Taylor; Secretary, Department of Employment and Workplace Relations and
[2007] AATA 1377
•29 May 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1377
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q 200600517
GENERAL ADMINISTRATIVE DIVISION )
Re SECRETARY, DEPARTMENT
OF EMPLOYMENT and WORKPLACE RELATIONS
Applicant
And MICHELLE TAYLOR
Respondent
DECISION
Tribunal Mr R G Kenny, Member Date29 May 2007
PlaceBrisbane
Decision
The Tribunal affirms the decision under review.
…………[Sgd]…………………
RG Kenny
Member
CATCHWORDS
SOCIAL SECURITY – parenting payment –– calculations based on incorrect income levels – overpayment of parenting payment – debt due to the Commonwealth – waiver of part of debt attributable solely to Commonwealth error – payments received in good faith - no special circumstances to enable remainder of debt to be waived.
Social Security Act 1991 (Cth) ss 503, 1068A, 1068B, 1223, 1224, 1237, 1237A, 1237AAD
A New Tax System (Family Assistance) Act 1999 (Cth) s 58 and Schedule 1Social Security (Administration) Act 1999 (Cth) s 68
Social Security Act 1947 (Cth) s 163
Re Vitalone v Secretary, Department of Social Security (1995) 38 ALD 169
Derriman and Secretary, Department of Family and Community Services [2002] AATA 215
SRVVV; SRWWW and Secretary, Department of Family and Community Services [2002] AATA 1337
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127
Groth v Secretary, Department of Social Security (1995) 40 ALD 541REASONS FOR DECISION
29 May 2007 Mr RG Kenny, Member Application
1. In the period from 10 July 2002 until 1 March 2005, Michelle Taylor (the respondent) received income support payments under the Social Security Act1991 (the Act) in the form of parenting payment. On 22 February 2006, a Centrelink officer determined that Mrs Taylor had been overpaid in respect of her parenting payment in that period (the overpayment period) and a debt of $19,289.31 was raised. The decision concerning the amount of the overpayment was affirmed by an authorised review officer but a component of the debt was waived leaving a debt of $17,433.45 to be repaid by Mrs Taylor. The period for which the debt was waived was from 16 January 2003 until 9 April 2003. The Social Security Appeals Tribunal (the SSAT) then reviewed the decision and, on 20 June 2006, determined that the debt was to be waived from the start of the overpayment period until 9 January 2005. On 27 July 2006, the Secretary to the Department of Employment and Workplace Relations (the applicant) sought review of that decision by the Administrative Appeals Tribunal (the Tribunal).
Issues for Determination
2. During the overpayment period, Mrs Taylor also received, in addition to the parenting payment, the family tax benefit. This is another form of income support which is payable under the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act). The rate of family tax benefit is calculated using an estimate of annual taxable income of the recipient and his or her partner: see s 58 and Schedule 1 of the Family Assistance Act. However, for the parenting payment, a different mode of calculation is used: see s 503, s 1068A and s 1068B of the Act. This bases the rate of payment on the fortnightly income of a recipient and that of his or her partner. It is Mrs Taylor’s contention that, throughout the overpayment period and until 3 March 2005, she was not aware of this distinction and understood that, by providing estimates of annual income, she was providing the information needed for both forms of payment.
3. Mrs Taylor does not dispute that she was overpaid parenting payment during the overpayment period. In its deliberations, the SSAT determined that the correct amount of the debt is $19,273.06, rather than $19,289.31, due to an adjustment that it made because of the income of Mrs Taylor’s husband. This reduction has not been disputed by the applicant and, on the basis of the material before me including Centrelink’s detailed calculation records, I am reasonably satisfied that this reduced sum constitutes the amount of the overpayment to Mrs Taylor.
4. In the original decision, the overpayment was raised after a recalculation of Mrs Taylor’s entitlement based upon the actual income of herself and her husband during the overpayment period. By applying the rate calculator set out in the Act, it was determined that Mrs Taylor was entitled to receive $2,020.21 whereas she had been paid $21,289.52. I am reasonably satisfied that this occurred in the period from 10 July 2002 until 1 March 2005 because Centrelink did not calculate her entitlements on the basis of the correct income details of Mr and Mrs Taylor.
5. In the decision of the authorised review officer, reference was made to s 68(2) of the Social Security (Administration) Act 1999 (the Administration Act). This requires the recipient of a notice issued under the Administration Act to provide, within a 14 day time-frame, requested information on matters which will affect the person’s social security payment. It was noted that such a notice, dated 13 June 2001, was sent to Mrs Taylor. This required her to advise Centrelink of a range of matters including if her personal income “goes over $100.02 a fortnight” or if she were to “change jobs“. As I read the decision of the authorised review officer, the overpayment was confirmed because Mrs Taylor did not comply with those obligations and because this led to incorrect payments being made to her.
6. In accordance with s 1223(1) of the Act, where a person obtains the benefit of a social security payment and where the person was not entitled, for any reason, to obtain that benefit, the amount of the payment is a debt due to the Commonwealth. I am reasonably satisfied that this provision of the Act is met for the reason that the combined income of Mr and Mrs Taylor was such as to preclude the payment to Mrs Taylor of the amount of parenting payment that she received. I am also reasonably satisfied that the amount of this overpayment is $19,273.06 and that this constitutes a debt owed by her to the Commonwealth.
7. Section 1237 of the Act lists the circumstances in which a debt may be waived. This includes the waiver of a debt arising from error in accordance with s 1237A of the Act which, in so far as relevant, reads:
the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt
8. The issue for the Tribunal is whether Mrs Taylor’s debt, or some proportion of it, should be waived in accordance with that provision. In the decision of the authorised review officer, the waiver of the component of the debt in the period from 16 January 2003 until 9 April 2003 was based on a finding that those payments were made to Mrs Taylor solely because of administrative error by the Commonwealth. However, for the period from 10 April 2003, the authorised review officer decided that the payments could not be waived because they had not been received by Mrs Taylor in good faith. It will be seen below that the applicant has now conceded that those payments had not been received by Mrs Taylor in the absence of good faith.
Submissions
9. Mr Dube, for the applicant, submitted that there was no basis to waive the debt because it had not arisen solely because of Commonwealth error. He submitted that, on various occasions from 13 June 2001 onwards, Mrs Taylor had been advised of the amount of income on which the calculation of parenting payments was made and that Mrs Taylor had been under a continuing obligation to advise Centrelink if her income, together with that of her husband, exceeded the notified amount. He also submitted that Mrs Taylor was under a continuing obligation to advise Centrelink of any change in her employment during the time when she received the parenting payment. He submitted that Mrs Taylor had failed to comply with each of those obligations and that this contributed to Centrelink’s reliance on incorrect income amounts. On that basis, in his submission, the debt did not arise solely through Commonwealth error. At the commencement of the hearing, as noted above, Mr Dube conceded that the payments had not been received by Mrs Taylor in the absence of good faith.
10. Ms Heyworth-Smith, for the respondent, submitted that the Commonwealth was solely responsible for the overpayment until 9 January 2005. She conceded that Centrelink had sent notices to Mrs Taylor, from 13 June 2001, in which reference was made to the income level upon which parenting payments were calculated and in which she was required to advise Centrelink if her and her husband’s income “goes over” the nominated amount. She also conceded that these notices required her to advise if she “change[d] jobs”. However, Ms Heyworth-Smith submitted that Mrs Taylor was not in breach of the first of those obligations because the income levels were already in excess of the amount nominated in the notice of 13 June 2001 and that this was a matter about which Centrelink had previously been advised. To that end, Ms Heyworth-Smith referred to the decision of the Tribunal in ReVitalone v Secretary, Department of Social Security (1995) 38 ALD 169. She also submitted that, throughout the overpayment period, Mrs Taylor had kept Centrelink informed of the estimates of the income that she and her husband would earn in each of the relevant financial years and that, as a result, Centrelink should have realised that the details about income levels provided in information notices to Mrs Taylor were incorrect.
11. Ms Heyworth-Smith also submitted that, in the period from 10 July 2002 until 9 January 2005, Mrs Taylor had not changed jobs but continued to carry out the same type of work albeit in different capacities. She submitted that the strict approach to the interpretation of a notice taken by the Tribunal in the Vitalone case applied equally to the requirement of notifying about changes in employment. Ms Heyworth-Smith conceded that Mrs Taylor had changed jobs on 9 January 2005 and had not so advised Centrelink as she was required to do. She accepted that, as a result, the debt in the period from 10 January 2005 could not be waived.
12. Ms Heyworth-Smith also noted that, at the commencement of the hearing, the applicant had conceded that the receipt of the parenting payment during the overpayment period was not accompanied by an absence of good faith by Mrs Taylor.
Evidence of Mrs Taylor
13. Mrs Taylor gave the following account of her dealings with Centrelink. She previously experienced a small overpayment of a social security benefit and, since then, has always been careful to ensure that information about income levels was provided to Centrelink. She usually overestimated these to ensure that the problem of overpayment would not arise again. She contacted Centrelink on 9 May 2001 and provided an estimate of $11,000 as her income for 2001/2002. On 15 October 2001, she provided further estimates for that year for herself in the amount of $11,000 and for her husband in the amount of $14,000. On 25 May 2002, she completed a Parenting Payment Partnered Review form in which she declared her gross income to be $9,010 and that of her husband to be $14,050. At that time, she was a self-employed contractor undertaking the book-keeping work for Dr Peter Hawes at a medical centre at the Logan Hyperdome. Dr Hawes opened a second medical centre – the Grand Plaza medical centre. Mrs Taylor also carried out the book-keeping duties in that practice but, in this instance, she did so as an employee of the practice from 1 July 2002. The types of duties that she undertook remained the same at both medical centres although the nature of her engagement had varied at the second centre. She did not advise Centrelink of these changes.
14. Mrs Taylor contacted Centrelink on 26 August 2002 to inquire about the transfer of the parenting payment to her husband. She was advised that calculations of the payment were made on their combined income and that it was important that this remained within the estimates that she had provided.
15. On 16 January 2003, Mrs Taylor spoke by telephone with a Centrelink officer about her parenting payment and provided an estimate of income for the 2002/2003 year in the amounts of $19,000 for herself and $6,000 for her husband. In April 2003, Mrs Taylor received a letter from Centrelink informing her that her parenting payment was being calculated on the basis of earnings of $164.23 per fortnight. She knew that this amount was incorrect and, as a result, she contacted Centrelink on 11 April 2003 to discuss the letter and her parenting payment. The officer with whom she spoke checked the estimates that were on her file and told Mrs Taylor that, as long as the income did not exceed the amount of $25,000, there would be no overpayment. Mrs Taylor said that she did not ring to discuss the family tax benefit and believed that, at all times in the conversation, she was discussing the parenting payment.
16. On 13 August 2003, Mrs Taylor provided further estimates of her and her husband’s income for the 2003/2004 year in the amounts of $20,000 and $10,000 and, on 15 November 2004, she provided estimates in the amounts of $26,000 and $10,000 for herself and her husband, respectively, for the 2004/2005 year.
17. On 10 January 2005, Mrs Taylor commenced working at the Groves Christian College. Initially, this was a three-month probationary period but it matured into permanent employment in March 2005. Mrs Taylor agreed she did not notify Centrelink of this change of employment.
18. Throughout the overpayment period, Mrs Taylor was also in receipt of the family tax benefit and she was unaware that the mode of assessing income for the calculation of that benefit differed from that which applied to parenting payment. On 3 March 2005, Mrs Taylor contacted Centrelink and was advised, for the first time, of the different methods of recording earnings for the two types of payment and was told that there was no link between information given for family tax benefit purposes and that which was applicable to the parenting of payment calculations. She was advised that the information that she had provided was used for the former and that there were no income records in relation to the parenting payment. At all times during the overpayment period, Mrs Taylor believed that the information she provided was to be relied upon by Centrelink for the calculation of both forms of benefit.
Evidence of Centrelink Officers
19. Evidence was given by two Centrelink officers who had dealings with Mrs Taylor during the overpayment period.
20. Theresa Bateup has worked with Centrelink since June 2002 and was a call centre operator when she spoke with Mrs Taylor on 16 January 2003. She completed files notes on that date. She had no independent recollection of her conversation with Mrs Taylor but noted that she updated estimates of income for the 2002/2003 financial year and did not update earnings for parenting payment. Ms Bateup said that her present practice is to provide information to customers about both parenting payment and family tax benefit, but she was unable to recall what her practice was in 2003.
21. Jillian Champneys has been a call centre operator with Centrelink since June 2002 and spoke with Mrs Taylor on 11 April 2003. Ms Champneys had no independent recollection of the discussion with Mrs Taylor but she identified a file note which she completed on that date. She said that, based on the file note, the conversation was about both parenting payment and family tax benefit. She interpreted the file note as indicating that she checked the estimates of income for the purposes of the family tax benefit but was unable to indicate what discussions occurred in relation to parenting payment. Ms Champneys said that, while her present practice is to discuss the modes of assessing income for both forms of payment, she was unable to recall what her practice was in 2003.
Consideration
22. In evidence was the file note completed by Ms Bateup on 16 January 2003. It noted that income estimates were provided in the amounts of $19,000 for Mrs Taylor and $6,000 for her husband. The record indicates that she generated the material because of an inquiry about family tax benefits. However, the note also includes the reference that Ms Bateup did not update the earnings for parenting payment purposes. Also in evidence was a letter concerning family tax benefit which was posted to Mrs Taylor on 16 January 2003. Attached to it was a note which was written by Mrs Taylor during the conversation with Ms Bateup. It records the receipt number to identify the call and confirms the information about the income estimates.
23. Also in evidence was a letter, dated 8 April 2003, sent to Mrs Taylor about her parenting payment. This identified Mrs Taylor’s fortnightly income as being $164.23. As noted above, on 11 April 2003, Mrs Taylor contacted Centrelink about that information and, at the end of the call, she recorded the receipt number of the call and wrote the following note on the letter:
Phoned re incorrect income figures. She said reviewed every 12 weeks. As long as don’t go over estimates me $19,000 Simon $6,000 nothing will have to be repaid.
24. A copy of the file note completed by Ms Champneys on 11 April 2003 relating to the telephone conversation with Mrs Taylor was also in evidence. It shows that Mrs Taylor’s inquiry was in respect of parenting payment. The note records that Mrs Taylor thought that the amounts stipulated were for the calculation of the family tax benefit and she was seeking confirmation that she would not have an overpayment. It shows that Ms Champneys checked the estimate details on the file and confirmed with Mrs Taylor that they would not exceed that amount during the year.
25. I am satisfied that Mrs Taylor is a truthful witness and I accept her evidence that she was not aware of the different means of calculating family tax benefit and parenting payment prior to March 2005. I am also satisfied that she kept Centrelink informed of the estimates of annual income from 9 May 2001 and throughout the overpayment period. Copies of Mr and Mrs Taylor’s taxation returns were in evidence and these reveal that the income estimates were reasonable. I am satisfied that Mrs Taylor believed that, throughout the overpayment period, Centrelink had the relevant information needed to correctly calculate her parenting payment.
26. On 13 June 2001, a letter was sent to Mrs Taylor by Centrelink. I am satisfied that this constitutes a written notice as provided for in the Administration Act. It required Mrs Taylor to advise Centrelink if her and her husband’s income “goes over” the nominated amount which was $100 per fortnight and also if she “change[d] jobs”. In ReVitalone v Secretary, Department of Social Security (1995) 38 ALD 169, the Tribunal was dealing with notice requirements under s 163 of the Social Security Act 1947 which are not materially different from those under s 68 of the Administration Act. There, the notice required that the recipient advise the relevant Commonwealth authority, the Department of Social Security (DSS), if income exceeded a certain threshold. In that case, the DSS had previously been made aware that the recipient’s income already exceeded that nominated threshold. It was held that, in the absence of fault, there was no failure to comply with the notice requirements in that situation. Mr Dube sought to distinguish that case on the basis that, after the receipt of the notice in that case, the recipient’s husband had attempted to provide income details to DSS. However, I do not read the decision as turning on that aspect: see also Derriman and Secretary, Department of Family and Community Services [2002] AATA 215 and SRVVV; SRWWW v Secretary, Department of Family and Community Services [2002] AATA 1337.
27. I am satisfied that Mrs Taylor did not fail to comply with the notice requirement to advise Centrelink if her income “goes over $100” because that event did not occur after receipt of the notice and Centrelink had been advised that her income level was higher than that threshold. I am also satisfied that the same strict interpretation adopted in the Vitalone case is applicable to the requirement in relation to advising about employment changes. The notice required Mrs Taylor to tell Centrelink if she started work, recommenced work, changed jobs, or started any form of business or self-employment. Ms Heyworth-Smith submitted that none of these events occurred as Mrs Taylor continued to do the same type of work for the same person but as an employee rather than as a self-employed person. I accept her submission in that regard concerning employment at the medical centres. I am satisfied that Mrs Taylor did not fail to comply with the notices from Centrelink prior to her undertaking employment at Groves Christian College. Her failure to advise Centrelink of that event within 14 days was a breach of her notice obligations. The giving of that advice would, on the balance of probabilities, have brought the incorrect payment regimen to Centrelink’s attention.
28. The Vitalone, Derriman and SRVVV cases were concerned with s 1224 of the Act which was repealed with effect from 1 July 2001 (item 10 in sch. 1 of Act No 47 2001). Under that provision, a debt arose where a person was paid benefits because a person failed or omitted to comply with a provision of the social security law. Accordingly, if a person failed to comply with an obligation to advise Centrelink of a matter about which notice requirements were given, amounts paid because of that constituted a debt to the Commonwealth. In the cases referred to above, because the recipient was found not to have been in breach of the notice requirements, no debt arose. However, in this case, the debt did not arise because of the failure to comply with a notice. It arose because of the level of income of Mr and Mrs Taylor. Accordingly, the issue of whether there was a breach of obligation to advise Centrelink of certain information is not directly relevant but I am satisfied that it points to an absence of contribution by Mrs Taylor to the making of the overpayment and, in the absence of such fault on her part, I am satisfied that the overpayment of parenting payment to her in the period from 10 July 2002 until 9 January 2005 arose solely through error on the part of the Commonwealth.
29. The authorised review officer waived the proportion of Mrs Taylor’s debt that arose from 16 January 2003 until 9 April 2003. This was based on the decision that sole Commonwealth error was responsible for the overpayment during that period. As I understand it, the authorised review officer accepted that there had been discussion about parenting payment on 16 January 2003 between Mrs Taylor and Ms Bateup but without fortnightly income details being recorded. Ms Bateup was unable to recall a conversation about parenting payment but Mrs Taylor recalled that this happened. Mrs Taylor also recalled the discussion with Ms Champneys on 11 April 2003 about parenting payment. Given my finding of sole Commonwealth error from an earlier date, it is not necessary for a finding to be made about the events of 16 January 2003. However, the evidence points to opportunities for the Centrelink officers to advise Mrs Taylor of the modes of calculation of parenting payment and family tax benefit and I am satisfied that this opportunity was not taken.
30. The authorised review officer decided that the overpayments made to Mrs Taylor after 9 April 2003 were not received by her in good faith. This was on the basis of events that occurred after Mrs Taylor received a parenting payment letter dated 8 April 2003. This declared Mrs Taylor’s fortnightly income to be $164.23 and her husband’s annual income to be $10,405.98. On receiving this letter, Mrs Taylor contacted Centrelink and spoke with Ms Champneys. I accept Mrs Taylor’s evidence that she understood from what she was told by Ms Champneys that a parenting payment overpayment would not occur if actual income levels did not exceed the estimates given. The authorised review officer noted that Mrs Taylor understood that she had been paid correctly because her husband’s income had reduced from $11,262.38 per year while hers had increased. He noted that Mrs Taylor’s income exceeded the amount of $164.23 by an amount which was greater than the decrease in her husband’s income and considered that this would have meant that Mrs Taylor did not receive subsequent payments in good faith.
31. The Federal Court has held, in the context of provisions similar to subsection 1237A(1) of the Act, that an absence of good faith arises where a person receives a payment where the person knew or had reason to know that he or she was not entitled to receive it: see Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127. I accept Mrs Taylor’s evidence that she did not know that she was not entitled to receive the payments and I am also satisfied that the differentials in her and her husband’s income did not provide a reason for her to realise that she was being overpaid. I have noted the concession by the applicant that there was no absence of good faith by Mrs Taylor and I am satisfied that that concession was properly made.
32. The debt as it arose in the period from 10 July 2002 until 9 January 2005 is waived in accordance with s 1237A of the Act. That is not the case with the remainder of the debt. I am also satisfied that the remainder of the debt can not be waived under s 1237AAD of the Act, which applies only where there are special circumstances, other than financial hardship alone, that make it desirable to waive the debt.
33. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, observed (at 545) that special circumstances:
would require something to distinguish... [the]… case from others, to take it out of the usual or ordinary case. ……. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
34. I am satisfied that there are no special circumstances in Mrs Taylor’ case that would justify waiver of the debt for the period from 10 January 2005 until 1 March 2005 under section 1237AAD of the Act.
Decision
35. The decision under review is affirmed
I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member
Signed:…………………………………………………………..
M. Brazier, AssociateDate/s of Hearing 27 April 2007
Date of Decision 29 May 2007
Solicitor for Applicant Sparke Helmore
Solicitor for Respondent Welfare Rights Centre
Counsel for Respondent Ms C Heyworth Smith
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