Yildiz; Secretary, Department of Family and Community Services [2000] AATA 899 (25 October 2000)

Last Updated: 27 October 2000

DECISION AND REASONS FOR DECISION [2000] AATA 899

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/1679

GENERAL ADMINISTRATIVE DIVISION )

Re SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES

Applicant

And ALI YILDIZ

Respondent

DECISION

Tribunal Dr JD Campbell

Date 25 October 2000

Place Sydney

Decision The Tribunal determines that the decision under review be set aside and in substitution thereof finds that: (a) the Respondent has a debt due and payable to the Commonwealth arising from overpayment of special benefit for the period 19 March 1998 to 2 July 1998; and (b) the Respondent has a debt due and payable to the Commonwealth arising from overpayment of special benefits for the period 3 July 1998 to 17 September 1998, with this debt being waived pursuant to section 1237A(1) of the Act; and (c) the matter is remitted to the Applicant to calculate the quantum of the debt owing for the period 19 March 1998 to 2 July 1998.

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

Dr J D Campbell

Member

CATCHWORDS

SOCIAL SECURITY - special benefit - failure to notify partner's employment - increase in combined income - overpayment - debt - write off - administrative error - waiver - good faith

Social Security Act 1991, sections 729, 759, 1068-G, 1223, 1224, 1236, 1237(A1), 1237AAD.

Re Hales and Secretary, Department of Social Security (1991) AAT 12159

Secretary, Department of Social Security v Hales (1998) 82 FCR 154

Re Greenwood and Secretary, Department of Social Security (1991) 64 SSR 897

Director General of Social Services v Hales (1983) 47 ALR 281

Department of Education Training and Youth Affairs v Prince (1997) 50 ALD 186

Re Beadle and Director General of Social Security (1984) 6 ALD 1

Re Colaiacolo and Secretary, Department of Social Security (AAT 2019, 24 April 1985)

REASONS FOR DECISION

Dr J D Campbell, Member.

1. The Secretary, Department of Family and Community Services ("the Applicant") in this matter seeks a review of the decision of the Social Security Appeals Tribunal ("the SSAT") dated 14 September 1999 that special benefit remained payable to Mr A Yildiz ("the Respondent") and that no overpayment of special benefit had occurred. As a consequence no debt was incurred, despite his wife returning to employment. This decision of the SSAT had set aside the decision dated 17 November 1998 of the Centrelink delegate to the Department of Family and Community Services that the Respondent owed a debt to the Commonwealth arising from an overpayment of special benefit of $3371.85 during the period 18 January 1998 to 16 September 1998. This decision was reviewed and affirmed by an authorised review officer on 5 July 1999.

2. A hearing was held before the Tribunal on 13 June 2000, during which the Tribunal was assisted by an interpreter fluent in the Turkish language. The Applicant was represented by Ms D'Cunha, an advocate from the Advocacy and Administrative Law Section of Centrelink. The Respondent was represented by his wife and both he and his wife gave oral evidence.

3. The following material was placed in evidence before the Tribunal:

Exhibit No. Description

T1-T21 pp 1-64 Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975

A1 Applicant's statement of facts and contentions dated 17 February 2000

Issue:

4. The relevant issue in this matter is whether Mr Yildiz owes a debt of special benefit in the amount of $3371.85 for the period 18 January 1998 to 16 September 1998, and if so, whether there are any grounds for not recovering all or part of it.

Legislation:

5. The relevant legislation is the Social Security Act 1991 ("the Act") and in particular sections 729, 759, 1068-G, 1223, 1224, 1236, 1237(A1) and 1237AAD.

Background evidence:

6. On 27 October 1997 the Respondent was granted a Provisional Resident Visa, subclass 309. On 8 December 1997 the Respondent arrived in Australia. The Respondent made an application for special benefit on 23 December 1997 and this was rejected on 22 January 1998 (T3). Following a review on 20 February 1998, the Respondent was notified that special benefit rate would be paid from his date of application and that his special benefit rate may be affected by any income, including casual earnings (T4).

7. On 18 March 1998 the Respondent lodged an income enquiry form with Centrelink, concerning himself and his wife, in which he stated that neither he nor his wife had undertaken any work between 5 March 1998 and 18 March 1998. The form indicated that the special benefit being paid to him was subject to an income test, and pursuant to section 759 of the Act, the Respondent was notified that he was obliged to inform Centrelink within seven days (as his rate of special benefit may vary) if he or his wife start paid work, or if there is a change of income (T5).

8. The Respondent's wife commenced receiving newstart allowance on 11 December 1997, and this was ceased on 26 March 1998, when Mrs Yildiz attended the Redfern Centrelink Office and advised that she had returned to work (Attachment 1 to Exhibit A1). As a result of this lodgement Mrs Yildiz's newstart allowance was ceased with effect 18 March 1998.

9. On 29 May 1998 the Respondent was issued with a special benefits review form (T6), with a suspension of benefit occurring on 26 June 1998 for non return of review form (T7). This was followed by lodgement of the form on 3 July 1998, in which the Respondent nominated partner income of $961.54 per week/fortnight (T8). Special benefit payment was recommenced on 3 July 1998 with effect from 26 June 1998 in a letter from the Applicant to the Respondent dated 3 July 1998 (T9). A similar recipient notification notice pursuant to section 759 was an integral part of the letter (T10).

10. A special benefit review form was lodged by the Respondent on 2 September 1998 in which the respondent reported his wife as earning $961.54 gross per week and had earned $5766 over the previous three months (T11). The Applicant issued a letter on 23 September 1998 suspending benefit payment because of non lodgement of the form (which had been lodged on 2 September 1998) (T12). In two further letters both dated 17 November the Respondent was advised by the Applicant that there had been an overpayment of special benefit of $3371.85 during the period 16 April 1998 to 11 November 1998 as his wife's income was not taken into account. (T14,T15)

Applicant's evidence:

11. The Respondent told the Tribunal that he was born in Turkey in 1979 and educated to year 11, before commencing work as a hairdresser. He arrived in Australia in December 1997. The Respondent stated that there were no discussions with him about the nature of special benefit, and that he was certainly unaware of the reasons why a special benefit payment should cease. He further stated that he had heard from other people that special benefit could be paid for 10 months.

12. The Respondent stated that he initially thought both payments would cease when his wife reported her employment on 26 March 1998, for he understood that people who work do not generally receive payments. The Respondent, after he had completed and lodged the review form on 3 July 1998, assumed that it was his right to receive payments. He further stated that if he believed he was not entitled to special benefit he would not have accepted it.

13. In response to questions asked in cross examination, the Respondent stated that he was unable to remember how the application was lodged; that he has made no other claim for social security benefits; and that he was probably, but not definitely, interviewed on day of lodgement and that he has no record of such an interview. The Respondent stated that he did not query the payments as he believed them to be his entitlement, and after notifying the Department of his wife's employment on 3 July 1998, he thought the Department would have stopped payment if he was not entitled to it. The Respondent stated that he had discussed with his wife the effect of her earnings on his payments and he thought that they would stop when she started work. Once they continued to be paid he assumed that the payments were being made correctly. The Respondent also stated that he did not advise Centrelink within the seven day notification period of his wife commencing work on 19 March 1998.

Mrs Yildiz:

14. Mrs Yildiz told the Tribunal that she was born in Australia in 1975, educated to year 12, left school in 1994 and had undertaken a number of office jobs before travelling to Turkey, meeting her husband and marrying him in 1997. She stated that for the last three years she had worked as a supervisor at a limousine company.

15. In discussing the issue of her husband's special benefit, Mrs Yildiz stated that she was given a form in Turkey when applying for a visa for her husband. The application for special benefit for her husband was initially rejected, but after a phone call and the issue of hardship, the application was approved. Mrs Yildiz stated that at the time a meeting was arranged but she cannot remember what it was about, although there was no discussion on the issue of special benefit.

16. In relation to the issue of the effect of her resuming employment, she thought that it would cause a reduction in her husband's rate of special benefit, and in this regard she placed some reliance upon her parents' experience. Mrs Yildiz stated that she probably did discuss the issue with her husband, but cannot remember the details, and that she was surprised when he continued to receive the full special benefit payment. Mrs Yildiz stated that they both went to the Centrelink office in July 1998 when lodging the Respondent's review form, and when payment continued she had no doubts about the correctness of the payments.

17. In response to questions asked in cross examination Mrs Yildiz stated that the newstart allowance was dependent on level of income, but that special benefits payment was different and granted for hardship. Mrs Yildiz considered that her earnings would affect the rate of special benefit payment, and that she believed her husband would have been aware that special benefits payments would have been affected by her earnings in some way. When payment continued, both she and her husband thought they were entitled to it.

Submissions:

18. The Applicant in this matter submitted that the special benefit is a discretionary payment and that it is granted for hardship reasons. Further the rate of payment is calculated pursuant to section 1068-G of the Act. The Applicant submitted that the granting of special benefit is not in question, but the significant issue in this matter is the rate of payment of the benefit once the Respondent's wife commenced work on 19 March 1998. The Applicant contends that the Respondent did not notify Centrelink of his wife's return to work until 3 July 1998, and that he had an obligation to do so within seven days pursuant to the recipient notification notice issued pursuant to section 759 of the Act.

19. The Applicant contends that once the Respondent's wife commenced to earn income at the rate nominated, the Respondent ceased to qualify for special benefit payment, with the correct date of effect for the cessation of both qualification and payability being the date of the disqualifying event. There is no need for a determination about his continued qualification. Thus the overpayment and the debt in this matter depend on the disqualifying event, with the debt creation provisions of the Act being concerned with past events. The Applicant further contends that the debt provisions of the Act are intended to stand alone and are not subject to any other determination provisions contained in the Act.

20. In relation to the overpayment for the period 18 March 1998 to 2 July 1998, the Applicant contends that the Respondent had a separate notification obligation to that of his wife, which he did not undertake. Further by virtue of correspondence received, it was made clear to the Respondent that his special benefit would be affected by any income received by him or his wife. His failure to notify in the Applicant's view constituted a failure or omission to comply with a provision of the Act and thus any overpayment constituted a debt pursuant to section 1224(1) of the Act.

21. In relation to the overpayment for the period 3 July 1998 to 16 September 1998, the Applicant contends that an overpayment did occur and that this constitutes a debt pursuant to section 1223(1) and/or section 1223(5) of the Act. Further the Applicant, while admitting that overpayment arose as a result of sole administrative error, contends that the Respondent did not receive the overpayment in good faith and as such the debt cannot be waived pursuant to section 1237A(1) of the Act. Similarly the Applicant contends that it is not appropriate to write the debt off pursuant to section 1236(1A) or to waive the debt pursuant to section 1237AAD of the Act, as no special circumstances exist.

22. The Respondent submits that on 26 March 1998 his wife notified the Applicant of her employment which had commenced on 19 March 1998. He also stated that he notified the Applicant of this on 3 July 1998. The Applicant further submits that any overpayment arose directly as a result of sole administrative error made by the Commonwealth and that at all times he received the payments in good faith. Accordingly the Applicant submits that any debt that exists should be waived because of administrative error and/or alternatively because of his extremely difficult circumstances, as he is in receipt of no income nor is he employed.

Considerations and findings:

23. The Tribunal having considered the evidence, observes that there is minimal disagreement abut the factual issues in this matter. The Tribunal makes the following finding of fact:

(a) the Respondent was granted a special benefit payment on 20 February 1998 effective from 13 December 1997 (date of application);

(b) the evidence indicates that the Respondent was not interviewed concerning the nature and issues surrounding a special benefit program;

(c) the Respondent was made aware that his special benefit payment was income dependent, and that he had to notify the Applicant if he or his wife commenced employment (correspondence of 18 March 1998);

(d) the Respondent's wife notified the Applicant on 26 March 1998 of her return to work on 19 March 1998;

(e) the Respondent and his wife did discuss the effect of her return to work and earning income on the Respondent's rate of special benefit payment;

(f) the Respondent concluded that as the rate of special benefit payment continued unaltered as a consequence of his wife's notification, his entitlement to special benefit payment remained unaltered;

(g) on 3 July 1998 the Respondent did notify the Applicant in writing of his wife's employment and her earnings;

(h) the Applicant, upon receipt of this notification, resumed payment of the special benefit to the Respondent which had been withheld on 26 June 1998 for non return of review form;

(i) the Respondent lodged a further special benefit form on 2 September 1998, again notifying the Applicant of his wife's earnings, with the Respondent's special benefit being ceased on 17 September 1998 for non-return of review form; and

(j) the Respondent, having notified the Applicant of his wife's earnings on 3 July 1998, and despite his earlier concerns that his wife's earnings may have an effect on his special benefit payment, was reinforced in his view by the continuance of payments of special benefit that his entitlement to payment was correct.

24. The Statutory framework for this matter involves a consideration of the following sections of the Social Security Act which provides for the following:

* section 729 defines the qualification criteria for the payment of the discretionary benefit of "special benefit", with the benefit being available only to a person who is not able to get any other income support payment.

The Tribunal notes that there was no disagreement between the parties that a correct determination to grant the Respondent a special benefit payment had been made.

* Section 1068-G of the Act contains the provisions relating to the effect of income, including the partner's income, on their maximum rate of special benefit.

The Tribunal notes that the Respondent's rate of special benefit was calculated when neither he nor his wife were working.

25. In continuing to work through the statutory framework and considering the factual circumstances within the context outlined, the Tribunal observes that the rate of special benefit payment is income dependent (either the Respondent and/or wife), and that once the Respondent's wife returned to work and earned the income nominated, the Respondent ceased to qualify for a special benefit payment, with the date of effect for cessation of both qualification and ability to continue to pay being the date on which his wife returned to work. As a consequence, in this matter overpayment commenced on 19 March 1998 and continued until the special benefit payment was ceased with effect 16 September 1998.

26. In considering the overpayment, the issue is further complicated by the Respondent's notification of his wife's earnings on 3 July 1998. In relation to the period 19 March 1998 to 2 July 1998, the Tribunal has already found that the Respondent did not notify the Applicant, when pursuant to a section 759 recipient notification notice he had obligation to inform Centrelink of his wife's return to employment on 19 March 1998. The Tribunal notes that both the Respondent and his wife were on special benefit payment and Newstart allowance respectively until the latter was cancelled as a result of Mrs Yildiz's advice on 26 March 1998. The Tribunal concludes in light of this that the Respondent did have a duty to notify Centrelink of his wife's return to work and her earnings as from 19 March 1998, within a period of seven days, and that he failed to do so. The Tribunal further finds, in the absence of any evidence to suggest that the Respondent's wife, when she advised Centrelink of her return to work on 26 March 1998, made any reference to her husband's situation and his special benefit payment, that the notification by his wife of her situation on 26 March 1998 does not discharge the onus upon him to notify in relation to his particular circumstances.

27. In furthering the discussion, the Tribunal, having already found that overpayment has occurred for the period in question, further concludes that this overpayment has resulted as a consequence of the Respondent's failure to notify. As such the Tribunal finds that the overpayment for the period 19 March 1998 to 2 July 1998 constitutes a debt owing by the Respondent pursuant to section 1224(1), which provides:

1224.(1) If:

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

under this Act or the 1947 Act; and

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

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

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

Act;

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

28. In further commentary the Tribunal notes the case of Re Hales and Secretary, Department of Social Security (1991) AAT 12159, affirmed by the Federal Court, which defined a failure to comply with a notice as a failure to comply with the section under which the notice was issued. Similarly in Re Greenwood and Secretary, Department of Social Security (1991) 64 SSR 897 it was again stated, when relying upon an earlier Federal Court decision in Director General of Social Services v Hales (1983) 47 ALR 281, that the failure or omission to comply with the Act must make a contribution to the cause of the overpayment, but not necessarily be the dominant or effective cause of the overpayment.

29. In relation to the period 3 July 1998 to 16 September 1998, the Tribunal has already made a finding that this has arisen solely as a result of administrative error by the Applicant. The Tribunal, in noting that an overpayment has occurred during this period, finds that there is a debt owing pursuant to both section 1223(1) and 1223(5) of the Act, which provide:

"1223.(1) Subject to subsection (2), if:

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

(b) the recipient was not qualified for the social security payment and the amount was not payable to the recipient;

the amount so paid is a debt due to the Commonwealth

1223.(5) If:

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

(b) the social security payment is not payable to the person; and

(c) the received amount was calculated using a maximum payment rate that was greater than the maximum payment rate that would have been used were the social security payment payable to that person;

the received amount is a debt due to the Commonwealth."

30. In turning to the two periods in each of which a debt of a different statutory character was created, the Tribunal moves to a consideration of whether any or all of these debts should be waived or written off. In relation to the issue of waiver the Tribunal notes the following statutory provisions which provide:

"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.

1237A.(1A) Subsection (1) only applies if:

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

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

whichever is the later."

31. In relation to the issue of sole administrative error, the Tribunal, having found that the Respondent failed or omitted to comply with a section of the Act and that this resulted in a debt for the period 19 March 1998 to 2 July 1998, further concludes that the debt for the period cannot be waived on grounds of sole administrative error.

32. The Tribunal has already concluded that the debt for the period 3 July 1998 to 16 September 1998 arose solely as a result of administrative error. In establishing whether the debt can be waived the Tribunal notes that the payments must have been received by the Respondent in good faith. In Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186, Finn J enunciated his understanding of the term "good faith" when he stated:

"The section asks that a quite specific question be addressed: was the payment received in good faith? It is quite unconcerned, for example, with whether, after 22 December, Mr Prince acted in good faith towards DEETYA. Its sole concern is with whether a particular state of affairs exists at the time a payment (or payments) is received.

...

For my own part, I consider the burden of the formula in the section 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her recipient of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received - ie 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."

33. The Tribunal, in considering the Respondent's state of mind, and whether he had or ought to have had knowledge that he was not entitled to receive payments at the time he received them, is mindful of the Applicant's background, his lack of English literacy, the absence of clear evidence of any interview at the time of application or granting of special benefit and the apparent continuity of payments despite notification of his wife's employment and earnings to the Applicant.

34. The Tribunal further notes the evidence of the Respondent, in which he described his expectation that there would be some variation in his rate of special benefit because of his wife's earnings and when it did not occur, he was of a mind that he was entitled to such payments, as the Applicant continued to pay them in the full knowledge of all the information regarding his wife's income.

35. The Tribunal, in noting that Mr Prince was not a novice receiver of income support payments and that there was no evidence adduced implying that the Respondent's memory of statement of events were in question, finds that the Respondent was an honest and reliable witness, a freshly arrived migrant, in receipt of his first income support payments, and that his state of mind was as he described it, when he received the payments during the period 3 July 1998 to 17 September 1998. As a consequence it is the Tribunal's finding that, while the Respondent may have had a particular expectation when his wife reported her return to work on 26 March 1998, the continuation of the payments, particularly after 3 July 1998, when again the wife's earnings were made known to the Applicant, had the effect of negating these earlier mindset expectations of the Respondent in that he believed that continuation of payments were his due, and that this state of mind existed during the period 3 July 1998 to 17 September 1998. In making a finding that the Respondent received these latter payments in good faith the Tribunal, in acknowledging the Respondent's age, migration status, his first income support payment and the actions of Centrelink, which would have confused even a seasoned receiver of income benefit support, has determined that the Respondent did not have reason to know that he was not entitled to the payments at the time the payments were made.

36. In summary it is the Tribunal's finding that any debt which may have accrued for the period 3 July 1998 to 17 September 1998 is waived pursuant to section 1237A(1) of the Act. The debt for the period 19 March 1998 to 2 July 1998 is not waived.

37. The Tribunal notes section 1237AAD of the Act, which provides:

"1237AAD. 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 false representation; or

(ii) failing or omitting to comply with a provision of this Act or the 1947 Act; and

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c) it is more appropriate to waive than to write off the debt or part of the debt."

The Tribunal has already found that in relation to the debt for the period 19 March 1998 to 2 July 1998 there was a failure by the Respondent to comply with a provision of the Act, and as such section 1237AAD(a)(ii) is relevant. Further, in noting the issues upon which the Respondent may seek to rely, namely the administrative error of the Applicant and his own financial circumstances, in that he, being not in receipt of any income support payments, is entirely dependent on his wife's earnings, the Tribunal finds that neither of these circumstances are of sufficient merit to be deemed uncommon, unusual or exceptional (Re Beadle and Director General of Social Security (1984) 6 ALD 1) and accordingly do not constitute special circumstances. In considering the financial circumstances the Tribunal, while noting the Respondent's lack of income, finds that while he was living with his wife, the couple's financial circumstances were not other than tightened.

38. Finally the Tribunal notes the provisions in relation to writing off the debt pursuant to section 1236(1A) of the Act, and again concludes that while the Respondent and wife remain members of a couple, it would be inappropriate to activate write off provisions.

determination

39. The Tribunal determines that the decision under review be set aside and in substitution thereof finds that:

(a) the Respondent has a debt due and payable to the Commonwealth arising from overpayment of special benefit for the period 19 March 1998 to 2 July 1998; and

(b) the Respondent has a debt due and payable to the Commonwealth arising from overpayment of special benefits for the period 3 July 1998 to 17 September 1998, with this debt being waived pursuant to section 1237A(1) of the Act; and

(c) the matter is remitted to the Applicant to calculate the quantum of the debt owing for the period 19 March 1998 to 2 July 1998.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell

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

Associate

Date/s of Hearing 13 June 2000

Date of Decision 16 October 2000

Advocate for the Applicant Ms D'Cunha, Departmental Advocate

Self-represented Respondent