Tune and Department of Family and Community Services

[2001] AATA 755

DECISION AND REASONS FOR DECISION [2001] AATA 755

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2001/437 & 438

GENERAL ADMINISTRATIVE DIVISION          )          
           Re      NICOLE ELIZABETH TUNE AND KERRYN AMANDA TUNE         
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Mr B J McCabe, Member  

Date31 August 2001

PlaceBrisbane

Decision      The Tribunal affirms the decisions under review.         

..............Signed..........................
  B J McCabe
  Member
CATCHWORDS
SOCIAL SECURITY – youth allowance – failure to notify of change in parent's circumstances

Social Security Act 1991 ss 561B, 1067G, 1224, 1236, 1237A, 1237AAD,

Beadle v Director-General of Social Security (1985) 60 ALR 225
Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

31 August 2001       Mr B J McCabe, Member   

1. This is an application for review of a decision of the Department of Family and Community Services. Nicole and Kerryn Tune sought the Youth Allowance in 1999. They discussed their application with Mr Owen Connolly, a Centrelink officer at the Centrelink Customer Service office at Mt Gravatt on 20 October 1999. Their mother, Mrs Glenice Tune, accompanied them to the meeting. Mrs Tune had recently left her employment. She was looking for a new job.

2. It was agreed that Mr Connolly told Nicole, Kerryn and Mrs Tune that Mrs Tune had to satisfy an income test if her daughters were to be eligible for Youth Allowance. Part 3.5 of the Social Security Act 1991 ("the Act") sets out the details of the parental income test. Section 1067G-F1 requires the decision-maker to determine the parental income in the appropriate tax year. The appropriate tax year is defined in s1067G-F4 as the "base tax year", which is:

"the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the period ends."

1. In this case, the base tax year was 1998-1999, and Mrs Tune's assessable income (according to her Notice of Assessment issued by the Australian Tax Office) was $48170. Mr Foster for the respondent explained that Mrs Tune's income meant that Nicole and Kerryn were ineligible to receive the Youth Allowance if the parental income test was applied.

2. The legislation also provides, at s1067G-F3, that the parental income test does not apply where the parent is in receipt of a Commonwealth benefit, such as Newstart. The applicants say Mr Connolly advised that their mother should apply for a Newstart allowance while she was looking for work. Mrs Tune did so and Nicole and Kerryn became eligible to receive the Youth Allowance. Payments commenced on 6 December 1999 at the highest rate of benefits.

3. Each payment was accompanied by a Recipient Notification Notice. The notice was issued under s561B of the Act. The notice informed the recipient of the amount paid in that period. The notice also explained that the recipient was obliged to inform Centrelink if there were changes in the recipient's circumstances. The first example given in the notice of a change that should be notified reads:

   "If you or your parents/guardians (if dependent); or for independent persons, you or your partner (includes a de facto partner): start paid work or any form of profession, trade, business, or self employment;…"

4. Nicole and Kerryn said they were not in the habit of reading the notices beyond ensuring that they had been paid the anticipated amount. Kerryn in particular was critical of the correspondence that the family received from Centrelink: in her evidence, she suggested that there was little point reading the letters because they usually contained mistakes.

5. In March 2000, Mrs Tune found a new job. She told Centrelink that her circumstances had changed, as she was required to do. Her Newstart benefit ceased. Neither Nicole nor Kerryn reported the change in their mother's circumstances to Centrelink as required by the Recipient Notification Notice. They say they did not report the change for two reasons:

(a) They assumed that Centrelink was aware of their mother's changed circumstances because she had reported her new job to Centrelink; and

(b) They were under the impression that there was no need for them to report any changes until the end of the financial year or some later point because the amount of their Youth Allowance was calculated with reference to the income data that had already been supplied. They say they were given this impression by Mr Connolly. Since they were not in the habit of reading the Recipient Notification Notices, they did not question this assumption.

1. The department did not make the connection between the cessation of Newstart payments to Mrs Tune and the payment of the Youth Allowance to her daughters. The department continued to pay the Youth Allowance to Nicole and Kerryn at the highest rate on the assumption that their circumstances had not changed, and the parental income test did not apply. The department did not realise that circumstances had changed until Mrs Tune's income tax records were filed some time later.
   The respondent's position

2. The department considered whether the payments made after 30 March 2000 to Nicole and Kerryn would have been made had the parental income test (which assumed the base year was 1998-1999) been applied. The department concluded that Nicole and Kerryn were ineligible. The department says the Tunes received money they were not entitled to receive. The overpayment was a result of the Tunes' failure to advise the department of their changed circumstances. The department says the amount of the payments made from 30 March to 24 November 2000 is now recoverable as a debt to the Commonwealth under s1224 of the Act. Unless it can be established that the debt ought to be written off under s1236 or that it ought to be waived under s1237 under the circumstances described in ss1237A or 1237AAD, the department says the money must be recovered.

3. Mr Foster conceded that if the Tunes had contacted Centrelink when the change in circumstances occurred, it was possible that a modified income test might have been used. Section1067G-F7 of the Act provides that a person may request the secretary to change the appropriate tax year where it becomes clear that the income in the year following the base tax year will be substantially less than in the base tax year. Section 1067G-F8 permits the secretary to determine the entitlement to the Youth Allowance on the strength of an estimate of the parental income in the later period. Mr Foster agreed it was possible that Kerryn and Nicole might have been eligible to receive some Youth Allowance payments (albeit at a lower rate than the payments they received) if the relevant calculations had been performed on estimated figures. But Mr Foster added that the proper time to make an estimate was on or shortly after 30 March 2000, when the Tunes' circumstances changed.
   The applicants' claim

1. Nicole and Kerryn Tune assumed they did not need to contact Centrelink to explain their mother's changed circumstances. I am satisfied they were not attempting to hide that information; they genuinely (although mistakenly) believed it was unnecessary to communicate with Centrelink in light of what their mother had told Centrelink, and in light of what they had come to assume following their meeting with Mr Connolly. They say they would have happily complied with the requirement to advise Centrelink if they had understood that requirement. Their misunderstanding, they say, was the product of Centrelink's errors. Mr Connolly - the Centrelink officer who had interviewed the Tunes in 1999 – conceded in a written statement tendered in evidence that:

   "It may have been possible that Nicole and Kerryn got the impression from me that they didn't have to advise Centrelink if their mother returned to work."

Importantly, though, Mr Connolly goes on in his statement to insist that:

"I did not tell Nicole and Kerryn that they didn't have to contact Centrelink if their mother's newstart allowance was cancelled."

1. Nicole and Kerryn accepted the truth of this statement. They both agreed Mr Connolly had not specifically told them they were not required to contact Centrelink, or that they should ignore the correspondence.

2. Kerryn has commenced university studies, while Nicole is in her last year of university. Kerryn has become eligible to receive the Youth Allowance, although she says that an amount has been deducted for tax and the balance is almost entirely taken by the department's deducting instalment payments in settlement of the debt it claims it is owed. Nicole is employed on a part-time basis. She earns a gross salary of around $220 per week. Both Nicole and Kerryn remain dependent on their mother. Mrs Tune said she borrowed money from her own mother to fund the education and upkeep of her daughters. She noted that the cost of textbooks and other materials necessary for study was very high.
   Findings of fact

1. I find that:

(a) Nicole and Kerryn Tune would not have been eligible to receive a Youth Allowance payment during the relevant period in circumstances if the entitlement was calculated using the 1998-1999 year as the base year.

(b) Nicole and Kerryn became entitled to receive the Youth Allowance payment because Mrs Tune was in receipt of a Newstart allowance.

(c)  Mrs Tune stopped receiving Newstart payments on 30 March 2000.

(d) Nicole and Kerryn did not inform the department of their mother's change in circumstances, and did not read nor respond to the department's notices setting out their obligations to provide Centrelink with relevant information. While the format and the wording of the notices was not as "user friendly" as it might be, I am satisfied from my observations of the applicants that they were capable of understanding the meaning of the documents if they had examined them.

(e) Nicole and Kerryn were confused by the explanations given to them by Mr Connolly, but he did not expressly advise them that they should disregard communications from the department or that they were not obliged to inform the department of changes in their circumstances. I am satisfied that their confusion would have been dispelled if they had read any of the department's notices and contacted Centrelink for advice.

(f)  Nicole and Kerryn do have the financial capacity to pay a small amount of money periodically in settlement of the debt. I accept that neither of the applicants is in a strong financial position: both are students, with Kerryn receiving the Youth Allowance and Nicole holding down a part time job. They are substantially supported by their mother. But a limited capacity to pay does exist.

(g) The amount of the debt claimed by the department stands at $2646.92 in the case of Nicole, and $2159.74 in the case of Kerryn.

Are Nicole and Kerryn Tune liable to repay the amount of the overpaid benefit?

1. It is clear that an overpayment was made to the applicants. The overpayment was made because the department assumed that the circumstances of the applicants had not changed, and they remained entitled to payment of the Youth Allowance at the top rate. The department would not have continued with the payments (and the debt would not have arisen) had they been provided with the information requested in their correspondence with the applicants. Although the advice from Mr Connolly may have been confusing, any misapprehension would have been dispelled had the Tunes read the correspondence from Centrelink and provided the department with the information that it sought.

2. If the Tunes had contacted the department when their mother's circumstances changed, they might have qualified for some payments through the use of an estimate under s1067G-F7 of the Act. But I accept Mr Foster's contention that the option estimate is no longer available. The Act is quite specific about the circumstances in which an estimate may be used. There is no provision for retrospective estimates. It follows the department could not now subtract from the debt the amount (if any) the Tunes might have received by way of Youth Allowance if it had been calculated on the strength of an estimate performed at the appropriate time.

Should the department write off or waive the debt in the circumstances?

1. The circumstances in which the secretary may write off a debt are set out in s1236(1A). Sub-sections (1A) (a), (c) and (d) have no application to Kerryn, while subsections (1A)(a) and (c) have no application to Nicole. I understand that Nicole is not presently in receipt of any social security benefits, but the cost of a recovery does not appear to be an issue, so that subsection(1A)(d) does not appear to have any bearing on her situation.

2. Section 1236(1A)(b) of the Act provides that the debt may be written off where the debtor has no capacity to repay the debt. Section 1236(1C) provides, in effect, that Kerryn must be taken to have the capacity to repay the money from her benefits "unless recovery by those means would cause the person severe financial hardship." I have already expressed the view that Kerryn would not suffer hardship if she was required to repay the money in small instalments. I am satisfied that Nicole, who has a part time job, would be able to pay a small amount each fortnight as well without hardship.

3. The power to waive a debt under s1237 of the Act may only be exercised for present purposes in the circumstances set out in ss1237A or 1237AAD. Section 1237A provides for the debt to be waived where the debt is "attributable solely to an administrative error made by the Commonwealth…". While Mr Connolly may have made an administrative error in not properly explaining the applicants' obligations and entitlements, his error was not the sole cause of the debt. I have already concluded that the overpayment was ultimately attributable to the Tunes' failure to read the correspondence and advise the department of their changed circumstances. It follows that s1237A is not available.

4. Section 1237AAD permits the secretary to waive the right to recover all or part of the debt in certain circumstances. I am satisfied that the debt did not result from the applicants' making a false statement or knowingly failing or omitting to comply with the Act. But are there "special circumstances" within the meaning of s1237AAD(b)?

5. The concept of "special circumstances" was discussed by the Full Federal Court in Beadle v Director-General of Social Security (1985) 60 ALR 225. In that case, Bowen CJ, Fisher and Lockhart JJ observed (at 228):

   "The phrase 'special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss."

Would Mr Connolly's failure to communicate clearly with the Tunes amount to special circumstances? In my view, it would not. Mr Connolly failed to explain the Tunes' obligations to them in clear terms so they were left with the wrong impression of what was required of them. But he did not actively mislead them, and they in any case had ample opportunity to clear up any confusion by reading and responding to the department's correspondence. Since I was unable to identify any other factors that took this case out of the ordinary (see Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545 per Kiefel J), I must conclude that s1237AAD has no application.
Repayment plans

1. Mr Foster told me that the department would enter into a repayment plan with each of the applicants to recover the debts due to the Commonwealth over time. In Kerryn's case, that would involve making deductions from her Youth Allowance payments while Nicole would presumably make payments from her earnings from part-time work. Mr Foster indicated that the usual minimum deduction was $25 per fortnight. In the circumstances, the department should not seek to recover more than the minimum amount from the applicants each fortnight.

2. For the above reasons the decisions are affirmed.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Mr B J McCabe, Member

Signed:         .....................................................................................
           B. Hitchcock,           Associate

Date of Hearing  17 August 2001
Date of Decision  31 August 2001
For the Applicants  In person
For the Respondent                 Mr N Foster, Departmental Advocate