Strang and Secretary, Department of Family and Community Services
[2005] AATA 193
•2 March 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 193
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2004/813
GENERAL ADMINISTRATIVE DIVISION )
Re ELIZABETH STRANG Applicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Dr EK Christie, Member Date2 March 2005
PlaceBallina
Decision
The Tribunal sets aside the decision under review and in substitution therefor decides to waive the overpayments of $15,299.67 of Austudy received by Ms Strang for the period 19 July 1999 to 30 June 2001 under the special circumstances provisions of the Social Security Act 1991.
...................[Sgd].......................
EK Christie
Member
CATCHWORDS
SOCIAL SECURITY – Austudy – overpayment - administrative error – special circumstances - waiver of whole or part of the debt
Social Security Act 1991 s 1236, 1237A, 1237AAD
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316
Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511
Jebb v Repatriation Commission (1988) 80 ALR 329
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277
Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435
Pledger v Department of Family and Community Services [2002] FCA 1576
Prince v Secretary, Department of Education, Employment and Youth Affairs [1997-98] 50 ALD 186
Re Secretary, Department of Social Security and McEvoy (1996) 23 AAR 543
Re Marshall and Cairns and Secretary, Department of Family and Community Services [2003] AATA 352WRITTEN REASONS FOR ORAL DECISION
9 March 2005 Dr EK Christie, Member 1. This is an application for review of the decision made by the Social Security Appeals Tribunal (the “SSAT”) made on 13 September 2004 to recover an Austudy debt in the sum of $15,299.67 for the period 19 July 1999 to 30 June 2001.
2. The evidence before the Tribunal comprised the documents filed pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” documents) [Exhibit 1] and the various exhibits lodged by the parties.
3. The applicant represented herself at the hearing. The respondent was represented by Ms J Dwyer, a Departmental Advocate.
Issues before the Tribunal
4. The only issues for the Tribunal to decide were whether the debt could be waived, in part or in full, for either “administrative error” or “special circumstances”
Findings of Fact
5. Ms Strang commenced a “marriage like relationship” with Mr Haydon Burford in March 1999 and ended this relationship in March 2002.
6. On the basis of the evidence before it, the SSAT made the following findings of fact:
“(i) Ms Strang was paid Austudy during the period 19 July 1999 to 30 June 2001.
(ii) During that period she was a member of a couple with Haydon Burford.
(iii)Mr Burford had made a loan to H Burford Pty Limited the balance of which was $166,091 as at 19 July 1999 and $152,931 as at 30 June 2001.
(iv)The loan was not disclosed to Centrelink on forms completed by Ms Strang and Mr Burford on 1 March 1999 and 22 June 1999. It was not disclosed until after the debt period.” [T1, Folio 8].
7.In response to these findings of fact, Ms Strang agreed with findings (i) and (ii) but gave the following qualified responses to findings (iii) and (iv), respectively:
§ that she had no knowledge of her partner’s involvement in his personal company, no awareness of loans involving himself and his personal company and no awareness of his financial situation; and
§ that she could not disclose to Centrelink anything about the loans between her partner and his personal company as she did not know the loan existed. Moreover, she had no idea who disclosed the loan to Centrelink as she did not know about it.
Contentions and Submissions of the Parties
8. Ms Strang submitted that she should not be responsible for not disclosing information that she was unaware of to Centrelink and that it was unjust to make her accountable and to penalise her for another person’s actions. Furthermore, that at no time had she knowingly made a false statement. An error had been made by Mr Burford - but she was not aware of his financial situation.
9. Ms Strang contended that she had completed her sections of the application forms appropriately, fully disclosing all her financial information as required. She then passed the forms over to Mr Burford to complete the areas relevant to him.
10. Ms Strang submitted that she would not have been able to receive the Austudy payment if the Centrelink officer had done their duty by properly reviewing the forms, noting that Mr Burford indicated he had a Commonwealth Bank account in the name of H Burford Pty Ltd.
11. It was Ms Strang’s contention that she had made no errors and at no time had acted in a dishonest manner in her dealings with Centrelink. As an innocent party, it was grossly unfair to make her wholly responsible for the repayment of this debt.
12. Ms Dwyer submitted that Ms Strang had not fulfilled her notification obligations to Centrelink, in relation to her change in circumstances, and so had contributed to the administrative error that led to the Austudy overpayments. Accordingly, the debt could not be waived under the “administrative error” provisions of the Social Security Act 1991.
13. Ms Dwyer further submitted that the Austudy overpayments could not be waived under the “special circumstances” provisions of the Social Security Act for the following reasons:
(a)Mr Burford had “knowingly” made a false statement. Mr Burford knew that he was the major shareholder of his company. His answer to the question on his claim form that he did not own shares in a private company was therefore false in his actual knowledge; and
(b)On a later form returned to Centrelink, Question 18 asked “Does the company owe money to any associates?”. Question 18 clarified “Money owed to by the company includes salaries and wages owed, loans made to the company, and dividends allocated to a shareholder that have not yet been paid to the shareholder”. Mr Burford answered “No”, which Ms Dwyer submitted was clearly a false statement which he knew to be incorrect; and
(c)Whilst there was no restriction on the types of things which could be considered in the context of section 1237AAD, Ms Dwyer submitted that there was nothing in the applicant’s factual circumstances that would be considered “special” according to the “Beadle test”.
The Tribunal’s Decision-Making Powers
14. “The question for the determination of the Tribunal is whether the decision [under review] was the correct one [that is, when there is only one decision] or preferable one [that is, when a range of decisions is available] on the material before the Tribunal: see Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60, [per Bowen CJ and Deane J, at 68].” There are a range of decisions possible in this application for review.
15. Administrative decision-makers are generally required to address the evidence before them and not confine themselves to evidence before a prior decision-maker whose decision is being reviewed unless the relevant legislation requires a decision to be based upon the circumstances at a particular point of time: see Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316 at 324-326; Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511 at 521; Jebb v Repatriation Commission (1988) 80 ALR 329 at 333). In this application for review, the Tribunal considers all the evidence and information before the Tribunal at the date of the hearing.
Statutory Requirements And Case Law
16. Section 1237 of the Social Security Act 1991 provides for circumstances where a debt due by a recipient of social security to the Commonwealth may be waived, either in part or in full. These circumstances arise where there were “special circumstances” that led to the overpayment – or if the overpayment arose from “administrative error”.
17. Section 1237AAD provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “special circumstances”:
“1237AAD – WAIVER IN SPECIAL CIRCUMSTANCES
“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.” [Tribunal emphasis].
18. For this section of the Act to apply to Ms Strang’s factual situation, there must be “special circumstances” that led to the overpayment of social security entitlements. In addition, Ms Strang must not have “knowingly” made a false statement or false representation or failed to have complied with a provision of the Act. Both these requirements must be satisfied for Ms Strang to succeed under the “special circumstances” provisions of the Social Security Act.
19. The Tribunal has had to consider the meaning and application of the expression “special circumstances” on many occasions. The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 has been an oft-quoted benchmark as to the interpretation of “special circumstances”. In that case the Tribunal said (at 3):
“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”
20. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (a case on “special circumstances” and section 1184 of the Act) at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:
“…would require something to distinguish Mr Groth’s 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.”
21. In Boscolo v Secretary, Department of Social Security(1999) 53 ALD 277, French J, a case that also referred to the Federal Court’s decision in Beadle, held that “special circumstances” is where there is “something unusual or different to take the matter the subject of the discretion out of the ordinary … [But] that does not require the case be extremely unusual, uncommon or exceptional.”
22. The principles in Re Callaghan and Secretary, Department of Social Security (1996-1997) 45 ALD 435 are relevant with respect to the meaning of “knowingly” at paragraph 48:
“There is nothing in s 1237AAD which suggests that the word 'knowingly' should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation of that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission debt”;
and later at paragraph 50:
“Knowingly omitting them is something different from fraudulently omitting them and I draw the distinction in this case.” [Tribunal emphasis]
23. “Fraud connotes an element of dishonesty”: Pledger v Department of Family and Community Services [2002] FCA 1576.
24. Section 1237A provides for a debt due to the Commonwealth to be waived, either in part or in full, because of “administrative error”:
“SECTION 1237A – WAIVER OF 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).” [Tribunal emphasis]
25. For this section of the Act to apply to Ms Strang’s factual situation, Ms Strang must not have contributed, in any way, to the administrative error that led to the overpayment. In addition, Ms Strang must have received her overpayments of social security entitlements in “good faith”. Both these requirements must be satisfied for Ms Strang to succeed under the “administrative error” provisions of the Act.
26. The legal meaning of “good faith” was considered by the Federal Court in Prince v Secretary, Department of Education, Employment and Youth Affairs [1997-98] 50 ALD 186. In this case, Finn J stated:
“if that person knows or has reason to know that he or she is not entitled to a payment received - i.e. 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…the [legislation] 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 the Parliament intended otherwise”.
Consideration of the Issues
27. The first question to be considered relates to the credibility of Elizabeth Strang and the veracity of her account as to her dealings with Centrelink. I accept Ms Strang to be a witness of truth and that she had acted honestly in all her dealings with Centrelink.
28. The next question for the Tribunal to consider is the factual evidence relating to whether the debt could be waived under the “special circumstances provisions” of the Act.
29. The first issue for the Tribunal to consider, in this regard, is whether Ms Strang or another person (Mr Burford in this case) “knowingly” made a false statement or representation or, alternatively, “knowingly” failed or omitted to comply with a provision of the Act.
30. The Tribunal accepts the following evidence of Ms Strang:
(a)When she first met Mr Burford in Adelaide in 1998 she had understood that he had sold his existing business the year before and her understanding was that his business involvement had ceased;
(b)She did not see her position to ask him about his financial affairs whilst they were going out together in Adelaide before entering their “marriage-like” relationship in 1999;
(c)Their “marriage-like” relationship was a “blended family relationship” (3 children each from a prior marriage) and she thought it best to keep her financial affairs separate from Mr Burford’s (i.e. for each family to have separate finances) in case their relationship ended;
(d)She never asked Mr Burford about his financial affairs and, moreover, he never disclosed his financial affairs to her; and
(e)Ms Strang never sought to embarrass Mr Burford by asking him details about his financial position.
31. Mr Burford’s oral evidence, in this regard, was also relevant. He stated that he tended to be a private person and his position was that it was not any of Ms Strang’s business to know what he was doing. Furthermore, he stated that he never discussed his financial dealings and affairs with Ms Strang. He acknowledged that Ms Strang would have been aware that he had sold his business in Adelaide before they came to New South Wales in 1999. However, she would not have been aware of the details of proceeds of this sale and the fact that he had many existing creditors to repay.
32. The Tribunal accepts Ms Strang’s evidence and has made an earlier finding that she was an honest witness. The oral evidence of Mr Burford corroborates Ms Strang’s evidence. Applying the test in Callaghan, the Tribunal concludes that Ms Strang could only have “constructive” – not “actual” knowledge of Ms Strang’s financial affairs and so could not have “knowingly” made a false statement or representation – or failed, or omitted to comply with a provision of the Act.
33. The Tribunal next considers the “knowingly” issue in relation to Mr Burford’s state of knowledge at the time and to events surrounding the false statement or the act or omission.
34. Mr Burford’s evidence was that he did not, in any way, knowingly make a false statement or answer statements on his claim form that were intended to mislead or to defraud Centrelink, for the following reasons:
(a)He had completed his claim form for parenting payment in August 1999 by answering “No” to Question 14. At this time his company “Island Surf and Sail” had ceased [in 1998]. He had then set up a new company, H Burford Pty Ltd in 1999. However, this company was not operating at this time i.e. the company was dormant and non-functional – and not active and operational;
(b)He had responded to the question in this manner because he believed the wording of the question about “operating” a business referred to a business which was actively operating which his company H Burford Pty Ltd was not;
(c)To clarify the situation he had completed a further question on his claim form dealing with “details of money held in bank, building society or credit union accounts”, by stating full details of all his bank accounts, including full details for his personal company H Burford Pty Ltd;
(d)No query was raised by Centrelink in relation to this information he had provided. His parenting payments followed and continued to be paid to him over time; and
(e)In relation to the question whether any dividend, loans made to the company which includes salaries and wages yet to be repaid to any shareholder or direction, Mr Burford had answered “No” because all loans had been repaid to the bank.
35. The Tribunal notes that Mr Burford had faxed information to a Ballina Centrelink staff member (“Pia”), some time in 2000-2001, notifying a change in financial circumstances. Approaches to this office by him had not provided access to the date the fax was received.
36. The Tribunal accepts Mr Burford’s account of the factual basis for completing his claim form and his reliance on Centrelink to pursue with him any inconsistency in the way he had completed his claim form with respect to his company involvement – given that he had fully disclosed the existence of his personal company, H Burford Pty Ltd, on his claim form.
37. The Tribunal agrees with the following observations of Senior Member Handley in Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543, with respect to reliance by social security recipients on advice by Departmental officers:
“Citizens are entitled to act upon the advice given to them by representatives of government through its departments and agencies. Citizens also are entitled to have confidence in the advice that they are given by persons in authority and who represent government departments and agencies. Citizens should be entitled to expect nothing less.”
and
“The responsibility for efficient and effective administration of departmental practice and policy must carry with it a responsibility for any error or mistake which is made by the departmental officers alone.”
38. Applying the test case in Callaghan, the Tribunal concludes that Mr Burford could only have “constructive” – not “actual” knowledge and so could not have “knowingly” made a false statement or representation – or failed, or omitted to comply with a provision of the Act.
39. With respect to a consideration of the legal meaning of “special circumstances”, the Tribunal considers the evidence of Ms Strang and case law.
40. In Re Marshall and Cairns and Secretary, Department of Family and Community Services [2003] AATA 352, the Tribunal was confronted with a reasonably analogous factual case to Ms Strang’s application for review. Marshall and Cairns were partners and both received the age pension. However, Ms Cairns had no involvement in providing information to Centrelink in relation to Mr Marshall’s income [assets and business investments]. The Tribunal waived Ms Cairns’ overpayments in full for “special circumstances” but decided that the overpayments received by Mr Marshall, over the same time period, were a debt that the Commonwealth could completely recover.
41. In the Marshall and Cairns’ case, the Tribunal found that:
(i)Ms Cairns had no “control” into the financial affairs, business and assets of her partner as he refused to disclose this information to her;
(ii)In such a situation, Ms Cairns completely relied on her partner to provide Centrelink with the current financial information;
(iii)Ms Cairns had never been given any indication by her partner that there was, or may have been, a problem with the entitlement she received – based on the information he had given to Centrelink; and
(iv)The consequence of the omission of Ms Cairns’ partner to disclose financial information to Ms Cairns was that she had no basis to query whether she had been paid the correct social security entitlements.
42. The Tribunal notes that Ms Strang was not a “nominated” person for Centrelink purposes and there is no evidence or information before the Tribunal that Ms Strang had ever been sent, or completed, an “SS313: Authority for Nominated Person” form.
43. The Tribunal concludes, for the following reasons, that the debt should be waived under the “special circumstances” provision of the Act as the following findings of part represent “unusual” or “uncommon” facts (Beadle’s case) – and do not necessarily have the quality of being “extremely” “unusual” or “uncommon” facts (Boscolo’s case); in addition, that the outcome is unintended or unjust (Groth’s case):-
(a)Ms Strang’s lack of control and knowledge on the status of her partner’s [Mr H Burford] involvement in his personal company as he failed to disclose any of his financial information to her;
(b)Ms Strang’s complete reliance on her partner [Mr H Burford] to provide Centrelink with the correct financial information as to his personal company business;
(c)no indication given by Ms Strang’s partner [Mr H Burford] that there may have been problems with the amount of Austudy entitlement Ms Strang received based on his involvement in his personal company;
(d)that Ms Strang had trusted her partner [Mr H Burford] to perform the role of correctly informing Centrelink of his financial situation;
(e)that Ms Strang was not a “nominated” person for Centrelink purposes; and
(f)in these circumstances, Ms Strang did not have a basis to raise a query with Centrelink whether she had been paid the correct social security entitlements;.
44. Given this finding, there is no need for the Tribunal to consider the factual evidence relating to whether the debt could be waived under “administrative error” provisions of the Act.
45. For all of the above reasons, the Tribunal sets aside the decision under review and in substitution therefor decides to waive the overpayments of an Austudy debt in the sum of $15299.67 for the period 19 July 1999 to 30 June 2001.
I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed: Camille Banks
AssociateDate/s of Hearing 2 March 2005 (at Ballina)
Date of Decision 2 March 2005 (at Ballina)
Date of Written Reasons 9 March 2005 (at Brisbane)
The Applicant appeared in person
For the Respondent Ms J Dwyer, Departmental Advocate
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