QX99F and Secretary, Department of Family and Community Services [1999] AATA 922 (8 December 1999)

Last Updated: 9 December 1999

DECISION AND REASONS FOR DECISION [1999] AATA 922

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q1999/648

GENERAL ADMINISTRATIVE DIVISION )

Re QX99F

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date 8 December 1999

Place Brisbane

Decision The Tribunal sets aside the decision under review and in substitution therefor decides that pursuant to subsection 1236(1A) of the Social Security Act 1991 the whole of the debt incurred ($1073.60) over the period 15 January 1998 to 4 June 1998 be written-off. Furthermore, that the question of write-off be re-evaluated when the applicant becomes eligible for social security entitlements.

(Sgd) EK Christie

MEMBER

CATCHWORDS

SOCIAL SECURITY - parenting payment - overpayment - whether debt could be waived or written off.

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

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

Director-General of Social Services v Hales (1983) 47 ALR 261

Re L and Secretary, Department of Social Security (1995) 21 AAR 412

Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26

REASONS FOR DECISION

8 December 1999 Dr EK Christie, Member

1. This is an application for a review of the decision of the Social Security Appeals Tribunal ("the SSAT") made on 30 April 1999 that an overpayment of parenting payment ("PgP"), in the amount of $1143.87, made to the applicant over the period 15 January 1998 to 4 June 1998 was a recoverable debt. The SSAT affirmed the decision of an Authorised Review Officer made on 21 January 1999.

2. In reaching its decision, the SSAT concluded that there were no grounds to waive the debt because of "administrative error" or for "special circumstances".

3. The applicant represented himself at the hearing and gave evidence by telephone. The respondent was represented by Ms J Dwyer, a Departmental Advocate.

4. At the hearing the Tribunal had in evidence documents lodged pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 - the "T" Documents (Exhibit 1).

5. At the end of the hearing the Tribunal exerted its inquisitorial powers and sought a detailed "Statement of Financial Circumstances" from the applicant. The significance of this Statement of Financial Circumstances for better informed decision-making was emphasised to the applicant. A copy of the statement was provided to the applicant by the Department after the hearing. However, the applicant advised the Department on 10 November 1999 that he would not be submitting the completed Statement of Financial Circumstances. This advice was subsequently confirmed by a response the Tribunal received from the applicant.

Issues before the Tribunal

6. The only issue for the Tribunal to decide was whether the PgP overpayments received by the applicant over the period (15 January to 4 June 1998) could be waived, in part or in full, because of "administrative error" or for "special circumstances". Alternatively, whether the debt could be "written off".

Facts

7. The general facts were not in dispute and may be stated briefly. The applicant was in receipt of Parenting Payment over the period 15 January 1998 to 4 June 1998.

8. The applicant was advised on 15 December 1997 and 22 March 1998 that his Parenting Payment was based on spousal income of $678.08 per fortnight and that he was required to notify Centrelink within 14 days if that income increased.

9. The applicant's wife's income increased to $407.69 from 12 January 1998 and to $500 per week from 4 May 1998. The applicant advised Centrelink of the increased income levels on 25 May 1998 at the time he completed a Parenting Payment Review Form (Document T7).

10. Recovery of the overpayment did not commence until after the applicant ceased to receive any kind of income support from Centrelink.

Contentions and Submissions of the Parties

11. The applicant submitted that Centrelink had been negligent in their management practices and the whole situation which led to the overpayment should have been avoided from the time he had provided income information to Centrelink on 25 May 1998 (Document T7). The applicant could not understand why it had taken Centrelink almost 7 months to recover any money after the time his PgP had been cancelled.

12. It was the applicant's impression that having notified Centrelink of his wife's income change on 25 May 1998, he was receiving the correct entitlement. He said that he was "totally ignorant" that he had been overpaid until he received Centrelink advice of the debt (Document T11, 2 December 1998).

13. The applicant submitted that Centrelink should accept responsibility for the overpayment. Whilst Centrelink's focus was on his obligations to notify of a "change in circumstances within 14 days" there seemed to be no rules for Centrelink for mal-administration - even though their actions to recover the overpayment had led to financial hardship for his family.

14. From his description of his family's lifestyle it would seem that it is a spartan existence in which the applicant's family had "few frills" with "little money to barely live". The applicant contended that there was no compassion in Centrelink.

15. In response to a Tribunal question, the applicant said that he had absolutely no chance for finding employment. He will be 62 in December. His occupation as a photo-lithographer had been superseded by computers. He lives in a region having one of the highest unemployment rates in the State. Youth employment was extremely high in the region making it even more difficult for older people. The applicant had been unemployed for 3 - 4 years but had received no social security benefits. He had tried "menial jobs" like fruit and vegetable picking but not owning a car and living well out of the town, his employment prospects were remote.

16. The applicant's current situation is that he has no income and receives no social security entitlements. Following the SSAT decision, Centrelink is recovering the debt on the basis of $5.00 per week.

17. The applicant concluded by acknowledging that an overpayment had been made but that Centrelink should accept responsibility for the error. Centrelink's seven month delay in informing him of the overpayment has now penalised him in terms of financial hardship for his family.

18. Ms Dwyer, for the Department, commenced by correcting the amount of the debt. She identified a number of errors stating that the true amount of overpayment was $1073.60.

19. Ms Dwyer submitted that the applicant had contributed to the administrative error which led to the overpayment by not notifying Centrelink of the change in his wife's income within 14 days. This obligation was on the back of the Centrelink advice letters dated 15 December 1997 (Document T5) and 22 March 1998 (Document T6). The applicant did not advise Centrelink of his wife's income change until 25 May 1998 (Document T7).

20. Ms Dwyer acknowledged that it was unfortunate that the debt had taken so long to calculate and that no warning had been given to the applicant after the PgP Review Form (Document T7) had been completed by him. She said that there were significant delays in advising people on overpayments which was partly due to limited resources of Centrelink and the focus on issuing payments. Centrelink was trying to improve this situation.

21. However, Ms Dwyer contended that the significant delay in advising the applicant of the overpayment was not in itself a "special circumstance".

22. In terms of "write-off", Ms Dwyer referred to the fact that the SSAT had looked at "financial hardship" to some extent. However, she agreed with the Tribunal request for a detailed "Statement of Financial Circumstances" as an additional approach to consider the question of "write-off". Such a Statement had not been requested, or prepared, up to the time of the Tribunal hearing.

23. In reply, the applicant stated that he would be eligible for aged pension in three years and that the recovery of the overpayment should be delayed until this time in order to avoid financial hardship to his family, i.e. until the time he received the aged pension.

Consideration of the Issues

24. The objective of the Tribunal is to review administrative decisions, not only on their merits, but in accordance with the law at all times. The relevant legislation is the Social Security Act 1991 ("the Act").

25. Section 1237 of the Act provides for circumstances where a debt due by a recipient of social security to the Commonwealth, may be waived:

"SECTION 1237A - WAIVER OF DEBT ARISING FROM ERROR

1237A(1) Administrative error. 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).

SECTION 1237AAD - WAIVER IN SPECIAL CIRCUMSTANCES

1237AAD The Secretary may waiver 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."

26. Section 1236(1A) sets out the basis for which a debt may be written off:

"SECTION 1236(1A) [Class of Debts] 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) the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt."

27. With respect to waiver on the basis of administrative error, the Tribunal agrees with the following conclusion of the SSAT:

".... the delay in processing the debt did not contribute to the debt amount as the debt finishes on the payday closest to 25 May 1998 [the date Centrelink first became aware of the applicant's wife's income details]. The processing delay cannot therefore be categorised as administrative error and subsection 1237A is therefore unable to be invoked."

28. The Tribunal understands the frustration of the applicant in this issue. The Tribunal also recognises that the delay cannot be described as an administrative error. Nevertheless it has been a fact affecting the financial well-being of the applicant and his family as recovery commenced and has continued over a period when he received no social security entitlements.

29. Based on a consideration of the whole of the circumstances in which the overpayment has arisen in the applicant's case, the Tribunal cannot find that there are any circumstances that are either "unusual", "uncommon" or "exceptional" to justify the legal meaning of "special circumstances" as described in Beadle and Director-General of Social Security (1984) 6 ALD 1.

30. The only remaining issue is whether it is possible for the Tribunal to write-off the applicant's debt. In deciding whether or not to exercise this discretion, the Tribunal must have regard to all the relevant circumstances of the particular case and to the scope and purpose of the Act. The Tribunal has also, customarily, had regard to a number of factors referred to by the Federal Court in Director-General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281. These factors were summarised by Senior Member Dwyer in Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26 at 42 as follows:

(a) the fact that the applicant has received public moneys to which he was not entitled;

(b) the way in which the overpayment arose whether as a result of innocent mistake or fraud;

(c) the financial circumstances of the applicant;

(d) the prospect of recovery;

(e) whether a compromise is offered;

(f) whether recovery should be delayed if there is a prospect that the circumstances of the person who received the overpayment may improve; and

(g) compassionate considerations and the fact that the Act is social welfare legislation and any financial hardship which may result from any action for recovery.

31. A former President of the Tribunal, Mathews J, has commented on the write-off provisions of the Social Security Act in Re L and Secretary, Department of Social Security (1995) 21 AAR 412. Given that the Act is beneficial in nature, the President's observations that the financial circumstances of the debtor and the prospect of the recovery of the debt will necessarily be the primary considerations in deciding whether to write-off a debt, are relevant. (Re L and Secretary, Department of Social Security (supra) at 427-8). The President summarised the position as follows (at 428):

"In summary, I consider that matters relating to the personal financial hardship of the individual are always relevant in any decision as to write off under s.1236(1). Retrospective considerations may occasionally be relevant. The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned. Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation? If an affirmative answer is reached to this question, then it would be appropriate to defer recovery in the manner contemplated by s.1236(1)."

32. On the facts of the case, the Tribunal finds that the applicant has received public moneys to which the applicant was not entitled. However, the Tribunal concludes, on the balance of probabilities, that these overpayments arose as a result of an innocent error on the applicant's part as his evidence indicates that he was "totally ignorant" that he had been overpaid until he received Centrelink advice of the debt.

33. Essentially, the applicant's financial circumstances and the prospects for recovery of the debt are dependent on his finding employment. The applicant will be 62 in December. The applicant is pessimistic about obtaining employment (see paragraph 15) as his occupation skills are now superseded by computers, and because of his age. There are some labour statistics which need to be recognised.

34. A report prepared by DEET and DSS titled "Evaluation of the Older Unemployed [55-64 year olds] Labour Market and Income Support Strategy" (May 1992) recognises the employment problem confronting the applicant. In its introduction to the implementation of an Older Unemployed Strategy, the report states (at page 7):

"The [Older Unemployed] Strategy was based on a recognition that older people bore the brunt of the 1982-83 recession and have not shared proportionately in subsequent job growth. Once unemployed they have a relatively poor chance of getting back into full-time employment and a relatively high probability of becoming long-term unemployed. They do not participate extensively in part-time employment. Moreover, the long-term trend of declining labour force participation by this age group could cause future economic problems in the context of an aging population."

35. Furthermore, statistics prepared by the Australian Bureau of Statistics (ABS), "Job Search Experience of Unemployed Persons: Australia" (July 1994), focus on the issue of age and employment:

"Difficulties in finding work relating to age, that is 'Considered too young or too old by employers', were reported as the main difficulty in finding work by 7 per cent of persons aged 15 to 34 years. In comparison, this was the main difficulty for 16 per cent of persons aged 35 to 44 years, 44 per cent of persons aged 45 to 54 years and 64 per cent of persons aged 55 years and over."

36. The question of write-off of the overpayment needs to be considered in the context of the applicant's financial circumstances and prospects for recovery of the debt. The applicant's financial circumstances are precarious and are exacerbated by the fact that the applicant has no income and receives no social security entitlement and would be significantly affected if:

(a) the applicant's health deteriorates;

(b) employment prospects do not crystallise; or

(c) the family experiences unexpected financial expenses which have not been budgeted for, as little, if any, savings exist.

37. The Tribunal concludes that an analysis of the facts governing employment of a person in the position of the applicant, as well as his financial means and obligations, would result in personal hardship if recovery continues to be pursued. In these circumstances, recovery is not a feasible proposition. Moreover, recovery would run contrary to the beneficial nature of the Act. However, this situation may well change when the applicant becomes eligible for social security benefits, e.g. aged pension.

38. In all the circumstances, but having particular regard to the applicant's existing financial circumstances and the prospects of recovery of the debt, the Tribunal is of the view that it would be appropriate to write-off the debt until such time as the applicant becomes eligible for social security entitlements and his financial means and obligations can be re-evaluated.

39. The Tribunal makes the observation as to the procedures used by Centrelink in determining the amount of the debt recovered each fortnight. From the applicant's account to the Tribunal, the applicant does not appear to have been involved effectively, if at all, in this process. The end result is that the applicant's family may have experienced aggravated financial stress which could have been avoided if standard practices had been in place. The Tribunal can only speculate how the recovery rate was determined if the goal was to avoid the social costs the applicant and his family have endured.

40. For the above reasons the Tribunal sets aside the decision under review and in substitution therefor decides that pursuant to subsection 1236(1A) of the Social Security Act 1991, the whole of the debt incurred ($1,073.60) over the period 15 January 1998 to 4 June 1998 be written-off. Furthermore, that the question of write-off be re-evaluated when the applicant becomes eligible for a social security entitlement.

I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed: Denise Burton

Secretary

Date/s of Hearing 13.10.99

Date of Decision 8.12.99

Counsel for the Applicant

Representative for Applicant Applicant by telephone

Counsel for the Respondent

Solicitor for the Respondent Ms J Dwyer, Departmental Advocate