants presented oral evidence. The Respondent was represented by Ms Hannelore Schuster, an advocate from the Advocacy and Administrative Law Team at Centrelink.
The following written material was placed into evidence before the Tribunal:
Exhibit No     Description
T1-T63, pp1-160 Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975.
T63A-T91, pp160A-210 Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975.
A1      Letter from Mr J Bradford dated 16 October 2001 by facsimile.
A2      Tax File Number Authority letter from Mr D Tagg, unsigned, dated 12 August 1991.
A3      Computer print out ** SUPERANNUATION/ANNUITIES (1)**, dated 21 January 2002 by facsimile.
A4      Family Assistance letter to SRVVV dated 18 December 2001.
A5      Statement by SRVVV dated 21 January 2001 by facsimile.
R1      Letter from Ms Schuster dated 26 July 2002 attaching 13 pages of computer print-out records.
R2      Respondent's Statement of Facts and Contentions dated 16 July 2002.

background

The following background is provided by way of information and is not disputed by the parties.
The Applicants live on a farm with their three children near Parkes. SRWWW became ill in 1986 and ceased work in 1988 having been diagnosed with Multiple Chemical Sensitivity with Chronic Fatigue ("MCS").
On 18 January 1990 SRWWW claimed invalid pension (subsequently disability support pension) ("DSP"), declaring that he had been in receipt of a superannuation pension since 10 January 1989, and SRVVV claimed wife pension ("WP"). The pensions were granted at a reduced rate and paid from 18 January 1990.
On 16 March 1992, 22 June 1992 and 14 September 1992 the Respondent wrote to the Applicants (Exhibits T66, 67, 71, 72, 75 and 76) informing them of their obligations to notify Centrelink in the event their combined incomes increased above $398.98 per week.
On 16 January 1993 Centrelink wrote to both Applicants (Exhibits T15 folios 50-52 and T16 folios 53-55) advising that the rate of both pensions would increase by $5 per fortnight to $262.90 per fortnight, being the full rate of DSP and WP with a combined fortnightly income threshold of $112.
In March 1994 SRWWW's MCS compensation claim for permanent impairment was resolved and the Applicants' repaid a compensation debt to the Commonwealth on the basis of a preclusion period concluding on 29 July 1993 (Exhibits A5, p3 and T51 folio 121).
On 19 February 1999 Centrelink wrote to SRWWW indicating that he had not informed Centrelink about his current rate of superannuation income and requesting him to do so (Exhibit T25). SRWWW contacted Centrelink on 2 March 1999 and advised that he was receiving fortnightly superannuation income but was not able to specify the amount. On 31 February 1999 State Superannuation Corporation stated that SRWWW's current rate of fortnightly superannuation payment was $919.45 (Exhibit T29).
On 27 April 1999 SRWWW commuted his periodic superannuation payments in favour of a lump sum payment (Exhibit T36 folio 91).
evidence
srvvv
The Tribunal had before it the statement by SRVVV (Exhibit A5), dated 21 January 2001 by facsimile, who also gave oral evidence. SRVVV told the Tribunal her husband, SRWWW, became unwell after spraying verges in the employ of the local Council in 1986, as a consequence of which he has not been able to work since 1988. She informed the Tribunal that SRWWW was diagnosed with MCS and was bed-ridden for two years after leaving work. SRWWW, she explained, is severely affected by the condition, suffering symptoms of chronic fatigue, loss of strength and mobility, and loss of mental acuity and memory. She stated that any exposure to a wide array of common chemicals, including herbicides and deodorants, exacerbates SRWWW's condition and symptoms. The family farm, she explained, provides a safe chemical-free environment that is beneficial to her husband, even though he remains unable to do any of the house or farm work.
SRVVV told the Tribunal their lives became very difficult, financially and emotionally, after SRWWW ceased work. SRWWW received a superannuation pension that was insufficient to cover living costs, as a consequence of which, she related, she contacted Centrelink and was told they were not eligible for any pension. SRVVV said she found part time employment, with which she persisted for eighteen months. However, this created other difficulties as SRWWW was unable to look after their two young children or do any work in the house or on the farm; a third child was born in 1991. Additionally, she recalled, they commenced a legal claim for compensation in respect of SRWWW's incapacity and impairment, which was very stressful as MCS was not well recognised or known at the time.
SRVVV related experiencing significant difficulties with their bank, which held a mortgage over the family property. She explained they called upon the services of Ms Fran Rowe, Rural Counsellor, who assisted negotiations with the bank and completed an application form for DSP and WP. In response, she recalled, a Centrelink Field Officer conducted a detailed assessment of their circumstances, visiting their farm and interviewing both Applicants. She told the Tribunal she understood this was done so that Centrelink could properly assess their social security entitlements on the farm. Part pensions were granted, which assisted their situation, she recalled. At this time, she explained, family income could be predicted fairly accurately, being principally comprised of SRWWW's fortnightly superannuation payments in the absence of any farm income. SRVVV recalled relying on SRWWW to manage their financial affairs, as he had done in the past; the only money she controlled was the WP amounts that were paid into a separate account.
SRVVV recalled receiving pensioner health cards "out of the blue" in October or November 1992. She told the Tribunal she rang Centrelink about this on a 1300 number, believing that they were not eligible to receive health cards because they were receiving part pensions. She stated that the female officer told her everything was in order as the way in which pensions were calculated had changed, being based on taxable income. SRVVV recalled being informed that "taxable income" included the farm, which was making a loss, as a result of which they would receive full pensions and health cards. She stated that she believed the Centrelink officer, as there was a terrible drought at the time and she had heard the Government was moving to provide more assistance for struggling farmers. SRVVV explained she had been surprised when their pensions increased without any forms or letters of explanation from Centrelink, and rang Centrelink to check that they were properly entitled. She stated the Centrelink officer told her that everything was in order and they were receiving what they were entitled to receive. The only letters she recalled receiving at that time from Centrelink related to CPI adjustments of pension payments. She stated that she believed what she was told by the Centrelink officer, as their circumstances had not changed and their income was the same, and there was no other explanation for what had occurred.
SRVVV said, a compensation debt was calculated by Centrelink and repaid following settlement of SRWWW's compensation claim in 1994. There was, she recalled, no suggestion or indication of any problem with the pension payments in these discussions.
SRVVV told the Tribunal, their five year-old son, Robert, became seriously ill in May 1993 and was diagnosed with osteomyelitis of the spine, spending three weeks in hospital and many months off school. She recalled that 1992 to 1995 was "a nightmare of court hearings, family illness, bank threats and drought". At this time, SRVVV recalled, SRWWW was becoming very confused and would forget where he was or what he was doing. However, she said, he was well enough to travel to Sydney for the court cases.
Between 1994 and 1998, SRVVV did not recall having any contact with Centrelink. SRWWW had signed an authority for Centrelink to access his taxation records so that their taxable income could be verified, she explained. Their taxable income changed from year to year, she explained, and SRWWW's accountant of long standing prepared their annual taxation returns. SRVVV told the Tribunal she believed that their pension entitlements were calculated at the end of each financial year and were checked against their taxation records.
SRVVV explained that her husband had commuted his superannuation as soon as he was eligible to do so by age in 1999. She explained that she and her husband consulted a financial adviser, Mr Bradford, regarding their financial affairs at that time. Mr Bradford had told them their pension payments did not appear to be correct and contacted Centrelink on their behalf, she stated. SRVVV told the Tribunal that she and her husband were very concerned about the possibility of something being wrong and understood from Mr Bradford that he had contacted Centrelink, querying their pension payments, and had been told Centrelink were "looking into it". Later, SRVVV explained, she had been told Centrelink could not find the relevant files. Finally, Mr Bradford presented an investment plan and suggested, as Centrelink had not advised of any problem, they should proceed to implement this, she recalled, and they did. SRVVV recounted that Centrelink informed them eighteen months later that there had been an overpayment as a result of which a large debt had been raised for which she and her husband were liable.
SRVVV concluded that their situation was not stable and remained difficult. She explained that in February she was diagnosed with high blood pressure, an enlarged heart and a leaking valve. She stated she was under a lot of stress and her mother had recently suffered a stroke.
srwww
SRWWW told the Tribunal he started receiving superannuation payments in 1989 after ceasing work, and received DSP payment in 1990. He recalled a Centrelink Field Officer visiting the farm and making an assessment, but could not recall the amount he was paid in either fortnightly superannuation payments or DSP payments.
SRWWW thought there probably were annual CPI changes to his superannuation payments. He recalled informing Centrelink of some changes but agreed he may not have informed them of all changes. He stated that for two or three years he was too sick, explaining that all the family relationships changed because he could not tolerate the chemicals in perfumes, deodorants and make-up. Friends or relations would come to visit and have to leave. His main focus, he recalled, was on getting better.
SRWWW could not recall whether or not his children were at home at this time and could not remember an increase in his pension payments in 1992-1993. He recalled looking at the figures sometime later and noticing there had been a "small increase of $10 to $15 per fortnight". He recalled SRVVV making a call to Centrelink but could not remember the details of that call.
SRWWW stated he attended a financial planning seminar in Sydney at which he met Mr Bradford in 1998 or 1999. He recounted seeking a "full financial run down" from Mr Bradford, who queried the amounts of pension being paid. SRWWW could not recall what Mr Bradford told him about this, but told the Tribunal he had relied on Mr Bradford to find out whether everything was in order, authorising him to consult Centrelink for this purpose. He recounted that Mr Bradford did not get an answer from Centrelink about whether everything was in order, but had been told the relevant files were missing and was concerned about the lack of information.
SRWWW stated he had been using a taxation accountant in Canberra since 1982. Each year, he explained, he would send all of the family's financial records to Canberra, including bank statements, so that proper returns could be prepared. SRWWW stated that the accountant had never raised a query about the pension payments.
In cross examination, SRWWW stated that he is not in the habit of reading since becoming unwell, conceding he may not have read the back of letters from Centrelink. He said he does not remember much from that time. When asked about the increase in his pension from $205.60 to $257.90 in 1993, SRWWW stated that he assumed the assessment calculation must have changed and could not see why he would have thought anything was wrong, as their taxable income was nil. SRWWW could not remember whether or not he had informed Centrelink about any changes in taxable income over the years.
SRWWW gave evidence that the lump sum superannuation payment in 1999 had been used to pay off the remaining debt on the family farm. He stated that he and his wife currently receive DSP and WP, from which an amount is deducted each fortnight by way of debt repayment, but SRWWW did not know the amount. He stated that SRVVV receives Family Tax Benefit and they have no other income, there being no income from the farm.
issues
The relevant issues in this matter are:

(a) whether the decisions to raise and recover debts arising from overpayment of DSP and WP were the correct and preferred decisions; and, if so

(b) whether the debts should be written off or waived.

legislation

The relevant legislation in this matter is the Social Security Act 1991 ("the Act") and in particular sections 132 (repealed), 172 (repealed), 1223, 1224 (repealed), 1237A and 1237AAD.
submissions
the applicants
SRVVV submitted that the overpayment occurred as a result of Centrelink's sole administrative error. Centrelink, she submitted, failed to properly record and take into account SRWWW's superannuation income as a direct consequence of which the overpayment had occurred. If the Centrelink error had not been made, she contended, the debt would not have arisen.
SRVVV gave evidence that she and her husband had relied on the information and advice provided by Centrelink, believing Centrelink "knew what it was doing". She argued that it was wrong and unfair for Centrelink to rely upon people in situations such as theirs, with serious family health, legal, financial and climatic problems, to cross check Centrelink's work and pick up their errors. SRVVV argued it was not possible or reasonable to expect them to do this in the circumstances and they should be able to rely on Centrelink.
SRVVV submitted she and her husband provided Centrelink with comprehensive information about their financial circumstances and sources of income, as they were required to do. She drew the Tribunal's attention to information she had provided to Centrelink on 6 November 1992 about an increase in fortnightly superannuation payments (Exhibit A3), asserting this was after receiving health cards. SRVVV contended that her husband had signed an authority for Centrelink to cross check his taxable income and taxation records, as necessary.
SRVVV submitted that she contacted Centrelink to query the provision of health cards and increased pension, even though their circumstances and income had not changed. She conceded that she and her husband understood that they were not entitled to health cards because they were on part pensions. The explanation provided by Centrelink, however, was plausible and reasonable, and they had accepted it, she reasoned, having no reason not to believe what they were told and having no expertise on the basis of which to challenge what they were told by officers acting with Centrelink's authority. SRVVV contended neither she nor her husband had dealt with Centrelink as customers before 1990. They had no reason to doubt what they were told about their pension calculations being based on their taxable income, as a result of which their pensions had increased. Thereafter, they received the pension payments in good faith, believing everything to be in order.
SRVVV submitted that Centrelink had not indicated there was anything wrong with their pension payments in the discussions about repayment of a compensation debt, following settlement of SRWWW's compensation claim in 1994. In 1999, Mr Bradford, acting as agent for SRWWW, queried the pension amounts, SRVVV contended, but it was not until 2000 that Centrelink informed them of the overpayment.
SRVVV submitted that the overpayments and the debt should be waived as they were caused by the sole administrative error of Centrelink and were received in good faith.
In the alternative, with regard to consideration of "special circumstances", SRVVV submitted that their circumstances were "special circumstances". This did not derive from health problems, alone, she submitted. She contended that their circumstances were rendered "special" by a number of factors:
(a)Centrelink caused the overpayment and did not identify any problem with their pensions for over ten years, during which time the amount of overpayment had become very large through no fault of their own. They did not have any money left from SRWWW's lump sum compensation payment in 1994 or from the lump sum payment on commutation of his superannuation, which had been used to pay-out the mortgage debt on the farm.
(b)The nature of SRWWW's illness had a very significant adverse impact on their lives:
(i)familial relationships suffered and visitors to the family home were strictly limited – family members, friends and service providers could not visit, and children could not have friends over from school unless they were chemical free;
(ii)family eating habits and diet changed, requiring consumption of chemical-free foods;
(iii)family cleaning habits and practices changed, requiring use of chemical-free cleaning agents only; and
(iv)farming practices changed, partly because SRWWW was not long able to undertake any farm or house work, and partly because no chemicals could be introduced.
(c)The family suffered serious financial problems as a consequence of SRWWW's loss of earnings, whereby they had to fight with the bank over an extended period of years in order to be able to keep the family farm and were otherwise in severely straitened circumstances.
(d)Pursuing a legal action for compensation relating MCS to SRWWW's previous employment was extremely difficult and stressful as the condition was not widely recognised or understood and the court hearings were held in Sydney on nine separate occasions.
(e)Running the farm and caring for SRWWW and their three children was extremely difficult, especially when Robert fell ill with osteomyelitis of the spine in 1993.
(f)The extensive and prolonged drought in 1992 and 1993 was extremely stressful, especially as the water supply to the house dried up, requiring additional expenditure to purchase clean untreated water.
(g)The stress of having to repay the debt, and possibly being forced to sell the farm after so much effort and struggle to retain it, would have an adverse effect upon their medical conditions and the well-being of their family. SRVVV's deteriorating health and her husband's poor health reduce the possibilities and options for repaying the debt.

SRVVV submitted if the debt cannot be waived on the basis of administrative error, it should be waived on the basis of "special circumstances".
the respondent
Ms Schuster, for the Respondent, conceded there was no dispute regarding Centrelink's administrative errors. She indicated that Centrelink implemented revised pension reference numbers between 8 and 22 October 1992, opining that it was possible that SRWWW's superannuation details may not have been properly transferred. This, she conceded, was a serious administrative error.
Ms Schuster submitted that Centrelink had no way of finding out about income details unless such information was provided. This, she contended, did not mean that SRWWW or SRVVV were responsible for Centrelink's errors, but it did mean they were responsible for notifying Centrelink of changes in their income. Centrelink wrote to the Applicants on 16 March 1992 (Exhibits T66 and T67), 22 June 1992 (Exhibits T71 and T72) and 14 September 1992 (Exhibits T75 and T76) informing them, inter alia, of the notification obligations attaching to the grant of DSP and WP. Ms Schuster submitted that the Applicants did not properly notify Centrelink of annual CPI increases in SRWWW's fortnightly superannuation payments (Exhibits T36 folio 91), noting the net fortnightly payment amount of 708.07 was declared in an income review on 25 November 1991 rather than the gross amount of $797.98 (Exhibit T3 folio 20). Ms Schuster submitted that the oft cited case of Re Vitalone and Secretary, Department of Social Security (1995) 38 ALD 169 should be distinguished on its facts from the present case.
Ms Schuster submitted the overpayment was not caused solely by administrative error of Centrelink, but was contributed to by the Applicants' failure to properly notify Centrelink of their income. She contended that the failure of the Applicants to comply with the notification provisions of the Act is a contributory cause of the overpayments, citing Re Greenwood and Secretary, Department of Social Security (1991) 25 ALD 775. The debt, she reasoned, is raised, therefore, under section 1224 of the Act and cannot be waived under section 1237A of the Act. Ms Schuster contended, even if the debt was caused by sole administrative error, it was not received in good faith: failure to read official letters is not acting in good faith, she reasoned, citing Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186 and Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553.
With regard to "special circumstances", Ms Schuster drew attention to the meaning of the term in Re Beadle and Director-General of Social Security (1984) 6 ALD 1. She submitted that the Applicants' reliance upon pension payments for their sole income does not distinguish them from other pension recipients. It is open to the Applicants, she opined, if they are suffering hardship because of the rate of repayment, to ask Centrelink to reduce the rate of recovery, also noting that no interest is payable on the debt. SRWWW's health problems, Ms Schuster submitted, do not place him so far outside the normal run of cases to warrant waiver of the debt on the grounds of "special circumstances".
consideration of the issues and findings
The Tribunal found the Applicants to be witnesses of truth. SRWWW's debility was clear and apparent during the conduct of the hearing.
is a debt owed to the commonwealth?
The first issue to be addressed is whether a debt due to the Commonwealth is raised under the Act for which the Applicants are liable. The Tribunal notes the applicability of section 1222A of the Act in the present case, whereby a debt is due to the Commonwealth only if express provision is made under the Act to that effect.
The Respondent submitted that a debt is raised pursuant to section 1224 of the Act (repealed in 2001) in consequence of the Applicants' failure to comply with notices issued pursuant to sections 132 and 172 of the Act (repealed in 1999) which relevantly provide:
"132     Secretary may require notice of the happening of an event or a change in circumstances
132(1) The Secretary may give a person to whom disability support pension is being paid a notice that requires the person to inform the Department if:
(a)       a specified event or change of circumstances occurs; or
(b)       the person becomes aware that a specified event or changes of circumstances is likely to occur.
…
132(3) Subject to section (3A), a notice under subsection (1):
(a)       must be in writing; and
(b)       may be given personally or by post; and
(c)       must specify how the person is to give the information to the Department; and
(d)       must specify the period within which the person is to give the information to the Department; and
(e)       must specify that the notice is a recipient notification notice given under this Act.
132(3A)         A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (3)(c) or (e).
…
132(5) A person must not, without reasonable excuse, refuse or fail to comply with a notice under subsection (1) to the extent that the person is capable of complying with the notice.
…
172     Secretary may require notice of the happening of an event or a change in circumstances
172(1) The Secretary may give a woman to whom a wife pension is being paid a notice that requires the woman to inform the Department if:
(a)       a specified event or change of circumstances occurs; or
(b)       the woman becomes aware that a specified event or changes of circumstances is likely to occur.
…
172(3) Subject to section (3A), a notice under subsection (1):
(a)       must be in writing; and
(b)       may be given personally or by post; and
(c)       must specify how the woman is to give the information to the Department; and
(d)       must specify the period within which the woman is to give the information to the Department; and
(e)       must specify that the notice is a recipient notification notice given under this Act.
172(3A)         A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (3)(c) or (e).
…
172(5) A woman must not, without reasonable excuse, refuse or fail to comply with a notice under subsection (1) to the extent that the woman is capable of complying with the notice.
…
"
Any social security payment that results from failure to comply with a notice issued pursuant to repealed sections 132 or 172 of the Act is a debt to the Commonwealth pursuant to repealed section 1224 of the Act, which provides:
"1224   Debts arising from the recipient's contravention of Act
1224(1)          If:
(a)       an amount has been paid to a recipient by way of social security payment…; and
(b)       the amount was paid because the recipient or another person:
(i)        made a false statement or a false representation; or
(ii)       failed or omitted to comply with a provision of… this Act…;
the amount so paid is a debt due by the recipient to the Commonwealth."

For these purposes, letters sent to the Applicants on 16 March 1992 (Exhibits T66 and T67), 22 June 1992 (Exhibits T71 and T72) and 14 September 1992 (Exhibits T75 and T76) are notices within the terms of repealed sections 132 and 172 of the Act, and the Tribunal so finds.

The Applicants submitted they complied with the notices, even though SRWWW did not read the relevant information about notification obligations printed therein. The parties agreed that SRWWW's superannuation payments were annually adjusted for changes in the Consumer Price Index ("CPI") in October each year and the Tribunal so finds. There is no evidence before the Tribunal that the Applicant's combined gross income increased above $398.98 per week prior to October 1992. The evidence is that SRWWW's superannuation income increased in October 1992 to $402.98 per week and the Tribunal so finds. SRVVV contended that on or about 6 November 1992 information was provided to Centrelink regarding the increase in SRWWW's fortnightly superannuation payments in October 1992. In support of the contention, SRVVV drew the Tribunal's attention to an undated Centrelink document (Exhibit A3) setting out the increased superannuation payment amount as of October 1992 that had been obtained under Freedom of Information legislation. The Tribunal is persuaded by this evidence and does not agree with Ms Schuster's contention that the Applicants failed to inform the Respondent about this increase in their income, finding, therefore, that the Applicants notified the Respondent of the increase in their combined weekly income in October 1992 to $402.98 per week (Exhibits A3 and T36).
The Tribunal finds the Applicants provided Centrelink with information, verbally, about increases in SRWWW's superannuation payment amounts in October 1990 and December 1991 (Exhibits T63A and T4). The Tribunal is not persuaded by the Respondent's submission that SRWWW understated his superannuation income in November 1991 (Exhibit T3 folio 20) and therefore failed to comply with his legal obligations. The Tribunal finds that SRWWW did provide Centrelink with net income information in November 1991, but corrected his error soon thereafter, providing gross income information, as required, in a telephone conversation with Centrelink on 6 December 1991 (T4), as a consequence of which no overpayment occurred.
The Respondent conceded, and the Tribunal finds, that information regarding SRWWW's superannuation pension "dropped off" the Applicants' records sometime in or about October 1992. The Tribunal finds that this eventuality occurred during a period of policy reform, whereby pensions and family payments were restructured with the effect that the level of pension payable to each of the Applicants changed.
In light of these findings, it is necessary to determine whether the Applicants "refused or failed" to comply with the notices received from the Department in March, June and September 1992. The notices specify, relevantly:
"You must tell us within 14 days if…your and your partner's combined gross income (before tax) goes above $398.98 a week"

The Tribunal accepts, on the balance of probabilities, that the Applicant's notification of an increase in their combined income on or about 6 November 1992 to $20,954 per annum, or $402.98 per week, is in compliance with their legal obligations. Therefore, the Tribunal finds no refusal or failure on the Applicant's part to comply with the notices dated 16 March, 22 June and 14 September 1992.

The Respondent submitted the Applicants failed to comply with notices issued on 16 January 1993 (Exhibits T15 and T16) regarding an increase in the rates of the Applicants' pensions, wherein the Applicants were informed:
"WHEN TO CONTACT US
Contact us if…any of the things listed on this page happen…
WHAT YOU MUST TELL US
You must tell us within 14 days if any of the things listed below happen, or are likely to happen…
YOU MUST TELL US WITHIN 14 DAYS IF:
…your and your partner's combined gross income (before tax) goes above $112 a week…"

The evidence is that the Applicants' combined income already exceeded the specified level on 16 January 1993 and had done so consistently, as declared to Centrelink, from the original date of application for pension on 18 January 1990. The Applicants submitted that Centrelink had been fully informed of their combined income and they expected this information to be used for the purpose of calculating their pension entitlements, as it had been in the past. The Tribunal finds the Applicants' expectations in this regard to be genuine and reasonable.

The Respondent argued that the Applicants failed to comply with the 16 January 1993 notices on each occasion as SRWWW's superannuation pension increased as a result of changes in the CPI in October of each year thereafter until such time as his pension was commuted on 27 April 1999. However, the Tribunal does not agree with this proposition. The 16 January 1993 notices did not require the Applicants to notify Centrelink of any and all changes to their combined income, requiring only that the Applicants inform Centrelink in the event that a change in their circumstances or income caused their combined income to cross a specific threshold. The fact is, and the Tribunal finds, no such change of circumstance or income occurred to cause the Applicants' combined income to cross the specified threshold: their combined income, as found, already exceeded the threshold; Re Derriman and Derriman and Secretary, Department of Family and Community Services [2002] AATA 215; Re Vitalone and Secretary, Department of Social Security (supra).
The question of compliance with a notice under sections 132 or 172 of the Act must be considered strictly, especially as non-compliance, if found, is potentially punishable by a period of imprisonment; Re Vitalone (supra). For these purposes a person's refusal or failure to comply with a notice, whether by commission or omission, must be considered, if found in the absence of "reasonable excuse" and "to the extent that the person is capable of complying with the notice", to embody inherently the element of fault. In the present case, the Tribunal finds there is no evidence of any such fault on the part of the Applicants in the material before it.
Absent fault, the Tribunal finds that the Applicants had not "refused or failed" to comply with the 16 January 1993 notice. On the contrary, the Tribunal accepts that the Applicants sought to comply with their legal obligations and, believing what they were told by Centrelink officers, genuinely thought they had done so. Their belief was sustained over an extended period during which communications with Centrelink concerning the level of pensions and the repayment of a compensation debt did not provide any hint or suggestion of anything wrong. Direct inquiries by the Applicants and their agent, Mr Bradford, regarding the level of pensions being paid in 1999 (Exhibit A1), and evidence that Centrelink had identified "a large overpayment" on 18 May 1999 (Exhibit T31), did not cause Centrelink to communicate any problem to the Applicants until 18 September 2000.
In the circumstances as found, the Tribunal does not agree with the Respondents submissions pursuant to repealed section 1224 of the Act, the Applicants having neither failed nor omitted to comply with the a provision of the Act. The Respondent urged the Tribunal to distinguish the case of Re Vitalone (supra) on the facts. The Tribunal finds, however, significant and pertinent consistency between the operative facts of the matter at hand and the case of Re Vitalone (supra). In both cases the Applicants complied with or sought to comply with their legal obligations to provide Centrelink with information as specified in notices under the Act. In the present case, as in Re Vitalone (supra), this eventuality did not occur, as the Applicants' combined gross income was already above the required threshold. In relation to the particular terms of the notices sent by the Respondent in Re Vitalone (supra), Matthews J said at ALD 175:
"Had the notices required notification only of any changes in the recipients' income, then the applicants' failure to inform the respondent of Mrs Vitalone's current wage level would, in all probability, have constituted a failure to comply with a notice under subsection 163(1). However, even this cannot be stated with complete certainty, for Mrs Vitalone had already informed the Respondent in her original application that her wages "varied". But the notices which were sent to the applicants required not only that there have been a change in their income, but also that that change had the effect of increasing their income so that it crossed a particular threshold. In the applicants' case, this threshold was never crossed, for their income already exceeded it."
The Tribunal concludes that, as in Re Vitalone (supra), the notices required that Centrelink be notified if certain specified events occurred, which, in the Applicants' case, did not occur. This being so, there was no failure or omission on the part of the Applicants to comply with the notices served by Centrelink and there was, therefore, no failure or omission to comply with a provision of the Act.
The Tribunal turned to consider the Respondent's submission, in the alternative, that a debt comprised of overpayments made after 1 October 1997 is raised pursuant to subsection 1223(5) of the Act (repealed in 2001). Subsection 1223(5) of the Act provides:
"Debts arising under this Act and the 1947 Act
…
Incorrectly paid amount
1223(5)          If:
(a)       an amount (the received amount) has been paid to a person by way of a social security payment on or after 1 October 1997…; and
(b)       because the received amount had not been correctly calculated using the relevant rate calculator…, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment… that should have been paid to the person under this Act;
the difference between the received amount and the correct amount is a debt due to the Commonwealth."
The Tribunal turned to consider subsection 1223(1) of the Act, which relevantly provides:
"Debts arising from lack of qualification, overpayment etc.
1223(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.
…"
The Respondent submitted that the amount paid to the Applicants had not been correctly calculated because SRWWW's superannuation pension income had not properly been taken into account when applying the relevant rate calculator until April 1999, when his superannuation pension was commuted. The Tribunal agrees with this submission.
The Tribunal finds, therefore, that the overpayment to each of the Applicants in the amount of $23,594.20 is a debt payable to the Commonwealth pursuant to subsection 1223(1) of the Act.
should the debt be waived?
The Tribunal turned to consider whether the debt should be recovered from the Applicants. The Act makes provision for the waiver of a debt in certain circumstances of relevance in the present case, specifically sections 1237A and 1237AAD of the Act, which relevantly provide:
"1237A          Waiver of a debt arising from error
1237A(1)        Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note:    Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
…"

1237AADWaiver in special circumstances

1237AAD 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 false representation; or

(ii) failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt."

administrative error

The Applicants submitted the debt should be waived because it was solely attributable to administrative error of the Respondent, contending the error persisted over an extended period of years, as a consequence of which the overpayment increased to a very substantial amount, through no fault of their own. The Respondent contended that the debt was not solely caused by Centrelink's administrative error, being causally contributed to by the Applicants' failure to inform Centrelink of the annual incremental CPI increases in SRWWW's superannuation pension. The Applicants did not receive the payments in good faith, knowing the payments they received after January 1993 were in excess of their entitlements and, therefore, the Respondent reasoned the debt could not be waived under section 1237A of the Act.

Considering all the evidence, the Tribunal finds the debt is solely attributable to the Respondent's administrative error, whereby the superannuation income received and declared by SRWWW and his wife was disregarded. The Tribunal does not agree with the Respondent's contention that the Applicants failed to comply with a provision of the Act and, thereby, contributed to the overpayment and the debt. The preponderance of the evidence supports the finding that the Applicants provided the necessary information and complied with notices issued by Centrelink and did not, therefore, fail to comply with a provision of the Act. This being the case, the Tribunal turned to consider whether or not the Applicants received in good faith the payments that gave rise to the debt.
good faith
The Tribunal is mindful of the words of Finn J in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (supra) at ALD 189, where his Honour said:
"For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received -–ie is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.
Given the conventional liability of a mistaken payee of money from consolidated revenue to repay that money irrespective of his or her belief as to an entitlement to it (that is, the 'rule' in Auckland Harbour Board v R [1924] AC 318), the concession made to the mistaken payee by s 289 of the SYA Act does seem in all probability to be directed to a payee who receives the money (to put the matter positively) in the good faith belief that he or she is entitled to receive it. In other words the frame of the section is to exclude from the right to a waiver, a person who knows or has reason to know that he or she is not entitled to receive the payment. It would be surprising to find that Parliament intended otherwise."

The Tribunal finds the Applicants' claims regarding their communications with Centrelink following the unheralded receipt of health cards and full pension payments in November 1992 to be credible, genuine and reasonable in the circumstances. The Tribunal accepts SRVVV's assertion that she reported and discussed the receipt of health cards with Centrelink, believing that neither she nor her husband were entitled to receive health cards, and was told they were so entitled. The Tribunal also accepts that SRVVV discussed the increase in pension with Centrelink officers and was told that the way in which pensions were calculated had changed and what they were receiving was correct. SRVVV's explanation was that she and her husband understood, on the basis of what they had been told by Centrelink, that their pensions were calculated on the basis of their overall taxable income, thereby taking into account the family farm. The Tribunal accepts that SRWWW, having given signed authority to Centrelink to check his taxation records, believed Centrelink would do so, as necessary, to ensure the rate of his pension was correct.
The Tribunal finds the Applicants' readiness to accept what they were told by Centrelink, without further testing their understanding or challenging the advice that was given, to have been naive. The Tribunal accepts that the Applicants' naivete in this regard was indicative of their lack of prior experience in dealing with Centrelink as social security recipients. However, the question of whether the Applicants' acceptance of what they were told was based on a suspicion that something was wrong, remains. In the words of Lord Blackburn in Jones v Gordon (1877) 2 App Cas 616 at 629:
"…If he was (if I may use the phrase) honestly blundering and careless, and so took a bill of exchange or a bank-note when he ought not to have taken it, still he would be entitled to recover. But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but that he must have had a suspicion that there was something wrong, and that he refrained from asking questions, not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind – I suspect there is something wrong, and if I ask questions and make farther inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to recover – I think that is dishonesty."
On balance, the Tribunal is persuaded by the honesty of the Applicants as witnesses of truth, as conceded by the Respondent. There is nothing in the evidence before the Tribunal to indicate that either SRWWW or SRVVV acted in any way dishonestly. In difficult circumstances, they relied on the information they received from Centrelink, having declared their income and questioned their entitlements and the Tribunal so finds.
The Respondent submitted that SRWWW's failure to read the detailed information provided on the back of Centrelink letters the Applicants received in the period September 1992 to January 1993 does not permit a finding of "good faith". In this regard, the Respondent urged the Tribunal to follow Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553. In the Jonauskas case Deputy President Forgie commented at 568-569:
"As I find later, Mr Jonauskas did not know that there could be an error in the amount of Age Pension that he was paid and he did not know because he did not read the back of the letter requiring him to notify the Department if there were an error in his combined income. His not knowing is not, however, sufficient for me to find that he received the payment in good faith. He had reason to know that there might be an error and that reason was in the letter. He knew that he had been required to give details of his income and that of his wife and it was reasonable to expect that the amount of the income would have some effect upon the amount of the Age Pension. The words at the top of the Income and Investments form he signed on 7 July, 1997 told him that the "… information asked for on this form is needed to decide whether the Department can grant your claim, or will be used to calculate your rate of payment." (T documents, page 24) I accept that Mr Jonauskas had difficulty reading English and that he suffered giddiness and ill health after his fall almost two years before he lodged his claim. Even taking those matters into account, I find that he did not care about any information in the letter other than the amount of pension he would be paid. He was careless as to whether it contained any other information that needed to engage his attention. In circumstances in which the information as to his obligations was given to him but he did not make any attempt to find out what they were let alone fulfil them, I do not find that he received the payments in good faith."

The present case is clearly distinguished on the facts. In the Jonauskas case (supra), the recipient was required and failed to notify Centrelink that a statement of combined yearly income was incorrect; there was no such explicit requirement in the present case. In the present case, the Applicants understood their obligations and sought to comply with them in accordance with notices issued by Centrelink.
Further considering the Respondent's submissions regarding "good faith", the Tribunal notes the comments of Deputy President Johnson in Re Secretary, Department of Social Security and Smitherman (1991) 22 ALD 336 at 345:
"A distinction... has to be drawn between the situation where a person makes an assertion that quite clearly and unambiguously on any objective criteria is not true (even if the person believes it is) and a situation where a person makes an assertion that he believes to be true about a state of facts, where the characterisation to be given to that state of facts is ambiguous, so that different minds may well differ as to the description that they would attach to that set of facts."
The Respondent contends the Applicants were provided with clear and unambiguous information, pertaining to the rate of pension payable in relation to the rate of assessed income, whereby "all notices prior to January 1993 clearly included references to the income assessed against the rates, no more such references are found after January 1993". This information, the Respondent submitted, was sufficient to alert the Applicants to a problem with the level of their pensions, at least providing them with reason to know something was wrong. The Tribunal does not agree with this submission, finding that Centrelink wrote to SRWWW on 14 September 1992 informing him that CPI increases would change the rate of pension in January 1993, noting (Exhibit T75):
"This means that your pension will go up by $5.00 per fortnight from 28 January 1993…Your fortnightly payment is…$205.60…You do not get the full pension because of your income, so tell us of any changes. You may get more pension if your income goes down…Your…Total combined income…$398.98 [per week]…YOU MUST TELL US WITHIN 14 DAYS IF: your and your partner's combined gross income (before tax) goes above $398.98 a week."

Centrelink wrote in similar terms on the same day to SRVVV (Exhibit T76). The Tribunal finds that Centrelink wrote to SRWWW on 5 December 1992 (Exhibit T14) explaining the introduction of Family Payment, whereby "all amounts for children will no longer be paid as part of your pension". This letter included, by way of explanation, an example based on a married pensioner couple with three children and no other income, receiving the maximum rate of pension, whereby, following the changes, the husband in the example would receive a total pension of $255.30. A letter in similar terms was sent to SRVVV on the same day (Exhibit T78). Centrelink wrote to SRVVV on 2 January 1993 (Exhibit T79) stating:
"From 7 January 1993, your Family Payment will be $248.40 per fortnight…We have assumed that your and your partner's combined taxable income for the 1991/1992 financial year was less than $64,938. If this is not correct you must let us know…"
In a subsequent letter to SRWWW dated 16 January 1993 (Exhibit T15), Centrelink wrote "Your pension will increase from $257.90 to $262.90 per fortnight from 28 January 1993", noting that "You and your partner can have combined income (apart from pension) of up to $112.00 a week and still get the full pension." A letter in similar terms was sent to SRVVV on the same day (Exhibit T16).
The Applicants gave evidence that they discussed changes in their pensions and benefits with Centrelink over the telephone during this period and believed, as a result, that their pensions would be assessed and calculated on the basis of their taxable income, which was inclusive of their farming activities. The Applicants explained that their overall taxable income, including SRWWW's superannuation and the farm, was nil. On this basis, the Applicants contended that they understood and believed as correct Centrelink's decision to increase the rate of their pension to the full rate, noting there had been no change in any other relevant factor and there was no other reason why their pensions would increase.
The Tribunal finds the Applicants' submissions on this point compelling and concludes that the information contained in the relevant letters is not sufficiently clear, when considered together, to dispel the Applicants' understanding regarding changes in their pensions, based as this was on erroneous advice from one or more Centrelink officers. The body of information provided to the Applicants is not sufficiently precise or clear to preclude ambiguity and is, therefore, open to differing interpretations by different minds, and the Tribunal so finds; Re Smitherman (supra). The Tribunal, therefore, finds that the Respondent's submissions in relation to "reason to know" do not disturb a finding of "good faith" in the circumstances.
There is a question remaining whether the Applicant's were alerted to the error and consequent overpayments at some later time prior to 27 April 1999, when SRWWW commuted his superannuation pension. The Tribunal finds that Centrelink wrote to SRWWW on 19 February 1999 requesting information about his rate of income from the New South Wales Superannuation Administration Authority ("SAA") following a data matching exercise in October 1998 (Exhibit T25), stating:
"Information from SAA indicates that you or your partner are receiving a superannuation payment.
Information from our records indicates that you may not have advised Centrelink or your, or your partner's, current rate of SAA income."

A Centrelink computer file record dated 2 March 1999 (Exhibit T26) reveals that:

"A/N rang, he could not tell me how much he was receiving, he stated he was receiving something from state super, I advised him we had no details of super on his record and that he may have been overpaid…advised we would confirm amounts from state super."

The Tribunal finds that these comments are sufficient to raise a suspicion in the Applicants' minds that something may have been wrong, particularly with regard to the reporting of CPI increases in SRWWW's superannuation pension, but not sufficient in the absence of evidence, to enliven doubt beyond that which caused the Applicants to seek confirmation and clarification from Centrelink. The Tribunal finds, however, that Centrelink did not inform the Applicants that an overpayment had occurred until 18 September 2000, sometime after SRWWW commuted his superannuation pension on 27 April 1999. The Tribunal finds, therefore, that the Applicants received the overpayments in good faith.

In conclusion, the Tribunal finds that the overpayment of the Applicants' disability support pension and wife pension between 1 October 1997 and 27 April 1999 was caused by the sole administrative error of Centrelink and was received in good faith. Thus, the debt raised pursuant to subsection 1223(5) of the Act must be waived pursuant to subsection 1237A(1) of the Act.
It is not, therefore, necessary, to consider submissions regarding the discretion to waive the debt on the basis of special circumstances pursuant to section 1237AAD.
The Tribunal determines to set aside the decision under review and in substitution therefor decides:
(i) with regard to SRWWW, the Commonwealth's right to recover the debt raised pursuant to subsection 1223(1) of the Social Security Act 1991 in the amount of $23,594.20 must be waived; and
(ii) with regard to SRVVV, the Commonwealth's right to recover the debt raised pursuant to subsection 1223(1) of the Social Security Act 1991 in the amount of $23,594.20 must be waived.
I certify that the 78 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S Webb, Member
Signed: O. Caragianni           .....................................................................................
  Associate
Date of Hearing  9 October 2002
Date of Decision  24 December 2002
Applicants self-represented
Advocate for the Respondent H Schuster