SOCIAL SECURITY - whether there was overpayment of sole parent pension - whether a debt exists - lapse in time before debt was raised - substantial delay to Applicant - significant effect on Applicant's ability to meet the contentions - decision set aside and in substitution recovery of the amount of 50 per cent owed by Applicant be waived

Social Security Administration Act 1999 - section 180

Social Security Act 1991 - sections 1224, 1237A, 1237AAD

1. This is an application by Ms Birgitta McLean ("the Applicant") to review the decision of the Social Security Appeals Tribunal ("the SSAT") dated 26 June 2002 which affirmed the decision of the Secretary of the Department of Family and Community Services ("the Respondent") to raise and recover a debt of $1,498.70 overpayment of sole parent pension during the period 5 May 1995 to 9 January 1997.

2. Subsequent to the lodgement of the application to the Tribunal but before the hearing, the Respondent recalculated the amount of the overpayment and varied the amount of the contended debt to $1,190.20. Section 180(1) of the Social Security Administration Act 1999 provides:

Variation of decision before AAT review completed

(1) If an officer varies a decision after an application has been made to the AAT for review of that decision but before the determination of the application, the application is to be treated as if:

(a) the decision as varied had been affirmed by the SSAT; and

(b) the application were an application for review of the decision as varied.

3. It follows that the decision under review is the decision to raise and recover a debt of $1,190.20.

4. At the hearing the Applicant appeared on her own behalf and the Respondent was represented by Ms Rachael Quinn. The Applicant gave oral evidence to the Tribunal and the following documentary evidence was before the Tribunal:

Documents lodged under section 37 of the Administrative Appeals Tribunal Act 1975

Copy of documents setting out Re-calculation of debt by Respondent

5. It is common ground that the Applicant was in receipt of sole parent pension when, in April 1995, she commenced to work at Blacktown Hospital. She ceased employment on 2 January 1997.

6. Throughout the relevant period the Applicant submitted review forms advising the Respondent of her earnings over the preceding 12 weeks.

7. In October 2000 a data matching exercise with the Australian Taxation Office yielded information about the Applicant's earnings in the relevant period and Centrelink reviewed the payments of sole parent pension received by the Applicant. On 20 April 2001 the Respondent raised the debt of overpayment. By the time of the hearing before the Tribunal the debt had been fully paid by the Applicant.

8. The issues to be considered by the Tribunal are:

9. The relevant legislation is section 1224 of the Social Security Act 1991 ("the Act") in relation to the question of the existence of a debt and sections 1237A and 1237AAD of the Act which relate to waiver of the right to recover a debt or a proportion of a debt.

10. The Applicant told the Tribunal that it has always been her practice to lodge three-monthly review forms with Centrelink on time and accompanied by the relevant payslips. She told the Tribunal that that is what she would have done during the relevant period. She said that from about half way through 1996 she had some money invested and when she withdrew the interest from that investment she would telephone Centrelink to advise them of that income. She was unable to recall whether she also included that information about her investments on her review forms but concluded that she probably did. She said that during the relevant period she was working on Fridays, Saturdays and Sundays on a permanent part-time basis and would occasionally work additional hours.

11. The Applicant told the Tribunal that she has two children, aged 11 and 13 years and that they are generally well with the exception of asthma which in both their cases is reasonably well controlled by medications. She said that she is in good health. She said that she has a $5,000 credit card debt because she will often pay her bills with her credit card and although she is currently up to date in her payment of bills her credit card debt remains outstanding.

12. The Applicant told the Tribunal that she considers the decision under review to be wrong because she knows that she would have given Centrelink all of her payslips and provided all of the relevant information on her forms. She questioned how the overpayment error could have arisen and stated that the error should have been dealt with closer to the time it arose, particularly when the information she required to refute it, for example, her payslips, was still available and Centrelink still had copies of those payslips and the forms lodged by her.

13. In cross-examination the Applicant was shown the letters contained in Exhibit R2 which are letters from Centrelink to the Applicant advising her of the amount of her income currently being taken into account in the calculation of her payment. The Applicant said that she had no memory of receiving those letters but noted that in June 1996 she had moved to Blacktown from Minchinbury for about one month, then moved to Rooty Hill until December 1996 when she moved to Forster where she now lives. It appeared to both parties that the addresses on the letters were correct given the movements she described. The Applicant said that it was her practice, when she received letters from Centrelink, to read them.

14. Document T7 is a Table setting out the Applicant's annualised income at three-monthly intervals during the period of the contended debt.

15. Document T9 is a Table setting out the actual income of the Applicant on a fortnightly basis as advised by the Applicant's employer.

16. Exhibit R3 is a Table setting out the method by which the contended debt was calculated by the Respondent and includes information on the amount of social security payment received by the Applicant, the amount of her actual income expressed as an annualised figure, the amount to which the Applicant was entitled on the basis of that income and the amount by which she was overpaid. Exhibit R3 also shows the basis on which the final debt figure was calculated in that it isolates some small overpayments which the Respondent elected not to take into account when determining the final debt figure. Exhibit R2 includes a number of letters dated from 26 April 1995 to 11 December 1995 from Centrelink to the Applicant which indicate amounts of income earned by the Applicant as recorded by Centrelink. Those letters required the Applicant to advise Centrelink within 14 days if her income increased to an amount more than the income nominated in the letter. Similar letters are contained in documents T5 and T11.

17. Section 1224(1) of the Act provides:

Debts arising from recipient's contravention of Act

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

18. It is not contended by the Respondent, that the Applicant knowingly made a false statement or failed to comply with a provision of the Act. However, whereas there is evidence, by way of Centrelink's records, of the amount declared by the Applicant as income on her review form, the Applicant has no corresponding evidence of the amounts declared by her. This is hardly surprising, given the relevant period commenced some nine years ago and Centrelink has itself destroyed the relevant review forms. In the absence of other evidence, the Tribunal concludes that the amounts recorded by Centrelink as declared by the Applicant are the amounts declared by her. Document T9, the Applicant's employer's advice of her earnings, shows that the earnings were underdeclared. The letters in Exhibit R2 and in T5 and T11 provided advice to the Applicant on the income recorded by Centrelink as being received by her and advised her of her obligation to inform Centrelink within 14 days if her income exceeds that amount. There was no evidence of the Applicant having provided such advice and so, pursuant to section 1224, the amount overpaid to her is a debt due to the Commonwealth. As to whether that debt should be recovered, the Tribunal considered the provisions of section 1237A and 1237AAD of the Act concerning waiver of recovery of debts.

1237A. (1) 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).

(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;

20. There is no evidence of administrative error on the part of the Respondent, other than the Applicant's evidence of it having been her practice to provide her payslips with her review forms. However, even if it could be established that there was administrative error on the part of the Respondent, the discrepancies between the Applicant's recorded earnings as reported by her, and her actual earnings as advised by her employer, would prevent any overpayment and resulting debt from being "attributable solely to an administrative error made by the Commonwealth".

21. Section 1237AAD of the Act provides:

Waiver in special circumstances

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.

22. There is no contention, nor any evidence that the Applicant knowingly made a false statement or false representation or that she knowingly failed or omitted to comply with the provision of the Act. The debt, having been fully repaid, cannot be written off. It remains to be considered whether there are any special circumstances.

23. The most significant circumstance surrounding this debt is the time that elapsed before the debt was raised. The debt period began in May 1995 and the debt was not raised until April 2001, some six years later. The Tribunal notes that the Respondent learnt of the overpayment in October 2000, following a data matching exercise with the Australian Taxation Office. The Tribunal also notes that some six months then elapsed before any action was taken by the Respondent. The frequency with which the Respondent undertakes data matching exercises and the speed with which it acts on information yielded by those exercises is a matter for the Respondent.

24. The Tribunal considers that the difficulties faced by the Applicant in meeting an allegation of debt after the elapse of six years should be taken into account in considering whether special circumstances exist. The substantial delay present in this case meant that the Applicant could not access any records, including payslips, about the income declared by her and the forms completed by her had long since been destroyed. The lapse in time also means that any advantage she may have had arising from the overpayment has long since passed and she has had to meet the liability for the overpayment at a time long after the effect of that advantage had ceased. The Tribunal considers the length of the delay in raising the debt in this case to be unusual and to have had a significant effect on the Applicant's ability to meet the contentions made against her and to absorb the burden of repayment. However, the Tribunal considers that, taking all matters into account, it is appropriate to waive 50 per cent of the debt raised against the Applicant.

25. The Tribunal is also mindful that, while the Applicant's financial circumstances are straightened and while her children suffer from asthma, her circumstances in these respects do not qualify as unusual or special.

26. The decision under review is set aside and in substitution therefor the Tribunal decides that recovery of the amount of 50 per cent of the debt of $1,190.20 owed by the Applicant to the Commonwealth should be waived.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Member

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