Forward and Department of Family and Community Services [2002] AATA 359 (17 May 2002)

Last Updated: 20 May 2002

DECISION AND REASONS FOR DECISION [2002] AATA 359

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/250

GENERALADMINISTRATIVE DIVISION )

Re JUDITH FORWARD

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr B J McCabe

Date 17 May 2002

Place Brisbane

Decision The Tribunal affirms the decision under review.

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

Mr B J McCabe

Member

CATCHWORDS

SOCIAL SECURITY - disability support pension - overpayment - whether administrative error or special circumstances exist to warrant the waiver of the debt

Social Security Act 1991

Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212

Beadle v Director-General, Department of Social Services (1984) 6 ALD 1

REASONS FOR DECISION

17 May 2002 Mr B J McCabe

Introduction

1. This is an appeal by Mrs Judith Forward against the respondent's decision to raise and recover a debt. The respondent says that Mrs Forward was overpaid disability support pension because her husband's income was understated. The amount of the debt has been recalculated several times. I was informed at the commencement of the hearing that the applicant is currently liable to repay $8132.81.

The Facts

2. Mrs Forward gave evidence at the hearing. She has been receiving a disability support pension for around 15 years as a result of an injury to her back. She commenced a de facto relationship with Mr Forward on 20 November 1998. (She subsequently married him on 30 October 1999). Mr Forward was a long distance truck driver who was employed at the time by a Gold Coast transport company, Motorcade Transport.

3. The applicant spoke with Centrelink when she entered into the relationship to advise of her changed conditions. She says a Centrelink officer visited them at home. The officer had the couple fill out a form asking questions about their joint income for the purpose of determining Mrs Forward's ongoing entitlement to receive payments from the respondent. Mrs Forward said she asked what sort of details the respondent required about her husband's income. She says she was told that entitlement to payments from the respondent was calculated on the basis of the basic wage - being the amount of Mr Forward's take-home pay less any allowances. The applicant said she was aware her husband received a number of allowances (including an allowance of around $42 per day paid by the employer each night her husband was on the road to cover meals and other expenses).

4. The applicant said she took care of the couple's finances and banking. Armed with the explanation provided by the Centrelink officer, she spoke with her accountant and asked for a letter setting out Mr Forward's basic wage. The accountant, Joan Jeffrey of Harper and Co, wrote a letter dated 6 November 1998 stating:

"This is to certify that the basic wage of Mr Douglas Forward is $500 per week. Should you have any further queries do not hesitate to contact this office."

5. Mrs Forward agreed that she received a number of client notification notices advising her of her responsibility to advise Centrelink if there was any change to the information that she had provided them. The letters each noted she had told Centrelink that the couple's combined income was $26,000.03 a year. But the letters also said "Income (income means your gross income before payment of any tax...)" and specifically required that she contact Centrelink "if your combined income shown above is incorrect...".

6. Mrs Forward said she was familiar with the obligation to report changes to Centrelink and knew the wording of the letters "off by heart" as she had been receiving the notices for a long period of time. She said she did not correct Centrelink's statement about combined income because as far as she knew it was the correct figure and had not changed. She said she relied upon her understanding of what constituted a basic wage and the accountant's letter.

7. Inquiries of Mr Forward's employer showed that Mr Forward was in receipt of more than $500 per week of income which should have been included for the purposes of the calculation. Mrs Forward said she knew that her husband was receiving more than $500 per week in the bank from her employer, but she assumed the balance was attributable to allowances that were not taken into account.

8. The respondent says that some of the balance was properly taken into account. Not all of the amounts received each week in excess of the amount declared as a basic wage were allowances that did not count for the purposes of the calculation of an entitlement. When the amounts that should have been included were taken into account, it turns out that Mrs Forward was overpaid a total of $8132.81.

9. Although the figures have been adjusted on several occasions (an authorised review officer reduced the amount after a change in the timing of the calculations, and the introduction of the New Tax System has resulted in the application of a more generous income test), there was little dispute about the quantum. I accept that the amount of the overpayment was correctly calculated at $8132.81. The substance of Mrs Forward's complaint was that she should not be required to repay the money because she acted honestly and followed what she understood to be Centrelink's advice and the advice of her accountant. She says that Centrelink should have followed up with the accountant if it had any questions.

10. The applicant also expressed her concern about the fact that some of the paperwork was missing from her file. The Centrelink officer with whom she dealt at first instance had also left. Mrs Forward was worried that her case would be prejudiced. Mr French for the respondent said that the original form declaring the amount of the couple's joint income completed in 1998 was missing, although the details were recorded on the information system. He said the original letter from the accounts was also missing. Mr French said there was no difficulty as the respondent did not dispute that the letter was received and relied upon by Centrelink, even if the copy was subsequently lost.

11. I accept that Mrs Forward was a witness of truth. I accept (and the respondent conceded) she acted honestly in her dealings with Centrelink.

The Law

12. Where an overpayment occurs as a result of a contravention of the law, s 1224 of the Social Security Act 1991 ("the Act") says the amount of the overpayment becomes a debt due to the Commonwealth. There has been an overpayment as a result of a contravention in this case because the applicant failed to provide correct details in response to the recipient notification notices. The original statement of income (supported by the letter from the accountant) was also incorrect.

13. The substantive question in this case is whether the debt should be written off or recovery of the debt should be waived.

14. Debts may be written off under s 1236 where:

(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.

15. None of those factors is present here. The debt is recoverable, the debtor's whereabouts are known, and there does not appear to be an issue as to cost-effective recovery. Evidence from Mrs Forward suggests that she and her husband are under financial pressure, but she acknowledged that she had recently commenced part time employment so that she would be able to meet any obligation that arose.

16. There remains the possibility of a waiver. Section 1237 says the Commonwealth may waive a debt in limited circumstances, including those set out in ss 1237A and 1237AAD.

17. Section 1237A deals with overpayments resulting from administrative error. The section provides relevantly:

"...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."

18. Deputy President Forgie held in Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212 (at par 15) that the expression 'attributable solely' meant 'exclusively', 'only' or 'to the exclusion of all else'. I do not think that the overpayment in this case is attributable solely to administrative errors by the Commonwealth as defined in Ward. The Centrelink officer who first spoke with the applicant appeared to give her the correct advice about excluding allowances from the statement of income (although given the applicant's confusion, he may not have explained the concept very well). Mrs Forward said she was never provided with proper advice from her husband's employer detailing the breakdown of his wage. Mrs Forward's accountant appears to have made a mistake in her assessment of Mr Forward's basic wage. The applicant, for her part, did not read and consider the terms of the client notification notices. There appears to have been a number of errors on the part of several individuals that have contributed to the misunderstanding about the level of joint income. It follows that s 1237A is not available.

19. Section 1237AAD permits a waiver in "special circumstances". The section says:

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

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

20. Mr Ffrench for the respondent agreed that the applicant did not knowingly provide false information or fail to comply with the Act. But he said there were no special circumstances in this case. As Toohey J explained in Beadle v Director-General, Department of Social Security (1984) 6 ALD 1 at 3, the circumstances in question must be "unusual, uncommon or exceptional". It is true that the applicant is already under financial pressure, but financial hardship alone is not enough to constitute special circumstances by reason of s 1237AAD(b). I was not able to identify any other circumstances that made this case unusual, uncommon or exceptional in the relevant sense.

Conclusion

21. I have considerable sympathy for the applicant. She acted in good faith. The overpayment was due to an innocent misunderstanding. But an overpayment was made, and there is no reason why the money should not be recovered.

22. I affirm the decision under review.

I certify that the twenty-two (22) preceding paragraphs are a true copy of the reasons for the decision herein of Mr B J McCabe, Member

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

Associate

Date/s of Hearing 19 April 2002

Date of Decision 17 May 2002

The Applicant appeared in Person

Solicitor for the Respondent Mr T Ffrench

Advocacy and Admin Law Team, Centrelink