Veraa and Secretary, Department of Employment and Workplace Relations
[2005] AATA 1226
•13 December 2005
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DECISION AND REASONS FOR DECISION [2005] AATA 1226
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/265
GENERAL ADMINISTRATIVE DIVISION )
| Re | JOHANNA VERAA | |
Applicant
| And | SECRETARY, DEPARTMENT OF EMPLOYMENT and WORKPLACE RELATIONS |
Respondent
DECISION
| Tribunal | Mr R G Kenny, Member |
Date 13 December 2005
Place Brisbane
| Decision | The Tribunal affirms the decisions under review. |
.............…...[Sgd]................…….
R G Kenny
Member
CATCHWORDS
SOCIAL SECURITY – overpayments of parenting payment – debt due to Commonwealth –– debt recoverable and not written off – absence of special circumstances - no waiver of debt – decision affirmed
Social Security (Administration) Act 1999
Social Security Act 1991 ss 1223, 1236, 1237AAD
Beadle v Director-General of Social Security (1985) 7 ALD 670
Re Beadle and Director-General of Social Security (1984) 1 AAR 362
REASONS FOR DECISION
| 13 December 2005 | Mr R G Kenny, Member |
Application
Johanna Veraa was paid parenting payment under the Social Security Act 1991 (the SS Act) from January 2002. On 30 November 2004, a delegate of Centrelink on behalf of the Secretary, Department of Employment and Workplace Relations (the respondent) determined that, in the period from 2 July 2002 until 28 June 2004, she had been overpaid an amount of $2,487.67 and that this was a debt due by her to the Commonwealth. That decision was affirmed by an authorised review officer on 2 March 2005 and, on 8 April 2005, by the Social Security Appeals Tribunal. She now seeks review of the decision by the Administrative Appeals Tribunal (the Tribunal).
The respondent was represented by Ms C Heffner. The applicant attended the hearing but was not represented. In evidence were the following:
§exhibit 1: the “T” Documents (T1 – T67) prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975;
§exhibit 2: a statement, dated 13 October 2005, by Jennifer Bouras;
§exhibit 3: a statement, dated 21 July 2005, by the applicant; and
§exhibit 4: a statement of withholdings from the applicant’s payment.
In addition, the Tribunal had before it a summary of the manner in which it calculated the payments made to Ms Veraa. Therein, it was acknowledged that there had been some minor errors made in the initial calculations and the amount of the debt alleged was reduced to $2421.67. The decision was varied, accordingly.
Issues and Legislation
The respondent contends that information requested from Ms Veraa in letters sent to her during the period of the overpayment was not supplied and that this contributed to the incorrect level of payments being made. In relation to the need to provide information, section 68 of the Social Security (Administration) Act 1999 (the Administration Act), in so far as relevant, reads:
“68. Person receiving social security payment or holding concession card
(1) Subsection (2) applies to a person to whom a social security payment (other than utilities allowance or seniors concession allowance) is being paid.
(2) The Secretary may give a person to whom this subsection applies a notice that requires the person to do either or both of the following:
(a)inform the Department if:
(i)a specified event or change of circumstances occurs; or
(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment.
…
(5) An event or change of circumstances is not to be specified in a notice under this section unless the occurrence of the event or change of circumstances might affect the payment of the social security payment or the person's qualification for the concession card, as the case requires.”
The debt in relation to parenting payment was raised under sub-section 1223(1) of the SS Act which reads:
“Debts arising from lack of qualification, overpayment etc.
1223(1) Subject to this section, if:
(a) a social security payment is made; and
(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.”
The respondent also decided that, in Ms Veraa’s circumstances, the debt could not be written off or waived under sections 1236 and 1237AAD of the SS Act, respectively, which read:
“Secretary may write off debt
1236(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
1236(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
1236(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a) the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa) the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt.
1236(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a) deductions from the debtor's social security payment; or
(b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c) setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
1236(2) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision-on the day on which the decision is made; or
(b) if a day is specified in the decision-on the day so specified (whether that day is before, after or on the day on which the decision is made).
Waiver in special circumstances
1237AAD The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or false representation; or
(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.”
The debt has, as noted above, been reduced since the decision was made by the Social Security Appeals Tribunal. In that regard, sub-section 180 of the Administration Act reads:
“Variation of decision before AAT review completed
(1) If an officer varies a decision after an application has been made to the AAT for review of that decision but before the determination of the application, the application is to be treated as if:
(a) the decision as varied had been affirmed by the SSAT; and
(b) the application were an application for review of the decision as varied.
(2) If an officer sets a decision aside and substitutes a new decision after an application has been made to the AAT for review of the original decision but before the determination of the application, the application is to be treated as if:
(a)the SSAT had set aside the original decision and substituted the new decision; and
(b) the application were an application for review of the new decision.
(3) If:
(a)a person applies to the AAT for review of a decision; and
(b)before determination of the application, an officer varies the decision or sets the decision aside and substitutes a new decision;
the applicant may, instead of proceeding with the application under subsection (1) or (2), withdraw the application.”
The issues for determination are whether there is a parenting payment debt owed by Ms Veraa to the Commonwealth, what the amount of any such debt is and whether any such debt may be written off or waived.
Ms Veraa’s evidence
Ms Veraa said she was aware that the level of her parenting payment depended upon the income she earned. She agreed that, during the overpayment period, she received income in the amount of $120 per week from a rental property she owned and also periodic payments for part-time work with several employers, namely, Education Queensland, the Hacienda Child Care Centre and her brother’s company, Ron Veraa Constructions. Ms Veraa was aware that she had to advise Centrelink of her earnings and believed that she had done this in respect of the rental property because, at the time of her initial claim for parenting payment, she made Centrelink aware that she owned the property. She did this by completing a document described as a “MOD R” in which she identified the address of the property, indicated that it was valued at $120,000 and advised that she was receiving rent in the amount of $120 per week. She also said that she had advised Centrelink of the earnings that she received from Education Queensland and Hacienda Child Care Centre but conceded that she had not done this in relation to her earnings from Veraa Constructions. She said that she received cash payments from her brother on an irregular basis because he only paid her when he had cash in hand. When she received the money, she considered declaring it but, because it was received irregularly, she did not know what dates she would have to put down for its receipt. She agreed that she had not sought advice on this from any Centrelink office.
Ms Veraa acknowledged that she had received a range of letters from Centrelink advising her of her entitlements. She agreed that, in those letters, she was advised by Centrelink of the annualised basis of the income upon which her parenting payments were calculated. She also agreed that the letters required her to advise Centrelink in the event that these amounts were incorrectly stated. However, she said that she was not aware of the way in which Centrelink calculated her payments, that she always assumed that her income amounts had been correctly stated and that she was being paid the correct amounts.
Ms Veraa is currently in employment and earning approximately $730 per fortnight. She lives with her daughter and both are in good health. She still owns the rental property and intends to keep it as security for her future. Ms Veraa has recently incurred expenses in relation to the eradication of termites and repair of associated damage in part of her house where she is now living.
Ms Veraa said that she had been repaying the debt through deductions from her family tax benefit. The current withholding is in the order of $34 per fortnight. She was critical that deductions were taken from her family tax benefit because this was not the same form of income support which had led to the overpayment.
Evidence of Jennifer Bouras
Ms Bouras was the Centrelink Officer who processed the initial application for parenting payment lodged by Ms Veraa. She was employed by Centrelink for nine years in the areas of pension payments and family tax benefit as well as in training of staff. She is no longer employed by Centrelink.
On perusing documentation, Ms Bouras agreed that she had been responsible for processing the original claim that Ms Veraa made but said that she had no independent recollection of Ms Veraa’s case. Ms Bouras conceded that she had been made aware that Ms Veraa had a rental property which generated income in the amount of $120 per week. She said this was a gross amount and that, when this information was received, it was routinely the case that the taxation returns for the previous year would be consulted to see whether or not there had been a net gain or loss on a rental property. In Ms Veraa’s case, she consulted the taxation documents for the 2001/2 financial year and, because of significant expenses incurred by Ms Veraa in that year in relation to the property, she had made a loss. In that situation, Ms Bouras entered $0 as the net income from the rental property. Ms Bouras said that her routine procedure was to advise the person in Ms Veraa’s position of the importance of taxation returns and the need for these to be lodged with Centrelink on an annual basis so that further calculations of the net income of rental property could be ascertained.
In the absence of further taxation returns being provided by Ms Veraa, the amount of $0 as the earnings from the rental property had been maintained. Ms Bouras said that the procedure she adopted was correct and that it gave the potential recipient of income support payments the benefit of legitimate business expenditures occurred in respect of a rental property. However, she said the full procedure depended upon the recipient then providing updates of those expenditures.
Respondent’s Case
Ms Heffner submitted that the procedure adopted by Ms Boulas had been correct and that it was then Ms Veraa’s obligation to provide further information about her rental income. She submitted that, throughout the period from February 2002, Ms Veraa was sent letters which clearly stated the income level that was being utilised for the calculation of her parenting payment. She submitted that each of those letters included a requirement that Ms Veraa was to advise Centrelink if the information provided was incorrect. In each case, she submitted, the letter constituted a formal notice and the information was to be provided to Centrelink within fourteen days.
Ms Heffner contended that taxation returns were not lodged by Ms Veraa until 15 October 2004 and that, as a result, the income from her rental property had continued to be listed as $0 on the basis of the initial calculations. She also submitted that incorrect information about her periodic earnings had been provided and that this had resulted in an incorrect level of payment to her. In particular, she submitted that there had been no information about income received from Veraa Constructions.
In the calculation of the overpayments, Ms Heffner submitted that Ms Veraa had received by way of parenting payment an amount of $22,886.11 in the overpayment period and that she had been entitled to receive only $20,360.95. She also conceded that, in a separate action by Centrelink, an individual overpayment of $103.49 had already been recovered from Ms Veraa and that this should be deducted from any debt that was calculated. In the result, she submitted that the amended debt was $2,421.67.
Ms Heffner submitted that there was no basis for either waiver or writing off of the debt.
Consideration
In evidence were letters sent by Centrelink to Ms Veraa. These were in the form described by Ms Heffner. On 21 February 2002, a letter was sent advising Ms Veraa that her annual income was $6.06. She was required to advise Centrelink within 14 days if her financial investments exceeded $1,202. On 10 May 2002, a similar letter was sent declaring annual income to be $6,564.10 and a requirement was included that, within 14 days, she was to advise if her income from financial investments exceeded $1,484. Letters providing that same information were also sent to Ms Veraa on 17 September 2003, 22 September 2003 and 24 March 2004.
A series of other letters were sent to Ms Veraa by Centrelink which referred to her periodic income. This included income from Education Queensland and the Hacienda Child Care Centre but it is not disputed that these amounts were correctly notified. This was confirmed by information provided by those employers. However, on 30 September 2004, Ron Veraa Constructions responded to a request by Centrelink for information about earnings of Ms Veraa and, in a document received by Centrelink on 30 September 2004, Ron Veraa advised that she had earned $1,132.50 for the 2002/3 tax year and $2,015.00 for the 2003/4 tax year. He also advised that she had not been employed during the 2004/5 taxation year. There is no documentation to indicate that these earnings were advised by Ms Veraa and she conceded this in her evidence.
Ms Veraa’s taxation return for the 2001/2 financial year revealed that she received $4,323.00 as net income from her rental property. Her 2003/4 taxation return revealed a net rental profit of $4,618.00.
On the material before me, I am satisfied that Ms Veraa’s parenting payment calculations were based on incorrect levels of her income in the period from 2 July 2002 until 28 June 2004. As noted above, a summary of those calculations was updated and provided to the Tribunal after the hearing by Ms Heffner. I am satisfied that they correctly calculate the amount received by Ms Veraa as $22,887.71 with the entitlement amount being $20,360.95. I have also noted the concession by Ms Heffner that $103.49 of this has already been repaid by Ms Veraa and, in the result, I am satisfied that the resulting and remaining over payment is $2,421.67.
I am satisfied that, on the basis of her current income, Ms Veraa is capable of repaying the debt through deductions from family tax benefit. I have noted Ms Veraa’s concern that this was used as a source for reduction of benefits. However, this approach by the respondent is in accordance with the terms of section 1236 of the Act. I am satisfied that it is recoverable by that means and that, therefore, it can not be written off.
A debt may be waived if it was attributable solely to an administrative error made by the Commonwealth. However, that basis for waiver is not raised by the evidence or submissions in this case. The alternative is for the waiver provisions in section 1237AAD of the Act to be considered. This provision is set out above and requires that there be special circumstances to justify that action.
The Act provides no guidance as to the meaning of the term special circumstances. In Beadle v Director-General of Social Security (1985) 7 ALD 670, the Full Federal Court, in dealing with the phrase, stated that it was not possible to lay down precise limits or precise rules for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss" (at 674). There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security (1984) 1 AAR 362) where (at 364) the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances must be “unusual, uncommon or exceptional” and must have a “particular quality of unusualness that permits them to be described as special".
In this case, the only circumstance raised by Ms Veraa is the need to incur expense to repair termite damage to her house. On her evidence, this is largely completed and was undertaken by her brother. She has a small outlay to make for the completion of this work but I am satisfied that there is nothing in this case that gives it a character of unusualness or unfairness and I am satisfied that there are no special circumstances that would justify waiver of the parenting payment debt under section 1137AAD of the Act.
Decision
The decision under review is affirmed
I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member
Signed: Jeff Mills
Legal Research Officer
Date/s of Hearing 4 November 2005
Date of Decision 13 December 2005
The Applicant was unrepresented
For the Respondent Ms C Heffner, Departmental Advocate
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