Gowan and Department of Family and Community Services [1999] AATA 65 (5 February 1999)

Last Updated: 17 February 1999

DECISION AND REASONS FOR DECISION [1999] AATA 65

ADMINISTRATIVE APPEALS TRIBUNAL )

) No. S1997/384 & S1997/385

GENERAL ADMINISTRATIVE DIVISION )

Re PHILLIP GOWAN and BRENDA GOWAN

Applicants

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Deputy President B.H. Burns

Date 5 February 1999

Place Adelaide

Decision The decisions under review are affirmed.

................(signed)...................

Deputy President B.H. Burns

CATCHWORDS

SOCIAL SECURITY - whether applicants required to notify of changes in their combined income - overpayments of disability support pension and wife pension - waiver - decision affirmed.

Social Security Act 1991 - ss 1072, 1075, 1224, 1237A, 1237AAD

REASONS FOR DECISION

5 February 1999 Deputy President B.H. Burns

1. These are applications by Mr Phillip Gowan and Mrs Brenda Gowan for review of decisions of the Social Security Appeals Tribunal ("SSAT"), affirming decisions of a delegate of the Secretary, Department of Family and Community Services (formerly the Secretary, Department of Social Security) as affirmed by an authorised review officer, to raise and recover debts of $3,513.10 each as a result of overpayments of disability support pension and wife pension respectively for the period 14 December 1995 to 26 June 1997.

2. The applications proceeded together, the relevant facts and the issues in dispute being identical in respect of each of the decisions under review.

3. The Tribunal had before it the documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975 (the "T" documents) together with other documentary material tendered at the hearing. In addition, the Tribunal heard oral evidence from Mrs Gowan, while Mrs M. Adams, employee at the Whyalla Hospital, and Ms K. Utting, pay clerk at the Whyalla Hospital, gave oral evidence on behalf of the applicants. Mr N. Masters and Ms L. Rasheed, officers of the Department of Family and Community Services ("the Department"), gave oral evidence on behalf of the respondent.

4. The applicants were represented by Mr M. Wait of the Welfare Rights Centre and the respondent was represented by Mr J. Underwood, a departmental advocate.

5. The relevant legislation is the Social Security Act 1991 ("the Act"). The following provisions are relevant to the facts at hand:

"132 Secretary may require notice of the happening of an event or a change in circumstances

132(1) The Secretary may give a person to whom disability support pension is being paid a notice that requires the person to inform the Department if:

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

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

132(2) An event or change of circumstances is not to be specified in a notice under subsection (1) unless the occurrence of the event or change of circumstances might affect the payment of the pension.

132(3) Subject to subsection (3A), a notice under subsection (1):

(a) must be in writing; and

(b) may be given personally or by post; and

(c) must specify how the person is to give the information to the Department; and

(d) must specify the period within which the person is to give the information to the Department; and

(e) must specify that the notice is a recipient notification notice given under this Act.

132(3A) A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (3)(c) or (e).

132(4) Subject to subsections (4A) and (4B), the period specified under paragraph (3)(d) must end at least 14 days after:

(a) the day on which the event or change of circumstances occurs; or

(b) the day on which the person becomes aware that the event or change of circumstances is likely to occur."

The provisions in s132 requiring that recipients of disability support pension notify of certain changes in circumstances are mimicked in s172 in relation to recipients of wife pension. Relevantly, s172 reads as follows:

"172 Secretary may require notice of the happening of an event or a change in circumstances

172(1) The Secretary may give a woman to whom a wife pension is being paid a notice that requires the woman to inform the Department if:

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

(b) the woman becomes aware that a specified event or change of circumstances is likely to occur.

172(2) An event or change of circumstances is not to be specified in a notice under subsection (1) unless the occurrence of the event or change of circumstances might affect the payment of the pension.

172(3) Subject to subsection (3A), a notice under subsection (1):

(a) must be in writing; and

(b) may be given personally or by post; and

(c) must specify how the woman is to give the information to the Department; and

(d) must specify the period within which the woman is to give the information to the Department; and

(e) must specify that the notice is a recipient notification notice given under this Act.

172(3A) A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (3)(c) or (e).

172(4) The period specified under paragraph (3)(d) must end at least 14 days after:

(a) the day on which the event or change of circumstances occurs; or

(b) the day on which the woman becomes aware that the event or change of circumstances is likely to occur."

Section 1224 provides for the raising of a debt where there has been a failure to comply with a provision of the Act and reads as follows:

"1224 Debts arising from recipient's contravention of Act

1224(1) If:

an amount has been paid to a recipient by way of social security payments; and

the amount was paid because the recipient or another person:

made a false statement or a false representation; or

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."

The relevant waiver provisions for the purposes of these proceedings are those contained in ss1237A and 1237AAD which read as follows:

"1237A Waiver of debt arising from error

Administrative Error

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).

...

1237AAD Waiver of special circumstances

The Secretary may waive the right to recover all or part of a debit 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;

(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 hard ship 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."

6. By way of background, the Tribunal finds as fact the following:

(a) Mr and Mrs Gowan applied for and were granted disability support pension and wife pension respectively commencing from 25 September 1992.

(b) At all material times, Mrs Gowan has been employed at the Whyalla Hospital.

(c) On 11 September 1995, in accordance with ss132 and 172 of the Act, Mr and Mrs Gowan were notified of their obligations to notify the Department within 14 days if their combined income became more than $204.90 per week.

(d) From 1 December 1995, on account of Mrs Gowan's income from Whyalla Hospital, Mr and Mrs Gowan's combined income became more than $204.90 per week. They failed to notify the Department of the above within 14 days or at any time thereafter.

(e) In July 1997, the Department became aware of the increase in Mr and Mrs Gowan's combined income. As a result, it was determined that overpayments of disability support pension and wife pension amounting to $3,513.10 each had occurred for the period 14 December 1995 to 26 June 1997 which constituted debts due to the Commonwealth.

(f) The decisions to raise and recover the relevant debts were affirmed by an authorised review officer and by the SSAT. Mr and Mrs Gowan applied to this Tribunal for review of the decisions of the SSAT.

The Evidence

7. Mrs Gowan gave oral evidence by telephone. Mr Gowan did not give evidence in these proceedings. In her evidence, Mrs Gowan asserted that in 1992, at the time she and her husband applied for pensions, she informed an officer of the Department that her income from the Whyalla Hospital fluctuated depending on her roster which changed every six weeks. She said she inquired as to whether she would have to bring pay slips into the Department every six weeks to verify changes in income but was told there was no need as the Department could check directly with her employer. She gave evidence she then signed a form authorising the Department to make contact with her employer for this purpose. When pressed for detail about the meeting at which this was alleged to have taken place, she could recall only that the Departmental Officer was a female and that the authority she signed was a one page handwritten document. The document was not produced before the Tribunal and Mr Underwood submitted that it could not be found as it did not exist.

8. Mrs Gowan's evidence as to the signing of the authority was corroborated by Mrs M. Adams, a casual employee at the Whyalla Hospital, who gave evidence on behalf of the applicants. She maintained that she regularly took pay slips evidencing fluctuations in her income into the Department until an officer of the Department suggested she sign a form authorising the Department to check directly with the employer. She too maintained the document was handwritten by an officer of the Department which she then signed.

9. Mrs Gowan was questioned as to her understanding, if any, as to the content of letters sent to her indicating that she must notify the Department within 14 days if her and her husband's combined income exceeded a certain amount (examples appearing at additional documents (AD) pages 6-8, 51-53, 74-76, 88-90, 101-103). She gave evidence that she received such letters every six weeks from the date at which payment of pension commenced and said she believed them to be as a result of regular reassessment of her entitlement to pension based on the Department's checking of fluctuations to her wages. Mrs Gowan admitted that she understood the letters to be informing her, among other things, of the requirement to notify of changes to income but said she ignored them as she was satisfied the Department was monitoring her income directly.

10. Mrs Gowan then gave evidence that her understanding in the above regard was confirmed by Neville Masters of the Department's mobile review team during a visit to the Gowan's residence in March of 1996. She said that he came to speak to her husband about certain allegations made against him, a fact confirmed by Mr Masters in his evidence, and that in the course of the interview she asked him whether the Department was still checking her income. Her account was that he replied that it was. In his evidence, Mr Masters could not specifically recall speaking to Mrs Gowan or being asked whether her income was being checked. He said that if he had spoken to her, he would probably have made a note of it (of which none could be found). He said that standard practice in this scenario would be to remind the recipient of their obligation to notify of changes to income. He also said he has never advised benefit recipients that they will not have to advise of increases in their income nor that the Department will routinely check their income for them.

11. Mrs Gowan's evidence with respect to both the signing of the authority and the receipt of letters from the Department was contradicted by Ms L. Rasheed, officer at the Whyalla branch of Centrelink. She gave evidence that in her experience spanning fourteen years at the Department of Social Security and now Centrelink, the Secretary has never sought authority from clients to check income details with employers and has never required clients to sign forms or statements to this effect nor requested them. She said that such practice would be unnecessary as the Secretary has the power under s1304 of the Act to gather such information without the consent of benefit recipients. Ms Rasheed also disputed that letters arising from reassessments had been issued to the applicants every six weeks and archive material evidencing correspondence sent to the applicants was produced to this effect (Exhibit R6).

12. Ms Rasheed gave evidence that at the time Mrs Gowan began receiving pension until around 1995, it was Departmental practice to regularly check income details with employers by way of sending out "Employer Verification Reports" which the employer was obliged to return completed. She said however that these checks took place on average every three to six months and sometimes less frequently depending on the particular client, rather than being issued every six weeks as was being maintained by Mrs Gowan. Ms Rasheed said that Departmental policy in this regard changed in 1995 whereupon the Secretary ceased making regular checks and instead verified income details with employers only where a change in income has been notified by a benefit recipient. Ms Rasheed stressed that at all times it has been standard practice at the Whyalla office (and across the Department in general) to emphasise that the onus lies with the benefit recipient to notify any changes to income despite checking that may be done by the Department, and that there would be no reason for officers to depart from this practice.

13. Mrs Gowan was also asked questions relating to a statement dated 2 May 1994 written on her behalf by an officer of the Department and signed by her (additional documents p63) in which the following was said:

"I would like to advise the department that my husband collapsed last fortnight. He was admitted to the Memorial Hospital in North Adelaide on 18/4/94. I have no idea how long he will be in Adelaide for. I took last week off leave without pay while I went to Adelaide so this pay will be lower than normal. Could you please reassess my entitlement to pension. My employer is the Whyalla Hospital."

She was asked why, if the Department was in regular contact with her employer as to her fluctuations in income and was regularly reassessing her entitlement to pension as she was alleging, was there any need to make such a statement requesting that reassessment occur and notify who her employer was. Mrs Gowan said that despite her understanding that routine monitoring of her pay was occurring, she was still under an obligation to notify of this "emergency type situation". Later, she said that she didn't know when the next six-week reassessment would occur meaning she needed to inform the Department to ensure it would occur immediately otherwise she might have been without income. She also said that she thought she was obliged to notify the Department when she changed jobs within the Whyalla Hospital in 1996.

Submissions of the parties

14. On behalf of the applicants, Mr Wait submitted that the evidence of Mrs Gowan should be accepted by the Tribunal, as corroborated by that of Mrs Adams, such that the Tribunal could be satisfied that she had signed a document at the time of application for pension authorising the Department to contact her employer directly for the monitoring of fluctuations in her pay. He submitted that Ms Utting's evidence ought to be accepted also to the extent that regular checks of Mrs Gowan's income were in fact done by the Department. He also submitted Ms Rasheed's evidence assisted his clients' case in so far as it confirmed that until 1995, the Department had in place a system of regularly checking income directly with employers and reassessing entitlement to pension accordingly (the "manual review process") and that in 1995, a policy change occurred putting an end to that system (T6) which was not communicated to the applicants.

15. It was then submitted that the Tribunal could be satisfied that as from the time they first received pension in 1992, the applicants believed that the Department was regularly checking Mrs Gowan's income and reassessing their entitlement to pensions accordingly. For this reason, they believed that they were not required to notify the Department of changes in income despite notices issued to this effect. It was submitted that occasions when Mrs Gowan did notify the Department of changes in her circumstances were not inconsistent with this belief. In particular, Mr Wait submitted that Mrs Gowan's notification about her drop in income when she took leave without pay on account of Mr Gowan's hospitalisation was to ensure she would not be without income as she did not know when the next six-weekly manual review would take place.

16. Based on the above, Mr Wait then made four submissions as follows:

(a) On account of the customary "manual review process" established in the Whyalla office, the Secretary could be said not to have exercised the discretion in ss132 and 172 to require the applicants to notify of changes to income. The notices issued pursuant to ss132 and 172 were nullities as they were superseded by the manual review process which was in place at the time. As the notices were nullities, there was no obligation on the applicants to notify of changes to income meaning the applicants had not failed to comply with a provision of the Act for the purposes of s1224.

(b) Alternatively, compliance with provisions in the Act including provisions in ss132 and 172 for the purposes of s1224 should be implied to mean "reasonable compliance". As there was a customary system of checking income in place - the manual review process - it was reasonable in the circumstances that the applicants should have failed to comply with notices under ss132 and 172.

(c) Alternatively, if the debts were found to exist, the debts should be waived pursuant to s1237A, namely, because the debts were solely attributable to administrative error on behalf of the Commonwealth and the relevant payments of disability support pension and wife pension were received in good faith by the applicants. The sole administrative error was either the Department's failure to notify the applicants that the manual review process was being ceased, or alternatively, administrative confusion caused by conflict between the manual review process and ss132 and 172 notices. The applicants received the payment of benefits giving rise to the debts in good faith as at all times they believed the Department was checking the income and adjusting their entitlement to benefits accordingly.

(d) Alternatively, there were grounds to waive the debts on account of the special circumstances of the case, namely, that the applicants were induced by the Department to rely on the manual review process which was then ceased without their knowledge as well as the deteriorating medical conditions of Mr and Mrs Gowan.

17. On behalf of the Secretary it was submitted that Mrs Gowan had not signed an authority for the Department to check her income directly with her employer. In this regard, Mr Underwood relied on the evidence of Ms Rasheed to the effect that there would have been no purpose served by such a course as the Secretary already possessed the necessary powers to check income with employers. Mr Underwood submitted that the manual review process in place until 1995 was a sound administrative practice to ensure that persons were not being paid in excess of their entitlements. However, in his submission, it did not amount to a systematic six-weekly process as alleged by Mrs Gowan. The Secretary also submitted that Mrs Gowan had not been told she did not have to notify of changes to her income, and to this end, relied again on the evidence of Ms Rasheed together with that of Mr Masters. Rather, Mr Underwood submitted that at all times the applicants understood their obligation, as contained in the ss132 and 172 notices, to notify the Department if their combined income exceeded a certain amount but that they deliberately chose to ignore them, thereby failing to comply with the provisions of the Act.

18. Mr Underwood then submitted that accepting the evidence of the Centrelink officers in preference to that of Mrs Gowan, there was nothing to indicate that the Department had made an administrative error in so far as it had misled the applicants into believing they were not required to notify of changes in income. Finally, he submitted that there were no special circumstances such that the debts should be waived pursuant to s1237AAD. Ill-health, he submitted, was not unusual, uncommon or exceptional. Further, as Mrs Gowan knowingly failed or omitted to comply with a provision of the Act in so far as she was aware of her obligations to notify the Department of changes but chose not to do so, relief under s1237AAD was not available.

Consideration of the Matters at Hand

19. In making its determination, the Tribunal has considered the totality of the material placed before it together with the submissions of the parties.

20. The Tribunal would indicate that it has had the advantage of carefully listening to Mrs Gowan during the giving of her testimony. The Tribunal found her to be an unimpressive witness as to matters of fact and, in particular, as to what transpired at the meeting at the Whyalla office of the Department during which she alleges to have signed a form authorising the Department to check her income. The Tribunal was left without the necessary confidence to accept her account of what took place on that occasion. The Tribunal formed the distinct impression that during the giving of her evidence she was prone to portray events in a light which best suited her ends and which did not necessarily accord with the reality of the situation. Accordingly, her account has not been accepted by the Tribunal where it could be said to be at variance with other witnesses who gave evidence before the Tribunal .

21. The Tribunal was similarly unimpressed with the testimony of Mrs Adams in this regard. She too was prone to portray events in their best possible light which did not accord with the reality of the situation. The Tribunal lacks the necessary confidence in her testimony and is not prepared to accept her account as representing an accurate account of what transpired.

22. On the other hand, the Tribunal found Ms K. Utting to be an impressive witness who was honest and straight-forward in the giving of her evidence. The Tribunal has no hesitation in accepting the entirety of her account. Similarly, the Tribunal found Ms Rasheed to be a very impressive witness. She was a very experienced officer of the Department who possessed an excellent recollection of the events in question. Ms Rasheed was frank and honest in the giving of her evidence which the Tribunal has no hesitation in accepting. The Tribunal is of the view that Mr Masters, despite having an incomplete recollection of some of the events under consideration, nonetheless did his best to accurately portray the events as best he could and the Tribunal accepts his evidence in that light.

Findings of Fact

23. Having regard to the accepted evidence, and the inescapable inferences which arise therefrom, the Tribunal makes the following findings of fact:

(a) At the time of application for pension, Mrs Gowan did not sign a document authorising the Department to check her income with the Whyalla Hospital, nor was it suggested by an officer of the Department that she should give such authority. Authority to check income details with employers was not required by the Secretary by virtue of s1304 of the Act and it was not at any time a practice of the Department to seek such authority.

(b) Until 1995, the Department regularly verified income with employers on a three to six monthly basis (and sometimes longer depending on the circumstances). At no time did it occur every six weeks in the case of Mrs Gowan. Since 1995, this practice has continued on an irregular basis.

(c) Mrs Gowan was not told by Mr Masters during a visit to the applicants' house in March 1996 or by any other officer of the Department at any other time that the Department was still checking her income or that there was no obligation on her or her husband to notify of changes to their combined income.

(d) On 11 September 1995, notices were issued to Mr and Mrs Gowan pursuant to ss132 and 172 respectively. Such notices were valid and placed an obligation on them to notify the Department within the allotted period if their combined income exceeded $204.90 per week.

(e) Mr and Mrs Gowan were aware of their obligations to notify of changes to income but chose not to do so. In so doing, they knowingly failed to comply with ss132 and 172 of the Act respectively.

24. Implicit in these findings is that the Tribunal rejects submissions (a) and (b) (paragraph 16 of these reasons) which were advanced on behalf of the applicants. Suffice to say, the Tribunal is satisfied that the discretions in ss132 and 172 were clearly exercised by the Secretary in the issuing of the relevant notices and that the obligations placed on the applicants courtesy of the exercise of the discretions were not overridden or superseded in any way by the manual review process. It follows that the amounts of disability support pension and wife pension paid to Mr and Mrs Gowan on account of their failure to comply with provisions in the Act, namely, ss132 and 172 respectively, are debts due to the Commonwealth (s1224).

25. The Tribunal now turns to consider the waiver provisions in ss1237A and 1237AAD of the Act.

26. With respect to the question of administrative error made by the Commonwealth, the Tribunal is satisfied there was none. Implicit in the findings of fact above, the Tribunal is not satisfied that the actions of the Department in any way led the applicants to believe that they were not required to notify of change to their income. Rather, the opposite is so. The Tribunal is satisfied that at all times, the Department discharged its duties under the Act to inform the applicants of the need to inform it of changes to income and it is solely because of the errors of the applicants in not so notifying that the debts have arisen. Further, the Tribunal is not satisfied that any administrative error has been demonstrated in respect of the operation or cessation of the manual review process in place until 1995. This was a sound administrative practice deigned to safeguard public monies and ensure benefit recipients received their correct entitlements. In no way could it be said that the system removed or affected, erroneously or otherwise, the continuing obligations on the applicants to notify of changes to their income by virtue of ss132 and 172 notices. Accordingly, as no error has been demonstrated on the part of the Commonwealth, s1237A cannot apply.

27. The Tribunal now turns to the waiver provision in s1237AAD of the Act. As the Tribunal is satisfied that the applicants knowingly omitted or failed to comply with the provisions in ss132 and 172 of the Act in so far as they were aware of their notification obligations and chose not to discharge them, this section is not applicable. In any event, the Tribunal would indicate that it is of the view that the circumstances of this case do not amount to special circumstances within the meaning of that phrase in s1237AAD. There is nothing unusual, uncommon or exceptional about the circumstances in which Mr and Mrs Gowan have found themselves that would make it appropriate to waive the debts under consideration. At the end of the day, on account of their own failure to notify of changes to Mrs Gowan's income in spite of a shared awareness that they were required to do so, the applicants have received payments of disability support pension and wife pension amounting to $3,513.10 each to which they were not entitled. In the circumstances it is appropriate that the monies be recovered from the applicants.

28. For these reasons, the decisions under review are affirmed.

I certify that this and the fourteen (14) preceding pages are a true copy of the decision and reasons for decision herein of DEPUTY PRESIDENT B.H. BURNS

Signed: .....................................................................................

Peter Psaltis (Associate)

Date/s of Hearing 8 December 1998

9 December 1998

Date of Decision 5 February 1999

Counsel for the Applicant Mr M Wait

Solicitor for Applicant Welfare Rights Centre (SA) Inc

Counsel for the Respondent Mr J Underwood

Solicitor for the Respondent CentreLink