Sutherland and Secretary, Department of Family and Community Services

[2000] AATA 1068

DECISION AND REASONS FOR DECISION [2000] AATA 1068

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No A2000/114

GENERAL ADMINISTRATIVE DIVISION        )          
           Re      KELMAN SUTHERLAND
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Pamela Burton, Senior Member  

Date1 December 2000

PlaceCanberra

Decision      The tribunal varies the reviewable decision and decides that the balance of the unpaid debt as at 28 September 2000 is waived.         
  ...................(Sgd).......................
  Pamela Burton
  Senior Member
CATCHWORDS
SOCIAL SECURITY - disability support pension - overpayment - failure to notify of changes in income – whether general inquiries sufficient to fulfil obligation to notify - debt due by applicant to the Commonwealth – whether departmental error - whether appropriate to waive right to recover all or part of debt 
Legislation
Social Security Act 1991, s8, s117, s1064, s132, s133 (as at 1996) s1224, s1237A and s1237AAD
Social Security Administration Act 1999
Data-Matching Program (Assistance and Tax) Act 1990
Authorities
Secretary, Department of Social Security v Thompson (1994) 20 AAR 435
Re Ivovic and Director-General of Social Services (1981) 3 ALN N95
Vitalone and Secretary, Department of Social Security (1995) 38 ALD 169

REASONS FOR DECISION

1 December 2000   Pamela Burton, Senior Member              

1. This is an application for review of a decision of the Social Security Appeals Tribunal (the "SSAT") dated 15 March 2000.  In that decision the SSAT varied the decision of a delegate of the respondent that an overpayment of a disability support pension ("DSP") debt of $6,236.90 for the period 13 June 1996 to 12 November 1998 be raised and recovered, and remitted the matter to the respondent for recalculating.  The respondent recalculated the debt for this period to be a gross amount of $5,835.50.

2. Mr Kelman Sutherland (the "applicant") represented himself at the hearing.  Mr Bernard Slattery, of Centrelink, represented the respondent.  The tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the "T documents").  The applicant gave evidence and Mr Ken Boyd, a work colleague, gave telephone evidence on his behalf.  A Centrelink employee, Ms Judith Thomas, gave evidence in person on behalf of the respondent.  The respondent also tendered a witness statement of Ms Thomas (Exhibit 2), a letter from Mr Slattery to the applicant dated 21 September 2000 (Exhibit 1), and an interpretation of a Customer Record Access Monitor Report prepared by Mr Slattery, being pages 5 to 11 of the respondent's Statement of Facts and Contentions (Exhibit 3).  
   background

3. The applicant has been in receipt of a DSP since 21 October 1993 (T14, p.49).  On 10 March 1995 the Department of Social Security (the "Department") wrote to Mr Sutherland to inform him that the rate of his DSP was being increased from $140.80 to $145.30 per fortnight from 23 March 1995 (T3, p.13).  The letter contained the statement that "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" (T3, p.13).  At the time, the applicant's yearly income totalled $12,012.  His weekly income was $231.00.  The letter also told the applicant to contact the Department within 14 days if, amongst other things, his gross (weekly) income exceeded $231.00 per week.

4. In April 1996 the applicant accepted full-time work with Hertz Rent a Car Australia Pty Ltd ("Hertz").  At this time his DSP payments were $348.00 per fortnight.  On 15 April 1996 he informed the Department by telephone that he would be commencing employment with Hertz on 16 April 1996.  The Department recorded that he would be earning $333.00 per week (T4, p.16).  It assessed the applicant's annual earnings by multiplying this wage by 52 weeks and adding an amount of $6.00 for "Financial Investments", and arrived at $17,322.  On 27 June 1996 the Department wrote to the applicant and advised him that his DSP would be reduced to $63.90 per fortnight (T5, p.17).  The letter informed the applicant that he must tell the Department within 14 days if, amongst other things, his "income, not including from financial investments or maintenance, increases" or if his "income as shown above is incorrect".

5. The Department, however, failed to reduce the applicant's DSP until 11 July 1996, on which date it was reduced to $63.90 per fortnight (T13, p.43).  As a consequence, the applicant was overpaid approximately $1,420 during the period 2 May 1996 to 11 July 1996.  The respondent now accepts responsibility for the delay and the consequential overpayment to that date.  The overpayment the subject of this review thus commences from 11 July 1996.

6. In the meantime, as from 9 June 1996, the applicant's hourly rate of pay was increased.  The applicant did not inform the Department of the increase as he did not know about it, or receive the increase until it was paid to him as back pay as a lump sum in April 1997.  The respondent accepts this, and the lump sum has been taken into account as income from the date it was received.  The applicant continued to receive the higher rate of pay from April 1997.

7. During the whole of the period of the applicant's employment with Hertz, the applicant received overtime and penalty rates from time to time, further increasing his income.  It is a matter of dispute whether the applicant advised the Department of his additional earnings, and what advice, if any, he was given about his obligations to notify of variations in his earnings.  On 17 December 1997 the applicant telephoned Centrelink (the Department's agency) and informed an officer that his income had reduced to $165.45 gross per week, based on 15 hours at $11.03 per hour (T4, p.16a). 

8. By letter of 17 December 1997 Centrelink informed the applicant that his DSP was to be increased to $237.50 per fortnight commencing 8 January 1998 with "arrears of  $167.50" credited to the applicant's account (T6, p.20).  On 22 December 1997 Centrelink received details of the applicant's income from the Australian Taxation Office (the "ATO") under the Data-Matching Program (Assistance and Tax) Act1990 (the "Data-Matching Act").  Notwithstanding this information which indicated that the applicant's DSP entitlement was to be reviewed, the applicant's DSP increased in accordance with Centrelink's advice to the applicant.  The increased rate of pension reflected a decrease in the applicant's basic weekly rate, but not the income he earned from overtime and penalty rates.

9. In October 1998 Centrelink received further information from the ATO under the Data-Matching Act. In compliance with section 11 of the Data-Matching Act, Centrelink sent a letter dated 20 October 1998 to the applicant which stated, so far as is relevant, as follows (T7, p.23):

   ATO records show your income (other than your Centrelink income) was $24373.
   At 23 January 1997 Centrelink records show your income was $17320.
   ATO records show that $24081 of your income came from salary.
   As you can see, at 23 January 1997 there was a difference between our records of your income for 1996/97 financial year and those of the ATO.
   However, this  information may no longer be correct or you may have already given us new information about your income.
   If the ATO records are correct, we might need to adjust the amount of Disability Support Pension you received.
   If you think the information from the ATO is wrong, would you please give us details of your income during 1996/97 financial year, including where and when you received this income. Payslips, group certificates, profit and loss statements, balance sheets, bank books, bank statements and tax returns would give us the information we need to check our records.

1. The applicant sent a letter to Centrelink, which was received on 6 November 1998, enclosing an earnings report from Hertz (T9, p.26).  The applicant stated in the letter that the earnings report "gives only the gross amounts of pay and not a break down of penalties or overtime incurred while I was casual.  However this can be obtained if you require, if so please let me know and I will organise this for you.  P.S How are you going on getting the dates on when I contacted D.S.S to change my pension details?"

2. On 1 December 1998 (T16, p.58) Centrelink raised a debt the subject of the applicant's appeal to the SSAT.  Centrelink regrets the delay that occurred by its inaction in raising the overpayment and notifying the applicant of it.  It concedes that its inaction contributed to the overall debt of the applicant.
   issues

3. The issue before the tribunal is whether the overpayment is correctly calculated and the debt properly raised. There are three interrelated issues. First, whether the applicant complied with the legislative obligation pursuant to the sections 132 and 133 of the Social Security Act1991 (the "Act"), as it then applied, to inform the respondent of changes in his income. Second, whether the debt raised by the respondent was due solely to administrative error thereby requiring the Secretary to waive the debt under section 1237A(1) of the Act. Third, whether waiver of all or part of the debt is desirable under section 1237AAD of the Act.
   the legislation

4. The applicant's income from Hertz is "income" under section 8 of the Act, which is calculated in accordance with sections 117 and 1064 of the Act. Sections 132 and 133 of the Act (now repealed and dealt with in Part 3 Division 6 of the Social Security Administration Act1999) provide that a DSP recipient is required to notify of a change of circumstances or the happening of an event.

5. Subsection 1224(1) of the Act is as follows:

   1224  Debts arising from recipient's contravention of law

   (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 the social security law or this Act as in force immediately before 20 March 2000 or the 1947 Act;

   the amount so paid is a debt due by the recipient to the Commonwealth.

1. Section 1237A(1) of the Act reads:

   1237A  Waiver of debt arising from error
   Administrative error

   (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.

1. Subsection 1237AAD deals with the waiver of debt 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 a 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.

contentions

1. The respondent contends that the applicant "failed to advise of changes in income as they occurred and within 14 days of the event" (T16, p.58). It contends that the debt should not be waived under 1237A(1) as the overpayment was not caused solely by administrative error. According to the respondent, the only waiver provision that is relevant is section 1237AAD of the Act.The applicant contends that he complied with all of his obligations to keep the respondent informed about his level of income.  He contends that he made telephone inquiries of Centrelink about his income situation, and that Centrelink gave him incorrect advice.  He therefore says that the overpayment arose through the respondent's error.  Dealing with these contentions requires looking at the evidence relating to the communications made between the applicant and Centrelink. 
   The evidence

2. At the hearing the applicant gave evidence that he telephoned the Department on 15 April 1996, from Mr Boyd's workshop, to inform it that he would be commencing work with Hertz.  The applicant spoke with Ms Thomas.

3. The telephone call is documented.  The Department's file note (T4, p.16) states that the applicant advised his earnings of $333.00 per week.  At the hearing, the applicant stated that at the time he thought he would be receiving an hourly rate of $8.92 and working 38 hours per week, and that he told Ms Thomas this.  As it transpired the applicant received $9.16 per hour (almost $333.00 per week), which is consistent with the figure recorded by the Department. 

4. Having heard the applicant's and Ms Thomas' evidence, I accept that the applicant gave an hourly rate, rather than a weekly income figure, and that Ms Thomas calculated the weekly figure while talking to the applicant over the telephone.  This accords with Ms Thomas' evidence that her practice is not to record information verbatim but to record the weekly figure calculated from the information given.  I conclude that the applicant probably informed Ms Thomas that he expected to earn $9.16 per hour (though he does not recall this), causing Ms Thomas to enter the figure of $333.00 per week. 

5. The applicant asserts that he informed Ms Thomas that he expected to receive overtime and penalty rates.  He recalls telling her his misgivings about accepting full-time work, which required a rotating roster and some weekend and night work.  He said that Ms Thomas was not interested in details of additional income from this source and that he was left with the impression that she only required his base rate of pay for the purpose of calculating his DSP entitlements. However, at one stage in giving evidence, he said Ms Thomas asked him to "put a figure on it" (meaning his earnings from overtime and penalty rates) which he was unable to do.  This accords with Ms Thomas' evidence that if a person does not know their exact income, she asks for an estimation.  On this evidence the applicant had no good reason to base the rest of his actions on the assumption that overtime and penalty rates were not assessable income for DSP purposes. 

6. The applicant indicated that he was surprised to learn from Ms Thomas that he remained entitled to DSP notwithstanding that he was working full-time.  The applicant recalled relating his surprise to Mr Boyd, his supervisor who, he says, "shook his head in disbelief".  Mr Boyd, who heard the applicant's half of the conversation, confirmed in evidence that the applicant told him that Ms Thomas's view was that he was entitled to a "part pension" despite working full-time and despite the applicant's view that "it didn't seem right to get a part pension" (T36, p.102).  Mr Boyd is "sure" that the applicant "told them everything they wanted to know about his work details".

7. Ms Thomas does not recall the conversation with the applicant, but said that she would not have said that overtime or penalty rates are not included in the assessment of income.  She said that the Department calculates DSP entitlement from the previous two weeks and relies on being informed of any changes in income. Her routine practice is to tell people to call Centrelink back on the same day each fortnight to let them know of any changes in their gross income so the person's file can be updated immediately.  Even accepting the applicant's evidence, it does not support a finding that Ms Thomas told him that he had no obligation to inform the Department of any increase in his wages by reason of a variation in the hours he worked in the form of overtime or the rate of pay he received by way of penalty rates.

8. The applicant said that when he received the letter dated 27 June 1996 from the Department confirming his entitlement, he again considered it strange that he would be entitled to the DSP given that he was working full-time.  The applicant's evidence is that he rang the Department to check whether the original advice was correct.  He said that he made a "general inquiry" and was not asked for and did not give his name.  He said that he was told that if he had already gone through this procedure with an officer of the Department the calculation would be correct.  There is no record of this conversation having occurred.  On closer questioning during the hearing, the applicant agreed that he did not specifically ask the officer during the second telephone call whether the advice that his overtime and penalty rates are not included in income was correct. 

9. At the hearing, in her evidence, Ms Thomas was asked about Centrelink practice for entering information on the computer system during telephone conversations.  She indicated that when a person telephones to advise of changes in their income, the normal practice is for the information to be entered onto the caller's computer file as it is provided.  It seems that the questions asked and answers given are not recorded verbatim.  She said that if a person makes a "general inquiry" in the course of which reference is made to receipt of overtime or penalty rates, the officer handling the inquiry would be prompted to ask the caller for details and open that person's file.

10. In April 1997 the applicant's employer notified him of a lump sum entitlement of $1,300.00 for back pay representing an increase in his rate of pay as from 9 June 1996.  The applicant was aware that the lump sum and the increase in his ongoing rate of pay would affect his DSP entitlement.  According to the applicant his next contact with the Department then occurred when he made a "general inquiry" as to what he should do in relation to the lump sum.  He claims he was advised that it would be "all worked out at tax time".  The applicant says he did not give, and was not asked to give, his name or any other details.  There is therefore no record of that call.

11. The applicant told the tribunal that he knew he was being overpaid by this time, as his rate of pay had increased and his DSP was not reduced accordingly.  The applicant completed his income tax return and did not provide a copy of it or advice of his annual income to the Department.  He explained that he did not need to inform the Department because he knew that the information would eventually be revealed in a data-match that would be conducted with the ATO.  The applicant explained that his father was an Australian Federal Police officer who informed him of the data-match system.

12. In December 1997 the applicant commenced working part-time.  He telephoned Centrelink, gave his name and details and the information that his income had reduced to $165.45 gross per week – based on 15 hours at $11.03 per hour.  His pension was increased accordingly.  Even then he did not advise the Department that his hourly rate had increased and that in April 1997 he had received  back pay to 9 June 1996.  The applicant explained that he thought it was reasonable not to mention this as, in his view, he had made efforts in the past to notify Centrelink of changes without Centrelink acting upon the information.  He considered that he had no obligation to repay the overpayment to that date, or to tell Centrelink of the details to allow an offsetting arrangement to be made against his entitlement to an increase in the pension. 

13. By letter dated 17 December 1997, Centrelink informed the applicant that his DSP payment would be increased to accord with the reduction in his earnings (T6, p.20). The applicant was again informed of his obligations to notify Centrelink of any changes in accordance with sections 132 and 133 of the Act. The applicant failed to do this, when, as it transpired, he worked more hours than he anticipated he would, it being a busy period over Christmas. Again, he was aware that Centrelink was overpaying him. At this stage Centrelink had received a data-match, and should have but did not do a review of the applicant's DSP entitlement.

1. In January or early February 1998, according to the applicant, he made another "general inquiry" of Centrelink over the telephone about his situation.  He said that the woman he spoke to said there was no need to notify Centrelink every pay cycle "if it would average out".  He did not give, and was not asked to give, his name or details, and thus there is no record of this call on Centrelink's system. 

2. In late February or early March 1998 the applicant said that he made another call to Centrelink.  He said that he made a general inquiry as to what he should do about his situation of working increased hours.  He says that again he was told that he could "average it out".  Ms Thomas in her evidence said that it was inappropriate for an officer to have given such advice.  She said that it was unlikely that such advice was given, if the officer had been given correct information.

3. Given the evidence of the clear operating principles of Centrelink to assess pension entitlements on the basis of fortnightly income, it is unlikely that two separate Centrelink officers gave such advice, on a clearly stated proposition of a person's income fluctuating each fortnight.  The applicant did not relate precisely the words he used in making his inquiries.  It is more likely that with reference to his fluctuating income he did not make it clear that his income in any fortnight exceeded the income he had previously informed Centrelink he earned.  I do not accept the applicant's evidence as to the content of those two telephone conversations.

4. The applicant continued to earn more than what Centrelink had assessed the applicant's income to be, up to and beyond the end of the 1998 financial year.  Even if the applicant believed that he had no obligation to inform Centrelink of an increase in his income unless it continued after it was "averaged out" over a period of time, he failed to inform Centrelink after the completion of this tax return that this had occurred. 

5. The applicant was asked whether he had set funds aside with the intention of being in a position to reimburse the respondent when the data-match took place.  He said that he did this initially, but then decided that the same outcome could be achieved by working fewer hours and taking a three-week holiday without pay.  This, he reasoned, would bring about a lowering of his income after averaging it out over a period of time.  As it transpired, the data-match revealed the extent of his overpayment before he took any leave without pay.

6. The tribunal asked the applicant why he did not inform Centrelink in writing of his predicament.  He stated that he was "functionally illiterate".  He explained that since 1998 he had undertaken literacy courses and had improved his writing ability.
   conclusions

7. The applicant was aware of the fact that he was being overpaid by Centrelink as it occurred.  He had no reasonable ground for believing that his overtime hours and penalty rates were not included in his assessable income for DSP purposes.  Even if the applicant was advised that nothing could be done about the lump sum back pay he received until tax time, he did not inform Centrelink of the increase he received in his standard hourly rate of pay as from April 1997.  He said in evidence that, having revealed that he received a lump sum by way of back pay, the Centrelink officer could reasonably conclude the increase in his pay was ongoing.  He apparently made "general inquiries" from time to time, and he seems to have placed his own interpretation on the advice he received.  The applicant wittingly allowed overpayments to continue by taking advantage of Centrelink's failure to ask him for specific details on each occasion that he rang with a "general inquiry".  The information he offered to Centrelink, on his own evidence, was insufficient to prompt Centrelink to access his file.

8. In relation to the applicant's claim that he is functionally illiterate, the applicant drew the tribunal's attention to the decision in Vitalone and Secretary, Department of Social Security (1995) 38 ALD 169 and sought to draw parallels with his own circumstances. In that case, Mr Vitalone's English was limited and he had done his best to communicate with the Department. The tribunal found that the Department was responsible for the failure of the communication. This is not akin to the facts of the case before me. The applicant had a sound command of English and proved capable of making clear to the respondent his changes in circumstances when the opportunities arose. He was able to communicate clearly and adequately when notifying the Department of his new job, according to Mr Boyd, and on the occasion when he sought an increase in his DSP. The applicant knew the level of detail required in those communications and was capable of fulfilling his obligation under sections 132 and 133 of the Act. He presented to the tribunal as an intelligent, highly articulate person, who provided relevant material and logical argument in response to issues raised and questions asked of him. He understood the case against him, and relied on his belief that it was up to Centrelink to protect its own interests.

9. The applicant understood and was aware of his obligation to notify Centrelink of changes in his income.  The tribunal does not accept the applicant's submission that he did all he could to fulfil the obligation to notify.  He was aware that Centrelink was not fully seized of the changes in his circumstances.  He was able to convey precise information to Centrelink in December 1997 when his earnings reduced.  He had the opportunity then, when his file was being updated, to notify of the previous increase in his hourly rate of pay and receipt of the lump sum in April 1997.

10. I find therefore that the applicant failed to fulfil his obligation to notify of changes in his income, and as a consequence he was overpaid DSP from 11 July 1996.  There is insufficient evidence to conclude that the applicant was given incorrect advice.
    Whether waiver is warranted

11. If the debt arose solely through Departmental error, waiver of the debt raised would be appropriate (section 1237A(1)). I have already concluded that this is not the case. However, Centrelink's inaction has contributed to the debt increasing over the time that it did. The question arises as to whether this delay amounts to a special circumstance to warrant waiver of the debt pursuant to section 1237AAD of the Act. No other special circumstances were put forward by the applicant. As early as December 1997, Centrelink received details of the applicant's income from the ATO under the Data-Matching Act but failed to review the applicant's DSP entitlement. The applicant came to believe that he was not likely to be asked to repay the overpayment.

12. The respondent recognises that Centrelink's inaction contributed to the overall debt of the applicant.  The respondent's counsel conceded the appropriateness of a waiver of part of the debt in recognition of the part Centrelink played in that respect.

13. The tribunal notes that the applicant received the benefit of the additional income, as well as the benefit of the overpayment in April to early June 1996.  The applicant told the tribunal that he was paying back the overpayment and there was about $1000 remaining in his debt to the respondent.  The tribunal did not receive confirmation of the outstanding figure from the respondent.  Taking the special circumstance of Centrelink's delay into account, the tribunal decides that a strict enforcement of the applicant's liability for the debt would be unjust or unreasonable (Re Ivovic and Director-General of Social Services (1981) 3 ALN N95).  The tribunal accepts the respondent's submission that, in line with the Federal Court decision in Secretary, Department of Social Security v Thompson (1994) 20 AAR 435, it is appropriate to use "intuitive justice" as to the amount of the reduction of the debt. The tribunal therefore decides that it is desirable to waive that part of the unpaid balance of the debt as at the date of this hearing.
    decision

14. The tribunal varies the reviewable decision and decides that the balance of the unpaid debt as at 28 September 2000 is waived.

    I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Pamela Burton, Senior Member

    Signed:         James Enderbury               .....................................................................................
      Associate

    Date of Hearing  28 September 2000
    Date of Decision  1 December 2000
    Counsel for the Applicant        Self-represented            
    Counsel for the Respondent    Mr Bernard Slattery
    Solicitor for the Respondent    Administrative Law Section, Centrelink