YPYL and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2011] AATA 310

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 310

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/3310

GENERAL ADMINISTRATIVE DIVISION		)
Re		YPYL

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member K Bean

Date9 May 2011

PlaceAdelaide

Decision The decision under review  is affirmed.

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

K BEAN
  (Senior Member)

CATCHWORDS

SOCIAL SECURITY – Overpayment of Carer Payment – Whether debt should be waived or written off – Decision under review affirmed.

Social Security Act 1991 ss 1223(1), 1236(1), 1237A(1), 1237AAD

Social Security (Administration) Act 1999 ss 68(2), 74

Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

REASONS FOR DECISION

9 May 2011   Senior Member K Bean  

introduction

1.      The applicant in this matter provides care for her elderly mother, and has been in receipt of Carer Payment (CP) since June 2008.

2.      Unfortunately, at the time she first applied for CP, the applicant says she did not appreciate that she was required to report changes in her husband’s income to Centrelink.  Nor did she appreciate that changes in her husband’s income could potentially affect her entitlement to CP.  The situation was further complicated by the fact that in the application form she completed in relation to CP, the applicant indicated that her husband’s income was likely to vary due to overtime “occasionally”.  In fact, it appears that, during the relevant period, his income varied regularly.  However, being unaware of this, Centrelink did not require the applicant to report her husband’s income on a fortnightly basis.

3.      As a result of a combination of these circumstances, a review of the applicant’s entitlements revealed that she had been overpaid CP in the amount of $3,165.83 during the period 24 June 2008 to 12 April 2010.

4.      A debt in that amount was accordingly raised against the applicant, and affirmed by an Authorised Review Officer on 4 June 2010[1].

[1] T3/13

5.      On 21 July 2010, the Social Security Appeals Tribunal (the SSAT) affirmed that decision, deciding that the debt had been correctly raised and that there were no grounds on which it should be waived or written off[2].

[2] T2/2

6.      On 9 August 2010, the applicant applied to this Tribunal for review of the decision of the SSAT[3].

[3] T1/1

issues

7.      It follows that the issues for determination by me are:

(a)whether there is an overpayment of Carer Payment (CP) totalling $3,165.83 for the period 24 June 2008 to 12 April 2010; and if so

(b)whether the amount overpaid has been correctly calculated;

(c)whether any overpayment is a debt due to the Commonwealth; and if so

(d)whether all or part of the debt should be waived or written off.

8.      I propose to address each of these issues in turn, after setting out the relevant background facts.

background facts

9.      As mentioned above, the applicant currently provides care to her mother, who lives with her and her husband.  Approximately five years ago, she and her husband

sold their house and her mother also sold her house, they pooled their resources and built a new house with a “granny flat” within the new house, so that the applicant’s mother could live comfortably with her daughter’s family and the applicant could care for her mother.  The applicant’s mother is now 80 years old and requires significant assistance with many aspects of her daily life, including getting in and out of bed, dressing, bathing and cooking[4].

[4] Exhibit 2

10.     The applicant did not apply for CP from the time her mother was first living with her and in fact was very reluctant to do so, as she did not like the idea of being “paid” to care for her mother[5].  However with the encouragement of her mother’s general practitioner and having regard to the family’s overall financial situation, she did apply for CP on 11 June 2008.  Her application was granted and she continues to receive that payment[6].

[5] Exhibit 2

[6] T21/248

11.     There is no dispute between the parties that on the form by which she originally claimed CP, the applicant indicated that her husband’s gross fortnightly salary was $1,345.16.  In response to the question “Is this your usual wage?” the “No” box on this form has a tick in it which appears to have been crossed out.  The “Yes” box also has a tick in it together with an asterix beside the box accompanied by the words “Occasional overtime will vary the gross amount (payslips supplied)”[7].  There is also no dispute that as a result of this information, Centrelink recorded that the applicant’s husband’s income was $1,345.16 per fortnight[8].

[7] T3/63

[8] T22/273

12.     There is also no dispute that subsequent to the applicant’s claim for CP being granted, numerous notices were forwarded to the applicant advising her that she was required to inform Centrelink about changes in events or circumstances that might affect her CP.  These notices also advised the applicant that Centrelink considered her and her husband’s combined fortnightly earnings to be $1,345.16 and specifically told her that she was required to advise Centrelink if “You or your partner start to receive income from work or the amount of income you receive or hours worked changes”[9].

[9]  T6/85

13.     It is also not disputed that following a data match with the Australian Taxation Office, Centrelink reviewed the applicant’s entitlement to CP[10].  Following a telephone call from Centrelink after this review, the applicant also provided her husband’s payslips to Centrelink and advised that she had not been aware of the need to advise of changes to his pay.  She also confirmed in this telephone conversation that her husband’s income changed on a regular basis[11].

[10] T21/249

[11] T21/249

14.     Centrelink’s review of the applicant’s entitlement to CP revealed that in the period 24 June 2008 to 12 April 2010, the applicant received CP totalling $12,717.39.  However in light of the information recorded in her husband’s payslips, the applicant was only entitled to receive $9,551.56.  Accordingly Centrelink decided that the applicant had been overpaid $3,165.83 in CP for that period and that this amount constituted a debt which should be recovered[12].

[12] T21/249-254

is there an overpayment and, if so, what is the amount of that overpayment?

15.     The applicant does not dispute that she was overpaid CP during the relevant period and nor does she dispute the amount of the overpayment.

16.     In light of the material available to me, I am satisfied that the applicant was overpaid CP in the period 24 June 2008 to 12 April 2010, that the amount of the overpayment is $3,165.83 and that this amount has been correctly calculated[13].

[13] The debt calculations are at T16/202.

whether the overpayment constitutes a debt due to the commonwealth

17. Sub-section 1223(1) of the Social Security Act 1991 (the Act) provides as follows:

“1223  Debts arising from lack of qualification, overpayment etc.

(1)      Subject to this section, if:

(a)      a social security payment is made; and

(b)a person who obtains the benefit of the payment was not               entitled for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.

…”

18.     I am satisfied that, in respect of the amounts of CP paid to the applicant in excess of that to which she was entitled having regard to the applicable income test, she was not entitled to receive those amounts.  I am accordingly satisfied that the overpayment amount of $3,165.83 is a debt due to the Commonwealth.

should the debt be waived or written off?

19.     The Act contains a number of provisions which confer a discretion to write off a debt or a power to waive the Commonwealth’s right to recover the whole or part of a debt in certain limited circumstances.  The provisions which are potentially applicable in the circumstances of this matter are s 1236 of the Act which provides for write off of a debt and ss 1237A and 1237AAD, each of which provide for waiver in specified circumstances.

20.     I propose to address the potential applicability of each of these provisions in turn, commencing with s 1237A.

Administrative Error

21. Section 1237A(1) of the Act relevantly provides as follows:

“1237A  Waiver of debt arising from error

Administrative error

(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).

…”

22.     This is the only provision expressly relied upon by the applicant, who argued that part of the debt should be waived pursuant to this provision.  She contended that Centrelink was at least partly responsible for the debt arising.  She said that when she was first interviewed in relation to CP, it was not explained to her that she would need to advise of changes to her husband’s income.  She also said that she had assumed Centrelink would be aware of this anyway, through the taxation system.  Therefore even if she had carefully read the notices which were sent to her, which she acknowledged that she did not, she argued that there was nothing in these to alert her of the need to communicate changes in her husband’s income to Centrelink.  She said it was her impression from the interview with Centrelink that the only change she would need to advise of was if she stopped caring for her mother.  She said that she felt she had done nothing wrong and it was inappropriate and unfair in these circumstances for her to have to repay the whole of the debt.  She also said that she did not know precisely what her husband earned each fortnight as his salary was paid directly into a bank account and neither she nor her husband always looked at his payslips.  She pointed out that she had not been told to report her husband’s earnings individually each fortnight and no one had ever suggested that she do this.  She also said that she had not understood that her entitlement to CP would change depending on his income in any event.

23.     As observed by the SSAT, with the benefit of hindsight it would have been preferable from the applicant’s point of view if she had been required to report her husband’s income fortnightly[14].  However the application form completed by the applicant in which she advised that her husband’s income may vary due to “occasional overtime” did not alert Centrelink to the need for this.  Accordingly, in my view the fact that Centrelink did not require the applicant to report her husband’s income on a fortnightly basis does not constitute an error on the part of Centrelink. 

[14] T2/9

24.     Even accepting that other errors made by Centrelink contributed  to the debt however, the main difficulty for the applicant’s arguments is that the debt is not attributable “solely” to those errors.

25.     In my view the debt is attributable in part to the fact that the applicant did not respond to any of the notices forwarded to her by Centrelink advising her that she was required to tell Centrelink if her husband’s current earnings per fortnight were not $1,345.16.  The applicant has explained why she did not respond to the notices, and it appears that she did not do so due to a combination of inaccurate assumptions on her part and an incorrect understanding of her obligations which she says was based partly on her communications with Centrelink.  In effect, she chose to proceed on the basis of the assumptions she had made and the understandings she had arrived at, and to disregard the written notices forwarded to her which would have served to correct her faulty assumptions and misunderstandings.  In these circumstances, it is clear in my view that the applicant’s failure to carefully read and respond to the notices contributed to the debt arising.  The first letter to the applicant was dated 19 June 2008[15] and if the applicant had responded to that letter by advising Centrelink that her husband’s income had changed, no debt would have arisen.

[15] T6/85

26.     For these reasons I am not satisfied that any part of the debt is attributable “solely” to an administrative error made by Centrelink and therefore the debt cannot be waived under this provision.

Special circumstances

27. Section 1237AAD of the Act contains a discretion to waive the right to recovery of all or part of a debt where 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.”

28.     As is apparent from the terms of this provision, it is only available where the debt did not result wholly or partly from the debtor “failing or omitting to comply with a provision of” a relevant Act.

29. In the circumstances of this matter, each of the notices received by the applicant was a notice under s 68(2) of the Social Security (Administration) Act 1999 (the Administration Act) which relevantly provides as follows:

“68       Person receiving social security payment or holding concession card

…

(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:

(a)      inform the Department if:

(i)        a specified event or change of circumstances occurs; or

(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;

(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;

(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.

…”

Section 74 of the Administration Act also provides as follows:

“74       Offence—failure to comply with notice

(1)A person must not refuse or fail to comply with a notice under section 67, 68, 69, 70 or 70A.

Penalty:        Imprisonment for 6 months.

(2)Subsection (1) applies only to the extent to which the person is capable of complying with the notice.

(3)      Subsection (1) does not apply if the person has a reasonable excuse.

(4)      Subsection (1) is an offence of strict liability.”

30. It is accordingly clear that the applicant was under an obligation to comply with the notices forwarded to her by Centrelink by advising Centrelink of any changes to her husband’s income, and that she failed to comply with that requirement. It also follows that in failing to comply with the notices, she failed to comply with s 74 of the Administration Act.

31. The next question therefore is whether the applicant “knowingly” failed to comply with the Administration Act.

32.     The meaning of the word “knowingly” was considered by the Tribunal in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435, in which the Tribunal observed as follows (at [48]):

“There is nothing in section 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.”

33.     Whilst I am satisfied that the applicant received the relevant notices, and she does not dispute this, she also gave evidence that she did not read these, or at least did not read them closely, and explained the reasons for this.  Her evidence was to the effect that she did not understand the notices to require any action on her part to ensure that Centrelink was correctly informed of her husband’s income.  In fact, at the time she received the notices she believed that Centrelink was aware of her husband’s income and any fluctuations in it, in any event.  Further, she did not understand that increases in her husband’s income would affect her entitlement to CP.

34. I accept her evidence in this regard and therefore I do not consider that the debt arose wholly or partly from the applicant “knowingly” failing or omitting to comply with the Administration Act. It follows that it is open to me to exercise the discretion conferred by s 1237AAD if I am satisfied that there are “special circumstances” that make it desirable to do this.

35.     Turning to the question of whether there are “special circumstances”, it is clear from the authorities that in order for circumstances to be “special” in the relevant sense, they must be “unusual” or “uncommon” and there must be something that distinguishes the case from the ordinary or usual case[16].

[16] See Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

36.     The applicant did not seek to rely upon the fact that her circumstances were out of the ordinary and nor did the evidence reveal any circumstances which I consider to be “special” in the relevant sense.  Whilst the applicant’s husband has been treated for prostate cancer, at the time she gave her evidence the applicant indicated that he was again working full-time.  In relation to her financial situation, she said that this was a “struggle” from week to week and that she and her husband did not go out.  However she acknowledged that she was “getting by”, with the assistance of CP.  She also acknowledged that her mother was receiving the Age Pension, which had not been taken into account in an income and expenditure statement prepared on her behalf by Uniting Care Wesley[17].

[17] Exhibit 2

37.     In light of the evidence, I am not satisfied that the applicant’s circumstances are “special” such as to justify waiver of all or part of the debt.

Capacity to pay

38.     Section 1236 of the Act also provides that the Secretary may, in certain circumstances, decide to write off a debt for a stated period or otherwise.  The section relevantly provides as follows:

“1236   Secretary may write off debt

…

(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.

…

(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.

…”

39.     Of the circumstances specified in the provision, the only one which is potentially applicable in this matter is that which provides for write off in circumstances where the debtor has no capacity to repay the debt.

40.     However, the applicant did not contend that she had no capacity to repay the debt and the respondent advised that she has been repaying the debt at the rate of $50 per fortnight with the current amount outstanding being $2,315.83.  The respondent also pointed out that it was open to the applicant to negotiate a different rate of payment if she was finding it difficult to maintain repayments at the current rate.

41.     As there is nothing before me to suggest that the applicant is currently in severe financial hardship or will be placed in severe financial hardship as a result of continuing to repay the debt by means of deductions from her ongoing CP, I am not satisfied that she has no capacity to repay the debt for the purposes of s 1236 of the Act.  I am also not satisfied therefore that it is appropriate to write off the debt, in whole or in part, pursuant to s 1236 of the Act.

conclusion

42.     I have accordingly concluded that the debt raised against the applicant has been correctly raised and that the debt should not be waived or written off.

decision

43.     The decision under review is affirmed.

I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member K Bean

Signed:         .....................................................................................
  Associate

Date of Hearing  22 February 2011
Date of Decision  9 May 2011
Advocate for the Applicant       Self-represented

Advocate for the Respondent   Ms J Edwards

Centrelink Advocacy Branch