Editors --- "Overpayment: failure to disclose information; knowingly; special circumstances waiver" [2012] SocSecRpr 15; (2012) 14(2) Social Security Reporter, Article 6

• WILSON and SECRETARIES TO THE DFHCSIA AND DEEWR
• Background
• The issues
• Discussion
• Formal decision

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Overpayment: failure to disclose information; knowingly; special circumstances waiver

WILSON and SECRETARIES TO THE DFHCSIA AND DEEWR

(2012/154)

Decided: 9th March 2012 by D.P. Hack

Background

In May 2007, Wilson’s daughter was taken from Wilson's care and placed into the care of the Northern Territory Department of Family and Community Services. Wilson did not notify Centrelink of this event and continued to receive parenting payment (single) and family tax benefit from May 2007 until May 2008 when the Department of Family and Community Services notified Centrelink. Wilson was not the ‘principal carer’ of the child during that time and therefore received $13,661.97 of parenting payment and $5,182.32 of family tax benefit (FTB) to which she was not entitled.

On 16 June 2008, Centrelink made a decision to raise and recover the amounts. This decision was affirmed on internal review and by the Social Security Appeals Tribunal on 12 October 2011.

The issues

1. Did the debts result wholly or partly from Wilson ‘knowingly’ failing or omitting to comply with an obligation to inform Centrelink that her child was no longer in her care?

2. If not, are the circumstances ‘special’ such as to warrant the exercise of the discretion to waive all or part of the debt?

Section 1237AAD of the Social Security Act 1991 provides for a debt to be waived if there are special circumstances that warrant the waiver of part or all of the debt. Section 1237AAD states:

Waiver in special circumstances

1237AAD. 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 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.

Discussion

Wilson accepted that she had been overpaid the amounts of the debts but said there were ‘special circumstances’ in her case.

The Secretaries submitted that Wilson ‘must have known’ that parenting payment (single) and family tax benefit were only payable when she had care of a child or children and that Wilson ‘must have made a conscious decision not to inform Centrelink of the removal of the child’. Furthermore, Wilson received documents on a fortnightly basis that told her that she was obliged to notify if, amongst other things, there was a change in the number of children in her care. She had also had many contacts with Centrelink during the relevant period.

The AAT, however, concluded that there was no knowing failure or omission on Wilson’s part. The AAT found that Wilson was poorly educated, had limited employment over the years and was ‘fairly unsophisticated’. She had been in receipt of the disability support pension since December 2008 for psychiatric conditions. The AAT was ‘struck’ by Wilson’s ‘apparent honesty’ and accepted that when the child was taken away by officials Wilson thought it was for one day and was told that the ‘court’ would decide.

The AAT also accepted that Wilson went into Centrelink about the removal of her child and was told that she did not have to change anything until the ‘court had decided the matter’. There was no Centrelink record of the conversation but the AAT concluded that a conversation did take place from which Wilson could genuinely and reasonably have concluded that no action was needed until a court decision about the child’s removal and care. The AAT further found that Wilson was still in a fragile emotional state about the removal of her daughter and that her state would have been even more fragile at the time. She did not understand the processes regarding the removal and there was ‘fertile ground for mutual misunderstanding’. The AAT found that Wilson lacked the guile to invent the conversation and it was Wilson herself who told an officer of the Department of Family and Community Services in May 2008 that she was still receiving the payments in question. Wilson had experience with a son leaving and returning to her custody but those were family arrangements with no court determination.

Having satisfied itself that the debt did not result, wholly or partly, from a knowing failure or omission by Wilson, the AAT then turned to the question of ‘special circumstances’ other than financial hardship alone. It found three features of Wilson’s case that were special: her very poor health, her precarious financial state and ‘notional entitlement’. In this context ‘notional entitlement’ was a recognition of the high probability that if Wilson had informed Centrelink of the child's removal, she would have applied for and been granted another benefit. The AAT referred to the case of Oberhardt v Secretary of Education, Employment and Workplace Relations [2008] FCA 1923 as authority that notional entitlement is not necessarily excluded when considering whether special circumstances exist.

Wilson had already repaid $7,557.51 of the $18,844.29 total debt. The AAT waived $11,925.78 of the debt which meant that Wilson would be refunded a 'modest' sum of $639 to 'assist her get her life back on track'.

Formal decision

The AAT set aside the decision underreview and substituted a decision that $11,925.78 of the debt be waived. [M.O'H]