Wittenberg and Secretary, Department of Social Services (Social services second review)
[2022] AATA 2437
•26 May 2022
Wittenberg and Secretary, Department of Social Services (Social services second review) [2022] AATA 2437 (26 May 2022)
AppID:Wittenberg and Secretary, Department of Social Services
MatterType: Social services second review
Division:GENERAL DIVISION
File Number(s): 2021/1042
Re:Eric Wittenberg
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member P Ranson
Date:26 May 2022
Place:Brisbane
The decision under review is set aside and in substitution the Tribunal decides that:
(a)The Applicant has a parenting payment debt due to the Commonwealth of $57,808.48 for the period 31 May 2012 to 28 August 2019; and
(b)The debt is written off for a period of six months from the date of this decision; and
(c)The debt is otherwise recoverable in full.
..........................[SGD]...........................
Member P Ranson
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by subsections 16(2AB)-16(2AC) of the Child Support (Registration and Collection) Act 1988.
Catchwords
SOCIAL SERVICES – debt – overpayment of parenting payment – waiver – write off –– where applicant updated agency regularly – good faith – special circumstances – financial hardship – COVID-19 pandemic – unusual and uncommon circumstances – decision set aside and substituted
Legislation
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
Beadle and Director-General of Social Security (1984) 6 ALD 1
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
FCT v Cassaniti [2018] FCAFC 212
SDEETYA v Prince [1997] FCA 1565Secondary Materials
Guides to Social Policy Law Social Security Guide Version 1.293 - Released 9 May 2022
REASONS FOR DECISION
Member P Ranson
26 May 2022
INTRODUCTION
Mr Wittenberg’s wife, Ms Katrin Borchert, is an Olympic level sportswoman. She competed in four Olympic games and secured medals each time. They have lived in Australia for many years and have four young children. Mr Wittenberg gave up his career in his native Germany to be the primary care giver and to allow Ms Borchert, also a native German, to pursue her career as a top-level kayaker and later as a coach and also as a teacher at a university. Ms Borchert has health issues arising from her sporting career and their youngest child has a heart condition. They are not a wealthy family.
From November 2011 to September 2019 with some periods of suspension and cancellation, Mr Wittenberg received parenting payment (PP) from Centrelink. He also received family tax benefit (FTB). The rules around reporting of family income for PP purposes changed in February 2014 after which only changes were to be reported rather than actual income each fortnight. For FTB, fortnightly reporting continued. Mr Wittenberg diligently reported their family income for FTB purposes in the mistaken belief that information would also be used for PP purposes.
As he now knows, Mr Wittenberg ceased to qualify for PP around 2014 and yet the payments continued until 2019 when Centrelink discovered otherwise, and the payments stopped. By that time and to his horror, Mr Wittenberg had accumulated a debt of $57,808.48 for overpaid PP.
Centrelink argues it was the responsibility of Mr Wittenberg to report changes to their family income both for FTB purposes and for PP purposes, even though both benefits are administered by the same organisation. Centrelink issued many notices and letters to Mr Wittenberg from 2012 to 2019 setting out the rate of PP he would be paid and the income of Ms Borchert as they recorded it with the usual alert for him to notify changes in family income. There were many discrepancies and yet he did not respond or raise with Centrelink they had incorrect information for PP purposes. He says he did not act on them because he assumed, incorrectly, the reporting he was doing for FTB would flow on to PP and he accepted the PP payments in good faith on that basis. Centrelink say it should have been apparent to him the income reported for FTB purposes was not transferred to his PP benefit.
There are two main issues in this case, namely, does Mr Wittenberg have a debt for overpaid PP and is that debt payable in whole or part. A sub-issue is whether reporting for FTB purposes suffices for PP. Mr Wittenberg acknowledges his mistake and says he honestly believed he had discharged his obligation by reporting family income for FTB purposes, and does not dispute the calculation of the overpaid PP. Whether Mr Wittenberg should repay the debt is the main issue for him.
Unfortunately for Mr Wittenberg, there is no mechanism for income reported for FTB to be applied to PP. It was incumbent on Mr Wittenberg to notice the discrepancies in the income Centrelink were relying on as stated in the letters they wrote to him and to contact them to correct those discrepancies. He failed to do that, so the debt stands and must be repaid to the Commonwealth. For the reasons set out below, Mr Wittenberg should be afforded time for he and Ms Borchert to seek employment or other sources of income to support their family and to repay the debt.
BACKGROUND
The parties in this case are:
Applicant
Mr Eric Wittenberg (Mr Wittenberg)
Respondent
Secretary, Department of Social Services (the Secretary)
On 14 October 2020, the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) affirmed a decision of an Authorised Review Officer (ARO), to raise and recover a parenting payment debt of $57,808.48 (the Debt) against Mr Wittenberg for the period 31 May 2012 to 28 August 2019 (the Relevant Period). The Debt was originally calculated as $59,994.49 later recalculated as $57,808.48.[1] Mr Wittenberg sought a review of AAT1. As he was dissatisfied with that decision, he has now applied to the General Division (this review) for a second review.
[1] Exhibit 2, SFIC, paragraphs 1.1 and 4.21.
Mr Wittenberg and Ms Borchert attended the hearing on 24 March 2022 by MS Teams video (the Hearing) and gave affirmed evidence. Mr Ben Dube (Mr Dube) attended the Hearing representing the Secretary. Ms Gillian Gehrke (Ms Gehrke) has ongoing carriage of the matter for the Secretary.
Prior to the Hearing, all parties were provided with an Exhibit List showing Exhibits 1 to 4. The following documents were admitted into evidence:
Number
Description
Exhibit 1
T Documents (T1 to T19).
Exhibit 2
Supplementary T Documents (ST1 to ST7)
Exhibit 3
Secretary’s Statement of Facts, Issues and Contentions dated 28 February 2022 (SFIC).
Exhibit 4
Copy of letter from Legal Aid Queensland dated 18 August 2021.
The Tribunal has considered all the material supplied to it and the oral evidence of Mr Wittenberg and Ms Borchert at the Hearing. Not all the evidence is referred to at length, or at all, in this decision record. That does not mean it has not been considered in determining the outcome. It is sometimes unnecessary to canvass all aspects, arguments, and history of a case in the decision record.
THE LAW
The SFIC sets out in detail the law which is relevant to this case with which the Tribunal concurs. As a copy of the SFIC and its attachments were provided to Mr Wittenberg prior to the Hearing that law will not be reproduced in detail in this decision other than to confirm the relevant legislation is contained in the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act 1999 (Cth) (the Administration Act).
The Registrar’s SFIC also refers to the Social Security Guide (the Guide) and especially Chapter 2.2.[2] The Tribunal notes where a general policy exists to guide the decision maker in exercising its powers, the Tribunal:
“will ordinarily apply that policy in reviewing the decision, unless the policy is unlawful or unless its application tends to produce an unjust decision … cogent reasons will have to be shown against its application”.[3]
[2] See Guides to Social Policy Law, Child Support Guide, Version 4.57, released 1 July 2021
[3] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 645 (Brennan J).
The Tribunal considers there are no pressing reasons to depart from the policy outlined in the Guide.
To the extent the Tribunal has considered policy in this case, it has not applied it inflexibly and has only considered it to the extent the Guide is consistent with the requirements as set out in the legislation as it would be an error of law for the Tribunal to state it must (emphasis added) follow what policy says concerning the scope or meaning of a provision in the Act or Regulations.
Mr Wittenberg’s PP rate is determined by the Benefit PP (Partnered) Rate Calculator with inputs including his income, and that of Ms Borchert, reduced to a fortnightly rate.[4] Income includes gross employment income.
THE FACTS AND EVIDENCE
[4] Sections 503(b) and s 1068B of the Act.
Oral evidence
The Tribunal approaches oral evidence understanding the following principles apply:
(a)Facts may be found based on oral evidence alone. There is no barrier to a fact being found on the uncorroborated evidence of a party to proceedings. There is no requirement that direct evidence by oral testimony or affidavit may only be accepted if corroborated. However, self-serving statements should be closely scrutinised.
(b)Evidence of a party is not to be regarded as prima facie unacceptable. While it will often be prudent to put forward corroborating evidence, parties are not obliged to call all material witnesses or produce all material documents.[5]
[5] For this and the preceding proposition, see, for example: Imperial Bottleshops Pty Ltd v Commissioner of Taxation (1991) 22 ATR 148, 155; and FCT v Cassaniti [2018] FCAFC 212.
Does Wittenberg have a PP debt?
Mr Wittenberg was paid PP from 14 November 2011 to 28 August 2019 of which $57,808.48 was more than his entitlement. There is no need in this decision to provide copious detail about the history of this case as Mr Wittenberg agrees with the calculation of the Debt. The evidence of Ms Borchert at the Hearing about that was:
‘Look, to be honest, Mr Ranson, I don’t think that [the debt amount] is in dispute. … What the amount is I don’t know, and I don’t want to argue that.’[6]
[6] Transcript of Proceedings dated 24 March 2022, page 12 lines 27-28.
The evidence of Mr Wittenberg at the Hearing about that was:
‘And the calculations, I guess they are right. Centrelink did with the debt, I don’t question that but that’s not what we want to, yes, question. That’s not what we are not happy with.’[7]
[7] Ibid page 18, lines 44 – 46.
How did the debt arise?
The essence of the problem for Mr Wittenberg is encapsulated in the extract from the letter of 12 February 2014. Prior to 12 February 2014, Mr Wittenberg was required to report his income and that of Ms Borchert on a fortnightly basis, which he did. On 12 February 2014, Centrelink wrote to Mr Wittenberg and advised him as follows:[8]
[8] Exhibit1, T Documents, T19, page 452.
· As your and/or your partner’s circumstances have changed, you are no longer required to report every two weeks to get paid unless you start working again. If you start working again you must notify us within 14 days.
· You must tell us within 14 days about events or changes in circumstances affecting your payment (see the enclosed form ’Changes you must tell us about’ for details).
· If your family income has changed from what you previously told us, please call 136150 to provide a new estimate for Family Tax Benefit.
That letter goes on to say on page 3:
You must tell us within 14 days (28 days if residing outside Australia) if any of the following happens to you/your partner, or you become aware that any of the following is likely to occur.
· You can tell us about these changes via self-service (online or phone), in writing (fax or post) or by visiting one of our Service Centres.
If you don’t tell us about any changes, you could have a debt. If you have a debt you may have to pay all or some of the money back.
The changes to be reported include:
Employment
· start, stop, recommence or change work in any form of profession, trade business or self-employment
· income from employment changes (the amount earned goes up or down)
To help us pay you the right amount you should bring your payslips with you.
Notwithstanding fortnightly reporting was no longer required, that only applied if there were no changes. Changes, including changes to income from employment, were still to be reported. The SFIC notes at paragraph 3.7: ‘Notably, between the start of the debt period and 19 February 2014, Ms Borchert’s income was declared 32 times (albeit incorrectly)’, meaning Mr Wittenberg was accustomed to reporting changes as they occurred. That reporting obligation did not change when the requirement to report fortnightly was removed.
The SFIC lists in detail the notices which were issued to Mr Wittenberg during the Relevant Period.[9] In all, the SFIC lists 26 dates between 1 December 2011 and 3 July 2018 when letters were sent to Mr Wittenberg advising him of the income used to calculate his PP entitlement and reminding him of the requirement to report changes.
[9] Exhibit 2, SFIC paragraph 3.5 and T19.
After finishing her career firstly as a kayaking professional and then as a coach, Ms Borchert undertook university studies and commenced working at Bond University. Initially she had one job then later two jobs in different faculties. Despite the warnings on the 26 letters sent to Mr Wittenberg during the Relevant Period, he never once reported a change in his income or that of Ms Borchert. The table at paragraph 3.7 in the SFIC sets out three examples of the discrepancies in income earned and income reported. All the discrepancies are large and in one case the declared income was nil whereas the income earned was $2,154.82.
The failure to report family income for PP purposes came to a head in April 2019 and Centrelink requested copies of Ms Borchert’s payslips from Bond University. They were provided in September 2019 and the income from Bond University was processed, which resulted in a debt of $59,994.49 being raised in October 2019. At the request of Mr Wittenberg an Authorised Review Officer (ARO) in Centrelink checked the calculation and affirmed the decision to raise and recover the overpaid PP. For reasons not explained in the SFIC, Centrelink requested detailed information from Bond University which they provided and resulted in a recalculation of the debt to $57,808.48 where it rests at the time of this decision.
Mr Wittenberg was aware of the consequences of not reporting family income correctly because a PP debt was raised in 2013 for failure to correctly report family income.[10] Mr Wittenberg said repeatedly at the Hearing he relied on the reporting he made to Centrelink for FTB purposes and in his view the failure of Centrelink to not pass the reported income information across for PP purposes or to contact him when discrepancies were discovered, is the cause of the Debt.
[10] Exhibit 1, T Documents, T16, page 299.
In Tomlin and Secretary Department of Social Services [2017] AATA 1810 at [42] a previous Tribunal noted: ‘… the Tribunal is not satisfied that Ms Tomlin – or any other person of reasonable mind – would be able to understand there are different reporting requirements for the income of a person’s partner for family tax benefit and parenting payment (partnered)’. This Tribunal has sympathy for that view. Nonetheless, it is not the role of Centrelink to contact its customers to check if they have correctly reported their income. That is for the customer to do and the letters from Centrelink remind them of their obligations.
The Tribunal finds Mr Wittenberg has a PP debt of $57,808.48 because he and Ms Borchert agree they were overpaid PP, albeit they have not checked the calculation of the Debt.
Write-off (delayed recovery) of a debt
The main issue for Mr Wittenberg is whether the debt can be written off or waived in whole or part.
Under s 1236 of the Act, recovery of a debt can be delayed for a specific period. Under s 12361A, the Secretary may decide to write off a debt if the debt is irrecoverable at law or the debtor has no capacity to repay the debt or the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor or it is not cost effective for the Commonwealth to take action to recover the debt.
There are four elements to s 1236 and the Secretary may invoke any one of the four to suspend recovery of a debt for a specified period. The whereabouts of Mr Wittenberg are well known and there is no evidence before the Tribunal the Debt is irrecoverable at law. Mr Wittenberg and Ms Borchert are in receipt of Centrelink benefits now, so it is cost effective for the Secretary to recover the Debt, albeit by instalments.
That leaves the capacity of Mr Wittenberg and Ms Borchert to repay the debt. The Secretary acknowledges Mr Wittenberg and Ms Borchert are not people of ample means albeit they own their own home and have no debt. Mr Wittenberg derives very modest income as a self-employed real estate salesman and Ms Borchert’s income from Bond University has substantially reduced caused by reduced student numbers following COVID-19 lockdowns and restrictions. Mr Dube acknowledged this at the Hearing as does the SFIC at paragraphs 4.91 to 4.93 albeit the SFIC was produced on 28 February 2022 and at that time there was no corroborating evidence of the reduced income for Ms Borchert from Bond University.
The Secretary’s alternate position as set out in paragraph 5.2(b) of the SFIC is to write off the debt for a period of six months. The Tribunal acknowledges this will allow time for Mr Wittenberg and Ms Borchert to arrange their financial affairs to generate the income they need to support their family and enter into a modest repayment arrangement to repay the Debt.
The Tribunal finds the Secretary has grounds to decide to write off the Debt for a period of six months because of the acknowledgment by the Secretary of the reduced income of Ms Borchert.
Waiver of debt arising from error
Under s 1237A(1) of the Act, the Secretary must waive the right to recover the proportion of a debt 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.
Mr Dube pointed out in his opening at the Hearing, it must have been apparent to Mr Wittenberg his reporting for FTB purposes was not (emphasis added) being shared for PP purposes when the letters advising him of Ms Borchert’s income showed nil in some cases when her actual earnings were substantially more than nil, or the amount recorded by Centrelink. Mr Wittenberg acknowledged at the Hearing he should have paid better attention to the letters he received from Centrelink.
Acting in good faith
The Secretary contents Mr Wittenberg did not receive the payments of PP in good faith because he must have known he was not entitled to the amounts he was being paid. That he says is due to the number of letters sent to remind him of his reporting obligations after advising Mr Wittenberg in 2014 he was no longer required to report earnings fortnightly and the previous debt which arose because of earlier incorrect reporting.
To act ‘in good faith’, also known as acting bona fide, is to act honestly and sincerely, without an intention to deceive. A decision made in good faith is one where the person making it genuinely believes it to be correct for all parties as a whole and not merely for their own self-interest. Good faith relates to the state of mind of the person making the decision. It is important at the time the decision is made, the maker honestly believed the decision to be in the best interests of all parties and is reasonable.
The Federal Court decision in SDEETYA v Prince [1997] FCA 1565 makes it clear that the question is whether the person had a positive belief of entitlement at the time of receipt. In Prince, Finn J stated that:
‘Its [the burden of proof of good faith] 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 - i.e., 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 knowledge or reason to know, the receipt would be in good faith.’
The Secretary should bear in mind Mr Wittenberg and Ms Borchert are not legally trained nor versed in the nuances of the Act and the Administration Act. Also, English is not their first language. Like most social security customers, they rely on Centrelink and its officers to apply the law to their circumstances as they notify them. Human error creeps into all decision making, including by Centrelink customers and Centrelink officers and systems.
The evidence of Mr Wittenberg is he acted honestly and sincerely, without an intention to deceive, notwithstanding it was in his interest, albeit naively (emphasis added), to accept the PP he received given he had correctly notified Centrelink of the change to their family income for FTB purposes throughout the Relevant Period and Centrelink advised him in 2014 he was no longer required to report fortnightly. He said in his evidence he was amazed his reporting to Centrelink for FTB purposes didn’t flow on for PP purposes. Re Tomlin agrees with him. He was not to know there was and is no mechanism in Centrelink for income reported for FTB to be applied to PP.
The Tribunal finds Mr Wittenberg did act in good faith in accepting PP during the Relevant Period because it doubts a person accepting payments not in good faith would continue to report family income correctly to Centrelink for FTB purposes.
However, the Tribunal finds there are no grounds for the Secretary to waive the right to recover any proportion of the Debt as attributable solely to an administrative error made by the Commonwealth because by his own admission, Mr Wittenberg contributed to the continuation of the error notwithstanding he accepted PP in good faith.
Waiver in special circumstances
Absent grounds to waive the Debt an alternate issue for Mr Wittenberg is whether there are grounds for waiver due to special circumstances.
Under s 1237AAD of the Act, the Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or a false representation or failing or omitting to comply with a provision of the Act, and there are special circumstances (other than financial hardship alone) that make it desirable to waive and it is more appropriate to waive than to write off the debt or part of the debt.
There are three elements to s 1237AAD and all three must be present for the Secretary to waive the right to recover a debt. The first element concerns knowingly failing to comply with a provision of the Act, which in this case relates to Mr Wittenberg advising Centrelink of their family income for PP as well as for FTB.
Knowingly means consciously or intentionally or deliberately doing or not doing something. Mr Wittenberg argues he did not deliberately fail to notify Centrelink of their family income for PP because he was advising that information to that organisation for FTB purposes. In his mind he had done all he was required to do. The difficulty for Mr Wittenberg is the 26 letters he received during the Relevant Period reminding him to notify changes in family income for PP and his failure to respond to any of them.
Accordingly, the Tribunal finds Mr Wittenberg knowingly failed to comply with a provision of the Act because by his own words, he should have paid more attention to those letters, so whilst he may not have deliberately failed to notify, he consciously did so.
As the term special circumstances is not defined in the legislation, the Tribunal turns to case law as does the Secretary who refers at paragraph 4.60 of the SFIC:
‘In Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal stated at [12]:
An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.’
Unusual, uncommon or exceptional circumstances markedly different from the usual run of cases
The quote above from Beadle sums up the test to be applied to the circumstances of Mr Wittenberg, that is, his circumstances must be unusual, uncommon or exceptional and markedly different from the usual run of cases.
Mr Wittenberg and his family have had their share of health and financial issues as most if not all families do over time. They have a son who has a heart condition, which has been successfully managed. Ms Borchert recently had a hip replacement. The Tribunal understands thousands of Australians have a hip replacement each year. It is not uncommon. Mr Wittenberg appears to be in good health.
As for their financial situation, Mr Wittenberg and Ms Borchert own their home and have no debt to service other than a student loan and the debt the subject of this decision. They are able bodied people with obvious capacity to work full-time and support their family and repay the debt arising from overpaid PP.
Accordingly, the Tribunal finds there is nothing unusual, uncommon or exceptional in their family circumstances, markedly different from the usual run of cases, so as to enliven waiver of the Debt in special circumstances.
Advice from Legal Aid Queensland
Exhibit 4 is a letter of advice from Legal Aid Queensland (LAQ). The letter seeks this Tribunal to waive the debt accrued during periods from the notification of income for FTB purposes and the next letter from Centrelink which included a s 68 notice. In doing so, the LAQ advice relies on three cases: Tomlin, Fletcher and Clark. The Secretary’s response to the LAQ advice is set out at paragraphs 4.58 to 4.63.
The Tribunal has considered the LAQ advice and the cases on which it relies and like the Secretary, finds the argument put forward is not made out in this case, even though it agrees with Tomlin about the unreasonable requirement for different reporting for FTB and PP purposes. Mr Wittenberg was issued numerous letters and notices during the Relevant Period which he failed to respond to.
Accordingly, the Tribunal finds the LAQ advice does not assist Mr Wittenberg in this case because all three cases are about sole administrative error, which the Tribunal has found does not apply in this case.
CONCLUSION
Mr Wittenberg is the victim of systemic errors by Centrelink for their inability to apply information about one benefit (FTB) to another benefit (PP). The systemic error being the lack of systems to share such information rather than requiring customers to provide that information multiple times. It is bordering on unconscionable for Centrelink’s systems to be unable to accommodate the sharing of customer income information as between benefit types.
He is also the victim of his own failure to keep a weather eye on his own financial affairs at least in terms of his social security entitlements. He accepts he was overpaid the amount of the Debt, albeit he says he has not checked its calculation.
The circumstances of Mr Wittenberg and his family are not unusual or out of the ordinary. They are able bodied people who can look after themselves once they overcome the immediate hurdle of the loss of paid hours at Bond University for Ms Borchert. Then they can begin repaying the PP they were not entitled to.
DECISION
The decision under review is set aside and in substitution the Tribunal decides that:
(a)The Applicant has a parenting payment debt due to the Commonwealth of $57,808.48 for the period 31 May 2012 to 28 August 2019; and
(b)The debt is written off for a period of six months from the date of this decision; and
(c)The debt is otherwise recoverable in full.
60. I certify that the preceding 59 (fifty-nine) paragraphs are a true copy of the reasons for the decision herein of Member P Ranson
…………………[SGD]…………………..
Associate
Dated: 26 May 2022
Date of Hearing: 24 March 2022
Applicant:
By Microsoft Teams Solicitor for the Respondent: Ms Gillian Gehrke
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