XSPF; Secretary, Department of Education, Employment and Workplace Relations and
[2008] AATA 425
•21 May 2008
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2008] AATA 425
ADMINISTRATIVE APPEALS TRIBUNAL )
) No T 2006/119
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT & WORKPLACE RELATIONS Applicant
And
XSPF
Respondent
DECISION
Tribunal The Hon R J Groom (Deputy President) Date21 May 2008
PlaceHobart
Decision The decision under review is affirmed.
(Sgd) The Hon R J Groom
Deputy President
CATCHWORDS
SOCIAL SECURITY - parenting payment - overpayment - debts raised - whether debt should be waived – whether attributable "solely" to administrative error by Commonwealth - "knowingly" making false statement - "special circumstances" - decision under review affirmed
Social Security Act 1991, ss 1236, 1237A(1), 1237AAD
Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553
REASONS FOR DECISION
21 May 2008 The Hon R J Groom (Deputy President) 1. The Secretary of the Department of Education, Employment and Workplace Relations ("the applicant") has sought a review of a decision of the Social Security Appeals Tribunal ("SSAT") made on 13 July 2006.
2. The respondent (“XSPF”) had been overpaid $3,344.50 by Centrelink as Parenting Payment because the full amount of her husband's earnings had not been declared.
3. The SSAT decided that part of the debt owed by XSPF, being that portion of the debt relating to the period from 19 October 2005, be waived under section 1237AAD of the Social Security Act 1991 ("the Act"). The portion of the debt waived by the SSAT amounted to $2,321.83. The balance of the debt remained due and payable by XSPF.
4. The application to this Tribunal was heard in Launceston on 15 February 2008. Mr B Sparkes appeared for the applicant and Ms R Diamond for the respondent. The respondent and her husband (the “husband’) gave oral evidence. The documents produced pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T Documents") and several other documentary exhibits were tendered in evidence. As agreed at the hearing the applicant made a written submission dated 25 February 2008 on the issue of administrative error. The respondent made a written submission in reply on the same issue dated 13 March 2008 which was received by the Tribunal on the 14 March 2008.
5. It is not in issue in these proceedings that the respondent had been overpaid Parenting Payment and that those overpayments are a debt recoverable by the Commonwealth. The amount of the debt is also not in dispute.
6. The applicant submits that the requirements of section 1237A and section 1237AAD of the Act are not satisfied and therefore the decision of the SSAT should be set aside and no portion of the debt waived.
7. The respondent submits that the debt should be waived pursuant to section 1237A of the Act. In the alternative it is contended that the debt should be waived under section 1237AAD of the Act.
The Issues
8. The principal issues to be determined by this Tribunal are:
a) should the debt, or part of it be waived under section 1237A of the Act?
and if not then,
b) should the debt, or part of it, be waived under section 1237AAD of the Act?
The Legislation
9. Section 1237A(1) of the Act provides as follows:
"(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)"
10. Section 1237AAD of the Act provides as follows:
"1237AAD Waiver in special circumstances
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 a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration 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.
Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt".
Background Facts
11. The Tribunal finds the following background facts:
(a) XSPF and her husband live in Tasmania. They have two daughters aged 15 years and 13 years and a son aged 10 years.
(b) The husband was receiving Newstart Allowance when he commenced work as a casual freight delivery driver with his employer on 14 June 2005. XSPF was then in receipt of Parenting Payment at the partnered rate. The amount of her Parenting Payment was dependent on her husband's income.
(c) The husband worked from Monday to Friday each week. The hours he was required to work varied each day according to the number of parcels he was required to deliver. If there were only a few parcels to be delivered he could finish work at 10.00 or 11.00 am in the morning. On other days when there was a good deal of work to do he would work a full working day.
(d) Soon after commencing work with his employer the husband lodged his application for his Newstart Allowance. He had difficulty correctly calculating his earnings because he did not keep an exact record of the varied hours he worked. A further complication was that he filled out the application form on a Tuesday and did not receive his payslip detailing his exact earnings for the previous week until the Wednesday.
(e) After the husband had lodged his first Newstart form he received his payslip. He opened the payslip and then realised he had earned more in the previous fortnight than was shown on the form he had already lodged.
(f) When the husband took his next fortnightly application to Centrelink he mentioned that he had earned more money than was shown in his previous form. The discussion which then took place between the husband and the officer of Centrelink will be discussed later in these reasons.
(g) On 6 October 2005 Centrelink commenced a review of the husband's Newstart Allowance payments. As part of that review he was asked to provide copies of five recent payslips within 14 days.
(h) The husband provided copies of his 5 most recent payslips on 19 October 2005. He had not opened any of his payslips since receiving the first one which he had opened. The husband opened the 5 payslips in the presence of the Centrelink officer. The officer said the husband would be notified within a week if there were any problems.
(i) Centrelink later wrote to the husband asking him to attend for an interview at its office on 21 December 2005. The husband told Centrelink that he could not attend on that date as he was working. There was no follow-up action taken by Centrelink and no further appointment was arranged.
(j) On 27 April 2006 a Centrelink officer determined that as a result of the under declaration of the husband's earnings he had been overpaid $646.81 and XSPF had been overpaid $3,344.50. It was then decided that the debts should be recovered from the husband and XSPF.
(k) The husband and XSPF sought a review of the decisions of 27 April 2006. On 29 May 2006 an authorised review officer affirmed the decision.
(l) On 31 May 2006 the husband and XSPF applied to the SSAT for a further review of the decisions. On 13 July 2006 the SSAT decided:
(1) To affirm the decision to raise and recover a debt of $646.81 from the husband.
(2) In relation to XSPF to set aside the decision and pursuant to section 1237AAD of the Act waive that part of her debt, namely 2,321.83, which had accrued after the 19 October 2005. Any excess monies so far recovered were to be refunded to XSPF.
(m) The Secretary of the Department then applied to this Tribunal on 18 August 2006 for a review of the SSAT decision to waive part of XSPF's debt under section 1237AAD of the Act.
12. The Tribunal will now consider each of the two issues referred to in paragraph 8 above.
Should the Debt be Waived under Section 1237A of the Act?
13. It is submitted on behalf of XSPF that Centrelink was informed by the husband when he went into their office on 5 July 2005 with his claim form that the payslip he had by then received showed that he had understated his earnings. It is argued that Centrelink failed to act on that information and failed to advise the husband how to complete his forms correctly. Again, when the husband provided copies of five payslips on 19 October 2005 it is contended that Centrelink failed to properly inform the husband about his under declaration of earnings and chose not to then act on the information he had provided. As a result of those failures the overpayments continued and the amount of the debt increased substantially. It is further submitted that from June 2005 until April 2006 the husband and XSPF were not informed that a debt was owed because of an overpayment. It is argued that Centrelink also failed to reschedule the husband's December 2005 meeting. As a result of these failures by Centrelink the debt continued to escalate until it was finally raised many months later, namely in April 2006.
14. The Tribunal accepts the husband's evidence that on 5 July 2005 he mentioned to an officer of Centrelink at their office that his payslip indicated that he had understated his earnings. It finds that the husband did not go to Centrelink specifically to make this fact known but briefly raised it when he was lodging his next claim form. The Tribunal concludes that the comment made by the husband was not stressed strongly, but simply made in passing. The officer was asked whether the husband should include the extra earnings in the next fortnightly claim form. He was told he should not. The Tribunal accepts the husband's evidence that the officer told him not to worry about the last claim form and that she briefly advised him how he should estimate his earnings if a payslip was not then available. The advice given was to add up hours he had worked and multiply that figure by the hourly rate. The Tribunal does not accept that the husband was told by the officer to "try and guess" how much he had earned.
15. The Tribunal considers it to be significant that the husband did not open further payslips to assist him in calculating his earnings. The payslips would obviously have been a useful source of basic information for the husband even if the slips did not cover the whole of the relevant fortnightly claimed periods.
16. From the period from 25 June 2005 to 28 March 2006 the husband's earnings were consistently understated. Up until 20 December 2005 he was responsible for declaring earnings when he lodged his Newstart application forms. His Newstart Allowance ceased at that time because he was then earning too much money to be entitled to that allowance. From 20 December 2005 XSPF was herself required to declare her husband's earnings for the purpose of her Parenting Payment. The earnings continued to be under declared. In the 22 fortnightly declarations of earnings in the relevant period 20 under declared the husband's income. There were only two occasions when the earnings were overstated. On no occasion during that period was the declaration of earnings accurate.
17. The Tribunal accepts the evidence that the husband did not do well at school and that his literacy and numeracy skills are at a low level. Nevertheless he had held down a number of jobs, and, although faced with very serious family difficulties, appears to have managed his affairs quite well. After considering all of the evidence the Tribunal concludes that the husband and XSPF did not take sufficient care to accurately state the husband's earnings in the claim forms lodged. That lack of care was one of the causes of the overpayments and the resultant debt.
18. At the same time there is also evidence of error on the part of Centrelink. As was found by the SSAT, and indeed as was acknowledged by the authorised review officer in his decision of 29 May 2006 (T Documents page 119), as from at least 19 October 2005 Centrelink was aware that there was a significant difference between the earnings declared and the wages actually received by the husband. Neither the husband nor XSPF was notified in a prompt manner of the discrepancies involved. That failure has to a degree accentuated the problem and caused the debt to increase in amount.
19. Section 1237A provides that only that portion of a debt that is attributable solely to an administrative error made by the Commonwealth is to be waived. (The emphasis is the Tribunal's).
20. The Tribunal finds that the debt in question arose at least in part from failures and carelessness committed by the husband and XSPF. No portion of it is attributable solely to an administrative error made by the Commonwealth.
21. The requirements of section 1237A are therefore not satisfied and there can be no waiver under that section of the Act.
Should the debt, or any part of it, be waived under section 1237AAD of the Act?
22. This section of the Act includes a threshold issue which has to be determined in the debtor's favour before the Tribunal can proceed to consider whether special circumstances are present.
23. The Tribunal must first be satisfied on the evidence before it that the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or representation or knowingly failing or omitting to comply with the Act.
24. In this case the question is whether either the husband or XSPF knowingly understated the husband's income.
25. It is important to recognise that the Tribunal has to be positively satisfied that the debtor or another person did not knowingly make a relevant false statement or representation.
26. The meaning of the word "knowingly" as used in section 1237AAD of the Act has been considered by the Tribunal on a number of occasions. (see, for example, Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 and Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553). In my view the word "knowingly" means knowledge in the mind of its maker of the falsity of the statement or representation at the time that statement or representation was made.
27. During the period in question at various times the husband and XSPF were each involved in advising Centrelink of the husband's earnings. Initially XSPF's Parenting Payment was assessed and paid only after the husband had lodged his fortnightly Newstart Allowance application form with Centrelink. On 21 December 2005 the husband's Newstart Allowance was cancelled following six consecutive fortnights when his income was so high that it precluded him from receiving the allowance. XSPF then had direct responsibility for declaring her husband's earnings each fortnight. She advised Centrelink of her husband's income each fortnight by telephone after receiving information from him.
28. The applicant contends that both the husband and XSPF were aware of their reporting obligations. It was submitted that this can be inferred from letters and information provided to them. It is submitted that they both knowingly under declared the husband's income. There was a consistent pattern, it is contended, of failing to correctly declare the husband's earnings. Apart from two isolated instances the amounts declared by the husband and XSPF on all other occasions were less than the amount actually earned. XSPF was informed of her obligations by letters in December 2005 and in January and February 2006. It is argued that she knew that her husband's earnings would affect her Parenting Payment and that she also realised that she was required to declare his earnings accurately and on the nominated dates. XSPF reported on the nominated dates as required and received payments accordingly. The applicant submits that the husband and XSPF knowingly understated the husband's earnings and therefore the pre-condition to a waiver under section 1237AAD is not satisfied.
29. It is submitted on behalf of XSPF that neither she nor her husband knowingly under declared his income. They did their best to provide an accurate estimate of the husband's earnings. It is argued that it was difficult to give exact information as the husband's pay period and the receipt of his payslip do not coincide with the Centrelink reporting period. As a result he had to guess his earnings for part of the reporting period. He was employed as a casual and his hours varied significantly depending on the number of parcels he had to deliver. XSPF, it is contended, generally thought in her mind that she was declaring her husband's income correctly. She was unaware of any problem with the way she and her husband had been declaring his income. The incorrect declaration of income were innocent mistakes compounded by Centrelink's failure to act and to give sound advice after its officers first became aware of the difficulties in accurately declaring the husband's income.
30. It is also submitted that any errors in declaring the husband's income correctly were also due in part to the enormous stress the family was under at the time the overpayments occurred. The husband and XSPF's daughters were victims of sexual abuse by a relative living in Victoria. Because of that abuse and the resultant criminal proceedings XSPF in particular was under great stress. At the relevant time she was in a constant state of emotional and physical exhaustion and is presently being treated for clinical depression. There is written medical evidence confirming the effect of these events on XSPF. XSPF has suffered from a number of serious illnesses.
31. The husband and XSPF's son suffers from compulsive obsessive disorder and other psychiatric illnesses and this has added to the stress as has the family's very difficult financial circumstances.
32. After carefully considering the material before it the Tribunal concludes that the husband had genuine difficulty calculating his earnings for the purpose of his application for his Newstart Allowance and his wife's Parenting Payment. The calculation of earnings was not a straight forward matter for him. His hours of work varied from day to day and the reporting period did not coincide with his pay period. His confused state of mind on the subject of declaring his earnings was evident in the very real problems the husband had in understanding and answering questions during cross-examination by Mr Sparkes. The Tribunal accepts his evidence that he had great difficulty passing subjects at school and recognises that both he and XSPF have low numeracy and literacy skills.
33. The extraordinarily stressful family circumstances cannot be ignored in judging the husband and XSPF's state of mind when declaring the husband's income. XSPF’s own illnesses, the sexual abuse of their daughters and the strain of the resultant criminal proceedings and also their son’s continuing serious health problems no doubt had a significant impact on both the husband and XSPF. These factors must have added to the other difficulty they had in calculating earnings and correctly filling out forms and advising Centrelink.
34. There was certainly a pattern to the understating of income. On only two of twenty two occasions the amount declared actually exceeded the husband's earnings. It is also of significance that many of the amounts declared were rounded to the nearest hundred or fifty which tends to support the husband's claim in evidence that he would guess the correct figure. A more calculating mind may have made the guess work appear less obvious.
35. The husband, of course, was the primary source of information about his earnings. XSPF relied on his estimates of his earnings. The Tribunal is satisfied that XSPF did not knowingly under declare the husband's earnings.
36. As far as the husband is concerned the Tribunal concludes that he had genuine difficulties in calculating his earnings for the purpose of his Newstart Allowance and for his wife's Parenting Payment. It finds that he was careless and inadvertent in fulfilling his obligations to properly declare his income but it finds on the material before it that his under declarations were not made knowingly or consciously.
37. The Tribunal is therefore satisfied that the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or false representation or otherwise knowingly breaching the Act.
38. The issue of special circumstances and the desirability of waiving any of XSPF's debt must now be considered.
Special Circumstances
39. The Tribunal must be satisfied that there are special circumstances (other than financial hardship alone) that make it desirable to waive all of part of the debt.
40. French J. in Secretary, Department of Social Security v Hales (1998) 51 ALD 695 explained the purpose of section 1237AAD as follows:
"The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode it useful purpose".
41. The decision-maker, initially the Secretary of the Department and now the Tribunal, is given a wide discretion, not limited by legislated particulars, to consider all the circumstances of a case and to decide whether they are “special” thus permitting the exercise of the discretion. In order to properly exercise this discretion there must be special elements in the case which stand it apart from the usual or the ordinary.
42. In the Tribunal’s opinion there is an abundance of circumstances in this case which, combined, make it unusual and exceptional.
43. Those special circumstances, briefly expressed, are as follows:
(a)The difficulties faced by the husband in correctly calculating his earnings caused by the irregular hours he worked, the fact that his pay week did not coincide with the reporting period and also his low numerical skills and poor understanding of how to properly declare his earnings.
(b)The failure by Centrelink to properly inform and advise the husband and XSPF of the inaccurate declarations of income after being provided with copies of five payslips on 19 October 2005 and at that point becoming aware that the fortnightly application forms were not being properly and accurately completed.
(c)XSPF's health problems and the extraordinary pressures borne by her family at the relevant time including the sexual abuse of her two daughters and the great pressure on the whole family caused by the pending criminal proceedings against the offender. Investigations of the offences and interviewing witnesses has occurred during 2005 and 2006 which was the period when the overpayments occurred. The girls have ongoing behavioural issues and receive counselling in relation to the sexual abuse. XSPF cares for her husband who at the present time suffers from a back injury, two daughters, one of whom is now pregnant, her father-in-law who is disabled and also her son who is intellectually handicapped.
44. The Tribunal concludes that the factors mentioned in paragraph 42 are sufficient to establish special circumstances. But in addition XSPF and her family are suffering great financial difficulties which were exacerbated by the debt overpayment which Centrelink had previously imposed and would impose again if the whole of the debt remains payable.
45. For those reasons the Tribunal finds that there are special circumstances present in this case and make it desirable to waive at least part of the debt.
46. The Act provides in section 1236 that in certain prescribed circumstances debt may be "written off". It was not contended by the applicant that it would be appropriate to write off the debt in this case. The Tribunal finds that none of the circumstances required to be present before a decision maker can proceed to write off a debt are present in this case. It finds that it is more appropriate to waive than to write off the debt or part of it.
47. After considering all of the circumstances of this application the Tribunal agrees with the views expressed in paragraph 54 of the reasons for decision of the SSAT and considers that it is appropriate to waive $2,321.83 being that portion of the debt which accrued from 19 October 2005 until 28 March 2006. The balance of the debt remains due and payable by XSPF.
decision
48. For the reasons expressed the decision of the SSAT of 30 July 2006 is affirmed.
I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of The Hon R J Groom (Deputy President)
Signed: H Healy (Administrative Assistant)
Date/s of Hearing 15 February 2008
Date of Decision 21 May 2008
Solicitor for the Applicant Mr B Sparkes, Centrelink Legal ServicesAdvocate for the Respondent Ms R Diamond, Launceston Community Legal Centre
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