Editors --- "Age pension overpayment: requirements for waiver due to administrative error; application of discretion to waive a debt because of special circumstances" [2014] SocSecRpr 6; (2014) 16(1) Social Security Reporter, Article 6

• MACHIELSE and SECRETARY to the DSS
• Background
• Issues
• Decision and reasons
• Waiver of debts solely attributable to Centrelink error
• Waiver where there were special circumstances
• Formal decision
• Contributor’s note:

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Age pension overpayment: requirements for waiver due to administrative error; application of discretion to waive a debt because of special circumstances

MACHIELSE and SECRETARY to the DSS

(2013/752)

Decided: 21st October 2013 by K. Hogan

Background

Machielse received age pension from July 2008. On 23 May 2012 a Centrelink officer decided to raise and recover a debt of $18,485.46 for the period 11 March 2010 to 2 May 2012 because his wife’s income had not been taken into account in calculating his rate of pension. Machielse appealed this decision unsuccessfully to a Centrelink authorised review officer and the Social Security Appeals Tribunal. He then appealed to the Administrative Appeals Tribunal.

Just before the debt period, his wife’s income was recorded by Centrelink as $1,208 per fortnight, and Machielse was therefore not required to report her income fortnightly to receive the age pension. In fact her income was higher than this, which had led to an earlier debt.

Apparently in response to this, Centrelink had removed the record of $1,208 per fortnight, and instead required Machielse to report his wife’s income fortnightly. But on 26 April 2010, Centrelink had sent Machielse a letter telling him he did not have to report income fortnightly, without reinstating a recorded amount for his wife’s income.

From that point, Machielse was paid the age pension at a rate that did not take into account his wife’s income.

Issues

There was no dispute that Machielse had been overpaid and had a debt. The issue was whether recovery of the debt should be waived. The Administrative Appeals Tribunal considered the two main grounds of debt waiver:

(a) Waiver of the proportion of a debt which is solely attributable to administrative error under s. 1237A of the Social Security Act 1991 (Cth) (the Act); and

(b) Waiver of a debt if there are special circumstances and the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or failing to comply with the Act under s.1237AAD of the Act.

Decision and reasons

Waiver of debts solely attributable to Centrelink error

The Tribunal discussed the meaning and application of this provision. It said, in effect, that although s.1237A of the Act allows the ‘proportion’ of a debt to be waived, this only permitted waiver of a proportion of a debt if, over the time period it related to, the debt was solely attributable to Centrelink error. It did not allow waiver of a proportion of a debt where, over that time period, it was partly attributable to Centrelink error and partly not.

Although the Tribunal considered that there were arguably errors in this case, it found that throughout the debt period the debt was partly attributable to Machielse’s failure to advise of his wife’s correct income in accordance with his obligations and therefore there was no proportion of the debt solely attributable to Centrelink error.

Waiver where there were special circumstances

In effect, the Tribunal found that Machielse did not know he was being overpaid until 25 June 2010 as, up to that point, he had been overseas and not using his bank accounts. It found, without much explanation, that he knew he was being overpaid from 25 June 2010. It appears the Tribunal drew this inference from his knowledge that his rate of pension had significantly increased once Centrelink removed his wife’s regular income from his record.

It found that the debt should be waived up to 25 June 2010 because Machielse had special circumstances, but the debt could not be waived from 25 June 2010 because the Tribunal was not satisfied that Machielse did not knowingly fail to comply with his obligation under the Act to tell Centrelink about his wife’s income.

Formal decision

The Tribunal varied the decision of the SSAT and referred the matter back to Centrelink to recalculate the amount of the debt in accordance with the Tribunal’s findings.

Contributor’s note:

Overall, this decision is an orthodox application of the law relating to waiver of debts.

Its interest lies in an extended discussion of the proper approach to the application of s.1237A of the Act. It rejects a line of argument about the application of this provision suggested by the word ‘proportion’ in that section. The problem is that ‘proportion’ is ambiguous and could mean either a proportion of the total debt worked out over the whole of the debt period or a proportion of the debt period worked out by reference to a period of time within that debt period. The Tribunal, correctly in the author’s view, says that only the second approach is possible under s.1237A and then, only if the debt is solely attributable to Centrelink error for that shorter period of time.

The Tribunal, unfortunately, also seems to suggest (at [57]) that constructive knowledge may suffice to preclude application of waiver under s.1237AAD of the Act. This would be legal error, reviewable in the Federal Court. However, accepting that a reviewing court is not to review reasons why with an ‘eye keenly attuned to the perception of error’ (Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd [1993] FCA 456; (1993) 43 FCR 280), it may be that a fair reading of the reasons is that ultimately the Tribunal found as fact that Machielse knew of the error because of the substantial increase in his rate of pension. (Editor’s note: an alternative view is that the Tribunal did not make a finding that Machielse knew of the error but that s.1237AAD requires the decisionmaker to reach a positive state of satisfaction that the person did not knowingly fail to comply with an obligation, whilst the Tribunal in this case could not reach a positive state of satisfaction on the evidence before it. This is implied from the Tribunal’s statements that:...

the Tribunal is unable to find that the applicant was not in a position to have dealt with the various notices and correspondence issued to him by Centrelink after 25 June 2010. Consequently, the Tribunal is unable to find that the applicant did not knowingly fail to comply with a provision of the Act in the period following 25 June 2010.)

[M.B. and S.T.]