Agresti; Department of Family and Community Services

[2000] AATA 383

DECISION AND REASONS FOR DECISION [2000] AATA 383

ADMINISTRATIVE APPEALS TRIBUNAL      )

)     No N1999/1040

GENERAL ADMINISTRATIVE DIVISION          )          

Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        

Applicant

And    LINDA AGRESTI    

Respondent

DECISION

Tribunal       Mr R P Handley, Senior Member 

Date19 May 2000

PlaceSydney

Decision      The Tribunal affirms the decision under review.
   (Sgd) Mr R P Handley
  ..............................................
  Senior Member
CATCHWORDS
SOCIAL SECURITY – Family Payment – overpayment – waiver – income test – appropriate tax year – failure to notify – whether 'request' to use estimate – special circumstances – knowingly making a false statement.
Social Security Act 1991 ss1237A(1), 1237AAD, 1069 H13, 1069 H14, 1069 H20, 1069 H21, 885, 1069 H15.
Re Secretary, Department of Fmaily and Community Services and Delia [1999] AATA 799.
Re Stuart and Secretary, Department of Social Security (1998) 54 ALD 241.
Secretary, Department of Social Security v Hales (1998) 82 FCR 154.
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435.
Beadle v Director-General of Social Security (1985) 7 ALD 670.
Re Beadle and Director-General of Social Security (1984) 6 ALD 1.
Groth v Secretary, Department of Social Security (1995) 40 ALD 541.

REASONS FOR DECISION

1. This is an application by the Secretary of the Department of Family and Community Services ("the Applicant") for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") dated 2 June 1999  (1) to affirm the raising of debts against Linda Agresti ("the Respondent") of $1216.80 and $517.00 and recovery of the debt of $517.00, but (2) to waive recovery of the debt of $1216.80.

2. At the hearing, the Applicant was represented by Cheryl Collis of Centrelink and the Respondent was represented by Sandra Koller of the Welfare Rights Centre. The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T Documents") together with exhibits tendered by the parties. The Respondent gave oral evidence.
   BACKGROUND

3. The Respondent, who is aged 36, is married with two children, Alexander aged seven, and Maxwell, aged three, who was born on 12 December 1996. About November 1996, the Respondent commenced maternity leave, and her husband, James Hogue, ceased full-time employment in order to assist in caring for his wife and children.

4. On 18 December 1996, the Respondent lodged a claim for family payment, notifying the Applicant of the birth of her son Maxwell (T3). In an accompanying Income and Assets form, the Respondent stated that her husband became self-employed on 12 November 1996. She also stated their joint taxable income in the current financial year (1996/1997), which she estimated at $56,543, was less than their income in 1995/1996 (which was $84,135).

5. By letter dated 1 May 1997, the Applicant advised the Respondent that "the income used to work out your and your partner's combined rate is: Family Payment $56,543.00" (exhibit A2).  The Respondent and her husband's combined taxable income for 1996/1997 was $70,930 which exceeded the threshold of $69,239 for family payment for a family with two children. By letter dated 1 December 1997, the Applicant advised the Respondent that she must notify the Applicant if her and her husband's combined income for 1996/1997 exceeded the income limit which applied to her ($69,239) (T9). The Respondent did not reply to this letter and family allowance, as family payment was renamed, continued to be paid to the Respondent on the basis of the Respondent's estimate of taxable income of $56,543 for the 1996/1997 financial year.

6. As a result of a data matching exercise between Centrelink and the Australian Taxation Office ("the ATO") , the Applicant learned that the Respondent's combined income for 1996/1997 was $70,930. On 21 May 1998, the Applicant cancelled payment of family allowance. On 28 July 1998, the Applicant decided to raise and recover debts against the Respondent of $1216.80 in respect of family payment/family allowance paid during the period 2 January 1997 to 18 December 1997, and $517.00 in respect of family allowance paid during the period 1 January 1998 to 21 May 1998. This decision was confirmed by the original decision maker on 25 August 1998.

7. An authorised review officer affirmed the decision in respect of the $1216.80 debt on 30 December 1998 (T19) and in respect of the $517.00 debt on 31 December 1998 (T20). On 2 June 1999, the SSAT affirmed the raising of the debts and the recovery of the $517.00 debt but set aside that part of the decision to recover the $1216.80 debt and substituted a new decision that the debt of $1216.80 should be waived (T2). On 12 December 1999, the Applicant lodged an application for review with the Tribunal.

8. The parties agree that the issue in dispute is the recovery of the debts. There is no dispute as to the raising of the debts. The relevant provisions of the Social Security Act 1991 ("the Act") relating to family payment/family allowance and the waiver of debts are discussed below under the heading Consideration of the Law and Evidence.
   THE RESPONDENT'S EVIDENCE

9. The Respondent said she received family payment for some time after the birth of her first child but payments were later suspended. She was given a form in hospital after the birth of her second child, Max, on 12 December 1996, but thinks the actual claim form lodged in January 1997 may have been obtained by her husband from the Hornsby office of the Department of Social Security ("the Department"). The Respondent said her husband filled out the form in discussion with her and they both signed it. The Respondent was aware of her eligibility for a maternity allowance following the birth of her son, an allowance which had been introduced in 1996 and which she recalls amounted to between $600 and $800. It was because of her eligibility for this allowance that the Respondent was keen to lodge a claim. It just so happened that the relevant claim form was also used to claim for family payment and childcare assistance. As a result of lodging the claim, she also received some back payments of family payment in respect of her elder son, Alexander.

10. The Respondent said 1996/1997 had been a very difficult year for her. Her mother had died in 1996, from whom she inherited a house. In November 1996, she and her husband had been evicted from the house they rented in Bondi and, as a result, they had gone to live with her husband's parents at West Pennant Hills. Also in November 1996, her husband resigned from his job in order to care for her and their son, and, shortly afterwards, the Respondent commenced 12 months maternity leave.

11. The Respondent said her husband gave up work to help look after her and their then four year old son because the Respondent suffered spinal injuries in a serious motor vehicle accident in 1994 and, as a result, has ongoing chronic pain in the right side of her body. Repetitive lifting of heavy weights aggravates the condition. Her husband intended to try and obtain contract work to help support the family. He did not regard himself as unemployed but rather as self-employed. However, because the new baby had health complications and her husband needed to look after the family, and because no contract work eventuated, her husband did not obtain work. Indeed, he has since remained the full-time carer for the family – primarily because of the family's health problems. The Respondent works as a full-time office worker and the family lives on her earned income and the income from her rental property.

12. The Respondent confirmed the detail of her and her husband's income stated in the Income and Assets module lodged with the claim on 6 January 1997 (T3) – in particular that in 1995/1996 her taxable income was $30,515 and her husband's was $53,620, a total of $84,135. The Respondent also confirmed the estimate of their income for 1996/1997 stated in the answer to question 47 on the form. Her income of $12,000 was an estimate of the rental income which she thought she would derive from the property she had inherited. At that time in January 1997, the Respondent was trying to sell this property with the intention of using the proceeds of sale to buy another property for her and her family to live in. The estimate of $12,000 was based on an estimate of income for that part of the year which she anticipated would precede the sale which was under negotiation. The sale subsequently fell through, in about June 1997, and the Respondent has retained the rental property.

13. The Respondent said her investment income of $2,600 was interest on the investment of the lump sum compensation settlement in respect of her claim arising from the motor vehicle accident. Her employment income of $16,641 was in respect of the time she had worked prior to the commencement of her maternity leave, and her husband's employment income of $25,302 was in respect of the period he had worked prior to his resignation on 12 November 1996.

14. The Respondent said she had not spoken to the Department at the time she and her husband completed the form. Her husband told her that when he collected the form from the Department, their file had been mislaid following the move from Bondi to West Pennant Hills. The Respondent said the ATO notices of assessment attached to her fax to the Department's Hornsby Office dated 29 January 1997 (T7) were in response to a letter from that office dated 13 January 1997 (R1) requesting ATO notices of assessment required to work out the Respondent's entitlement to arrears of family payment. The Respondent noted that her husband's taxable income for 1996/1997 of $25,161 (T8), was $141 less that the estimate of $25,302 given to the Department on 6 January 1997 (T3).

15. The Respondent was referred to the letter addressed to her dated 1 May 1997 from the Department's Hornsby office (A2), which stated that "The income used to work out your and your partner's combined rate is: Family Payment $56,543.00." This letter required that she notify the Department if her and her partner's "combined income will be more than $62,197.30". The Respondent said she had no specific recollection of this letter. However, at that time she thought their income was still falling.

16. The Respondent said she did not remember receiving the Department's letter of 1 December 1997 (T9) and did not respond to it. She and her husband had finally moved into their new house at Umina on 12 December 1997 after having done some minor work on it prior to moving. Since moving from Bondi to her husband's parent's house in West Pennant Hills in November 1997, their records had been in storage and their affairs were in some disarray.

17. With regard to the ATO's notice of assessment of the Respondent's taxable income for 1996 / 1997 at $45,769 (T13), the Respondent said this exceeded her estimate of $31,241 (T3) because it included rental income as a result of her retaining her rental property after the sale fell through. She had not anticipated this additional rental income in January 1997. Her 1996/1997 ATO assessment issued on 19 November 1997 had been later in the year than usual because preparing her tax return had been more complicated as a result of her inheriting the rental property.

18. As an indication that she is generally accurate in making estimates of income, the Respondent noted that her ATO Provisional Tax assessment for 1997/1998 of $45,276 (T10) was close to her actual taxable income for that year of $44,604 stated in her ATO Notice of Assessment dated 3 December 1998.

19. The Respondent said when she was first notified of the overpayment in mid 1998, she was amazed. She had no idea that she was not entitled to family allowance. She has always tried to be open and honest in her dealings with the Department.

20. In cross-examination, the Respondent was asked about the caution which is set out on the Income and Assets module of the claim (T3) beneath question 47. This states:

    "If your estimate is not within 10% of your actual income, you may have to repay your Family Payment and/or Childcare Assistance."

The Respondent said she generally reads the forms she signs but did not understand the consequences of under-estimating their income. Her main objective in completing the claim form had been to obtain the maternity allowance. She had no idea of the basis on which family payments were made.

1. The Respondent was also asked about when she became aware that their taxable income for 1996/1997 might exceed her estimate. She said that her financial situation was so unpredictable mid 1997 that at any one time she was unable to tell what her income might be. The Respondent said she did not understand that she had a choice as to whether or not to provide an estimate.
   SUBMISSIONS
   APPLICANT

2. Ms Collis, for the Applicant, said that the Respondent would not have qualified for family payment in 1996/1997 based on the Respondent's combined income for the base year 1995/1996 of $84,135, which significantly exceeded the threshold for a family and two children. Obviously, the Department had regard to the Respondent's claim form and her estimate of income for 1996/1997 which was considered a request to use her estimate for the purpose of assessing her entitlement to family payment.

3. Ms Collis submitted that, in January 1997, the Respondent having received ATO notices of assessment for her and her husband's income in 1995/1996, must have been aware that she would only he eligible for family payment on the basis of her estimate for 1996/1997. With her fax to the Department dated 29 January 1997 (T7) she enclosed ATO notices of assessment for 1993/1994 and 1994/1995. She must have been aware of the significance of particular levels of income for the purpose of assessing eligibility for family payment.

4. Ms Collis noted that the claim form did warn of the risk of providing an estimate, stating:

   "If your estimate is not within 10% of your actual income, you may have to repay your Family Payment and/or Childcare Assistance."

1. Ms Collis submitted that s 885 empowered the Applicant to recalculate the family payment to which the Respondent was entitled. Ms Collis noted that the Respondent did not reply to the Department's letter of 1 December 1997 (T9) by providing details of her combined income for 1996/1997, the base year for the calculation of family payments paid in 1998. Because the Respondent did not reply, the Applicant had no choice but to continue family payments in 1998 based on the Respondent's estimate for 1996/1997. The Applicant had power to do this under s1069 H18. Had the Respondent replied and provided an estimate of her combined income for 1997/1998, she could have been paid on this basis from January 1998. It was the Respondent's responsibility, as a recipient of social security benefits, to notify the Applicant of events or circumstances which might affect her payments. Despite having been notified of her reciprocal obligations, the Respondent failed to notify the Applicant of her changed circumstances.

2. Ms Collis referred the Tribunal to the decision in Re Secretary, Department of Family and Community Services and Delia [1999] AATA 799. In that case, the Tribunal said, at paragraph 27, that whether or not the completion and lodging of a form with the Applicant:

   "…would be described as a request is immaterial, given the Tribunal's view as to the Secretary's very broad powers to obtain and utilise information for the purposes of ensuring that persons are, on the material available to the Secretary at the relevant time, being paid their correct entitlements in accordance with the Act."

Ms Collis said that, as in Delia (supra), the approach taken by the Applicant in the Respondent's case was to apply the legislation beneficially. It should also be noted that the Applicant's procedures contain in-built safeguards to enable customers to provide revised estimates at any time.
RESPONDENT

1. Ms Koller, for the Respondent, referred the Tribunal to the analysis of the relevant legislation in Re Stuart and Secretary, Department of Social Security (1998) 54 ALD 241. The Secretary's power to increase the rate of family payment payable to a person is contained in s 878. This section empowers the Secretary to make a determination where the rate being paid is less than the rate "provided for by this Act". Ms Koller argued that this power should, therefore, only be exercised in accordance with other provisions in the Act. She referred the Tribunal to the Modules of section s 1069H which set out the income test to be applied in assessing a person's eligibility for family payment. In particular, she referred to s 1069-H21 which stipulates that an estimate for the current tax year can only be utilised to make a determination of the rate of family payment payable to a person if "(c) the person requests the Secretary to make a determination under this point;". Ms Koller said no such request had been made by the Respondent. As in Stuart's  case (supra), there was no provision in the claim form lodged by the Respondent on 6 January 1997 for her to make a request.

2. Ms Koller submitted that the decision in Delia (supra) was wrongly decided because the Tribunal had failed to undertake the detailed examination of the relevant legislation undertaken in Stuart (supra). The Act did not provide a licence for the Secretary to use an estimate to assess a person's rate of family payment whenever he or she feels it may be beneficial to the person's circumstances. It is up to the person to make this decision after taking account of the risk factors.

3. Ms Koller noted that the relevant legislation is very difficult to understand and so the consumer protection safeguards in the legislation are important because by asking the Applicant to calculate the family payment payable based on an estimate, the person was running the risk of an overpayment if he or she underestimated their income for the current year by more than ten percent. The inclusion of a requirement for a request in s 1069-H21, was a reflection of Parliament's intention to provide such safeguards. Ms Koller said that the Respondent's primary intention in filling out the claim form was to claim maternity allowance. It just so happened that the Applicant used a composite form in respect of claims for maternity allowance, childcare assistance and family payment.

4. The Applicant sought to rely on s 885 but, Ms Koller submitted, that section only permits the Applicant to recalculate the family payment payable. It does not empower the Applicant to make a determination.

5. Ms Koller said since the Respondent had not made a request on the claim form lodged on 6 January 1997, the Applicant was only empowered to determine the family payment payable to the Respondent on the basis of the "base year", ie 1995/1996. Thus, the determination to pay family payment to the Respondent was made solely because of the Respondent's administrative error and, therefore, both debts must be waived under s 1237A(1).

6. With respect to the second debt of $517.00, Ms Koller said the Respondent should have been asked for information about her combined income in 1996/1997. Ms Koller submitted that s 1069-H15 did not apply because paragraph (b) was not satisfied. This paragraph required, in the Respondent's case, that the family payment rate for 1998 should be worked out on the basis of the Respondent's combined income in the then current tax year, ie 1997/1998. Ms Koller said there was no power for the Applicant to continue paying family payment to the Respondent in 1998 on the basis of the 1996/1997 estimate. Thus, the debt of $517.00 had arisen solely because of administrative error by the Applicant and the debt must, therefore, be waived under s1237A(1).

7. Ms Koller noted that the Applicant's letter to the Respondent dated 1 May 1997 (A2) did not say the Respondent was being paid on an estimate, and the letter of 1 December 1997 (T9) was not the appropriate letter since it did not ask the Respondent to provide details of her income for 1996/1997, the base year for payment of family payment in 1998. Ms Koller said the Respondent had no clear understanding of how the 1996/1997 estimate was being used. These events had occurred at a time of significant personal upheaval for the Respondent and it was only afterwards that she discovered how the rules worked. Ms Koller said it was clear that the Respondent had acted in good faith throughout.

1. Ms Koller submitted that, alternatively, if waiver were not available under s1237A(1), then waiver was available under s1237AAD because of the special circumstances of the Respondent's case. Ms Koller said the Federal Court decision in Secretary, Department of Social Security v Hales (1998) 82 FCR 154 did not require that the person be suffering financial hardship. In the Respondent's case, there were other special circumstances, such as the extent of the Applicant's administrative error, and the circumstances of the Respondent's life at the relevant time – her mother's death in 1996, the Respondent's ill-health, the fact that they were evicted from their home in November 1996, the birth of a new child who also had health problems – which justified exercise of the Secretary's power under s1237AAD.
   CONSIDERATION OF THE LAW AND EVIDENCE

2. The issue for the Tribunal to determine is whether recovery of the debts should be waived. There are two relevant provisions: s1237A(1), s1237AAD. A consideration of whether the debts should be waived also requires a consideration of the conduct of the parties in relation to family payment/family allowance and whether they acted in accordance with the relevant provisions of the Act. The Tribunal notes that family payment was renamed family allowance with effect from 1 October 1997 but that this renaming was not accompanied by any other significant substantive change.

3. The payment of family payment/family allowance is subject to an income test set out in s1069-H based on the combined assessed taxable income of the person and his or her partner for the appropriate tax year. Section 1069-H13 states:

   "1069-H13 Subject to the following provisions of this Submodule, the appropriate tax year for a family allowance payday is the base tax year for that payday."

In turn, s1069-H14 states:

"1069-H14 The base tax year for a family allowance is the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the payday occurs."

However, provision is made for changing the appropriate tax year at the person's request:

"1069-H20 If:

(a)a person requests the Secretary to make a determination under point 1069 H-21; and

(b)as a result, the Secretary determines under that point that the appropriate tax year, for the purpose of applying this Module to the person for a family allowance payday on or after the day on which the request is made, is the tax year in which the person makes the request;

the appropriate tax year, for that purpose, is the tax year in which the person makes the request.

1069-H21 If:

(a)family allowance :

(i)is not payable to a person because of this Module; or

(ii)is payable at a reduced rate because of this Module; and

(b) the person gives the Secretary an estimate of the person's income for a tax year; and

(c)the person requests the Secretary to make a determination  under this point; and

(d)the person agrees that the person's rate of family allowance for that tax year is to be recalculated if the person's actual income for that tax year exceeds 110% of the amount estimated by the person.

the Secretary must determine that the appropriate tax year, for the purpose of applying this Module to the person for a family allowance payday on or after the day on which the request is made, is the tax year in which the request is made.

1069-H22 A request under point 1069-H21 must be made in writing in accordance with a form approved by the Secretary."

1. Ms Koller submitted that when the Applicant assessed the Respondent's eligibility for family payment/family allowance in 1997, the appropriate tax year for the Respondent was her base tax year which was 1995/1996. There is no dispute that the Respondent's income for that year was a total of $84,135 which exceeded the threshold of $69,239 for a family with two dependent children. Thus, Ms Koller argued, family payment/family allowance should not have been paid.

2. Ms Collis submits that the Respondent's claim form, lodged on 6 January 1997, was rightly considered a request by the Respondent to use the estimate of her 1996/1997 income of $56,543 supplied by the Respondent in answering question 47 of the Income and Assets module of the form, for the purpose of assessing her entitlement to family payment. Thus, Ms Collis submits, section 1069-H20 and H21 apply so that the appropriate tax year is 1996/1997. Since the Respondent's actual income for that year was $70,930, then s 885(1) is applicable. This states:

   "885 Recalculation if income exceeds 110% of estimated amount

   885(1) If:

   (a)in working out the rate of family allowance payable to a person, regard is had to the person's income for a tax year; and

   (b)the income to which regard was had consisted of an amount estimated by the person; and

   (c)the person's income for that tax year is more that 110% of the amount of the income on which the determination of the rate of family allowance was based;

   the person's rate of family allowance is to be recalculated on the basis of that income.

   …"

1. Thus, Ms Collis contended the Applicant was empowered to recalculate the family payment payable to the Respondent. Ms Collis noted the Respondent's failure to respond to the letter of 1 May 1997 (A2) which stated:

   "The income used to work out your and your partner's combined rate is:
             Family Payment $56,543.00"

The letter also notified the Respondent:

"You must tell us if you or your partner:

start work or recommence work, change jobs or start self-employment; or
are self-employed and your combined income will be more than $62,197.30 in the 1995/96 or 1996/97 financial year;"

In the Respondents' case this latter figure is 110% of the estimate of $56,543.00.

1. The Respondent also failed to respond to a letter dated 1 December 1997 (T9) which contained the following notification:

   "If your combined taxable income in the 1996/97 financial year was more than the income limit that applies to you, you must tell us within 14 days after this letter is given to you."

The income limit for the Respondent was $69,239. Her income for 1996/1997 was $45,769 (ATO notice issued 19 November 1997 (T13)) and her partner's was $25,161 (ATO notice issued 18 July 1997 (T8)), a total of $70,930. The Respondent should have notified the Applicant of this.

1. Ms Collis contended that because the Applicant received no such notification, it had no option but to continue payment of family allowance in 1998 based on the 1996/1997 estimate of $56,543. Ms Koller contended that the Respondent had no power to pay family allowance to the Respondent on this basis in 1998. Ms Koller cited s1069-H15:

   "1069-H15 If:

   (a)family allowance is payable to a person:

   (i)on the last family allowance payday in one calendar year; and

   (ii)on the first family allowance payday in the next calendar year; and

   (b)the person's family allowance rate on the last family allowance payday is the earlier of the 2 calendar years is worked out on the basis that the person's appropriate tax year is the tax year in which the payday occurs (the current tax year); and

   (c)the person's family allowance rate on that payday was worked out on that basis because the person had made a request under point 1069-H21; and

   (d)the person's income for the current tax year is less than the person's income for the base tax year;

   the person's appropriate tax year, as from the beginning of the later calendar year, is the current tax year and not the base tax year unless the income for the base tax year is less than the person's income free area.
   …"

1. Ms Koller contended that the application of this section in the Respondent's case provides for the Respondent's appropriate tax year in 1998 to be 1997/1998, and not, as the Applicant claims, 1996/1997. Thus, Ms Koller submitted, the second debt of $517.00 arose solely because of the Applicant's administrative error. The Tribunal notes that this is not the case. The Respondent should have provided details of her 1996/1997 income in response to the letter of 1 December 1997.  Had she done so, the Applicant would have assessed the Respondent's eligibility for family allowance in 1998 on her base year for 1998, which was 1996/1997, and the Respondent's income for that year would have precluded payment. Thus there can be no finding of sole administrative error by the Applicant and recovery of the second debt of $517.00 cannot be waived under s1237A(1).

2. Returning to a consideration of the first debt of $1216.80, the issue raised by the parties is whether the Respondent "requested" the Secretary to make a determination based on the Respondent's estimate of $56,543.00 for 1996/1997. Ms Collis contended that the claim form lodged by the Respondent on 6 January 1997 must be taken to be such a request given that the Respondent must have been aware of the significance of particular levels of income in assessing eligibility for family payment. Ms Collis also drew attention to the warning on the claim form which stated:

   "If your estimate is not within 10% of your actual income, you may have to repay your Family Payment and/or Childcare Assistance."

Ms Collis noted that the letter of 1 May 1997 (A2) also stated that the Respondent's family payment was based on an income of $56,543.00.

1. Dealing with the notification requirement imposed on the Respondent by that letter, the Tribunal notes that the requirement only applies in the Respondent's case if she or her partner were self-employed. The Respondent notified the Applicant on the Income and Assets module of the claim form lodged on 6 January 1997 that she was on maternity leave from full-time work and her husband became self-employed on 12 November 1996. The Tribunal accepts the Respondent's evidence that although it was her husband's intention to obtain contract work as a self-employed person, this did not, in fact, happen, primarily because he was fully occupied in caring for his wife and two children. The Respondent's health has been affected by a back injury in a motor accident in 1994 as a result of which she has chronic pain in the right side of her body and has difficulty lifting. Her second child also had health complications. The Respondent said that, in any event, no suitable contract work became available for her husband. Thus, despite his intention, her husband did not become self-employed, and was not self-employed in May 1997 and thereafter.

2. Even if he had been self-employed, the Respondent's evidence was that she was not aware of how much her income for 1996/1997 might be at that time and whether it would exceed $62,197.30. When the Respondent gave her estimate in January 1997, this included an estimate of income from the investment property inherited from her mother in 1996, calculated on the basis that the sale of the property, which was under negotiation in January 1997, would be completed in the fairly near future. In fact, the sale of the property subsequently fell through resulting in an increase in rental income. The Respondent was, however, uncertain how much this increase might be, given her unfamiliarity with the deductions which are permitted to be set off against gross rental income.

3. Ms Koller contended that the Respondent did not request the Secretary to make a determination on the basis of the Respondent's estimate of income for 1996/197. Ms Koller said that because the legislation is so difficult to understand, and the person's risk in receiving payments based on an estimate is significant, the consumer protection safeguards in the legislation are important. Ms Koller cited the Tribunal's decision in Stuart (supra) which she contended was a correct analysis of the relevant law. She argued that the decision in Delia (supra) was wrongly decided because the Tribunal failed to undertake a detailed examination of the legislation like that undertaken in Stuart (supra) and failed to understand its effect as a result.

4. In Stuart (supra), Deputy President Forgie undertook a detailed examination of the relevant law. The case involved completion of a claim form which appears to have been similar to that completed by the Respondent in the present matter. Ms Stuart gave an estimate of income in answer to a question on the form, and that estimate was used as the basis on which family payment was calculated. The Tribunal found (at p255):

   "…there is no request to be found on the form generally or at questions 10 and 11 in particular. It is not enough to have a form approved by the secretary. That form must be a request."

1. Deputy President Forgie considered the meaning of the word "request" and noted (at p255) that questions 10 and 11 on the form were:

   "…not formulated in terms of a request. There is no sense to be gained from those questions that Ms Stuart is asking the secretary that he change her appropriate tax year or even that she is expressing a desire that he do so…"

Nor was such a sense to be gained from taking the whole form into account.

1. Ms Collis, by contrast, sought to rely on Delia (supra). In that decision, Deputy President Burns said (at paragraph 20):

   "…The Tribunal's considered view is that the Secretary is not bound to have regard to such estimates only where it can be said that the person made a request under s.1069-H21 or where there has been a notifiable event, but it is at liberty to do so whenever information has been properly obtained by the Secretary and the Secretary sees fit for the purposes of ensuring that the person is being paid the correct rate of family allowance provided for by the Act..."

1. Nevertheless, Deputy President Burns stated (at paragraph 26-27):

   "The Tribunal would indicate that although, at the end of the day, the issue of whether or not there was a request by Mrs Delia for the purposes of s1069-H21 is not determinative of the issues before the Tribunal, in view of the uncertainty surrounding the issue arising from perceived differences in the Tribunal's reasoning from time to time, the Tribunal would consider it appropriate in the circumstances to indicate its view that the preferred approach is that taken by Deputy President Forgie in the case of Stuart (supra). The Tribunal's considered view is that the word 'request' is to be given its ordinary meaning and that provision of information to the Department in the circumstances apparent here cannot be considered to be a request. As Mrs Delia said, had she been fully appraised of the fact that she could choose whether or not to provide an income estimate and request a determination to be made, and had she been aware of the potential consequences of adopting such a course, she may well have chosen not to provide an income estimate, thereby sacrificing any additional entitlements she may have been entitled to and avoiding the potential for overpayments to arise. As it was, she was not so appraised but was responding to what she perceived to be a demand by the Department which would result in a cancellation of payment should she fail to comply. The Tribunal would indicate that it cannot be assumed that every person who is paid family allowance at a reduced rate and who experiences a fall in income will necessarily choose to receive a higher rate of benefit thereby running the risk of incurring a debt should their estimate prove incorrect by greater than 10 per cent. Accordingly, it cannot be taken that a person in Mrs Delia's shoes has made a request of the Secretary simply because she has supplied an income estimate which, on its face, rendered her being entitled to a higher rate of payment.
   At the end of the day however, whether or not it would be described as a request is immaterial, given the Tribunal's view as to the Secretary's very broad powers to obtain and utilise information for the purposes of ensuring that persons are, on the material available to the Secretary at the relevant time, being paid their correct entitlements in accordance with the Act…"

1. In the present case, the Respondent submitted a new claim on 6 January 1997 (T3) in respect of her second child born on 12 December 1996. She said her primary objective in submitting the claim was to obtain the maternity allowance. She was not, at that time, receiving family payment in respect of her first child. The Tribunal notes the form served as a claim for family payment, maternity allowance and childcare assistance. Question 47 of the Income and Assets module of the form requests an estimate of income for 1996/97 where the applicant has ticked a box in question 45 because of a change in circumstances. The relevant box ticked by the Respondent was that her partner "became self-employed" on 12 November 1996. Question 47 does not contain any explanation of how an estimate of income will be used by the Applicant, although there is a warning box at the foot of the page which states:

   "If your estimate is not within 10% of your actual income, you may have to repay your Family Payment and/or Childcare Assistance."

1. The Tribunal is unable to see how question 47 could be interpreted as a "request" in the context of s1069-H21, and, thus, in its view, s1069-H21 does not apply. Ms Collis did not contend that any other section could be used by the Applicant to justify reference to the estimate for the then current tax year in assessing the family payment payable to the Respondent. She sought instead to rely on the view that the Act is beneficial legislation and that it was "the Secretary's duty to apply the legislative provisions in a manner most beneficial to the recipient of that benefit".

2. In the Tribunal's opinion, the Secretary can only act in such a way where he or she is empowered to do so by law. The Tribunal agrees with the approach adopted by the Tribunal in Stuart (supra) that, in the absence of a request, there is no such power in this case. The Secretary was, therefore, required to assess the Respondent's eligibility for family payment on her income in her base year which was 1995/1996. Her income for that year exceeded the relevant threshold and no family payment was payable on that basis.

3. The Tribunal therefore concluded that the payment of family payment to the Respondent for the period 2 January 1997 to 18 December 1997 was solely as a result of administrative error by the Commonwealth. In finding the Respondent received the family payments in good faith, the Tribunal relied on the Respondent's oral evidence as to her and her family's circumstances during 1997 – in particular, her lack of focus on anything to do with family payments at a time, following the birth of her second child, when she was trying to sell one house and then, subsequently, to buy another, which purchase having being concluded, involved some minor renovations to the house before the family finally moved in on 12 December 1997. The Tribunal accepts that the Respondent did not have any understanding of how the provisions of the Act operated and was not aware that she was receiving family payments to which she was not entitled.

4. The Tribunal therefore concludes that, with regard to the first debt of $1216.80, s1237A(1) is satisfied and the Secretary must waive the debt.

5. The remaining issue is whether there are grounds to justify the exercise of the power of waiver under section 1237AAD in respect of the second debt of $517.00. Section 1237AAD(a) requires that the debt did not result wholly or partly from the debtor or another person "knowingly" making a false statement or representation or failing or omitting to comply with a provision of the Act. The meaning of the word "knowingly" in this section was discussed by the Tribunal in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435. Deputy President Forgie (at 445) aligns "knowingly" with actual knowledge. The Tribunal finds that although the Respondent did not respond to the letter of 1 December 1997 as she was required to do, this was because she was focused on moving to Umina, a move which was completed on 12 December 1997. Her obligations as a recipient of social security benefits were far from her mind at that time.

1. Section 1237AAD(b) requires that "there are special circumstances (other than financial hardship alone) that make it desirable to waive" recovery of the debt. Although the Act provides no guidance as to the meaning of "special circumstances", this has been the subject of statutory interpretation by the Federal Court and the Tribunal.

2. The leading case is probably Beadle v Director-General of Social Security (1985) 7 ALD 670, a decision of the Full Federal Court. In Beadle, the Court did not think it possible to lay down precise limits or precise rules. It would depend on the circumstances of a particular case as to whether they constituted special circumstances. Moreover, even though the phrase 'special circumstances' lacks precision, it "is sufficiently understood in our view not to require judicial gloss" (at 228).

3. The Court affirmed the decision of the Tribunal under review in that case, Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase 'special circumstances' is "incapable of precise or exhaustive definition", said, nevertheless, that the circumstances "must have a particular quality of unusualness that permits them to be described as special" (at 3).

4. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Keifel J, after referring to the Federal Court's decision in Beadle, observed that special circumstances:

   "…would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case…it would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary."

1. In the Federal Court decision in Hales (supra), French J said of the "concept" of special circumstances:

   "The evident purpose of section 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words of the section."

1. Ms Koller acknowledged that the respondent is not suffering financial hardship. However, Ms Koller submitted that there were other special circumstances which justified waiver: including the extent of the Applicant's administrative error, the circumstances of the Respondent's life at the relevant times – her mother's death in 1996, her own ill health, their eviction from their Bondi home in November 1996, the birth of their new child who also had health problems.

2. The Tribunal notes that the most difficult time for the Respondent was from November 1996 to mid-December 1997. By the end of 1997, the most difficult issues facing the Respondent and her family had apparently largely been resolved. The Tribunal is not, therefore, satisfied that the requirement of special circumstances is met in relation to the second debt of $517.00.

3. In conclusion, the Tribunal agrees with the decision made by the SSAT which is, therefore, affirmed.

I certify that the 64 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R P Handley, Senior Member

Signed:         .....................................................................................
  Associate

Date/s of Hearing  18 February 2000
Date of Decision  19 MAY 2000           
Representative for the Applicant              Ms C Collis
Representative for the Respondent        Ms S Koller