Timmins; Secretary, Department of Social Services and (Social services second review)
[2017] AATA 1088
•14 July 2017
Timmins; Secretary, Department of Social Services and (Social services second review) [2017] AATA 1088 (14 July 2017)
Division:GENERAL DIVISION
File Numbers: 2016/7006 AND 2016/7012
Re:Secretary, Department of Social Services
APPLICANT
AndKelsie Timmins and Joseph Timmins
RESPONDENTS
DECISION
Tribunal:Senior Member J Sosso
Date:14 July 2017
Place:Brisbane
The Tribunal affirms the decision under review.
.........................[Sgd]...............................................
Senior Member J Sosso
CATCHWORDS
DEBT RECOVERY – age pension – overpayment – write off – waiver of debt arising from administrative error – receipt of payment in good faith – debts waived - decision under review affirmed.
LEGISLATION
Social Security Act 1991`
Social Security (Administration Act 1999
CASES
L and Secretary, Department of Social Security (1995) 21 AAR 412
Stubbs and Secretary, Department of Families and Community Services [2003] AATA 729
Crawford and Secretary, Department of Family and Community Services (2002) 67 ALD 464
Johns and Secretary, Department of Social Security [2015] AATA 662
Sekhon v Department of Family and Community Services (2003) 132 FCR 126
Ward and Secretary, Department of Family and Community Services [2000] AATA 212
Panacci and Secretary, Department of Employment and Workplace Relations [2008] AATA 30
Jordan v Secretary, Department of Families and Community Services [2004] FCA 1582
Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186
Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576
REASONS FOR DECISION
Senior Member J Sosso
14 July 2017
INTRODUCTION
The decision under review is that of the Social Services and Child Support Division of this Tribunal (AAT1) of 29 November 2016 which set aside a decision of the Department of Human Services (the Department) to raise and recover age pension debts from Mr and Mrs Timmins (the Respondents) in the amount of $51,248.44 in each case for the period 7 May 2008 to 13 October 2015 (the debt period).
A hearing was conducted on 31 May 2017. The Secretary, Department of Social Services (the Applicant) was represented by Ms J Forsyth. The Respondents did not attend the hearing, nor, at their request, were they linked in by telephone. They were, however, represented by their daughter Ms Julie Timmins who attended in person. Ms Timmins explained that her parents are in very bad health but could be linked in if necessary. As it transpired this did not prove necessary.
ISSUES
There are two issues to be resolved:
(a)whether the Respondents were overpaid the age pension?; and, if so
(b)whether the debts owed ought to be recovered in part or in whole?.
THE FACTS
The following factual outline is not contested by the parties.
The Respondents were in receipt of the age pension.
Prior to 7 May 2008 the age pension paid to the Respondents was calculated on their assets and income which included a Q Super superannuation investment held by Mrs Timmins and a Commonwealth Superannuation Scheme (CSS) pension paid to Mr Timmins.
Mr Timmins had been in receipt of a CSS Pension since 14 November 1985, and as of 21 December 2007 his gross fortnightly payment was $1,199.35. The amount of the CSS pension was CPI updated every six months – Exhibit 1 T4 pp.53-54.
On 15 January 2008 the Department wrote to the Respondents advising that their gross age pension was $242.70 each (gross), based on a combined annual income of $32,864.08 – Exhibit 1 T 20 p.193, T 21 p.226.
On 25 March 2008 the Department again wrote to the Respondents advising that the amount of age pension would increase to $248.55 per fortnight each from 10 April 2008 – Exhibit 1 T 20 p.196, T 21 p.229.
On 12 May 2008 Mrs Timmins notified the Department that she had withdrawn the total amount of her Q Super account. The file note of this notification is as follows (Exhibit 1 T17 p.171):
“cus advised that account ….. with commonwealth that was put up on 7 January 08 was not correct it should have been ……. Customer q super was cashed on 280705 received $38138 money from that went into account…….. and money was used to pay off loan on house and car which was approx. $18,000, and over the last few years account has been depleting because of hospitalisation of husband cancer and staph infection and various other incidents bills/debts.”
All of the problems that crystallised years later had their genesis in actions taken by the Department on 22 May 2008.
After receipt of the above advice of Mrs Timmins of her changed circumstances, the Department amended their records of her bank balance as advised, but instead of recording her Q Super Superannuation Account as having a zero balance, it was left unchanged, but Mr Timmins CSS Account was recorded as having a zero balance.
On 17 June 2008 the Department wrote to the Respondents. In the letter to Mr Timmins, he was advised that his gross age pension would be $456.80 from 3 July 2008 – Exhibit 1 T 20 p.200. Mrs Timmins was also advised that her age pension would increase to $456.80, but the letter also noted that she had a Q Super balance of $37,622 – Exhibit 1 T 20 pp.233-234.
On 26 June 2008 Mrs Timmins contacted the Department to have her Q Super balance removed in accordance with the information she provided on 12 May 2008. In accordance with this information, Mrs Timmins profile was updated to record a zero Q Super balance, however Mr Timmins zero CSS balance remained unaltered.
The Department wrote to the Respondents on 7 (Mrs Timmins) and 8 (Mr Timmins) September 2009 notifying them that their age pension had been increased to $464.20 – Exhibit 1 T 20 pp.207 and 240. This calculation was predicated on the assumption that the Respondents had combined assets worth $38,427 and an annual income of $148.54.
From this time until 13 October 2015 the Department continued to calculate and pay the age pension to the Respondents on the assumption that Mr Timmins did not receive a CSS pension.
On 22 October 2015, following a request from the Department, CSS provided details of the amount of pension payments credited to Mr Timmins for the period 24 December 2004 until 26 June 2015. During that time his CSS gross fortnightly pension increased from $1099.21 to $1452.30 – Exhibit 1 T 4 pp.53–54.
As a consequence of the Department’s error the Respondents were each overpaid age pension of $51,248.44.
At AAT1 and in the present proceedings, the Respondents did not contest the fact that they had been overpaid or the quantum of the overpayment.
On 3 June 2015 the Department determined to raise and recover the debts in the amount of $51,248.44 from each of the Respondents.
STATUTORY OVERVIEW
Section 55 of the Social Security Act 1991 (the Act) provides that a person’s rate of age pension is calculated by using the pension rate calculator in s 1064 of the Act.
Section 1064-A1 of the Act provides that the rate of pension is a daily rate. That rate is calculated by dividing the annual rate calculated according to the Rate Calculator by 364. This section also contains a Method Statement for calculating a person’s maximum payment rate. The Statement contains 12 steps, but of relevance to this matter is Step 11 which provides:
“Compare the income reduced rate and the assets reduced rate: the lower of the 2 rates, or the income reduced rate if the rates are equal, is the provisional annual payment rate.”
Subsection 66A of the Social Security (Administration) Act 1999 (the SS(A) Act) requires a person, inter alia, in receipt of the age pension to notify the Department within14 days of an event or change of circumstances which might affect the payment of age pension.
Subsection 68(2) of the SS(A) Act provides that the Secretary of the Department may give a person a notice requiring them to inform the Department of a specified event or change in circumstances.
Subsection 100(1) of the SS(A) Act provides that if a person receiving, inter alia, an age pension is given such a notice, and the recipient fails to comply with this obligation and the event or change in circumstances results in a reduction of the pension rate, then the age pension becomes payable to the recipient at the reduced rate on the day the event or change of circumstances occurs.
When a person obtains the benefit of a social security payment they are not entitled to, the amount of the payment is a debt due to the Commonwealth, and such debt arises when the person obtained the benefit of the payment – s 1223(1) of the Act.
The Act, however, contains certain provisions that allow for a debt due and owing to be written off or waived.
Subsection 1236(1) of the Act provides that the Applicant may, on behalf of the Commonwealth, write off a debt for a stated period or otherwise.
The discretion to write off a debt is not open-ended. Subsection 1236(1A) limits its exercise to four specified circumstances. Apart from grounds of recoverability and discoverability, the remaining grounds are:
·the debtor has no capacity to repay the debt (para (b));
·it is not cost effective to recover the debt (para (d)).
Section 1237A of the Act provides that the Applicant must waive the right to recover so much of the debt that proportion of the debt that is “attributable solely to administrative error made by the Commonwealth” if the debtor received in good faith the payment(s) that gave rise to the debt.
CONSIDERATION
Introduction
It is not contested that the Respondents were paid a rate of age pension in excess of their entitlements. Accordingly, pursuant to s 1223 of the Act, the amount of overpayments is a debt owed to the Commonwealth.
The next issue is whether these debts can be recovered by the Commonwealth.
Section 1236 – Write off
As pointed out, s 1236 allows for the writing off or delaying recovery of a debt for a period in specified circumstances.
The meaning of “write off” was explained by Matthews J in Re L and Secretary, Department of Social Security (1995) 21 AAR 412 as follows (at 424):
“In contrast with waiver, the writing off of a debt does not extinguish it. The debt remains enforceable, but a decision is made not to pursue it, either indefinitely or for a set period. In either case, the decision can be reversed and enforcement proceedings commenced at any time in response to any changes in the circumstances which led to the decision in the first place.”
The only relevant grounds for considering a “write off” are whether the Respondents have no capacity to repay or it is not cost effective for the Commonwealth to take action to recover the debts.
The Applicant submits (Secretary’s Statement of Issues, Facts and Contentions (SSIFC) para 29) that section 1236 has no application as the debt can be repaid at $292.80 each per fortnight.
The ability to write off a debt because the debtor has no capacity to repay has to read in conjunction with s1236 (1C) which provides, as far as is presently relevant, that a debt is recoverable by means of deductions from the debtor’s social security payment. However, this subsection then contains the following proviso:
“unless recovery by those means would result in the debtor being in severe financial hardship.”The term “financial hardship” is defined by s 19C of the Act, but it does not apply to the age pension. Nonetheless, it does provide some assistance. The term is defined to mean the value of a debtor’s liquid assets is less than the maximum fortnightly amount of the applicable payment.
This term has been considered by the Tribunal. In Stubbs and Secretary, Department of Families and Community Services [2003] AATA 729, the Tribunal provided this helpful explanation (at para 20):
“Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature.”
This scenario is illustrated by Crawford and Secretary, Department of Family and Community Services (2002) 67 ALD 464. In that matter the debtor lived in New Zealand with his mother, was not in receipt of any Commonwealth social security payments, had no assets, was employed part-time intermittently and in addition to his social security debt of $9,189.78 had a child support debt of $3,000.
A more recent example is Johns and Secretary, Department of Social Security [2015] AATA 662. The debtor in that matter was overpaid the age pension. The Tribunal found she was in very difficult financial circumstances. She was struggling with multiple deaths, including those flowing from the death of her daughter who was drug-affected. She had no significant assets and her low level of income was insufficient to meet her expenses.
Member Webb made the following observations:
“40 To my mind, in circumstances such as those facing Ms Johns, where she is already struggling and failing to make ends meet on a weekly basis, and where she has no assets to speak of, recovery of the debts for which she is liable by deduction from her Age Pension, even by small amounts, is likely to render her already difficult financial situation severe and untenable. It is not the purpose of the debt recovery provisions of the Act to render someone in her circumstances destitute.”
The circumstances of the Respondents in this matter are quite different.
Mr Timmins continues to receive CSS pension payments. The Respondents own their own home. From July 2016 until payments were frozen, the Respondents were being debited $15 each per fortnight – Exhibit 1 T6 pp.65 and 82. There is no evidence before the Tribunal that during this period of time the Respondents were placed in a position of severe hardship or destitution.
Ms Julie Timmins admitted during the course of the hearing that the deductions from her parents age pension were manageable, as was the overall reduction in the age pension. Certainly the reduction in the quantum of the age pension constituted a significant reduction in the Respondents’ income, but the amount they were receiving since 2008 was far in excess of their entitlements.
It could not be said that the Respondents have no capacity to repay their debts.
Insofar as the Commonwealth was deducting fortnightly payments from the Respondents’ age pension, it also is not possible to conclude that it is not cost effective for the Commonwealth to take steps to recover the debt.
Having considered the evidence presented, I am not satisfied that any of grounds for writing off a debt prescribed by s 1236(1A) are met in this matter.
Section 1237A – Waiver of debt arising from administrative error
Subsection 1237A(1) requires the Applicant to waive the right to recover that proportion of a debt that is attributable solely to an administrative error by the Commonwealth, if the debtor received in good faith the payment.
This subsection, therefore, has two limbs. The first is that the debt was solely attributable to an administrative error by the Commonwealth, and second the payment was received in good faith.
The Applicant contends (SSFIC para 31 - 38) there has not been an operative sole administrative error on behalf of the Commonwealth. While the Applicant concedes that there was an error when the Department deleted Mr Timmins’ CSS income on 22 May 2008, it is nevertheless contended that the various notices issued to the Respondents required (pursuant to s 68(2)) the Respondents to inform the Department about any matters affecting their age pension payment.
In particular the Applicant relies on the notice of 7 September 2009 which identified their rate of payment and advised that this rate was based on an annual income of $148.54.
The Applicant concedes that during the entire debt period the notice of 7 September 2009 was the only rates notice issued to the Respondents.
The Applicant further draws the attention of the Tribunal to the contacts made by Mrs Timmins with the Department on 12 May and 26 June 2008 where she notified firstly of the liquidation of her Q Super account and secondly when that fact was not factored in to her rate of pension payment.
The Applicant submits these contacts (para 35):
“clearly demonstrate the Respondents were in fact reading their letters and knew how superannuation income affected their payment. At the very least, a substantial increase in their rate of payment of approximately $232 per fortnight was enough to arouse suspicion.”
Member Pickard at AAT1 waived the debts of the Respondents pursuant to s 1237A of the Act. In doing so he accepted the evidence of Ms Julie Timmins that her father regularly provided copies of his CSS benefit statements to the Gympie Centrelink office. Member Pickard said (Exhibit 1 T2 p.9 at para 23):
“While the Department has not provided any evidence about receiving these statements I accept Miss Timmins evidence that they were provided to the Gympie Centrelink office. It appears that the bi-annual fund statements provided to CSS pension recipients are issued after the application of a bi-annual indexation rate increase. There is no explanation by the Department about whether it processed the information provided in the statement or whether it was discarded/ignored as it has no need of the fund statements such as those provided by Mr Timmins as CSS provides the information about index increases to the Department. Regardless of whether they received update information from CSS I am satisfied that Mr Timmins gave them information every six months in the debt period that informed the Department that he was receiving a CSS pension and details of that pension. The Department ignored that information for a period of approximately seven years. I am satisfied that despite the letters sent to Mr and Mrs Timmins (six letters sent over seven years) the Department was provided with the information about Mr Timmins CSS pension every six months. As such Mr and Mrs Timmins would have a positive belief that their age pensions were being calculated using the information they regularly provide about Mr Timmins CSS pension. For this reason I am satisfied that the discretion under section 1237A of the Act should be applied so that each Mr and Mrs Timmins debts incurred for the overpayment of age pension in the debt period should be waived.”
Before dealing with the evidence before the Tribunal on the question of whether the debt is attributable solely to Commonwealth administrative error, it is necessary to deal with what this entails.
The words “attributable solely to an administrative error made by the Commonwealth” were considered by the Full Federal Court in Sekhon v Department of Family and Community Services (2003) 132 FCR 126.
R D Nicholson J observed (at 130):
“The word ‘attributable’ brings into play the notions of causation ‘as an effect to a cause’: Macquarie Dictionary (2nd ed, 1991), p. 106. The word ‘solely’ brings notions of exclusivity. Solely means ‘as the only one or ones’ or ‘exclusively or only’; Macquarie Dictionary p.1664. It means ‘one and only, single; only’, also ‘singular, unique, unrivalled’; The New Shorter Oxford English Dictionary (1993), p. 2938. It is used elsewhere in the Act but not in conjunction with ‘attributable’ so that other usage does not assist in relation to the subsection in question…There is therefore no reason not to give the word ‘solely’ its proper application in the circumstances.”
Selway J was of the same view (at 135):
“The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words ‘a debt attributable solely to an administrative error’ can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error”.
This is a very high standard, and as the Tribunal determined in Ward and Secretary, Department of Family and Community Services [2000] AATA 212, the duty to waive a debt does not arise when there are other errors or factors independent of the Commonwealth’s administrative error, albeit those other errors or factors are minor.
This approach to interpreting the words solely attributable to administrative error is illustrated by the following decisions.
In Panacci and Secretary, Department of Employment and Workplace Relations [2008] AATA 30 due to a Centrelink coding error the debtor’s disability support pension was increased from $76.18 to $399.90 per fortnight. The Tribunal found that there was not sole administrative error as the debtor had considerable knowledge of her reporting obligations and was experienced in the practices of Centrelink calculating her social security payments. The fact that her social security payments increased by 500% when there were no changes in her personal circumstances should have alerted her to a problem.
In Jordan v Secretary, Department of Families and Community Services [2004] FCA 1582 the debtor was in receipt of two benefits under the Act, in circumstances in which the Newstart Allowance was required to be, but was not, reduced by the amount paid for by the New Enterprise Incentive Scheme (NEIS). This resulted from a coding error by Centrelink. The debtor was a lawyer with 20 years experience in a civil litigation practice.
The debtor was receiving NEIS payments when Centrelink sent to him a Newstart Application form. He had previously been receiving Newstart. This form was sent in error. The debtor orally informed Centrelink he was in receipt of the Newstart allowance when he lodged the application form. Subsequently the debtor lodged a number of other Newstart allowance applications. Prior to lodging the first of those applications, he was given notification by the agency responsible for NEIS that it was his responsibility to notify Centrelink of the recommencement of the NEIS allowance to avoid overpayment.
In rejecting the debtor’s submission that the overpayment was solely due to administrative error by Centrelink, Finn J said ([19] – [20]):
“19 Mr Jordan’s first contention is that the overpayment was attributable solely to Centrelink’s administrative error and that the Tribunal should have so found. He claims that he considered he was obliged to continue to lodge the Newstart application forms; that he did not understand he was effectively applying for Newstart payments as such, but only for whatever he may have happened to have been entitled to (and he raised the matter of an entitlement to rent assistance although his evidence was that he was not aware of any such entitlement when he lodged the applications); and that he had disclosed to Centrelink that he was in receipt of NEIS payments.
20 In my view, it clearly was open to the Tribunal to reach the finding it did in relation to the totality of the payments made to Mr Jordan. The Tribunal did not acquit the Department of administrative error. On the contrary. As I read the Tribunal’s reasons, it found that the payments were not attributable solely to that error. They would not have been made had not Mr Jordan lodged the application forms which did not disclose the NEIS payments. Without those applications no payments would have been made so that no part of the debt was attributable solely to an administrative error of the Commonwealth. Put shortly, his action compounded the significance and consequence of the Commonwealth’s administrative error.”
The uncontested evidence is as follows:
(a)On 12 May 2008 Mrs Timmins notified the Department her Q Super account was nil;
(b)On 22 May 2008 the Department recorded Mr Timmins had a CSS balance of nil;
(c)On 17 June 2008 the Department advised Mr Timmins that his age pension had increased from $232.75 to $441.00;
(d)On 17 June 2008 the Department also wrote to Mrs Timmins advising her that her age pension had increased to $459.70 and noting she had a Q Super balance of $37,622;
(e)On 26 June 2008 Mrs Timmins again contacted the Department and advised she had a nil Q Super balance;
(f)The Department subsequently recorded that Mrs Timmins had a Q Super balance of zero but also continued to record Mr Timmins as having a CSS balance also of zero.
(g)On 7 September 2009 correspondence was forwarded by the Department to the Respondents advising that they had a combined income of $148.54.
The sole attribution test is essentially an objective measure. The good faith test is by its very nature subjective. Yet the two are inextricably intertwined. When assessing the factual matrix there is a considerable overlap when dealing with the two limbs of s 1237A.
In this matter three questions arise from the undisputed facts:
(a)Did the Respondents, or either of them, do anything which compounded the initial (and ongoing) administrative error of the Department?
(b)Did the Respondents, or either of them, fail to do anything which they should have done, which compounded the initial (and ongoing) administrative error of the Department? and
(c)Did the Respondents, or either of them, actually take steps, knowingly or otherwise, that would have rectified the administrative error of the Department?
Dealing with the first question, there is no evidence before the Tribunal that either Mr or Mrs Timmins did anything which compounded the original administrative error. Unlike the situation in Jordan the Respondents did not file or lodge any misleading or erroneous material which compounded the original administrative error.
Second, the Respondents did not fail to do anything that was asked or sought from them. The Respondents did receive notices from the Department irregularly (approximately six over seven years), and hidden in the small print was the standard formulae about due notification. Yet notification can only crystallise if there is knowledge of the facts that need to be reported. There is no evidence before the Tribunal that Mr Timmins had actual knowledge that the Department was calculating his and his wife’s age pension on the incorrect assumption that he had a nil CSS balance. Further, the Applicant hangs its case on the letter of 7 September 2009 wherein the Respondents were advised amongst all the other matters that their pension was based on an annual income of $148.54. The immediate question that this poses is this: in the mind of two aged and very sick people, how does this lead to a realisation that the CSS balance has been omitted? This is even more to the point, when considering the next question.
So, in conclusion, the Respondents received a few notices over a long period of time. Only one of those dealt with the issue of the nexus of income and pension payment, and even then obtusely. At no time, it would seem, was there ever a specific statement that the age pension rate was predicated on zero superannuation balances for both Mr and Mrs Timmins.
In life the only clear vision is rear vision. It is therefore raising the bar far too high to impose on two aged and sick people a standard of care predicated on current knowledge and without factoring in the irregularity of notices, their dense content and the context of how they were received: namely, the health of the Respondents and any other interactions they may have had with Centrelink.
This leads to the third, and critical question. Member Pickard set out in his reasons the evidence given to AAT1 by Ms Julie Timmins that her father would attend at the Gympie Centrelink office and provide to staff a copy of his bi-annual CSS Statement. Member Pickard accepted the truthfulness of the evidence of Ms Timmins.
Ms Timmins stated at the 31 May 2017 hearing that she was physically present on two occasions when her father visited the Gympie Centrelink office and handed over a copy of his biannual CSS Statement.
Ms Timmins said she was with her father in February 2009 and again sometime in 2012 when he approach the counter of the Gympie Centrelink office and said to a member of the counter staff words to the effect of “this is my update”. Ms Timmins claimed that on both occasions the documentation was accepted and stamped.
Further, Ms Timmins said her father’s belief was that having supplied official documentation his records would be duly updated.
The Applicant both in written submissions and at the hearing, contended that it would be highly unlikely that the Department would repeatedly fail to record any file note of 14 interactions over seven years.
The contention of the Applicant has some force. It would be very unlikely that there would be no record of Mr Timmins providing fourteen statements over an extended period.
However, the evidence before the Tribunal is not to that effect. Clearly the fact that Ms Timmins said that her father provided six monthly CSS updates to Gympie Centrelink is her honest belief, but in the absence of her father testifying that he did so, it is nothing more than hearsay and conjecture.
Nonetheless the Tribunal observed Ms Timmins and formed a positive view of her and her truthfulness. The Tribunal has no reason to disbelieve that she attended with her father on two occasions at the Gympie Centrelink office and personally witnessed him providing a copy of his CSS statement to counter staff in 2009 and 2012.
It is not necessary or helpful for the Tribunal to speculate why there is no official record of those transactions, all that is necessary is that I make a finding that Mr Timmins did notify the Department on two occasions in 2009 and 2012 of his CSS Account, and from February 2009 at the latest, the Department was put on notice that Mr Timmins did not have a zero balance in CSS Account.
It follows from the above that the administrative error that led to the Respondents being paid more than $100,000 in age pension over a seven year period was attributable solely to administrative error by the Commonwealth.
However, the next issue to be determined is whether the Respondents received the excess age pension in good faith. In short, even if the error was solely that of the Commonwealth, did they receive the extra money with “clean hands”.
The starting point in considering the application of this requirement is the decision of Finn J in Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186. His Honour was considering s 289(2) of the Student and Youth Assistance Act 1973, which in all material respects mirrors s 1237A(1). His Honour said (189):
“Its (s 289) 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 a knowledge or reason to know, the receipt would be in good faith
…In other words the frame of the section is to exclude from the right to a waiver, a person who knows or who 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.”
This approach was further refined by French J (as he then was) in Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529. His Honour said (534):
“I do not take what his Honour said in that case (i.e. Prince) as supporting the proposition that a person can be found to be receiving payments other than in good faith simply by reason of the fact that there are facts in existence which are known to the recipient sufficient to negative the recipient’s entitlement. In my opinion that is not a sufficient criterion. Knowledge of relevant facts is not enough to generate reason to know of the lack of entitlement.
The criterion of receipt in good faith may be characterised as a positive one as counsel for the respondent submitted. That is not to say that a recipient of a mistaken payment must prove that he or she has considered the entitlement to the money and positively concluded that there is an entitlement. There is no question of an onus here to be met by the recipient who claims benefit of the mandatory waiver. Nor is there some twilight zone between good faith and want of good faith. A waiver can only, in my opinion, be declined where there has been a receipt without good faith, of moneys mistakenly paid. This accords with the general approach taken by Finn J whose construction of the provision is related to the criteria for want of good faith.
Consistently with what his Honour said in the Prince case, want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient. That proposition is quite consistent with the view that the existence of such facts may support an inference that the recipient disbelieved or doubted or was suspicious about his or her entitlement. ‘Reason to know’ as Finn J used that term in Prince does not necessarily import a criterion of imputed as distinct from actual want of good faith as I have described it.”
While these decisions provide useful guidance they relate to another piece of legislation, albeit one with similar wording and objectives (social benefit). However, there are two decisions on s 1237A which provide specific guidance to the Tribunal.
The first is Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424. Cooper J made the following observations (436/[40] and [41]):
“40…A lack of good faith does not mean that the recipient of the payment must be acting fraudulently when the payment is received and retained. It means that for whatever reason, the recipient acts without an honest belief that he or she was entitled to receive and retain the payment when he or she receives the payment and decides to exercise control over it by retaining it.
41 A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquires where doubt exists.”
The second decision is Pledger v Secretary, Department of Family and Community Services [2002] FCA 1576.
In that matter the applicant received the carer pension to provide full-time care for her mother. Within a day of her mother’s death she informed the Department. Approximately a week later the deceased’s mother’s age pension was cancelled. The applicant was entitled to receive bereavement payments of carer pension for a further 14 weeks after her mother’s death. She continued to be paid the carer pension for a further four years, and during that time the Department wrote to her a number of occasions informing her of pension increases. In each letter reference was made to the fact she was receiving a carer pension. Finally, in March 1997, almost four years after her mother’s death, the applicant received a letter from the Department seeking information as to her mother’s medical well-being. The applicant again informed the Department that her mother was dead and said: “ I was aware in 1993 that I was no longer entitled to carers pension but I thought I was on some other kind of payment like the dole payment. But I did not know that I had to fill in forms.”
Weinberg J, after considering all of the previous authorities, said (at [59]):
“What seems to emerge from these authorities is that whether a payment has been received in good faith can only be determined after a careful consideration of the actual state of mind of the recipient of that payment. In that sense the test is entirely subjective, and not objective. However, plainly idiosyncratic views as to what might be regarded as acceptable behaviour, including the standards of a ‘Robin Hood’, will not be regarded as amounting to ‘good faith”.
His Honour later noted (at [70]):
“The authorities suggest that the terms ‘dishonesty’ and ‘lack of good faith’ are closely related.”
Having stated (at [79]) that the applicant’s case was that she had not acted dishonestly and had done nothing wrong he then noted that the AAT focused entirely on the fact that she was “aware” that she was being paid a carer pension when she was no longer eligible.
His Honour concluded as follows ([90] – [93]):
“90…It seems to follow that the applicant’s belief that she had done nothing ‘morally’ wrong, not just by her standards, but by the standards of ordinary decent people, must at least be relevant to whether she acted in ‘good faith’.
91 The applicant’s case, as presented to the AAT, was that although she was aware that she was no longer entitled to a carer pension after her mother’s death, she at all times believed that she was entitled to a social security pension or benefit, albeit under a different name. It seems to me that it is not sufficient in those circumstances simply to ask whether she was aware that she was not entitled, in law, to a carer’s pension.
92 It is far from clear whether the AAT found that the applicant believed that by receiving the carer pension she obtained an amount greater than that to which she would be entitled if she received a different pension or benefit. When one considers as well her repeated, though unsuccessful attempts to have the Department rectify its error, the question of her good faith is seen to be significantly more complex than the AAT appears to have recognised.
93 Assuming that one accepts as true the applicant’s account of her state of mind, I consider that there is a serious question as to whether ordinary, decent members of the community would regard what she did as ‘dishonest’. I am not dissuaded from that view by the AAT’s finding that she was ‘aware’ that she was being paid carer pension when ‘no longer eligible’”.
Turning now to the evidence before the Tribunal, it is clear that both Respondents are at an advanced age and in ill health. Mr Timmins is 91 years of age (he will turn 92 in July) and been in ill health for a number of years. His General Practitioner, Dr John Manton provided a medical certificate dated 4 April 2017 (Exhibit 3) which provided this rather blunt statement of his well-being:
“Mr Joseph Timmins has a range of complicated medical conditions including heart failure and inoperable prostrate cancer and he has a history of bowel cancer.
At the age of 91 discussions of a life expectancy is probably a moot point. If he lived 3 or 4 years that would be a victory. One to 2 would be more likely but he could drop dead tomorrow.”
Mrs Timmins has suffered a stroke and is also in very bad health.
Mr Timmins bad health is of long standing. In a medical report by Dr Uzo Diba, Relieving Registrar of the Prince Charles Hospital dated 21 August 2009, Mr Timmins then recent medical history was outlined (Exhibit 4):
“Diagnosis
1Staphylococcus aureus septicaemia with likely infective pseudoaneurysm of the right coronary artery May 2008
(a) Follow up CT coronary angiography 18.11.08 showed stable appearance of RCA aneurysm with a decease (sic) in size of associated soft tissue component – possibly at least moderate associate luminal stenosis
2Atrial fibrillation
3Normal LV systolic function (ejection fraction 58%) with moderate mitral regurgitation and biatrial enlargement (echocardiogram 24.9.08)
4Admission in October 2008 to Gympie hospital with heart failure….
5COPD
6Rectal cancer with surgery November 2007
7Hypertension
8Gout”
It will be seen that in May 2008 when the chain of events that led to the current matter commenced, Mr Timmins was in the Prince Charles Hospital being treated for septicaemia. According to Ms Julie Timmins, her father was hospitalised for a long period of time, possibly months. Her mother moved from Gympie and lived with her at Coorparoo while Mr Timmins was hospitalised.
Further, Mr Timmins had undergone rectal cancer surgery in November 2007.
By October 2008 he had returned to Gympie, because he was admitted to Gympie Hospital with heart failure.
As Weinberg J held, the test of good faith is subjective, subject of course to the exclusion of idiosyncratic and plainly unacceptable and unsustainable standards of behaviour.
Good faith is inherently elastic and contextual, but at its most basic the above cases all stress the fundamental test of honesty. Did the person honestly believe that they were entitled to receive the public money credited to them? This is not an objective test. It is grounded in the belief of the person in question. This requires a decision maker to apply a contextual analysis. The decision-maker must weigh the personal circumstances of the recipient: environmental, material, intellectual and physical. The test of honesty expounded by the above Federal Court judges, as French J stated, is not based “on the mind of some imaginary recipient”. The test is grounded on the circumstances of the particular recipient and the evidentiary matrix presented to the decision-maker.
A person does not honestly believe in a state of affairs if they “turn a blind eye to circumstances which raise doubt”, or indeed, as French J noted in Haggerty (at 535) where a person has a “belief, doubt or suspicion as to entitlement”. A person can be said to have met the good faith standard in s 1237A if they have proceeded with a honest but mistaken belief as to their entitlement, and this honest belief is not clouded by doubts or suspicions (see Jordan at [30]) and is not so outlandish that it would fail the test of what a reasonable person in that overall context would have done or believed.
Here, the facts suggest that the Respondents were experiencing extremely troubled times in 2008. Mr Timmins, at that stage aged 83, had undergone a cancer operation, was hospitalised with a staph infection and then suffered a heart attack. And all within twelve months.
These events occurred at the time that the Department made the administrative error.
It is not surprising that Mr Timmins would not have been concentrating on his age pension or documents emanating from the Department. He was fighting a life and death struggle which lasted for months.
All of the material before the Tribunal suggests that the Respondents acted honestly in their dealings with the Department. There is no suggestion that they knew, or even suspected, that they were receiving money they were not entitled to.
In the mind of many people the large increase in the age pension in 2008 would have aroused curiosity, or even suspicion. No doubt many people would have made specific inquiries to ascertain why such a substantial increase occurred.
However, the Respondents did not. There are two possible reasons why they did not go down that path.
The first is that Mrs Timmins made two specific contacts with the Department clarifying her Q Super balance. It was following the liquidation of that balance that the age pension increased. If the Respondents cast their mind as to why they received this increase, they may have formed the view that the increase was causally connected with the now zero balance in the Q Super account.
The second is the more probable and logical. During 2008 the Respondents had their energies and thoughts almost totally focused on whether Mr Timmins would live or die and in that context what would otherwise have been a big issue (the age pension increase) would have paled into comparison.
Further, the Tribunal accepts that Mr Timmins on at least two further occasions provided Gympie Centrelink with copies of his CSS bi-annual pension statement. As Member Pickard found, Mr and Mrs Timmins would, most likely, have had a positive belief that their age pensions were being calculated in accordance with the information they were providing.
I am satisfied that the Respondents state of mind remained constant over the debt period, and at no time did their view that they were entitled to receive the extra age pension vary.
Accordingly, I am reasonably satisfied that the Respondents received the additional age pension amounts in good faith.
CONCLUSION
I find that the debts of the Respondents must be waived pursuant to s 1237A of the Act as they are attributable solely to administrative errors by the Commonwealth and were received in good faith by the Respondents.
As waiver of the debts has been determined pursuant to s 1237A, it is not necessary to consider the possible operation of s 1237AAD (Waiver in special circumstances).
DECISION
The decision under review is affirmed.
I certify that the preceding 117 (one hundred and seventeen) paragraphs are a true copy of the reasons for the decision herein of Senior Member J Sosso
.........................[Sgd]...............................................
Associate
Dated: 14 July 2017
Date of hearing: 31 May 2017 Advocate for the Applicant: Ms Julie Timmins Advocate for the Respondent: Ms Jasmine Forsyth Solicitors for the Respondent: Department of Human Services
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