Editors --- "Overpayment of age pension: was notification of change in financial situation given?" [2008] SocSecRpr 44; (2008) 10(4) Social Security Reporter, Article 10

• COOPER and SECRETARY TO THE DFHCSIA
• The law and considerations
• Formal decision

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Overpayment of age pension: was notification of change in financial situation given?

COOPER and SECRETARY TO THE DFHCSIA

(2008/828)

Decided: 8th August 2008 by G. Ettinger

It was not in dispute that Mr and Mrs Cooper had been receiving age pension since January 1997,and overpayments had been made for the period 1 July 1999 to 10 July2007. The Tribunal accepted the amount of the debt as calculated, noting that withholdings from the pensions of the Coopers continued to be made.

It was also not in dispute that when the Coopers applied forage pension, they supplied all the information which was required. They also provided a copy of a Commonwealth Bank pay advice indicating that at 18 July1996, the Coopers were in receipt of $25,644 pa, or $983.61 per fortnight from a Commonwealth Bank Officer Superannuation Fund. This document was dated 26 July1998, signed by the Coopers, and informed Centrelink that the Coopers were in receipt of a Commonwealth Superannuation Fund payment. The Coopers thereby authorised their Bank to inform Centrelink about their income stream products.

The Department argued that there was no copy of a completed income stream product form on the Coopers’ Centrelink file. However, it appears information was provided by the Commonwealth Bank Superannuation Fund to Centrelink, because on 15 February 1999, Centrelink wrote separately to the Coopers advising, among other things that their combined yearly income had been assessed as being $29,344.64 which was made up of deemed investments of$3,437.72 and Super/Income stream of $25,906.92. The Department told the Tribunal that the current practice where a product is subject to CPI increases is that Centrelink would write to the recipient annually and ask for annual updates of the figures. The Tribunal stated that it was more likely than not, that did not happen in the Coopers’ case in the relevant years.

The Department’s case was that the Coopers regularly received correspondence indicating their total annual income, and that each letter indicated they had to keep Centrelink informed of any changes to their income or assets.

Mr Cooper acknowledged receiving such correspondence, but he said that the forms and letters were extremely difficult to comprehend in terms of working out the components and deemed figures used for calculating pensions.

Mr Cooper argued that he received no letter from Centrelink between 1999 and 2007 which made clear to him, and from which he could calculate, that his and his wife’s pension payments were being worked out on the basis of the original figure provided for the superannuation fund. It was only in 2007 that the breakdown of figures provided a mechanism for him to understand that the wrong figure was being used, and that the overpayments had accordingly been made. He was in hospital at the time but notified Centrelink as soon as he was able.

The Department did not dispute Mr Cooper’s evidence but provided details of the number of times and dates on which the Coopers were sent correspondence.

Mr Cooper confirmed receipt of those letters but also argued that if he had understood he needed to give annual updates for his superannuation payments, he could easily have done so, because he received an update each year. He relied, however, on the fact that there was an annual CPI increase, and assumed that that would be taken into account by Centrelink because it had been disclosed on the 1998 form, and that Centrelink would use it in calculating the pensions.

The law and considerations

The Tribunal considered that the Coopers were required to notify Centrelink of any changes to his financial situation. They omitted to do so with regard to the CPI increases to the Commonwealth Bank Officer Superannuation, as a result of which these increases were not taken into account when calculating the rate of age pension. As a result the Coopers each had legally recoverable age pension debts of $5,651.47 pursuant to s.1223(1) of the Social Security Act 1991 (the Act).

The Tribunal then considered the waiver provisions contained in the Act including whether there were grounds for write-off for a period or whether there were any grounds for waiver of the debts.

The Tribunal considered whether there was administrative error, under s.1237A(1) of the Act which provides 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.

Mr Cooper submitted that the error in overpaying him and his wife age pension was solely that of Centrelink, because he had provided all the information it needed to calculate his pension, the forms he received were difficult to interpret, and Centrelink did not, between 1999 and 2007, detail the amounts of his superannuation pension to him in correspondence in a way in which the amounts and basis for the calculation could be identified.

The Department emphasised that the Coopers had a duty to inform Centrelink about their income and assets levels and any changes to those, and that the annual CPI increase in the superannuation product needed tube disclosed. The Department also admitted that the current practice was to write to the recipients directly about that aspect of their income, but was unable to say when that practice commenced, or whether it was the practice between 1999 and 2000. The Department accepted there was error on the part of Centrelink, but submitted that it was not sole administrative error, and that in any case the Coopers were obliged to keep Centrelink fully informed of any changed financial circumstance.

The Tribunal accepted the Department’s submission, as it was not satisfied that the error which arose was due to sole administrative error because Cooper had a duty to inform Centrelink regarding changes to his superannuation product. This was so despite the Tribunal finding that Mr Cooper relied upon the authorisation he gave to the Bank to disclose the amounts of superannuation he received and found that it was a reasonable assumption for him to have made when he signed the authority on 26 July 1998.

On the evidence before it the Tribunal was satisfied that the Coopers had the capacity to repay the debt and that recovery had been undertaken. Consequently, it was inappropriate to write-off the debts.

The Tribunal next considered whether the debts should be waived because of any special circumstances. Section 1237AAD of the Act provides for the possibility of waiving all or part of a debt on the grounds of special circumstances provided the person does not knowingly make a false representation or does not knowingly fail to comply with an obligation. The Tribunal noted the word ‘knowingly’ was considered in the Tribunal case of Callaghan v Secretary, Department of Social Security(1996) [1996] AATA 413; 45 ALD 435:

There is nothing in section 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 tube 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.

The Department submitted that the presence of actual knowledge may be inferred from the circumstances where a debtor had the opportunity to gain that knowledge, and there were no obstacles to him or her acquiring that knowledge. Reference was made to two other cases, Secretary, Department of Family and Community Services v Temesgen [2002] AATA 1290; (2002) 72 ALD 563 and Balancio v Secretary, Department of Family and Community Services (2003) AATA 466. The Department submitted that the Coopers received valid notices under section 68 of the Social Security Administration Act 1999, and knew or had the opportunity to acquire the knowledge from the letters they received setting out their obligation to advise Centrelink if their income changed. Therefore as the Coopers failed to advise of changes to their income, they knowingly omitted to comply with a provision of the Act, and that s.1237AAD(a) was therefore not satisfied.

The Tribunal concluded that the Coopers did not knowingly make a false statement, or failed or omitted to comply with a requirement under the Act. This was based on the totality of the evidence, the correspondence from Centrelink to the Coopers between 1999 to 2007 and Mr Cooper’s evidence in that he relied on his 1998 form authorising information regarding his superannuation pension to be disclosed to Centrelink and this disclosed a CPI annual increase.

The Tribunal then went on to consider whether there were special circumstances. The Tribunal was mindful that Mr Cooper was self-represented and was unable to articulate what special circumstances he wished it to rely upon to find waiver of the debts. The Tribunal was satisfied that the Coopers had done everything possible to disclose income from all sources, to Centrelink. Mr Cooper wrote regularly to Centrelink to disclose any changes of his financial situation, as he was required to do, not only in response to its letters, but at other times.

The Tribunal accepted that Mr Cooper did not have any idea and could not be vested with the constructive knowledge that his written authorisation of his index superannuation pension amounts would not be disclosed to Centrelink annually. The Tribunal found that that was a special circumstance in itself and was satisfied that half the debt should therefore be waived in recognition of that situation.

Formal decision

The Tribunal decided to set aside the decision and directed that half of the Coopers’ debts be waived and remitted the matter to Centrelink for calculation of the appropriate amounts.

[S.P.]