Creeney; Department of Family and Community Services [2000] AATA 373 (17 May 2000)

Last Updated: 25 May 2000

CATCHWORDS - SOCIAL SECURITY - family allowance - overpayment - whether debt due solely to administrative error of Commonwealth - debt attributable to information provided by applicant - no waiver - no special circumstances - decision set aside.

Social Security Act 1991- ss 872, 873, 1237A(1), 1237AAD

Student Assistance (Youth Training Allowance) Amendment Act 1994 - s 289

Gerhardt v Secretary, Department of Employment, Education and Training (Federal Court 970815, 20 August 1997)

McKnight and Secretary, Department of Social Security (unreported, Decision No. 9819, 2 September, 1994, Senior Member Hotop)

Re Beadle and Director-General of Social Security [1984] AATA 176; (1984) 6 ALD 1; (1984) 1 AAR 362

Re Gerhardt and Department of Employment, Education and Training (unreported, Deputy President S A Forgie, Decision No. 1094, 17 May, 1996)

Re De Neumann and Secretary, Department of Social Security (1996) 45 ALD 787

DECISION AND REASONS FOR DECISION [2000] AATA 373

ADMINISTRATIVE APPEALS TRIBUNAL )

) Q 1999/163

GENERAL ADMINISTRATIVE DIVISION )

Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And CHRISTINE CREENEY

Respondent

DECISION

Tribunal Miss S A Forgie (Deputy President)

Date 17 May, 2000

Place Brisbane

Decision The Tribunal:

1. sets aside the decision of the Social Security Appeals Tribunal dated 5 January, 1999; and

2. substitutes a decision that the decision of a delegate of the respondent dated 26 October, 1998 and affirmed by an authorised Review Officer dated 27 November, 1998 is affirmed.

S A FORGIE

Deputy President

REASONS FOR DECISION

On 1 February, 1999, the applicant, the Secretary of the Department of Family and Community Services ("Secretary") applied for review of a decision of the Social Security Appeals Tribunal ("SSAT") dated 5 January, 1999. In that decision, the SSAT set aside a decision of a delegate of the Secretary which had been dated 26 October, 1998 and affirmed by an Authorised Review Officer on 27 November, 1998. The delegate's decision had been to raise and recover from the respondent, Mrs Christine Michelle Creeney, an overpayment of family payment in the amount of $2,284.95 in respect of the period 2 January, 1997 to 20 November, 1997. In its place, the SSAT substituted a decision that there was a debt for that period but waived its recovery.

2. At the hearing, the Secretary was represented by Mr Letch, an advocate in his Department. Mrs Creeney was represented by Miss Heywood-Smith of counsel. The documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 ("T documents") were admitted in evidence together with a computer print out relating to Mrs Creeney's benefits. Mrs Creeney gave oral evidence in support of her case.

THE ISSUE

3. It was accepted by both parties, and I agree, that Mrs Creeney has been overpaid family payment in the amount of $2,284.95 in respect of the period 2 January, 1997 to 20 November, 1997. The issue in this case is whether recovery should be waived.

BACKGROUND

4. There was no dispute between the parties regarding a number of factual matters in this case. In light of that and on the basis of the evidence, I have made the findings of fact which I will set out in the following paragraphs.

5. Mrs Creeney is married to Mr Damian Paul Creeney and they have two children: Dion and Vaughan. Dion suffers from a hearing impairment. Both Dion and Vaughan have suffered from developmental difficulties. Mr and Mrs Creeney have consulted various specialists in relation to them and incurred great expense in trying to provide them with appropriate treatment and schooling.

6. During the 1996 calendar year, Mrs Creeney was in receipt of family payment. In a letter dated 8 September, 1996, the Department had advised her that she was entitled to receive $255.20 each fortnight for Dion and Vaughan. The income used to calculate her rate of payment was $24,210.00. That represented the combined taxable income of both her and her husband for the 1994/95 tax year. She was to advise the Department if her income would be more than $26,631.00 in either the 1995/96 or 1996/97 tax years (T documents, pages 32-34).

7. In approximately October, 1996, Mrs Creeney received a questionnaire headed "Review of your family payment and childcare assistance". When she returned the completed questionnaire on 24 October, 1996, Mrs Creeney attached a letter written by her husband on 22 October, 1996 (T documents, pages 35-37). In that letter, Mr Creeney wrote:

" I refer to the review of Family Payment. Around June 1995 my income increased to about $27500 pa. I notified your office by Phone.

When I received this review I discovered that $24,000 was still recorded. I made enquiries and was told that it would not affect our payment.

From my employer I earned $30,500 which is above my estimate of $27,500 due to overtime.

We discovered some financial difficulty last financial year. Therefore I applied for a (sic) early release of my Superannuation Funds. I was granted $8000 before tax unaware that this would affect my family payments.

Therefore this will put my estimate out by about $10,000.

This financial year I estimate about $30,900 as there will be no overtime permitted. By losing our family payment because of my over estimate would strain the family dramatically. Probably causing me to apply for more superannuation funds to make up for the family payment lost.

I hope you will take this into consideration when reviewing our family payment." (T documents, page 37)

8. At question 4 of the questionnaire, Mrs Creeney was asked to write the taxable income as shown on the Tax Notice of Assessment received for the tax year 1995/96 if they had received such an assessment. Mrs Creeney showed that her husband had received $37,833.00 (T documents, pages 35 and 43).

9. When question 4 was answered, a respondent to the questionnaire was directed to question 7. Question 7 asked him or her to list any changes he or she had not already told the Department about. Had a person not answered question 4, he or she was required to answer question 5 and then question 6. Question 5 asked why taxation returns would not be lodged by 31 October, 1996 and question 6 asked him or her to estimate their combined taxable income for the tax year 1995/96. Although Mrs Creeney had answered question 4, she also answered question 6 and gave a figure of $688.00 for herself and $37,833.00 for her husband.

10. On 7 November, 1996, the Department cancelled Mrs Creeney's childcare allowance at her request. In its letter advising her of the cancellation, the Department advised her that it worked out her rate was $24,210.00. An entry in the Department's computer records showed that Mr Creeney had requested the cancellation of childcare allowance on 7 May, 1996.

11. A note in the Department's computer records dated 8 November, 1996 reads: "FPA to assess on 1996/97 reduced inc est of $30900 as originally requested on eoy form - now updated after phone call from client's partner." (T documents, page 57)

12. On 25 December, 1996, the Department wrote to Mrs Creeney and advised her that she would be paid $46.80 for Dion and Vaughan from 2 January, 1997. She was advised that the Department had used the information she had given it on the questionnaire in order to work out her entitlement. The income it had used was $38,521.00 (T documents, pages 51-52). She was told that she would need to advise the Department if her income exceeded $42,373.10.

13. A note of a telephone conversation recorded on the Department's computer system reads:

"Client phoned ? 02 JAN 1997 11.11 AM. Phone ... Discussion:- client called ref. reduction of fpa. she advises she wrote to dss in early nov to (a) cancel cca and (b) to advise she received a one off superannuation pay of approx $5000.00 please check and call her. thanks don ... tsb" (T documents, page 58)

14. Mrs Creeney was then paid on the basis of the estimate of $30,900.00 that Mr Creeney had given in his earlier letter dated 22 October, 1996 and lodged with the Department on 24 October, 1996 (T documents, page 37). She was advised of the change in her rate in a letter dated 3 January, 1997 (T documents, pages 59-61). The amount of payment increased as a consequence to $145.85 each fortnight. Pursuant to ss. 872 and 873 of the Social Security Act 1991 ("the Act"), the letter notified her that she must advise the Department within 14 days if certain things happened or were likely to happen. Among those things were if she or her husband started or recommenced work, changed jobs or started self-employment. She must also advise it if her combined income would be greater than $33,990.00 in the 1995/96 or 1996/97 tax years.

15. On 23 October, 1997, Mrs Creeney lodged a further questionnaire headed "Review of your family payment and childcare assistance" (T documents, pages 62-63). In her answers to that questionnaire, Mrs Creeney showed that her husband had received $38,405.00 as taxable income in the 1996/97 tax year. She again answered question 6 and showed a figure of $38,405.00 as their estimate taxable income for that tax year. At question 7, Mrs Creeney noted that no changes had occurred to her or her husband since 30 June, 1996. She was then directed to proceed to question 9 but chose instead to answer question 8. Question 8 asked her to estimate her combined taxable income for the tax year 1997/98. She showed a figure of $33,000.00 as her husband's estimated taxable income.

16. On 13 November, 1997, Mrs Creeney completed a form headed "Changes to your Income and Assets" (T documents, pages 66-73). She was advised at the beginning of the form that the information she provided would be used to calculate the rate of payment of various benefits, including family payment. At question 9, she advised that her husband's income had reduced from 3 November, 1997 as he "had to go to a casual position" (T documents, page 69). Question 11 asked her to give details of her estimate taxable income in view of the change she had advised in question 9. She estimated that her husband would receive $26,500.00 in the 1997/98 tax year.

17. On 18 November, 1997, the Department wrote to Mrs Creeney and advised her that her family payment would be $265.49 for Dion and Vaughan each fortnight. Payment at that rate would commence on 4 December, 1997 and was calculated on the basis that her combined taxable income was $26,500.00. She was required to give the Department notice if certain things happened or were likely to happen. In substance, those things mirrored those listed in the previous year. In relation to her income, she had to advise it if her combined income for the 1996/97 and 1997/98 tax years exceeded $29,510.00 (T documents, page 77).

18. On 26 October, 1997, Mrs Creeney completed a further review of her family payment (T documents, pages 62-63). She showed her combined taxable income to be $38,405.00 in the 1996/97 tax year. As this was more than 110% of her estimated combined income, her rate of family payment was recalculated under the Act.

THE EVIDENCE

19. During 1996, Mrs Creeney said, they experienced financial difficulties. They decided that they should draw down some portion of Mr Creeney's superannuation funds on the basis of hardship. At the time Mrs Creeney received a questionnaire headed "Review of your family payment and childcare assistance", Mr Creeney noticed that the funds he had drawn from his superannuation fund had been included in his taxable income for the 1995/96 tax year. They had received approval to draw down a further sum of approximately $8,000.00 and expected to receive it in November, 1996. As there was no space on the questionnaire in which to refer to the superannuation funds, Mrs Creeney said that her husband telephoned the Department's Telecentre for advice as to whether his wife should mention the payment in the questionnaire. Mrs Creeney was in the room while her husband made the call. She said that he was advised by the officer at Telecentre that she should attach a letter setting out the situation. They followed that advice and attached a letter to the completed questionnaire when it was lodged on 24 October, 1996 (T documents, pages 35-37).

20. When his wife received the questionnaire in October, 1996, Mr Creeney said, he had received approval to draw down further superannuation funds. He had not actually received those funds as it was up to him to pass the letter on to his fund. The figures he used in his letter were a "rough estimate". No-one contacted him about his letter. In cross-examination, Mr Creeney agreed with Mr Letch that his letter could be read as referring to his income in the 1995/96 tax year. He had intended it to refer to the 1996/97 tax year. Mr Creeney said that he did not know why he had written $10,000.00 as the amount of his over estimate. He had thought it better to overestimate. When it was suggested to him that the amount of $10,000.00 referred to the superannuation funds he drew down in 1995/96, he did not reply.

21. Mrs Creeney said that she realised that her payment had been substantially reduced when she went to withdraw money from her bank account on 2 January, 1997. At first she thought that the difference was due to the fact that she had advised the Department in November that she no longer wished to receive child disability allowance. A copy of the Department's computer records notes Mrs Creeney's having cancelled that allowance on 8 July, 1996 (T documents, page 56).

22. Mrs Creeney said that she telephoned the Department's general enquiries number and her call was followed up by another officer of the Department's Strathpine office. Mr Creeney said that he was not in the room at the time his wife made the telephone call. Mrs Creeney said that she raised the superannuation payment with the officer who rang her back. He asked her how much that payment had been and she told him it had been $5,000.00. Mrs Creeney said that the officer did not ask her any further questions about it.

23. She said that the Department did not pay her on the basis of the estimate as it had been requested to do but on the basis of her husband's income for the previous financial year. The officer asked her whether she wanted to be paid on the basis of an estimate and she replied that she did. She was told that she would be paid on an estimate and the amount of the payment was then increased. When she subsequently received a letter stating that her rate of family allowance was calculated on the basis of her combined income of $30,900.00 she said that she did not have any views on it. Mrs Creeney said that she had thought that the Department had decided that the superannuation payments were not earnings and were not relevant. She reached that conclusion as her husband had written about them to the Department and she had told the officer about them.

23. It was her understanding, Mrs Creeney said, that superannuation payments were not taxable income. It was a joint decision between her and her husband to submit an estimate of their income in January, 1997. Had she realised that it was part of her taxable income, she would not have submitted an estimate at all.

CONSIDERATION

24. The issue in this case turns upon whether the debt incurred by Mrs Creeney may be waived under the Act. In that regard, ss. 1237A(1) and 1237AAD are relevant. Taking first s.1237A(1), it provides, insofar as it is relevant, that:

"... 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."

25. Ms Heywood-Smith submitted that the Department's administrative error was to fail to take into account Mr and Mrs Creeney's estimate of their income in calculating their rate of payment. She said that its error was made up of three contributing errors. First, the Department's officer had failed to advise them in October, 1996 that the superannuation funds drawn down by Mr Creeney would be included in their estimate of taxable income at question 8 of the questionnaire completed in October, 1996. There was a deficiency in the questionnaire in that it did not advise them that the superannuation funds could be included. Second, the Department had failed to take into account the contents of the Creeney's letter. If it had encountered any difficulties in understanding it, the Department should have made enquiries of Mr and Mrs Creeney. Third, the Department had failed to act on Mrs Creeney's oral advice given in the telephone conversation on 2 January, 1997.

26. In the case of Re Gerhardt and Department of Employment, Education and Training (Decision No. 1094, 17 May, 1996, unreported), I considered the meaning of the word "solely" as it is used in s. 289(1) of the Student Assistance (Youth Training Allowance) Amendment Act 1994. That provision is substantially the same as s.1237A(1). I concluded that:

"There is nothing in sub-section 289(1) which indicates that any meaning should be given to 'solely' other than its ordinary meaning. Applying those ordinary meanings to the sub-section mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth's administrative error. The Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth's administrative error (i.e. they are incidental to the Commonwealth's error), then it may be that the debt is attributable solely to the Commonwealth's administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact." (paragraph 40)

This interpretation was not said to be in error by the Federal Court in Re Gerhardt v Secretary, Department Employment, Education and Training (unreported, Federal Court 970815, 20 August, 1997). It has been adopted by the Tribunal in McKnight and Secretary, Department of Social Security (unreported, Decision No. 9819, 2 September, 1994, Senior Member Hotop) and Re De Neumann and Secretary, Department of Social Security (1996) 45 ALD 787 (Deputy President Chappell).

27. Having regard to the whole of the evidence, I am not satisfied that the debt is attributable solely to an administrative error made by the Department (and so by the Commonwealth). It is said that the Department was at fault in that the questionnaire completed by Mrs Creeney in October, 1996, did not refer to superannuation payments. I accept that it did not but it did refer to taxable income. The question further made it clear that taxable income referred to gross income less any deductions allowed by the Tax Office. At the time Mrs Creeney completed the questionnaire and Mr Creeney wrote the letter, Mr Creeney should have been aware that his superannuation payment was subject to tax. He had drawn down funds in the 1995/96 tax year and had been given a group certificate by Comsuper. That group certificate showed that tax instalments had been deducted. Indeed, Mr Creeney noted in his letter that his superannuation payment had been "$8,000 before tax". It follows that I do not consider that the form was deficient. Furthermore, I do not accept that, in Mr and Mrs Creeney's particular circumstances, that it could reasonably be misunderstood by them so that they would not have known that funds drawn down upon Mr Creeney's superannuation fund would not be relevant in assessing entitlement to family payment.

28. Although I accept that Mr and Mrs Creeney now believe that Mr Creeney's letter of 22 October, 1996 referred to the 1996/97 tax year and Mr Creeney's draw down of superannuation funds in the 1996/97 tax year, I do not accept that was their intention at the time. I am not satisfied that the letter referred to the draw down of superannuation funds in the 1996/97 tax year but those funds he had draw down in the 1995/96 tax year. At the time he wrote the letter, Mrs Creeney was being family payment on the basis of taxable income for the 1994/95 tax year of $24,210.00. She had to advise the Department if her income would exceed $26,631.00 in the 1995/96 or 1996/97 tax years. In view of that background, Mr Creeney's reference to $24,000 in the second paragraph of his letter must be read as a reference to his income for the 1994/95 tax year. Taken in its context, his reference to his telephone call notifying of his increased income must also be read as referring to his likely income in 1994/95.

29. Mr Creeney then specifically referred to his financial difficulty "last financial year". When it is noted that the letter was written on 22 October, 1996, that reference must be read as the 1995/96 financial year. His reference to having been granted "$8,000 before tax" must be taken as a reference to an amount received in that financial year as well i.e. as received in 1995/96. He said that he "was granted" the sum "unaware that this would affect my family payments". In the context of the letter, I do not consider that the reference to the sum of $8,000 can reasonably be interpreted as a reference to the further superannuation funds for which Mr Creeney had received approval to draw down but had not actually drawn down. That view is reinforced by reference to the following paragraphs. The superannuation funds would certainly increase his estimate of $27,500 "cut by about $10,000".

30. Mr Creeney's letter is divided into two clear sections. Having dealt with the matters I have already outlined the letter then moves to "this financial year" (emphasis added). This can only refer to the financial year 1996/97 as that is the financial year in which October 1996 falls. He gave an estimate of $30,900.00 but made no reference to the fact he had already drawn down further superannuation funds. The highest that he put the possibility of having to draw down funds was that he would "probably" be caused to apply for those funds to "make up for the family payment lost".

31. When the letter is read with the questionnaire, I am not satisfied that the Department should have read it to mean that Mrs Creeney's combined income of $30,900.00 for the 1996/97 tax year would need to be increased by $8,000.00 if superannuation funds were to be taken into account in calculating her family payment. Mr Creeney clearly distinguished between the 1995/96 and the 1996/97 tax years. He clearly indicated in his letter that he understood that his superannuation funds had an effect on his wife's family payment as he said that he had been granted it "unaware that this would affect" his family payment.

32. The Department did make an error in that it did not contact Mrs Creeney to ask her whether she wanted to have her family payment assessed on the basis of an estimate. That would have been the course of action it could have been expected to follow as Mr Creeney had clearly indicated in his letter that he expected to receive reduced earnings "this financial year". Contact could have been made by the Department's either writing or telephoning Mr and Mrs Creeney. Had a telephone call been made, it can be imagined that the second draw down of funds might have been mentioned by Mr and Mrs Creeney. Had that happened, it would be expected that the Department would tell him or her that the amount of that superannuation payment would need to be included in any estimate of income for 1996/97. With the benefit of hindsight, I am satisfied that the Department should have touched upon the issue had it contacted her in writing.

33. While the Department should have acted upon Mr Creeney's letter in the way I have indicated, I do not consider that the whole of the responsibility for the misunderstanding lies with it. For the reasons I have given earlier, I consider that Mr and Mrs Creeney did not raise the issue of their superannuation payment and specifically ask what affect it had on Mrs Creeney's entitlement. In not raising that issue, they are partly responsible for their misunderstanding of the impact of superannuation payments upon family payment entitlements. My view is not altered by the events surrounding the telephone call made by Mrs Creeney to the Department in January 1997. She referred to a superannuation payment of approximately $5,000 but did not refer to the fact that there had been two such payments. I make that finding based on her evidence and the Department's file note of her conversation with an officer on 2 January, 1997.

34. Based on her oral evidence, I find that Mrs Creeney assumed that the superannuation payment was not relevant because it, or at least one of them, had been disclosed to the Department. I am not satisfied that she never specifically asked about the impact of superannuation payments upon family allowance entitlements.

35. It follows that I do not consider that the overpayment of family payment made to Mrs Creeney, and so the debt owed by her to the Commonwealth, is attributable solely to the Commonwealth. Mrs Creeney contributed to the misunderstandings that led to the overpayment. In view of that conclusion, it is not relevant to consider whether Mrs Creeney accepted the payments in good faith.

36. That brings me to s. 1237AAD, which provides:

"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."

37. The expression "special circumstances" has been considered in various cases but most build upon the statement by the Federal Court in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3, (Toohey J (Presidential Member), I A Wilkins and Dr J G Billings (Members)) that special circumstances are those that are "unusual, uncommon or exceptional".

38. There is nothing in Mrs Creeney's circumstances that make her circumstances special. Unfortunately, many recipients of family allowance find themselves in the position of having received overpayments due, at least in part, to their misunderstanding of the basis upon which those payments are made.

39. For the reasons I have given, I:

1. set aside the decision of the Social Security Appeals Tribunal dated 5 January, 1999; and

2. substitute a decision that the decision of a delegate of the respondent dated 26 October, 1998 and affirmed by an authorised Review Officer dated 27 November, 1998 is affirmed.

I certify that the thirty-nine preceding paragraphs are a true copy of the reasons for the decision herein of Miss S A Forgie (Deputy President)

Signed: ....................................................... M Martinez Associate

Date of Hearing 29 July, 1999

Date of Decision 17 May, 2000

Advocate for the Applicant Mr S Letch

Counsel for the Respondent Ms C Heywood-Smith

Advocate for the Respondent Welfare Rights Centre