SOCIAL SECURITY - pensions, benefits and allowances - Carer Payment - failure to notify of change of income - whether debt exists - waiver - administrative error - special circumstances - meaning of "knowingly failing" in special circumstances

Social Security Act 1991 ss.222, 1061A, 1224, 1237A, 1237AAD, 1300

Re Morgan and Secretary, Department of Family and Community Services [1999] AATA 390

Re Armitage and Secretary, Department of Family and Community Services [1999] AATA 700

Re Castanheira and Secretary, Department of Social Security (AAT 12861 6 May 1998)

1. This is an application by Mr Todd Saunders (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 5 July 1999 (T2) which affirmed a decision of a delegate of the respondent dated 25 May 1999 (T6) as affirmed upon review by an authorised review officer (ARO) on 16 June 1999 (T14) to raise and recover a debt of Carer Pension in the amount of $256.00. The applicant also applied to the respondent for advanced payment which was refused by a delegate on 11 June 1999 (T10) and by an ARO on 21 June 1999 (T16), this decision also being affirmed by the SSAT on 5 July 1999 (T2).

2. The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T17), together with five exhibits, four lodged by the applicant (Exhibits A1-A4) and one lodged by the respondent (Exhibits R1). In addition, the Tribunal heard evidence from the applicant who represented himself. The respondent was represented by Mr Jim Underwood, a departmental advocate.

3. The issue before the Tribunal is whether there is a debt of Carer Pension for the payday 13 May 1999 and, if so, whether part or all of the debt should be waived.

4. The applicant was in receipt of Carer Pension at the relevant time. By letter dated 22 April 1999 (T4) the applicant was advised by the Department that his payment was being calculated on an annual income of $2,340, and telling him that he needed to inform the respondent if (inter alia):

your income, not including financial investments or maintenance increases

5. In the fortnight ending 2 May 1999 the applicant earnt $612 and in the fortnight ending 16 May he earnt $396 (T7). The applicant did not advise the respondent of his income for these periods.

6. A delegate of the respondent raised a debt in the amount of $256 being Carer Pension for the payday 13 May 1999 (T6) pursuant to s.1224 of the Social Security Act 1991 (the Act), which has been affirmed by an ARO and the SSAT upon review.

7. The applicant applied for an advance payment of his Carer Pension on 11 June 1999 (T9) which was refused due to the raised debt and pursuant to sub-s.1061A(4) of the Act. This was affirmed by both an ARO and the SSAT. On 4 August 1999 the applicant made further request for advance payment, which was granted.

8. The applicant gave evidence that he attempted to contact the respondent at least four times during the relevant period by telephone but continually got an engaged signal. He stated that a fridge magnet he was given by Centrelink (Exhibit A3) advised him only to ring the number indicated. He further stated that he therefore kept ringing to attempt to notify the respondent of his change in income. He told the Tribunal that he was unable to attend the office personally as he was a full-time carer and had a duty of care to fulfil. He further stated that he had never written the Department a letter and in any event the fridge magnet advised him to phone.

9. The applicant referred the Tribunal to s.1300 of the Act which states:

The Minister is to direct the Secretary to develop a service which will enable a person to make a telephone call to an office that is under the general control of the Secretary, at no greater cost than the cost of a local telephone call."

10. In the applicant's submission the respondent has failed to live up to its policy and legislative requirements in the provision of an adequate telephone service. He also told the Tribunal he is in financial hardship.

11. Mr Underwood submitted, on behalf of the respondent, that the applicant failed to declare an increase in his income from employment, and this was a failure to comply with his notification requirements. He submitted that a debt had correctly been raised pursuant to s.1224 of the Act. He told the Tribunal that the applicant's yearly income was determined by multiplying his declared fortnightly income by 26 weeks.

12. He submitted that waiver pursuant to s.1237A (administrative error) is unavailable due to the provision of s.1237A(1A), as in this case, the debt was raised within six weeks of the event. He submitted that there are no special circumstances that would justify waiver, and that the applicant had knowingly failed to comply with the Act.

13. The Tribunal is satisfied that the notice issued pursuant to s.222 (T4) required a response by the applicant. The Tribunal has ongoing concerns about the respondent's methods of calculating an annual rate of income for casual workers. However, this is not the case to canvas all of these concerns. In this case, since the applicant was in the practice of notifying fortnightly, and appears to have had an ongoing expectation of part-time work, the Tribunal accepts the respondent's method of calculation of annual income, and that the receipt of the income on 2 May 1999 was a notifiable event.

14. It is further satisfied, and so finds, that however innocently, the applicant failed to comply with the notice, and hence a debt has arisen pursuant to s.1224 of the Act. Section 1224 gives rise to a debt even when there is no fault at all on the part of an applicant.

15. Turning to waiver, the Tribunal is satisfied that s.1237AAA is not applicable and notes that the debt has been fully recovered to date.

16. In relation to s.1237A, sub-s.1237A(1A) directs that s.1237A is only applicable where the debt is not raised within six weeks of the relevant event. In this case the debt was raised within six weeks, and hence, s.1237A is not applicable and the Tribunal so finds.

17. In respect of special circumstances, the first head of s.1237AAD(a)(ii) requires that the person not knowingly fail to comply with a provision of the Act. Mr Underwood submitted to the Tribunal that the applicant "knew" he had to notify and "failed" to do so, and hence "knowingly failed".

18. In the Tribunal's opinion, Mr Underwood has not correctly interpreted the meaning to be given to the phrase "knowingly failing". Standard legislative interpretation suggests that the word "knowingly" cannot be separated from the "failing", and the words must be taken in conjunction. This means that there must be "knowledge" applied to the "failing". "Knowledge" in this sense is not to be considered as simply being knowledge of a notification obligation, but is akin to actual or reckless intent as applied to the failing.

19. In Re Morgan and Secretary, Department of Family and Community Services [1999] AATA 390 the Tribunal applied the phrase as follows at paragraph 43:

"43. Having regard to the whole of the abovementioned evidence, the Tribunal is inclined to find that Mrs Morgan did knowingly fail to comply with a provision of the Act in that, although she was aware of her obligation under the Act to comply with the DSS notice, given to her by letter dated 10 October 1996, under s872 of the Act requiring her to notify the DSS within 14 days of certain changes of circumstances, including a change of job by her or her partner, she consciously and deliberately chose not to comply with that notice. Instead of notifying the DSS of Mr Morgan's change of job on 18 November 1996 within 14 days of that date, she consciously and deliberately chose, for her own reasons, to delay notifying the DSS of that change until she thought it was appropriate to do so. That, in the Tribunal's opinion, constituted a cavalier attitude by Mrs Morgan towards her obligation under the Act to comply with the notification requirement of the abovementioned DSS notice and would justify a finding by the Tribunal that Mrs Morgan did knowingly fail to comply with a provision of the Act, within the meaning of para (b)(ii) of s1237AAC(4) of the Act."

20. In Re Armitage and Secretary, Department of Family and Community Services [1999] AATA 700 the Tribunal stated at paragraphs 36 and 37:

"36. The meaning of the term "knowingly" has been considered by the Tribunal in Re Callaghan and Secretary, Department of Social Security [1996] AATA 413; (1996-1997) 45 ALD 435 where Deputy President Forgie stated at 445:

"(48) There is nothing in s 1237AAD which suggests that the word 'knowingly' should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act_. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission."_

37. Moreover, applying the principles in Re Callaghan and Secretary, Department of Social Security_, the Tribunal finds, on the civil standard of proof, that in failing to notify the Department of Social Security of a_ "notifiable event", Mrs Armitage did not knowingly fail to comply with a provision of the Social Security Act. Accordingly, the Tribunal concludes that paragraph (a) of Section 1237AAD of the Act is satisfied"

21. In Re Castanheira and Secretary, Department of Social Security (AAT 12861 6 May 1998) the Tribunal stated at paragraph 47:

"47. Did the applicant knowingly fail to comply with the relevant provisions of the Social Security Act 1947 or of the Act? In the Tribunal's opinion, she did not. The Tribunal accepts that the applicant genuinely believed that the DSS had been sufficiently notified of her, and her children's, proposed departure and absence from Australia. Accordingly, the Tribunal finds that her actual failure to comply with the requirements of the notices, as mentioned in paragraph 46 above, and, therefore, with the relevant provisions of the abovementioned legislation, was not conscious or deliberate, but, instead, was unintentional or inadvertent. In the Tribunal's opinion, therefore, the condition specified in para (a) of s.1237AAD of the Act is satisfied."

22. Following these decisions, in this Tribunal's opinion, the interpretation to be given the phrase "knowingly failing" requires a standard of conscious, deliberate failure to comply with a provision of the Act. Inadvertent or unintentional failure does not constitute "knowingly", even when an applicant knows he needs to notify. It is a civil standard of proof where "knowingly" is a conscious and deliberate choice (Re Morgan) and also can include recklessness to the consequence of failing to comply with a provision of the Act.

23. With this in mind, the Tribunal turns to the present matter. The applicant gave evidence that he attempted to contact the respondent on at least four occasions within the relevant period. It is clear from his evidence that he was aware that he needed to contact the respondent. His failure to contact the Department was not deliberate or conscious but inadvertent, as he tried but could not get through the jammed phone lines. This being the case, on the civil standard of proof required of s.1237AAD(a), the applicant cannot be said to have "knowingly" failed to comply. Accordingly, the applicant has not knowingly failed to comply with a provision of the Act and sub-s.1237AAD(a) is satisfied, and the Tribunal so finds.

24. From his evidence, which the Tribunal found credible, the applicant placed reliance upon the Centrelink fridge magnet (Exhibit A3) which informed him that he should tell the respondent if his earnings have changed and gives a telephone number. The respondent sought to rely on the provisions of the notice (T4) in that it tells the recipient that they can contact the respondent by phone, in writing or in person.

25. The Tribunal accepts that the applicant was unable to contact the respondent in person due to his care commitments, and it commends him for his commitment at that time to the person he was caring for. The only evidence on file of the applicant writing to the respondent occurs after the relevant period, when he was pursuing avenues of appeal, and appropriately put submissions in writing.

26. Although perhaps he could have written to the respondent, the terms of the notice do not say "if you cannot get through on our phone system you must contact us in writing". It simply gives some contact options which include writing. The applicant relied upon the magnet, which mentions nothing about writing. It was his belief, which the Tribunal finds to be reasonable, that he should ring the Department to notify them, and if they did not answer, then he would try to ring them again later on. Were the applicant unable to contact the Department by phone, because, for example, he didn't have access to one, it would be reasonable to expect him to write to them or go there in person. Where he has access to a phone and the notice tells him that he can contact them by phone, it is incumbent upon the respondent to ensure that adequate provision is made for people to contact the respondent by this method. It is unfair to expect an applicant with care of a disabled woman and her three children to utilise time consuming methods of notification because the respondent is not providing adequate phone services.

27. The Tribunal agrees with the applicant that the respondent has an obligation to provide a service in terms of an adequate phone system. The Commonwealth Ombudsman's Annual Report for 1998/99 notes at page 28 (inter alia):

The significant increase in Centrelink complaints was primarily due to legislative changes in eligibility criteria for young Australians, which were brought about by the introduction of Youth Allowance on 1 July 1998. These changes were difficult to comprehend and comply with, and when coupled with computer difficulties, they generated a huge volume of inquiries to Centrelink, making the Call Centres (formerly Teleservice) virtually inaccessible for a period, resulting in large numbers of complaints during July and August.

28. This report is more concerned with a period in 1998, however it is apparent to this Tribunal that the respondent has had ongoing difficulties with the telephone system in 1999. The Tribunal accepts the applicant's evidence as credible that he was unable to get through despite numerous attempts.

29. Given the applicant's circumstances, the Tribunal is satisfied that he took all reasonable steps to attempt to comply with his obligations, and it is only as a result of the failure of the respondent to provide an adequate phone service that this debt has arisen. Coupled with his financial circumstances, the Tribunal is satisfied on this basis that it would be "unjust, unreasonable or otherwise inappropriate" (Re Ivovic and Director-General of Social Services [1981] AATA 57; (1981) 3 ALN N95 at N97) for the applicant to suffer the burden of this debt, especially since it resulted in the denial of an advance payment in June 1999, a fact which caused the applicant some apparent stress and financial hardship.

30. It is appropriate for the forgoing reasons to exercise the discretion pursuant to s.1237AAD of the Act and waive the debt and the Tribunal so finds.

31. For the above reasons and pursuant to s.43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor waives the debt of $256.00.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE

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