Editors --- "Parenting payment debt: administrative error waiver" [2007] SocSecRpr 11; (2007) 9(1) Social Security Reporter, Article 11

• KAMYUEN and SECRETARY TO THE DEWR
• The issue
• Background
• The law
• Sole error
• Good faith
• Waiver and special circumstances
• Formal decision

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Parenting payment debt: administrative error waiver

KAMYUEN and SECRETARY TO THE DEWR

Decided: 12th December 2006 by K. Levy

The issue

In this matter the key issues were whether a debt of Parenting Payment (single) (‘PPS’) had been incurred by KamYuen and, if so, whether grounds existed for write off or waiver of that debt.

Background

In June 2003 KamYuen was receiving PPS. In August and November of 2003, in August and October 2004, and in January and September 2005 she updated her earnings with Centrelink. However, her advice in August 2004 that she was earning $532 per week was not coded by Centrelink until October 2004, and then was coded incorrectly as being her fortnightly rather than as her weekly earning rate.

A letter advising her that the PPS paid to her was based on the fortnightly earnings rate of $532 was sent to KamYuen on 27 October 2004, and with effect from August 2004 she was paid arrears of PPS after recalculation of her entitlement. In January 2005 KamYuen contacted Centrelink to update her earnings level and, because she had received arrears of PPS, to question whether she may have a PPS debt, but was reassured that no amount had been overpaid to her. In addition, her employer advised Centrelink of KamYuen’s various earnings rates in the period January to August2005. As a result of both the coding error by Centrelink, and variations in KamYuen’s actual earnings rates, she was overpaid $4957 in PPS for the period from October 2004 to August 2005. KamYuen became aware of this overpayment in September 2005 when advising Centrelink of a further change in her earnings rate.

KamYuen had been in an abusive marriage before her separation, and was caring for three children, one of whom had a serious drug problem. She attended TAFECollege after her separation to complete Years 11 and 12 and subsequently obtained employment.

The law

It was not disputed that an overpayment of $4957 had occurred, and the Tribunal agreed that this overpayment amount was a debt due to the Commonwealth. The critical issue for consideration by the Tribunal was whether this debt should be waived pursuant to s.1237A(1) of the Social Security Act1991 (the Act), which provides:

1237A(1) 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.

Sole error

The AAT noted that it was Centrelink’s error which had caused a significant increase in KamYuen’s payments and the incorrect payment of arrears. It considered whether the issuing of a letter by Centrelink to Kam Yuen advising her to notify Centrelink of any change or concern about her personal details, exonerated Centrelink. It decided that the letter did not:

... exonerate the Commonwealth[from responsibility for an overpayment brought about through administrative error] as that would be tantamount to placing the customer in a position of being responsible to undertake quality control of Centrelink’s records and, therefore, its errors. (Reasons, para. 30)

Good faith

The Department argued that KamYuen did not receive the overpayments in good faith, because she was concerned about the back payment of arrears in October 2004 and whether she may have to repay a debt, but did not query the matter until January 2005. She gave evidence that in that time she did not spend any of the arrears in case she had to repay it.

The Tribunal found that KamYuen enquired on 27 January 2005 as to whether she had been overpaid and received verification that she had not been overpaid. While she was previously concerned about the accuracy of the arrears payment, she felt exonerated after her enquiry. At that time she did not attempt to clarify whether the amount she was reporting as current income in January 2005 was per week or per fortnight. However, the AAT considered that she was entitled to believe her previous reports were faithfully recorded. The AAT said:

In the circumstances, whatever human frailty existed concerning her suspicions about the arrears payment, this was overcome in that she did not refuse to make reasonable enquiries. This was consistent with her level of education and insight and consistent with the level of honest enquiry which would be expected by the community. The payments from 8 October 2004 to25 August 2005 were therefore received in good faith as defined in law.(Reasons, para. 33)

The Tribunal concluded that the PPS payments from October2004 to August 2005 were due solely to an administrative error by Centrelink and that KamYuen had received them in good faith and, in turn, that the debt must be waived.

Waiver and special circumstances

The Tribunal noted in passing that under s.1237AAD waiver can also occur if ‘special circumstances’ can be said to exist. This requires the existence of circumstances other than financial circumstances alone (Beadle v Director-General of Social Security[1984] AATA 176; (1985) 60 ALR 225 at 228), or where the facts ‘...distinguish the case inconsideration from the usual case’.(Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134).The Tribunal concluded that such circumstances did not exist in Ms Yuen’s case.

Formal decision

The Tribunal set aside the decision to recover the debt and directed that the overpayment from 8 October2004 to 25 August 2005 be waived.

[P.A.S.]