Winter and Secretary, Department of Family and Community Services

[2003] AATA 253

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 253

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2002/766

GENERAL ADMINISTRATIVE  DIVISION		)
Re		JUSTYNE WINTER

Applicant

And

SECRETARY, DEPARTMENT

OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date19 March 2003 

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

..............................................

(Sgd)
  RG Kenny
  Member

CATCHWORDS

Social Security – overpayments of home care child allowance – overpayments of parenting allowance - overpayments of parenting payment – debts due to Commonwealth - waiver of debt – administrative error – special circumstances

Social Security Act 1991 ss 1224, 1236, 1237A, 1237AAD

Beadle v Director-General of Social Security (1985) 7 ALD 670
Director‑General of Social Services v Hangan (1982) 70 FLR 212
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Beadle and Director-General of Social Security (1984) 1 AAR 362

REASONS FOR DECISION

19 March 2003  Mr RG Kenny, Member      

Application

1.      Justyne Winter (the applicant) received income support payments under the Social Security Act 1991 (the Act) in the form of home care child allowance, parenting allowance and parenting payment, respectively, from 1994 until 2000.  On 26 July 2001, a Centrelink officer, on behalf of the Secretary, Department of Family and Community Services (the respondent), determined that the applicant had been overpaid in relation to those payments and that the overpayments were debts due to the Commonwealth.  The debts were determined to be $701 in respect of home care child allowance for the period from 29 September 1994 until 30 March 1995; $9,154.90 in respect of parenting allowance for the period from 4 July 1996 until 12 March 1998; and $19,108.76 in respect of parenting payment in the period from 26 March 1998 until 21 November 2000.

2.      Those decisions were affirmed by an authorised review officer on 13 December 2001, 7 March 2002 and 5 February 2002, respectively.  In turn, they were affirmed by the Social Security Appeals Tribunal on 16 August 2002.  On 3 September 2002, the applicant sought review of that decision by the Administrative Appeals Tribunal (the Tribunal).

3.      At the hearing, the applicant was represented by her husband, Stephen Winter, who also gave evidence. Ms T Shea, Advocate from the Advocacy and Administrative Law Team, appeared for the respondent.

4.      In evidence were the T Documents (T1 – T60) (exhibit 1) as well as the following:

·exhibit 2 - a bundle of letters from the respondent to the applicant dated 27 September 1994, 8 May 1997, 19 May 1997, 21 March 1998, 16 June 1998, 10 December 1998, 18 June 2000 and 2 November 2000;

·exhibit 3 - a summary of payments made by the respondent to the applicant;

·exhibit 4 - a series of computer entries relating to the applicant’s payments; and

·exhibit 5 - a statement, undated but lodged with the Tribunal on 2 December 2002, by the applicant and her husband.

Issues and Legislation

5.      It is not disputed by the applicant that she was paid home care child allowance, parenting allowance and parenting payment in the periods noted above or that she was overpaid the amounts $701, $9,154.90 and $19,108.76 for those forms of income support payment, respectively, in the periods noted above ie from 29 September 1994 until 30 March 1995 in respect of home care child allowance, from 4 July 1996 until 12 March 1998 in respect of parenting allowance and from 26 March 1998 until 21 November 2000 in respect of parenting payment.  Also, it is not disputed by the applicant that these were overpayments which were debts due to the Commonwealth.

6.      The issue taken by the applicant with the decision under review is that the debts should be waived on either of two grounds.  The first ground was that the debts arose solely through administrative error on the part of the Commonwealth and therefore without contributing error on her part.  The second ground was that there were exceptional circumstances in this case that required the debts to be waived.

7.      In this case, the debt was raised under sub-section 1224(1) of the Act which reads:

“1224 (1) If:

(a)an amount has been paid to a recipient by way of social security payment; and

(b)        the amount was paid because the recipient or another person:

(i)        made a false statement or a false representation; or.

(ii)failed or omitted to comply with a provision of this Act or the 1947 Act;

the amount so paid is a debt due by the recipient to the Commonwealth.”

8.      A debt may be written off under the Act in accordance with section 1236 which, insofar as it is relevant, reads:

“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.”

9.      The matters relating to waiver of the debt due to sole administrative error by the Commonwealth and to the applicant’s special circumstances arise under sub-section 1237A(1) and section 1237AAD, respectively, which read:

“1237A.(1)      Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

Note:   Subsection (1) does not allow waiver of a part of a debt that   was caused partly by administrative error and partly by one   or more other factors (such as error by the debtor).

(1A)               Subsection (1) only applies if:

(a) the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

(b) if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.

1237AADThe 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.”

Applicant’s case

10.     The applicant said that, over the period that she received Centrelink payments, she and her husband had run a restaurant and, initially, lived in an attached flat, with all their living expenses being paid by the business.  They paid themselves a low wage but the amounts they were paid varied, and they would not know from week to week what the business could afford to pay them.  They changed the business structure in 1996 from a partnership to a company and family trust and expanded their operation by building a motel on the site of the restaurant.  They continue to own and operate the business and now live in a house which is also on the site.

11.     The applicant acknowledged that the debts had arisen because incorrect information about her income had been relied upon by Centrelink in calculating her payment levels.  She said that she believed the problem began with the first document lodged with Centrelink in 1994.  This was the claim form for home child care allowance and, therein, she had responded “no” to a question asking whether she was a wage earner.  She said that this was not a correct response.  However, she said that she had also responded “yes” to a question asking whether she was self‑employed.  She said that she knew she was a wage-earner but, because she was self-employed, she also believed that the two responses she gave were correct when read together.  She submitted that the form itself was deficient in that it was misleading.

12.     The applicant acknowledged that she had received notices from Centrelink throughout the overpayment period.  She said that she and her husband had not responded in writing to these notices but had visited the Kingaroy Centrelink office and explained their position on each occasion.  This was that their business was one which had significant variations in the levels of fortnightly income and that this made it impossible to provide accurate income details to Centrelink.  She said that she and her husband had explained to various officers there that the only way that they could do this with any degree of accuracy was by consulting their taxation records for a 12 month period and by using average fortnightly figures based on these annual earnings.  She said that she was advised by Centrelink officers that this was acceptable and had relied on that information.  For that reason, she continued to respond to requests for information in that way.  She knew that there were times when income levels exceeded the maximum amounts which were advised in Centrelink notices but had always believed that the method of averaging her income meant that she was complying with Centrelink requirements as long as the average figures were under the threshold levels.

13.     Mr Winter said that he had assisted his wife in completing Centrelink documentation and that he was aware of the difference between personal and business income.  He said that he and the applicant may have gone to the Kingaroy office on between five and ten occasions over the period of payment but he was not able to recall the last time that they did so.  He also agreed that his and the applicant’s financial position was such that present arrangements for repayment of the debt were appropriate and he agreed that this financial position had been enhanced by a substantial win, in the order of $650,000, from a lottery in 2000.

14.     Mr Winter submitted that there was some confusion in that different methods applied to the means of calculating particular income support payments with parenting payment being based on fortnightly income figures and family tax benefit being based on annual income figures.  He also submitted that, because annual taxation figures had been provided to Centrelink, that agency was in a position with its data matching facilities to determine whether or not any discrepancies arose. Further, he submitted that, with that capacity, Centrelink should also be in a position where it could cross-check fortnightly and annual income amounts provided by a recipient in relation to the various types of income support payments received.

15.     Mr Winter submitted that there had been many errors made by and acknowledged by Centrelink in relation to their dealings.  He referred to an occasion in 1997 when information provided about income was incorrectly coded with the result that payments were wrongly cancelled but subsequently restored.  He submitted that Centrelnk’s continuation of payments at incorrect levels was due to its incorrect usage of the annual information given by the applicant about her income and that, if it had used that information correctly, the level of income support payments would have been adjusted and no overpayment made.  In that sense, he submitted, the errors which led to the overpayments were entirely those of Centrelink.

Respondent’s submission

16.     Ms Shea said that, in relation to the home care child allowance overpayment, the applicant had incorrectly ticked the "no" box on her claim when asked if she received any money from wages or salary when she was, in fact, drawing a significant amount from her business as a salary at that time and the respondent assessed her claim, accordingly.  She said that, by letter dated 27 September 1994, the applicant was advised by notice that the respondent was assessing her on the basis of ongoing income of $88.86 per fortnight and requested that she advise the respondent if her income was more than $96.86 a fortnight.  She said that, although her income was more than $96.86 per fortnight, the applicant did not contact the respondent to so advise until March 1995 that her income was $200 per week.  She said that this led to the cancellation of the home care child allowance.

17.     In relation to parenting allowance, Ms Shea said that the applicant applied for this on 21 April 1995 advising that her income was from a partnership share of one-quarter of $18,000 and income of $200 per week.  She said that the allowance was granted on 6 July 1995 based on income of $168.50 per fortnight each for the applicant and her husband and the applicant was notified of this and required to advise if the income went above those amounts.  Ms Shea said that the taxable income for both the applicant and her husband for the 1994/95 tax year was $10,443 each; that for the financial year 1995/96, it was $12,937 for the applicant and $8,849 for her husband; and that, for the financial year 1996/97, it was $15,449 for the applicant and $8,867 for her husband.  She said that each of those amounts was greater than the notifiable income amount but that the applicant only advised her 1995/1996 income level when she lodged a review form on 8 May 1997.  She said that, as a result, the allowance was cancelled.

18.     Ms Shea said that Mr Winter had contacted the respondent on 13 May 1997 and advised that the combined weekly income of himself and the applicant was $318 per week.  She conceded that, by administrative error, this was coded as $318 per fortnight and the allowance was restored.  A letter dated 19 May 1997 was sent to the applicant advising that parenting allowance had been restored on this basis and the applicant did not contact the respondent in response to this letter.

19.     Ms Shea also said that the applicant did not advise in October 1997 of a change in circumstances namely that she began to receive distributions from the newly created family trust.

20.     In relation to parenting payment, Ms Shea said that, on 21 March 1998, the respondent advised the applicant by letter that parenting allowance was replaced by parenting payment and that her entitlement had been worked out using her income of $178.39 and her partner's income of $178.28 per fortnight.  The applicant was required in that notice to advise the respondent if her income exceeded that amount. She said that the applicant and her husband drew, as income from their business, $175 per week each from 24 March 1997; $200 per week each from 14 July 1997; and $250 per week each from 23 March 1998.

21.     Ms Shea said that, on 1 May 1998, the applicant lodged a parenting payment review form and advised in that form that she and her husband held shares worth $5000 in South Burnett Winery and that they had received income from the Winter Family Trust.  She said that this was the first time the respondent had been advised of the trust although this was a notifiable event advised in the letter sent to the applicant on 21 March 1998.  She also said that, by written advices of May 1998 and 10 December 1998, the applicant was advised that her personal income was being assessed at $48.85 per fortnight and the applicant did not respond to these letters to notify that the income reference was not correct.  She also said that, on a review form dated 7 May 1999, the applicant advised that the earnings in the previous financial year were $11,125 each for herself and her husband but that she did not advise the taxable income for the financial year 1989/99 had increased to $13,000 each.

22.     Ms Shea said that, on 18 June 2000, a letter was sent to the applicant stating that her payment was calculated using annual income of $1,310.14 for her husband, her other annual income of $1,345.76 and nil fortnightly income for her.  She said that the applicant did not respond to this letter.

23.     Finally, Ms Shea said that, in November 2000, after the applicant advised that she and her husband had won $650,000 in a lottery, parenting payment was cancelled as this brought their assets above the relevant limit.

24.     Ms Shea submitted that it was not in dispute that the three debts had arisen because of some administrative errors by the respondent and by a failure by the applicant to properly advise of her actual income over a long period despite receiving many notification letters.  She submitted that the debts arose pursuant to section 1224 of the Act.

25.     As the debt was conceded, Ms Shea submitted that the question for the Tribunal was whether consideration should be given to writing off the balance or of waiving the debts, or any part thereof.

26.     Ms Shea submitted that the writing off of the debt under section 1236 of the Act was not appropriate as the applicant was not in financial hardship and had the capacity to repay the debt via deductions from her social security payments.

27.     In relation to waiving the debt under sub-section 1237A(1) of the Act, Ms Shea submitted that two criteria must be satisfied: the debt must arise solely from administrative error and the incorrect payments must have been received in good faith.

28.     Whilst conceding that the respondent had made errors in this matter, Ms Shea submitted that the waiver provision would not apply if there was a failure or omission by the applicant which was a contributing cause for the debt.  Here, the applicant had failed to respond to notices with regard to all three payment types and failed to notify of change of income over a period of seven years during which this income increased.  It was therefore submitted that sole administrative error was not the cause of the debts and that they cannot be waived pursuant to sub-section 1237A(1).

29.     Ms Shea submitted that waiver under section 1237AAD of the Act was not appropriate because there needed to be special circumstances and that was not so in the applicant’s case.

Consideration

30.     The applicant has accepted that the amounts paid to her by way of home care child allowance, parenting allowance and parenting payment are overpayments to which she was not entitled.  I am satisfied that the amounts of $701, $9,154.90 and $19,108.76, in those respective categories of payments, are, indeed, overpayments and that they are debts due to the Commonwealth under section 1224 of the Act.

31.     The provision in relation to writing off a debt is sub-section 1236(1) and it is set out above.  In this case, the debt is not irrecoverable at law in the terms provided for in sub-section 1236(1B) of the Act and, as the applicant ia already repaying the debt, she has not have an incapacity to repay it as provided for in sub-secrtion 1236(1C) of the Act.  The other components of sub-section 1236(1) are not raised on the evidence.

32.     A debt must be waived under sub-section 1237A(1) of the Act if it is attributable solely to an administrative error made by the Commonwealth and if the debtor received in good faith the payment or payments that gave rise to the debt.  I accept the submission of Ms Shea that this will not be met as long as there has been some contribution to the causing of the debt by the applicant: see Director‑General of Social Services v Hangan (1982) 70 FLR 212 at 215, 225 and 235.

33.     The applicant’s case is that, instead of responding in writing to Centrelink when she realised that there were discrepencies between the fortnightly earnings and the amounts declared as maximum amounts in Centrelink letters, she attended the Kingaroy office of Centrelink with her husband and provided information to various officers there.  She said that she relied on the information given to her and felt that, by advising the officers of the manner of calculating her income, she was complying with her obligations under the Act.  Clearly, the incorrect payments continued and did so for a long period of time.  For the applicant to have believed that her visitations to the Kingaroy office would effect a remedy to the incorect levels of payments, she must have perceived that some error was being made. Unfortunately, the errors were not removed and yet no other steps were taken by the applicant to remedy the situation.

34.     I consider that the evidence of the applicant and her husband was unreliable in relation to their attending the Kingaroy office.  They were unable to identify particular officers and Mr Winter gave the range of visits as being in the order of 5 to 10.  Neither was able to state when the last visit occurred.  There is no record of the dealings between the applicant and the Centrelink officers at Kingaroy in relation to her being able to utilise a fortnightly average of income rather than actual fortnghtly amounts.

35.     In this case, there is error conceded by the respondent but I am satsified that there was also contributing error on the part of the applicant in the manner submitted by Ms Shea and noted above.  That being so, the debt cannot be waived under sub-section 1237A of the Act.

36.     A debt may be waived under section 1237AAD of the Act which is set out above.  For that to be done, it must be the case, amongst the other reqiuirements of the provision, that there are special circumstances other than financial hardship alone that make it desirable to waive.

37.     The Act provides no guidance as to the meaning of the term special circumstances in section 1237AAD of the Act.  In Beadle v Director-General of Social Security (1985) 7 ALD 670, the Full Federal Court 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 have a particular quality of unusualness that permits them to be described as special".

38.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Keifel J, after referring to the Federal Court's decision in Beadle’s case, observed (at 545) that special circumstances:

“would require something to distinguish... [the].. case from others, to take it out of the      usual or ordinary case. ……. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some      feature out of the ordinary.”

39.     I am satisfied that there is nothing in this case that gives it the character of unusualness or unfairness and I am satisfied that there are no special circumstances in the applicant’s case that would justify waiver of the debt under section 1237AAD of the Act.

40.     The decision under review is affirmed

I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed:         Denise Burton
  Administrative Assistant

Date/s of Hearing  5 March 2003
Date of Decision  19 March 2003

For the Applicant  Mr S Winter, applicant’s husband       
For the Respondent                  Ms T Shea, Departmental Advocate