Curtain and Secretary, Department of Family and Community Services [2002] AATA 188 (21 March 2002)

Last Updated: 22 March 2002

DECISION AND REASONS FOR DECISION [2002] AATA 188

ADMINISTRATIVE APPEALS TRIBUNAL )

) NoQ2001/806

GENERAL ADMINISTRATIVE DIVISION )

Re LINDA CURTAIN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date 21 March 2002

Place Brisbane

Decision The decision of the Social Security Appeals Tribunal dated 16 August 2001 is set aside and in its place is substituted the decision that special circumstances warrant the waiver of that part of the debt that remains unpaid.

......(Sgnd).......

J Cowdroy

Member

CATCHWORDS

SOCIAL SECURITY - Overpayment - Parenting Allowance - Whether special circumstances exist to warrant the waiver of the debt - Whether overpayment attributable to an error of the Department - Financial hardship to applicant

Social Security Act 1991 (Cth)

Re Ross Martin Junor and Secretary, Department of Social Security (1997) 48 ALD 326

Re Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72

REASONS FOR DECISION

21 March 2002 Ms J Cowdroy

Background to the Application

1. By decision dated 16 August 2001, the Social Security Appeals Tribunal ("the SSAT") reviewed a decision made by Centrelink on 31 August 2000 to raise and recover an amount of $7518.50, being an overpayment of parenting payment. The SSAT varied the period over which the debt was created, which reduced the debt to $7114.70, but otherwise affirmed the decision.

2. The Tribunal heard the matter on 30 January 2002. The applicant appeared in person and gave evidence, as well as her husband, Mr L Curtain. Ms J Dwyer represented the respondent. The T-documents, as well as supplementary documents marked S1-S10, and documents headed A-C, were received and entered into evidence as Exhibit 1. The applicant tendered a list of expenses which was received into evidence as Exhibit 2.

3. It is not disputed that the applicant was in receipt of parenting payment at the maximum rate during the period 21 May 1998 to 29 July 1998 ("the relevant period"). As at 21 May 1998, her husband was working part time. He declared his earnings from his employment on his fortnightly newstart allowance forms. His casual work converted to full time work on 25 May 1998.

4. A copy of a letter dated 5 June 1998 from Mr Curtain to Centrelink conveyed advice of the commencement of full time employment, and that the anticipated salary was $25,000 per annum. That letter made no reference to the fact that Mrs Curtain was in receipt of parenting payment. Whilst that letter was not on the departmental files, it was conceded that this letter was most likely given to Centrelink during an interview on 27 July 1998. It was also conceded that letters dated 12 June 1998 and 27 June 1998 from Mr Curtain to Centrelink, which advised of a change of address for family members, was most likely given to Centrelink at that interview.

5. Mr Curtain lodged a fortnightly claim for newstart allowance on 29 April 1998 and, according to the records held by the respondent, the applicant's parenting payment on 7 May 1998 was assessed on the basis of the information contained in that document. Subsequently, Mr Curtain did not lodge a fortnightly form again until 29 July 1999.

6. On 24 April 1998, a letter was sent to Mrs Curtain advising that she would be paid $113.70 fortnightly, commencing on 7 May 1998 (T21-67) and on 8 May 1998 another letter stated that she would be paid $290.10 fortnightly starting on 21 May 1998 (T21-69). Both those letters indicated that payment was calculated on the basis of the applicant and her partner's income. It also set out her obligation to advise Centrelink if either her or her partner's income changed.

7. Mrs Curtain did not advise of Mr Curtain's income throughout the relevant period. An overpayment of $7114.70 occurred during that period.

Applicant's Evidence

8. The applicant told the Tribunal that her husband "did all the paperwork" for Centrelink. When she was required to sign any forms, her husband completed them and she affixed her signature. She said that she did not understand what was on the forms "most times". She said that the amount of her parenting allowance was always changing and she did not take much notice of the variations.

9. The applicant's evidence was that she did not recall reading the letters dated 24 April 1998 or 8 May 1998. She also denied any knowledge that $290.10 was the maximum rate payable. She said she did not read the information relating to the obligation to advise of change of income. She was aware that her husband had provided information to Centrelink about his employment and that "we put our trust in the system".

10. The applicant acknowledged that the schedule set out at T9-36 accurately reflects the amounts of parenting payment she received, which varied from $171.10 on 9 April 1998, increased to $290.10 on 23 April 1998, reduced to $113.70 for the fortnight commencing 7 May 1998 and remained at $290.10 or $291.80 or $293.80 throughout the relevant period. Although she maintained she did not know that she was receiving in excess of her entitlement, she acknowledged that she was aware that her husband's income affected the amount of her parenting payment.

11. Mrs Curtain also acknowledged that she had been in receipt of parenting payment in 1996, and that a letter dated 30 October 1996 (S5-10) advised her that she could not receive more than $64.80 because her husband was no longer receiving an income support payment. She also acknowledged that she received other letters advising of changes in the payment of parenting allowance and that they refer to a need to advise Centrelink if the family income changes. Because she did not read the notices, the fact that the amounts varied did not worry her.

Mr Curtain's Evidence and Submissions

12. Mr Curtain stated that on the majority of letters sent to his wife, they recorded his income as nil. This was the case, even when he was receiving income from employment and had been regularly notifying that income to Centrelink. He said he had been diligent in informing Centrelink of the amounts he had earned as he was aware of his obligations. He said he continued to lodge newstart allowance forms for five fortnights after obtaining work in line with the respondent's requirements. He acknowledged awareness that, on previous occasions, parenting payment fluctuated according to the amount that he earned.

13. During the course of the overpayment, his wages were increased from $25,000 per annum to $35,000 per annum. However, because he was no longer receiving newstart allowance, he did not think to advise Centrelink of the increase in income. He said that even if he had read the letters addressed to his wife in full, he probably still would have thought he had complied with his obligations. He stated that 'most people don't read the small print'.

14. Mr Curtain pointed out that following the interview with Centrelink on 27 July 1998, cancellation of newstart allowance had occurred, the record of which appears on a computer print-out prepared on 26 October 2001 and which is marked B4. He said that when he attended the interview on that day, he was told that he did not need to be interviewed as he was already undertaking full-time work. Mr Curtain said that insufficient weight had been given to the fact that he had always complied with his obligations.

15. The cancellation of newstart allowance resulted from information which he provided to Centrelink and be believed that he had discharged his obligations. He then relied on the respondent to correctly calculate the amount of parenting payment.

16. In respect to financial matters, Mr Curtain is in receipt of $520 net per week from his employment. His expenses are $175 per week rent. He has the usual household expenses and school fees/tuition fees for two daughters who attend Northern Christian College. He provided a list, which was accepted into evidence as Exhibit 2, which describes debts totaling $61,000. The couple has no savings and he said if his wife had to repay the entire debt it would cause them difficulty unless the repayments were in the order of $20 per fortnight.

Respondent's Submissions

17. Counsel for the respondent acknowledged that administrative error occurred on the part of the respondent, in that when Mr Curtain's newstart allowance was cancelled, normal practice was to automatically reduce the partner's parenting payment to basic rate. However, this did not occur.

18. It was pointed out that on all the notices issued to Ms Curtain, both before and during the relevant period, there was an explicit direction that she was obliged to advise of any change of income. Despite the fact that her husband had notified Centrelink of his income, Mrs Curtain still had a personal obligation to notify of her partner's income. Reference was made to Re Ross Martin Junor and Secretary, Department of Social Security (1997) 48 ALD 326 in which Deputy President Burns commented on s 574 of the Social Security Act which requires a person to inform the department if a specified event or change of circumstances occurs. Deputy President Burns considered that that provision required the applicant personally to notify the department of a change in circumstances.

19. In this context, the Tribunal was referred to T4-25 & 26 of Exhibit 1, and in particular, that part of page 2 of the letter to the applicant. It states:

"WHEN TO CONTACT US: This is a recipient notification given under the Social Security Act 1991. You must tell us about events or changes in circumstances affecting your payment within the 14 day period which starts on the day after the day on which they happen or are likely to happen. If your partner has to give a form to Centrelink on a regular basis, you can tell us about any changes on that form. This means that you and your partner do not have to tell us more than once."

20. It was submitted that the above wording makes it clear that an obligation to advise of a change in circumstances is imposed on the recipient, even when the information is placed on the partner's form. Further, the responsibility falls solely on the recipient when the partner is not required to give a form to Centrelink.

21. In regard to the issue of good faith, the Tribunal's attention was directed to the applicant's evidence in which she acknowledged that she knew that the amount of parenting payment was calculated on the amount of her husband's income. If Mrs Curtain had read the notices sent to her, she would have been put on notice that any payments she received were calculated incorrectly.

22. The Tribunal was referred to Re Secretary, Department of Family and Community Services and Jonauskas (2001) AATA 72 where authorities on the meaning of 'good faith' are discussed. In Jonauskas, Deputy President Forgie determined that the applicant did not act in good faith as he was careless in not reading the back of the letters sent to him advising him of his recipient notifications. Miss Forgie found that Mr Jonauskas did not know that there could be an error in the amount of Age Pension that he was paid because he did not read the back of the letter requiring him to notify the Department if there were an error in his combined income. The comment was made: "His not knowing is not, however, sufficient for me to find that he received the payment in good faith" (at par 61).

23. In relation to the utilization of the waiver provisions, it was contended that waiver was not appropriate where a recipient of pension has not complied with their obligations.

The Legislation and its Application:

24. It is not in dispute, that the applicant received an overpayment of parenting payment. This is because s 1223(5) of the Social Security Act 1991 ("the Act") states, in effect, that if an amount has been paid to a person by way of social security payment because the received amount had not been correctly calculated and the received amount is more than the amount which should have been paid (the correct amount), the difference between the received amount and the correct amount is a debt due to the Commonwealth.

25. The Tribunal then turned to consider the waiver provisions. Section 1237A states that a debt must be waived if the debt is attributable solely to an administrative error made by the Commonwealth and the debtor received the payment/payments in good faith.

26. The Tribunal finds that the debt is attributable to an error on the part of the respondent by failing to check the applicant's continuing entitlement to parenting payment once it had been notified by her husband that he was receiving $25,000 per annum from his employment; as well as applicant's failure to notify as required. In those circumstances, the waiver provisions in section 1237A cannot be utilised.

27. The other relevant waiver provisions are contained in s 1237AAD of the Act, which state:

"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 or the 1947 Act; and

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and it is more appropriate to waive than to write off the debt or part of the debt."

28. Having heard the evidence of the applicant and Mr Curtain, I am satisfied that the applicant's actions in not making contact with Centrelink does not equate to her "knowingly failing or omitting to comply" with her obligations under the Act.

29. In considering whether there are special circumstances, I am mindful of the fact that the debt arose partly because of the applicant's failure to notify. The Tribunal had been referred to Jonauskas (supra) and it was contended that the case before me has similar facts. Jonauskas is said to be authority for the proposition that the discretion ought not to be exercised in circumstances where a customer has not complied with notification obligations.

30. In Jonauskas, Mrs Jonauskas declared her income for the purposes of calculating her husband's entitlement to age pension, and an officer of Centrelink had incorrectly recorded Mrs Jonauskas weekly income in the computer records as fortnightly income. That officer had conducted a face to face interview with the applicant and his evidence was that it was his practice to talk to a new claimant and explain about the obligations to advise of any change in income. Mr Jonauskas received at least three letters during the course of the overpayment period advising of the basis upon which his pension was calculated, and he failed to read them, consequently he did not become aware that his wife's income had been understated.

31. In my view, the factual scenario in which the present overpayment occurred is quite different. According to the respondent's records, Mr Curtain's newstart allowance was cancelled on 16 April 1998. The comment is made at T18-49 that Mrs Curtain's "partner had gone off NSA on 16/4/98". This is at odds with the letter from Centrelink to Mr Curtain dated 22 May 1998 which informed him that his next payment of newstart allowance for the period 30 April 1998 to 13 May 1998 would be $290.90 (T21-73). (This letter was forwarded nine days after the payment had been made).

32. Presumably that was his last payment, as the next paragraph reads: "We are not able to pay you Newstart Allowance for the time being because of your and your partner's income from employment".

33. In any event, at the time the applicant received the letters dated 24 April 1998 and 8 May 1998, her husband was not in receipt of newstart allowance or was in receipt of a reduced rate of newstart allowance due to his income. As Mrs Curtain's evidence was to the effect that she left matters of a financial nature and 'form-filling' to her husband, it was not unreasonable for her to assume that Centrelink had been provided with accurate information about her husband's income and this in fact occurred.

34. The respondent relies on the letters addressed to the applicant from Centrelink dated 24 April 1998 and 8 May 1998. However, there were other letters sent on 3 April 1998 and 14 April 1998 and whilst these letters were not sent during the relevant period, it is instructive to examine them. The four letters conveyed the following information in relation to payment of parenting allowance::

3 April 1998 $171.10 starting on 9 April 1998

14 April 1998 $290.10 starting on 23 April 1998

24 April 1998 $113.70 starting on 7 May 1998

8 May 1998 $290.10 starting on 21 May 1998

35. In all the letters advice is conveyed that the payment had been worked out using both the applicant's and her partner's incomes. All the letters also state in bold type: "Your entitlement has been worked out using your income of $0.00 per fortnight". No mention is made of any income from Mrs Curtain's partner. It is simply silent on that aspect.

36. There follows several paragraphs commencing with "WHEN TO CONTACT US", and advising that the document is a recipient notification notice. About half-way through the document, the following statement is made:

"You must tell us if any of these things happen or are likely to happen".

There follows a list of specific events, and towards the bottom of the list it states:

". your partner's total personal income goes over $0.00 per fortnight".

37. Despite the advice that entitlement is calculated on both Mrs Curtain and Mr Curtain's income, and despite the variations in the amounts paid, there is no reference to Mr Curtain's income in any of those documents. Consequently, even if Mrs Curtain had read the documents in their entirety, it would not have been clear to her that the department was in error, as it would have appeared, due to the fluctuations in her payments, that regard was being had to her husband's income.

38. It cannot be denied that the applicant's failure to read the letters sent to her was, to say the least, imprudent. However, her inaction is to some extent explicable in that she had no reason to think that the family's financial circumstances had changed. Consequently, she believed that she was receiving the correct payment. Further, not only had her husband advised Centrelink through his fortnightly forms of the correct income, he re-affirmed it in his letter dated 5 June 1998 (T15-43).

39. Centrelink had every opportunity to review Mrs Curtain's entitlement to parenting payment and failed to do so. It is also significant, in the Tribunal's view that no action was taken to review the applicant's entitlement to parenting payment until August of 2000.

40. This is not a case where a person has simply 'turned a blind eye' to their obligations. Mrs Curtain clearly believed that her payment was correct. Whilst she may have been naieve to not have questioned the fact that she was receiving parenting payment at what could be perceived to be at a reasonably high level than was the case at other times, having observed the applicant give evidence, I am not persuaded that this would have alerted her to the potential of being overpaid.

41. Whilst I accept the general principle that it is inappropriate to consider special circumstances where a person has contravened a provision of the Act, I also consider that the circumstances in which that contravention are occurred need to be addressed. Clearly, some contraventions of the Act are more serious than others. Prolonged inactivity to notify in the face of an obvious error could be regarded as a serious matter. I do not consider that such error was obvious in the present circumstances.

42. Whilst financial hardship on its own is not to be regarded as 'special circumstances', clearly the repayment of such a large debt will significantly impact on the family's financial stability on a long term basis. They already have a considerable variety of debts, as well as ongoing rent payments. They have no savings and the prospect of repayment of $20 per fortnight for an indefinite period, whilst not crippling, is harsh. However, financial hardship on its own is not sufficient grounds for me to waive the debt. It can however, be considered in combination with other circumstances.

43. Having had regard to all the matters put to me, I consider that the circumstances in which the overpayment occurred, and in particular the fact that no review was made by the respondent which resulted in the debt accruing over a lengthy period, coupled with the applicant's degree of culpability compared to that of the respondent, warrants the exercise of the discretion to find 'special circumstances'.

44. Having noted that the applicant has repaid approximately $800 of the debt, I consider it reasonable in all the circumstances to waive the remainder of the debt.

I certify that the forty-four (44) preceding paragraphs are a true copy of the reasons for the decision herein of

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

Associate

Date/s of Hearing 30 January 2002

Date of Decision 21 March 2002

The Applicant appeared in Person

Solicitor for the Respondent Ms J Dwyer, Centrelink