Walsh and Anor; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Anor and
[2008] AATA 75
•29 January 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 75
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2006/1649 and N2006/1701
GENERAL ADMINISTRATIVE DIVISION ) Re
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Applicant
JULIE-ANNE WALSH
Respondent
Re
And
JULIE-ANNE WALSH
Applicant
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Ms N Isenberg, Senior Member Date29 January 2008
PlaceSydney
Decision The decision under review is affirmed. ...................[SGD]........................
Ms N Isenberg
Senior Member
CATCHWORDS
SOCIAL SECURITY – carer pension – Debt due to the Commonwealth – Whether debt attributable “solely” to Commonwealth’s error - Whether debt should be waived – “special circumstances”
LEGISLATION
Social Security Act 1991 - s 1223, 1236, 1237A and 1237AAD
CASE LAW
Sekhon v Secretary, Department of Family and Community Services - (2003) 76 ALD 105
Secretary, Department of Employment and Workplace Relations and Taylor [2007] AATA 1377 (29 May 2007)
Re Gerhardt and Department of Employment, Education and Training (AAT 10941, 17 May 1996)
Secretary, Department of Families, Community Services and Indigenous Affairs and Ors and Shaw and Ors [2007] AATA 1691 (24 August 2007)
Secretary, Department of Education, Employment, Training and Youth Affairs and Prince (1997) ALR 127
Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Secretary, Department of Social Security and Hales (1998) 51 ALD 695
Re Ivovic and Director-General of Social Services (1981) 3 ALN No 61
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436
Weekes and Secretary, Department of Family and Community Services [2004] AATRA 770 (22 July 2004)
Re Secretary, Department of Employment and Workplace Relations and Bilgin [2007] AATA 1167 (23 March 2007)
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Davy v Secretary, Department of Employment & Workplace Relations [2007] AATA 1114, (9 March 2007)
REASONS FOR DECISION
29 January 2008 Ms N Isenberg, Senior Member DECISION UNDER REVIEW
1. On 13 May 2006 an authorised review officer affirmed a Centrelink decision to raise and recover from Ms Walsh a carer payment debt, in the amount of $12,694.89, in respect of the period 16 November 2002 to 23 December 2005. On review by the Social Security Appeals Tribunal (‘SSAT’) the debt between 25 May 2004 to 23 December 2005 was waived under section 1237A of the Social Security Act 1991 (“the Act”). However the SSAT also decided that the balance of debt from 16 November 2002 to 24 May 2004 was to be recovered from Ms Walsh.
BACKGROUND
2. Ms Walsh was granted (what is now) carer allowance for her daughter from August 1998, and from September 2002 in respect of her son, as well as carer payment. At that time Ms Walsh stated her combined weekly income (with her partner, Mr Jamie Bell) totalled $1,008.38 per week, which is $52,435.76 per annum. Carer payment is paid subject to an income test.
3. Centrelink sent Ms Walsh a series of letters about the information used to calculate carer payment.
DATE
INFORMATION USED TO CALCULATE CARER PAYMENT
AMOUNT
12 December 2002
Combined Annual Income
$25,800.80
17 December 2002
Combined Annual Income
$36,170.40
15 September 2003
Combined Regular Fortnightly Income
$1,391.14
25 May 2004
Combined Regular Fortnightly Income
$1,391.14
4. The letters stated, among other things that the combined annual income estimate or combined regular fortnightly income was used for calculating regular payment. Each letter also informed Ms Walsh that she should contact Centrelink within 14 days to advise if “your and your partner’s gross income before payment of any tax … increases” or “has changed”.
5. Ms Walsh contacted the Family Assistance Office (‘FAO’) to provide income estimates, which included information about her carer payment:
DATE OF ESTIMATE
MR BELL
MS WALSH
ANNUAL CARER PAYMENT
25 May 2004
$39,500
$15,000
$3,875
3 November 2004
$39,500
$15,000
$3,875
12 December 2004
$39,500
$16,500
$3,875
2 June 2005
$44,500
$16,500
$3,875
6. On 1 December 2005, after data-matching with the Australian Taxation Office (‘ATO’) Centrelink wrote to Ms Walsh noting a discrepancy between her and Mr Bell’s income for the 2003/2004 financial year, and the income recorded by Centrelink at 30 June 2004 for the purposes of carer payment. The letter stated that according to the ATO, Ms Walsh’s income (other than Centrelink income) was $15,396.00, whereas Centrelink records showed income of $0 as at 30 June 2004 and that, according to the ATO, Mr Bell’s income (other than Centrelink income) was $38,496, whereas Centrelink records showed $25,136.
After receiving information from Ms Walsh and Mr Bell‘s employers, on 6 January 2006 Centrelink raised a $12,694.89 carer payment debt against Ms Walsh.
ISSUE BEFORE THE TRIBUNAL
7. Whether there is a recoverable debt for the period 16 November 2002 to 23 December 2005; and if so, whether the debt should be recovered?
LEGISLATION
8. The relevant legislation in this matter is the Social Security Act 1991 in particular sections 1223, 1237A and 1237AAD.
THE HEARING
9. l had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence.
10. Ms Walsh and Mr Bell gave evidence and were cross-examined on behalf of Centrelink.
CONSIDERATION OF EVIDENCE AND FINDINGS
Is there a recoverable debt?
There was no dispute that Ms Walsh had been paid more carer payment, than that to which she was entitled. Consequently, the amount of the overpayment is a debt owed by her to the Commonwealth under subsection 1223(1) of the Act.
Should the debt be recovered?
11. The Act makes limited provision for debts not to be recovered.
12. Pursuant to subsection 1236(1) of the Act, a debt can be written-off by the Secretary in a very limited number of circumstances, none of which apply in this matter.
13. A debt may be waived under section 1237A, if two conditions are met, namely that the debt arose solely because of administrative error and the debtor received the payments in good faith.
Was the debt solely attributable to an administrative error by Centrelink?
14. It was contended on Ms Walsh’s behalf that the carer payment debt arose due to administrative errors which are solely attributable to the Commonwealth.
15. In the 2002/2003 financial year Ms Walsh and Mr Bell’s actual income, according to the ATO, was only marginally different – $52,660 – to the annualised income estimate in the claim form. The income cut-off point at the time Ms Walsh was granted carer payment was $52,273 per annum. Therefore, even on the basis of her income estimate, she was not entitled to carer payment at that time due to her family’s combined income.
16. In her claim form Ms Walsh had estimated her fortnightly income as $436.11, and noted that she expected a big drop in pay due to a new roster. However, the material provided by her employer indicated that her gross fortnightly income between 29 November 2002 and 18 February 2005 exceeded this amount on all but four occasions. It regularly exceeded $700 per fortnight.
17. Similarly, she had estimated Mr Bell’s fortnightly income as $572.27. Information provided by Mr Bell’s employer for the period 20 November 2002 to 16 December 2005 showed that in every fortnight Mr Bell earned not less than $1300.
18. The first letter in relation to carer payment was sent to sent to Ms Walsh on 12 December 2002. That letter stated that her carer payment was based on a combined annual income of $25,000.80, but did not provide the basis for this figure. There was some speculation as to why this figure, and not the amount that Ms Walsh declared on her carer payment form, was used to work out her entitlement, but it remains clear that the figure used was wrong. Similarly, there was no explanation why, in the letter of 17 December 2002, the rate of carer payment was said to be based on a combined annual income of $36,170.40. It also was clearly an error.
19. However I must determine if the resultant overpayment was "attributable solely to" Centrelink’s error. The phrase has been considered by the Full Federal Court in Sekhon v Secretary, Department of Family and Community Services (2003) 76 ALD 105 where the relevant test was said to be whether the only cause that objectively can be ascribed to the relevant debt is an administrative error.
20. Centrelink sent letters to Ms Walsh, during the debt period, setting out the basis on which she was being paid carer payment and her notification obligations to Centrelink.
21. Although the letters stated income amounts for Ms Walsh and Mr Bell which were not accurate, Ms Walsh did not provide updated accurate income amounts. Ms Walsh said that she did not read the forms ‘word for word’ and ‘didn’t read the fine print’ because she had ‘too much going on’, noting her own medical problems and those of her children. She ‘never read the back page’. She thought the early letters were just telling her she was now going to receive carer payment, her application for which had previously been refused. She also thought that her income would only be relevant to the calculation of carer payment if she worked more than 20 hours per fortnight. Ms Walsh said that even if she had read the (first of the) letter(s) she would not have realised that the quoted combined annual income of $25,000.80 was wrong, because she is not good with figures, and also the income information she had previously supplied was what was earned on a fortnightly, rather than annual, basis.
22. I note however that the income information provided by her, was within only weeks of completion of the form, clearly inaccurate. In particular, Mr Bell’s fortnightly income was about three times, and sometimes more, than what she had recorded.
23. I was referred to the Tribunal’s recent decision in Taylor; Secretary, Department of Employment and Workplace Relations [2007] AATA 1377 (29 May 2007). In that case, as here, the respondent had already advised Centrelink of the correct amount of her combined family income. However, Centrelink did not record this income correctly, and sent her a letter asking her to advise Centrelink if her income “goes over” an amount that was lower than the income amount she had already notified to Centrelink.
24. It was submitted that in that case the Centrelink letter was phrased ‘in similar terms’ to the letters sent to Ms Walsh. That is not entirely accurate. Each letter sent to Ms Walsh required her to contact Centrelink within 14 days to advise if “your and your partner’s gross income before payment of any tax … increases” or “has changed”. Both her income and that of Mr Bell had clearly changed (and in fact, increased) between the time of application and the date of the first of the letters. Taylor then is clearly distinguishable.
25. Her failure to advise Centrelink of her change in financial circumstances then means that Centrelink’s error was perpetuated for some time. I accept that Ms Walsh’s failure to notify Centrelink of correct combined income amounts for the purposes of calculating carer payment, and failure to respond to or question letters sent in relation to payments, also contributed to the overpayment.
26. The overpayment arising between 16 November 2002 to 24 May 2004 is therefore is not solely attributable to Centrelink’s error: Re Gerhardt and Department of Employment, Education and Training (AAT 10941, 17 May 1996).
27. The situation however is different from 25 May 2004. On that date Ms Walsh contacted the FAO with information about her and Mr Bell’s income.
28. Ms Walsh evidence was to the effect that she assumed that when she gave Centrelink her income estimates for family tax benefits (‘FTB’) that this was also used to work out her carer payment. She provided updated estimates of her family’s income, and, she submitted, those estimates should have been used to update her income for carer payment.
29. A number of submissions were made on the Secretary’s behalf to the effect that it would have been inappropriate for Centrelink to apply Ms Walsh’s estimate of income, provided for the purposes of FTB, to her carer payment.
30. It was submitted that carer payment and FTB are governed by different pieces of legislation with different definitions of “income” apply to each payment type. While this is undoubtedly the case, I do not think that the ordinary Centrelink beneficiary should be expected to appreciate this subtlety. It was further submitted that Ms Walsh should have been aware of the need to notify both parts of Centrelink because separate notices were sent in relation to carer payment and family assistance, each with different phone numbers. A notification to Centrelink for one purpose should suffice.
31. It was also submitted by Centrelink’s advocate that Ms Walsh’s estimates were not accurate, because she deliberately overestimated FTB income, so as not to incur a debt. However Ms Walsh and many beneficiaries like her choose to overestimate their income, so as to avoid incurring a debt. Some, with adequate means, forego fortnightly payment altogether, and wait for end of year reconciliation instead. If Centrelink had proceeded on the basis of the information provided by Ms Walsh in respect of FTB, her (carer payment) debt situation would be markedly different.
32. I was referred by the Secretary’s advocate to Secretary, Department of Families and Community Services and Indigenous Affairs and Ors and Shaw and Ors [2007] AATA 1691 in that:
“each recipient of benefits has a unique personal situation the details of which are not known to Centrelink, and it is up to each person to correctly advise Centrelink about his or her own situation when asked”
However, whilst I agree with the cited portion of the decision, that case was different to the present matter. In that case Ms Shaw had provided a zero estimate of income despite being paid parenting payment by Centrelink. Here, Ms Walsh, from 25 May 2004 advised Centrelink not only of her carer payment, but also of her income and Mr Bell’s income.
33. Accordingly, I find that the debt arising from overpayment from 25 May 2004 was attributable solely to administrative error by the Commonwealth.
Was the overpayment from 25 MAY 2004 received in good faith?
34. I was referred to Secretary, Department of Education, Employment, Training and Youth Affairs and Prince (1997) ALR 127 and Haggerty v Department of Education, Training and Youth Affairs [2000] FCA 1287. 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.
35. There was no evidence other than that from 25 May 2004 Ms Walsh believed that her payments were calculated correctly. She had declared her and her partner’s income correctly in relation to her FTB. She understood that Centrelink was aware of the increase and she updated her income estimates three further times after that date in the period under review.
36. Ms Walsh had no reason to suspect that her payments were incorrect. At the time she was in receipt of FTB, child care benefit, carer allowance and carer payment - all payments with very different income tests. I agree with the submission that she could not have been expected to be aware of how increases in her family’s income should affect each one of them. I do not believe she turned a ‘blind eye’ to her circumstances: Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424.
37. Significantly, Ms Walsh was not sent any rate notices in relation to her carer payment between 25 May 2004 and 1 December 2005.
38. The debt accruing from 25 May 2004 was therefore clearly caused by Centrelink not taking into account Ms Walsh’s updated income statement and there was no absence of good faith on her part.
39. Accordingly the carer payment debt arising after 25 May 2004 is waived.
Are there special circumstances why the balance of the debt (16 November 2002 to 24 May 2004) should be waived?
40. A further provision of the Act allows for waiver of debts in “special circumstances”. That term is not defined in the Act but the circumstances need to be so unusual or exceptional that strict application of the law would be unjust, unreasonable, inappropriate or otherwise unjustified: Re Ivovic and Director-General of Social Services (1981) 3 ALN 61. Recently the term was considered in Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436 where Justice Besanko noted “the importance of maintaining flexibility in determining what constitutes special circumstances”.
41. Further:
“It was not the intention of Parliament to confine the exercise of discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasized. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.”
42. It was contended by the Secretary that the situation in which Ms Walsh finds herself is not significantly different from that of other recipients of carer payments who have received overpayments, such as would warrant waiver of recovery of any part of the debts which are under review by this Tribunal.
43. Ms Walsh cares for her two children, both of whom have health issues.
44. In addition she has her own health problems. She has gynaecological problems which have required hospitalisation. Ms Walsh also suffers from depression and anxiety, although she is not receiving any psychiatric care at this stage. Shortly before the hearing she was investigated for a thyroid module and a breast lump which was biopsied.
45. Ms Walsh works on part-time and earns approximately $920 per week. Mr Bell is now on a fixed salary of $45,000 per annum. There is little, if any discretionary spending. They have virtually no assets and have reasonably high medical expenses, mainly associated with the children’s conditions. They have credit card debts of $10,000 and a personal loan of $39,000.
46. I was urged to take into account the administrative errors made by the Commonwealth, as I did in Weekes and Secretary, Department of Family and Community Services [2004] AATRA 770 (22 July 2004). The Secretary, on the other hand, contended that any administrative errors made by the Commonwealth should not be considered as a “special circumstance” and referred me to Re Secretary, Department of Employment and Workplace Relations and Bilgin [2007] AATA 1167:
“Section 1237A(1) addresses the consequences of benefits which are paid solely as a result of administrative error on the part of the Department. It cannot have been parliament’s intention to nevertheless allow the retention of such benefits, under a different section, in circumstances where the recipient was partly to blame. Viewed in its statutory context, something more must be required” (at paragraph 18).
47. Each matter is different. In the present matter, I agree that Ms Walsh’s circumstances are unfortunate but she has, for nearly five years, had the benefit of the money to which she was not entitled. Taxpayers are entitled to expect that in the ordinary course money paid to Centrelink beneficiaries to which they are not entitled will be recovered: Secretary, Department of Social Security v Hales (1998) 82 FCR 154.Recently, that approach was adopted in Davy v Secretary, Department of Employment & Workplace Relations [2007] AATA 1114, 9 March 2007 at 80. I have come to the conclusion that while her circumstances, taken together, are regrettable there is nothing so unusual, exceptional or uncommon about her situation so as to set her apart from others in receipt of Centrelink benefits that recovery of the debt in respect of the period 16 November 2002 to 24 May 2004 would be unjust or unreasonable.
DECISION
48. The decision under review is affirmed.
I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member
Signed: ...[SGD].......................................
AssociateDate of Hearing 17 December 2007
Date of Decision 29 January 2008
Solicitor for the Applicant Ms D Anagnos
Solicitor for the Respondent Ms J Maclean
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